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Canada cuts off lumber talks

Cedar is loaded for export to the United States at Interfor's mill in Squamish, B.C. Canada has suspended softwood lumber talks with the United States. (File/Associated Press / The Spokesman-Review)
Beth Duff-Brown Associated Press
Cedar is loaded for export to the United States at Interfor's mill in Squamish, B.C. Canada has suspended softwood lumber talks with the United States. (File/Associated Press / The Spokesman-Review)

TORONTO – Canada on Tuesday suspended talks with the United States on their ongoing lumber dispute to protest Washington’s refusal to heed a NAFTA panel ruling that sided with the Canadian position.

A meeting that had been scheduled for next Monday to start the next round of talks in the dispute has been canceled, Canada’s Trade Minister Jim Peterson announced.

Last week, a NAFTA panel dismissed Washington’s claims that Canadian softwood exports are subsidized by Ottawa and damage the U.S. lumber industry.

Ottawa called on Washington to immediately return about $4.1 billion in antidumping duties collected from Canadian lumber companies since 2002. U.S. builders say the duties drive up the cost of constructing or remodeling homes.

Washington refused, saying the ruling didn’t end the matter because it did not deal with a 2004 decision by the U.S. International Trade Commission which supported the American case. U.S. Trade Representative Rob Portman pledged to keep in place punitive tariffs on Canada and seek a negotiated settlement.

“I have conveyed Canada’s position to U.S. Trade Representative Rob Portman and appreciate our open dialogue,” Peterson said in a terse statement Tuesday.

Neena Moorjani, a spokeswoman for Portman, said the USTR was disappointed that the talks had been canceled and hoped negotiations would resume shortly.

Canada has questioned the U.S. commitment to the North American Free Trade Agreement, the trade pact between Canada, the United States and Mexico adopted in 1993.

The Bush administration imposed the tariffs in 2002 after accusing Canada of subsidizing its lumber industry. Most U.S. timber is harvested from private land at market prices, while in Canada, the government owns 90 percent of timberlands and charges fees for logging. The fee is based on the cost of maintaining and restoring the forest.

A spokesman for the Washington-based National Association of Home Builders, decried the U.S. tariffs on Canada’s softwood lumber as a “hidden tax” that has cost U.S. home buyers and consumers more than $4 billion.

“We feel like the U.S. should honor the NAFTA ruling and give back the duties and immediately end the tariffs that have been placed on softwood lumber,” said Michael Strauss, a spokesman for the home builders group. Last week’s ruling “should have been the end of the line.”

The association said the tariffs add about $700 in additional costs for a typical wood-frame house in the United States.

Last Thursday, an Extraordinary Challenge Committee of NAFTA dismissed U.S. claims that an earlier NAFTA ruling in favor of Canada violated trade rules.

Canadian trade officials last week believed the victory would be the final blow to the U.S. timber industry’s claims that Canadian producers are unfairly subsidized, although they acknowledged the Americans still had some options outside NAFTA, including a formal constitutional challenge or action under WTO regulations.