Tariffs hurt Canada?s industry, U.S. buyers

The U.S. Commerce Department's preliminary ruling last month to set tariffs on Canadian lumber imports is not only harming Canadian lumber producers, but is acting as a tax on all American home buyers by raising the cost of housing, Canada's top trade official told the National Association of Home Builders.

"At a time when the U.S. economy is weakening and dangerously slowing down, one of the few sectors of the American economy that is still showing signs of healthy life home building is being affected by this tax that the Administration wants to impose," Canadian Trade Minister Pierre Petti-grew said Sept. 10 in an exclusive interview with Nation's Building News, NAHB's newspaper.

According to a press release from NAHB, Pettigrew was meeting in Wash-ington Sept. 10 with Commerce Sec-retary Donald Evans, U.S. Trade Rep-resentative Robert Zoellick and Capitol Hill lawmakers to discuss the U.S./ Canada softwood lumber trade dispute and to let American consumers know that they have a stake in the outcome.

"This is a tax that U.S. home builders are being asked to pay to support U.S. lumber producers," Pettigrew said. "It is basically a tax that the administration is seeking to pass on to all home buyers."

In a preliminary ruling Aug. 10, the Commerce Department placed a 19.3 percent countervailing duty on Canadian lumber shipments into the United States. The tariff was brought about by a group known as the Coalition of Fair Lumber Imports, a group of large domestic lumber producers whose members include International Paper, Sierra Pacific, Potlatch and Temple-Inland, according to the NAHB release.

A preliminary anti-dumping decision dumping occurs when foreign producers sell their products in the U.S. at a loss is expected in October. Anti-dumping duties would increase housing costs even further.

The NAHB estimates that the nearly 20 percent countervailing duty could add as much as $1,000 to the cost of an average new home. The CFLI also is pushing for an additional 38 percent anti-dumping duty to be slapped on imports of lumber from Canada.

There have been three previous countervailing duty cases on this issue, and in each case in which it was taken to a final decision, it was ultimately determined that the Canadian government did not provide unfair subsidies to its lumber industry.

"The problem right now with the Commerce Department is that they've completely changed their calculations," Pettigrew said. "It's a very interesting contradiction. In 1983, no subsidy was found. In 1986, with the same facts and same law, they found a subsidy. In 1992, the subsidy finding of 6 percent was based largely on the existence of export restrictions on logs.

"Stumpage fees (the fee that Canadian provincial governments charge for wood cut on public land) have increased 150 percent since then, and now they find a 19 percent subsidy fee. It's incoherent. It's inconsistent. It's purely political maneuvering on the part of the administration."

Canada has challenged the Aug. 10 Commerce Department ruling with the World Trade Organization and has made it very clear that if the U.S. government were to issue a final decision in Decem-ber or early next year to impose countervailing and/or anti-dumping duties, Canada would fight to have the ruling overturned.

"We will challenge this at every legal level we can," Pettigrew said.