Despite 'significant progress' made at three days of meetings in Toronto between Canadian and US officials last week, the US is sticking to its determination to impose a tax on imports of Canadian lumber.
US lumber industry spokesman John Ragosta said that even if the Canadian government and industry agreed to every US demand for reform of timber pricing, a border tax would still be required to prevent a surge of Canadian exports while changes were phased in.
The tax of 19.3%, officially a 'countervailing duty' applied under WTO rules in cases of dumping, was imposed after some US lumber companies complained that Canadian provinces were subsidising lumber firms by charging low 'stumpage' to cut timber on public lands.
The BC government has said it is prepared to revise the way it prices lumber on Crown lands and consider changes to rules to protect forestry jobs that force cutting even when it is not economically viable. Although that does sound like an admission of artificial pricing, the federal government has lodged an appeal against the tax with the World Trade Organisation (WTO). It will take months or even years for the WTO process to complete its stately progress, and in the meantime the Canadians are hoping that negotiation will bring a quicker result.
Mr. Ragosta however says the only way to get a deal would be to impose a tax that would ensure that there is no flood of cheap Canadian lumber during the months or years it will take to restructure the Canadian pricing system. He said a cap on volume, such as the five-year Softwood Lumber Agreement that expired on March 31, would not be acceptable.
Even if British Columbia, which supplies half of Canadian lumber exports to the US, is prepared to move towards the US position, eastern producers, who are in the majority in the industry association, have a different view. "We still believe free trade is the critical objective and getting to unencumbered and unharassed trading relationships is key," said Bob Rae, who acts for the eastern producers. "But we're certainly prepared to pursue the multi-track process the government has undertaken, litigation at the WTO and these discussions."
The US Commerce Department is offering Canadian softwood lumber producers the opportunity to be exempt from the new duty if they can prove they are not dumping, and has just extended the closing date for applications for another three weeks.
Each year Canada exports C$10 billion of softwood lumber including pine, fir, spruce and cedar to the US. The new tax has already forced Canadian lumber companies to lay off thousands of their workers.
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