US Ruling Confirms Punitive Tax On Canadian Softwood Exports

by Mike Godfrey, Tax-News.com, New York

02 November 2001

The US Department of Commerce (DOC) has decided, in a preliminary ruling, in favour of American lumbermen, landowners and workers who claim that the Canadian timber inustry is guilty of 'dumping' its lumber on the US market at prices below its production costs.

As a result the US Department has confirmed the punitive 19% anti-dumping duty being levied on softwood imports from Canada. An irate Canadian timber industry has lodged an appeal with the World Trade Organisation.

However, the WTO appeal process could take years and the tension that has increased between the two countries since the 19.3 per cent duty was imposed will become all the more intense with this latest ruling from the DOC.

A statement from the Coalition For Fair Lumber Imports explains that by using data from Canadian lumber mills, the DOC determined that prices of Canadian lumber sold in the US during the period April 2000 to March 2001 averaged 12.58 per cent less than the average production cost measured in several Canadian regions. In the preliminary ruling on Wednesday the DOC calculated a specific anti-dumping duty for six Canadian mills and an average duty to scores of other mills.

Rusty Wood, chairman of the Coalition, said: 'This ruling proves that Canada's provincial lumber policies encourage unfair trade. Canada should move away from protectionist government policies that insulate its industry from market competition. Until Canada's lumber production is market-based, the US cannot let unfair trade practices destroy our mills, our jobs and the forest landowners who rely on our industry.'

In an official statement from the DOC, Don Evans, US Commerce Secretary said: 'Wednesday's decision marks an important step in the investigation of softwood lumber imports from Canada. The determination was based on facts received before the Department, with active participation of all interested parties. We look forward to comments on our prelimiary determination, and will consider thse comments carefully as we proceed with the case.'

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