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UPDATE 3-U.S. finds Canada lumber harms U.S. producers, duties to remain

(Adds Canada reaction)

By Eric Walsh and Leah Schnurr

WASHINGTON/OTTAWA, Dec 7 (Reuters) - The U.S. International
Trade Commission said on Thursday it made a final finding that
exports of softwood lumber from Canada injure U.S. producers,
virtually ensuring that hefty duties on imports of the building
material will remain in place for five years.

The decision will impose anti-dumping and anti-subsidy
duties affecting about $5.66 billion worth of lumber and comes
amid increasingly acrimonious talks on renegotiating NAFTA, the
trilateral trade pact between the United States, Canada and
Mexico.

The U.S. Lumber Coalition, an industry lobby group that
petitioned the U.S. Commerce Department last year to open a
dumping and subsidy investigation, lauded the decision.

"The massive subsidies that the Canadian government provides
to its lumber industry and the dumping of lumber products into
the U.S. market by Canadian companies cause real harm to U.S.
producers and workers," Coalition Co-Chair Jason Brochu said in
a statement.

Andrew Leslie, Canada's parliamentary secretary of foreign
affairs, called the duties "unwarranted, unfair and deeply
troubling". He told the House of Commons that "we will continue
to fiercely defend our softwood lumber industry".

Ottawa last week formally opened a case against the United
States at the World Trade Organization over the Commerce
Department's decision to impose the duties.

That followed the launch by Ottawa last month of a NAFTA
trade challenge over the move.

The combined final duty rates on the material used widely to
build homes range from about 10 percent to nearly 24 percent,
below a preliminary range of about 17 percent to 31 percent.

The affected Canadian firms are West Fraser Timber Co Ltd
, Canfor Corp, Conifex Timber Inc,
Western Forest Products Inc, Interfor Corp and
Resolute FP Canada Ltd.

The Lumber Trade Council of British Columbia, a province
with a significant forestry industry, said it was confident the
decision would be overturned, calling it "completely without
merit."

A U.S. homebuilder group has called the ruling
"shortsighted" amid concerns that it would drive up prices for
consumers.

The disagreement centers on the fees paid by Canadian lumber
mills for timber cut largely from government-owned land. Those
fees are lower than fees paid on U.S. timber, which comes
largely from private land.

The decision to impose tariffs followed failed talks to end
the decades-long lumber dispute between the two countries.
Canada dismisses the idea that it is subsidizing producers.
(Reporting by Eric Walsh and Leah Schnurr; Editing by G Crosse
and Andrew Hay)

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