Posted on 01/08/2003 10:02:33 PM PST by lewislynn
U.S. suggests plan to end lumber dispute with Canada
By Bradley Meacham Seattle Times business reporter
In an effort to end a trade dispute, the Bush administration proposed that Canada change the way it sells trees in exchange for dropping U.S. tariffs on its lumber. The administration last year imposed the tariffs, averaging 27 percent, to protect U.S. timber companies from cheaper Canadian softwood, including pine, fir and cedar. Most of Canada's forestland is owned by the government, which subsidizes cutting to provide jobs, the United States says.
Grant Aldonas, the U.S. Undersecretary of Commerce for International Trade, proposed that Canada open bidding on cutting rights for lumber, a move it hopes would raise the price. The United States contends that the Canadian government now sells timber as much as 75 percent below market value.
In a 33-page document presented to the government of Canada late Monday, he asked that it also eliminate restrictions on how lumber is cut and processed to encourage competition.
Canada has rejected similar proposals in the past and is challenging the U.S. tariffs through the World Trade Organization.
"This is essentially a starting point to open up the discussion," said a Commerce Department official. Aldonas hopes the proposal leads to negotiations and an interim solution within the next couple of months, she said.
The tariffs have led to layoffs on both sides of the border and prompted some Canadian mills to export even more wood to compensate for the cost of the duties.
Increased imports from Latin America and Europe have led to lower lumber prices in the United States, trimming profits at some companies that originally pressed for the tariffs.
Ending the dispute is critical for Federal Way-based Weyerhaeuser, which has 10,000 of its 58,000 employees and 18 of its 45 softwood mills in Canada.
The cost of the duties adds pressure on Weyerhaeuser, which is trying to pay down debt from its $8 billion acquisition last year of Willamette Industries.
The company in November proposed that Canada tax its lumber exports in exchange for the United States dropping the tariffs. British Columbia later suggested a similar interim tax that would start at 17 percent and decline as lumber prices rise.
Canada's national government rejected the earlier proposals and has provided financial support to help communities hit by the U.S. trade barrier.
Aldonas is scheduled to discuss the proposal in Washington, D.C., today with The Coalition for Fair Lumber Imports, a group of 260 U.S. timber companies that lobbied for the tariffs. Aldonas will travel to Toronto for discussions with the Canadian government on Friday.
Bradley Meacham: 206-515-5066 or
There are many more people who buy lumber than who work in the industry. If the Canadians want to subsidize our purchase of lumber, more power to them.
You're right. That sentence suggests someone in US government can determine what "market value" is.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.