WTO creates panel to rule on US-Canada lumber ...

January 17, 2005

17 January 2005

WTO creates panel to rule on US-Canada lumber dispute

The following article is excerpted from the 14 January 2005 edition of “The Journal of Commerce”.

The World Trade Organization on Friday created a panel … to decide if the U.S. has complied with the global commerce body's rulings in a long-running lumber dispute with Canada.

The compliance panel will rule within three months. If it finds the U.S. has failed to comply with WTO rules, it will open the way for Canada to retaliate, trade officials said.

But the WTO held off on authorizing Ottawa's request to punish the U.S. with immediate retaliatory duties worth $166.45 million. That makes little immediate difference to the dispute, however, because Ottawa already had agreed with Washington not to apply any penalties until a final WTO decision on U.S. compliance.

In 2002, the U.S. slapped import duties on Canadian softwood lumber, which is used by house builders, accusing Ottawa of hurting U.S. manufacturers by subsidizing its lumber industry. Canada denied this.

Canada claims the U.S. failed to respect decisions made by the WTO last spring, but Washington says it has adopted them.

In rulings in February and March 2004, a WTO dispute panel said the U.S. had the right to impose duties on Canadian lumber, but that some breached international trade rules because the U.S. Department of Commerce had miscalculated them.

Most U.S. timber is harvested from private land at market prices, while in Canada the government owns 90 percent of timberlands and charges fees - called stumpage - for logging. The fee is based on the cost of maintaining and restoring the forest.

U.S. timber companies contend that Canada's stumpage fees are artificially low and amount to subsidies that allow Canadian mills to sell wood below market value.

The U.S. says it complied with the WTO rulings because it trimmed its tariffs last month, but Canada has protested that the cut is too small and fails to respect the WTO decision.

On Thursday, Canada's International Trade Minister Jim Peterson said Ottawa also would launch a renewed challenge to U.S. duties under the North American Free Trade Agreement.

The trade battle between the neighbors built up steam after the expiration of their Softwood Lumber Agreement in March 2001.

Under that agreement, Canada had been allowed to ship a certain amount of lumber to the U.S. without duties, with tariffs set for shipments beyond that level. In return, the U.S. agreed not to launch any trade action, including the imposition of protective duties.

When the agreement ran out, the U.S., under pressure from domestic producers, moved quickly to impose extra duties on Canadian imports.

While the U.S. timber industry generally applauded the tariffs, home builders on both sides of the border say they have driven up the cost of new homes in the U.S…..


Topic(s): 
International Initiatives
Information Source: 
World Customs Organization (WCO) / World Trade Organization (WTO)
Document Type: 
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