U.S. vote against Canadian softwood 'without merit', says B.C. trade council

VANCOUVER, Dec. 8 (Xinhua) -- The vote by the U.S. International Trade Commission (ITC) this week to label Canadian softwood imports as harmful to American interests is "completely without merit", the British Columbia Lumber Trade Council has said.

The council's comments came Thursday here after the American trade commission unanimously voted 4-0 that Canadian softwood lumber imports have been damaging to the U.S. lumber industry.

The U.S. lumber coalition says Canada subsidizes its softwood producers with low stumpage fees for harvesting trees on public land, which allows Canadian producers to export wood into the U.S. that is cheaper than local product.

The vote comes after the U.S. Commerce Department initially slapped most Canadian softwood producers earlier this year with a combined anti-dumping tariff and countervailing duty of 26.75 percent. That rate was dropped to 20.83 percent, last month.

"The ruling today, while not unexpected, is completely without merit," said Susan Yurkovich, the president of the B.C. Lumber Trade Council in a release on Thursday.

"There can be no doubt that this process is biased in favour of the U.S. industry," she said. "To our knowledge, the ITC has never before reached an affirmative decision of injury when an industry was enjoying the most profitable period in its history, which is the case today for the U.S. lumber industry."

She said the council will initiate appeals as soon as possible and will continuing to work with provincial and federal governments in the dispute, which has experienced several flare-ups over the last three decades.

"We are confident that the ITC decision will be overturned," she said.

"The U.S. Coalition's claims of injury ring particularly hollow given the extraordinary financial performance that the U.S. lumber industry is enjoying," Yurkovich said. "Canadian imports are at a lower level today than at the levels deemed non-injurious under both the 2006 Softwood Lumber Agreement and by the ITC itself in the last round of litigation."

B.C. is the largest Canadian exporter of softwood lumber to the U.S. The lumber industry supports about 145,000 direct and indirect jobs in the province.

Canada's softwood lumber exports to the U.S. have fallen since the U.S. initially enacted its tariffs earlier this year, Canada's national broadcaster, the CBC, reported Thursday.

However, near-record wood prices have so far insulated Canadian producers, the CBC said.

The report said the Canadian softwood exports to the U.S. has fallen by 8 percent in the first nine months of this year, compared to the same period last year.

Canada has challenged the U.S. tariffs under the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). The NAFTA dispute panel is expected to make its ruling by next fall, the CBC reported. The WTO process could take years.

Duties against Canada collected so far by U.S. authorities have been kept in a 500-million dollars bond.

Canadian exporters will now have to pay the tariffs out of that bond, said trade expert John Ries at the University of British Columbia in Vancouver.

"Going forward, (more) duties will be collected as well," he told Xinhua in an interview Friday. "This isn' t a surprise. There was a preliminary determination on injury long before, and Canada is taking the dispute to both a NAFTA panel and a WTO panel. This is a lot like the last dispute in the early part of the 2000's where it got to the same point."

He said the WTO ruled in favour of Canada in that dispute, but the U.S. authorities are raising the same complaints once again.

If the WTO finds in favour of Canada once again, it doesn't necessarily mean the U.S. will drop its softwood tariffs, Ries said. "The WTO doesn't have an army or police to do that."

Rather, it would give Canada the ability to levy tariffs of its own against U.S. imports. "Then things just kind of get uglier," he said.

The crux of the dispute is whether or not Canada's stumpage fees for trees logged from public land equates to a subsidy, he said. Most U.S. lumber is logged from private land.

One possible outcome is that the U.S. and Canadian trade delegates negotiate new restrictions on the amount of Canadian softwood that can be sent into the U.S. market, Ries said.

"That's not perfect, but it's a heck of a lot better than a 25 percent tariff collected by the U.S. government," he said. Enditem