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

WASHINGTON/OTTAWA (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.

FILE PHOTO - A pile of cut logs sit on Spanish Banks in Vancouver, British Columbia April 26, 2006. REUTERS/Andy Clark

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