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US-Canada Trade Dispute Threatens Lumber Industry - 2001-11-29

Thousands of jobs are at stake as officials from the United States and Canada race to solve a multi-billion dollar trade dispute. Import duties recently imposed by the U.S. Commerce Department on Canadian softwood lumber are having a widening effect on employment in Canada.

The United States slapped a 32-percent duty on Canadian softwood lumber, in the latest round of an ongoing trade dispute.

A U.S. lumber industry lobbying group, the Coalition for Fair Lumber Imports, requested the trade action, alleging that stumpage fees, which the Canadian regional governments charge lumber companies for cutting trees on public land, are below market price, and represents an unfair subsidy.

The U.S. Commerce department says that after a preliminary investigation it found that the subsidy totaled 19.3 percent. It imposed a countervailing duty in that amount in August and added a 12.8 percent anti-dumping tariff in October.

Canadian trade officials say over 16,000 Canadian lumber jobs have been lost, as the result of the tariff, most in the western province, British Columbia. The officials estimate a further 15,000 are threatened.

Most of the laid off workers are represented by the IWA: the Industrial, Wood and Allied Workers of Canada.

Union President Dave Haggard says the lay offs are now spreading eastward.

"It's just starting to hit the rest of Canada," he says. "We're starting to have announcements of lay offs all the way from New Brunswick to Vancouver Island now."

Former Montana Governor Marc Racicot heads a U.S. team that is working to negotiate a settlement.

Mr. Racicot says he believes an agreement might be in place by the December 25 Christmas holiday.

"We believe that it's feasible and that it's urgent enough that we have that hope," he says.

Canadian Prime Minister Jean Chretien says the U.S. tariffs violate free trade agreements with Canada. Canadian officials assert the prices the government charges for cutting trees do not represent a subsidy but are an established part of Canada's lumber industry.

Softwood lumber is most commonly used for construction and Canada's objections to the duties are supported by wood processing firms, building supply companies and home builders in the United States. Up to two-thirds of softwood lumber in the United States comes from Canada.

Michael Carliner, an economist with the U.S. Association of Homebuilders says the duties are unjustified and will most likely be struck down by an international tribunal. He adds the tariffs harm home buyers in the United States.

"Those people that can barely afford a house, that have trouble qualifying for a mortgage, they are likely to be priced out of the market," he says.

Similar tariffs on Canadian lumber were imposed three times in the past. Each time, a tribunal set up under the North America Free Trade Agreement ruled in favor of Canada.

For the workers in sawmills and lumber yards across Canada either a settlement or ruling against the duties, cannot come soon enough. It is estimated that it will take at least four months to get all the closed mills reopened and operating at regular production levels.