U.S. panel says Canadian softwood imports hurt American woodworkers

By DON McINTOSH, Staff Reporter

In a case that several U.S. unions have been watching closely, the U.S. International Trade Commission (ITC) ruled May 2 that softwood lumber imports from Canada are hurting U.S. producers. Following an earlier U.S. Department of Commerce finding that the imports are subsidized by the Canadian government, the ruling paves the way for the United States to impose tariffs averaging 27 percent on softwood lumber imports from Canada. The tariffs are expected to take effect May 22.

Denny Scott, assistant director of the Western Council of Industrial Workers, an affiliate of the Carpenters Union, says the tariff is a clear victory for U.S. millworkers, which have been hit hard by Canadian imports. The Coalition for Fair Lumber Imports, an industry group of sawmill and woodlot owners, reports that Canadian imports have been a factor in the permanent closure of 31 mills in Oregon and 14 in Washington in the last three years, with at least 2,720 jobs lost in Oregon and 934 in Washington.

Last year, the United States imported nearly 18.5 billion board feet of softwood lumber from Canada, accounting for 34.3 percent of U.S. consumption.

The ITC ruling is the latest development in a long-running feud. For years, to avoid tariffs, the Canadian government maintained voluntary limits on softwood lumber exports to the United States. But the last such agreement expired April 1, 2001, and Canada refused to renew. So the Coalition for Fair Lumber Imports, joined by the Paper, Allied Industrial, Chemical and Energy Workers International Union (PACE) and the Western Council of Industrial Workers filed suit before the ITC, charging that Canada was dumping lumber at less than market prices.

About 95 percent of forests in Canada are government-owned, and lumber companies there enjoy long-term leases and harvest rights at one-third to one-quarter the price U.S. timber companies pay.

British Columbia uses sales of timber on state-owned land to fund government services. The provincial government determines the amount of revenues it wants, and then signs long-term contracts in which it sets the price for timber sales at levels that may have nothing to do with the price U.S. companies pay to log private lots. On top of that, to encourage stable employment, the province requires timber companies to log continuously or lose their right to cut on government-owned land. This fact has also prompted concern among environmentalists, who think the policy has led to overcutting.

Though the tariff ruling is a victory for millworkers, Scott says opponents in the homebuilding and lumber retail industries may have won on the public relations front - they've succeeded in getting the issue framed in the press as a "protectionist" measure that will help U.S. millworkers at the expense of U.S. homebuyers and construction workers. The American Home Builders Association says the tariff will add $1,500 to the price of a new house.

Scott says that is total speculation, that in fact, there's no way a producer can easily pass through costs in the lumber industry because the price is more determined by demand and supply than by production costs. He predicts that as Canadians export less, U.S. producers will increase production, thus keeping prices about the same for users. While the high tariffs will likely reduce the amount of Canadian lumber imports, Scott says it's too soon to tell if U.S. mills will rehire.

The battle is far from over. Responding to the U.S. move to impose tariffs, Canada has already filed six separate complaints with the World Trade Organization, and Canadian corporations like Weyerhaeuser (a U.S. corporation that has 30 percent of its operations in Canada) have filed at least three lawsuits against the United States under the North American Free Trade Agreement (NAFTA).

May 17, 2002 issue

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