WTO on the softwood lumber agreement between US and Canada

["Ian Murray" <seamus2001@xxxxxxxx>]

Friday June 29 4:10 PM ET

WTO Rules for U.S. on Lumber Issue
By NAOMI KOPPEL, Associated Press Writer

GENEVA (AP) - The World Trade Organization on Friday rejected Canadian
claims that the United States was breaking international trade rules
in a dispute linked to the huge North American lumber industry.

WTO ruled that a U.S. ``statement of administrative action'' related
to the 1930 Tariff Act is legal, but left hope for Canada that it
could succeed if it brought a new case in the future.

Canada imposes a total ban on exports of raw logs, which U.S.
producers say leads to a glut of lumber domestically and a fall in the
cost of items made from logs, such as boards.

The U.S. producers claim that the export ban is therefore a hidden
government subsidy to the Canadian wood industry. They are also
concerned that Canada's ``stumpage'' system for licensing lumber
cutting on provincial land - which often takes into account social and
environmental policy, not just market rates - is unfair.

WTO rules allow member states to impose additional import duties if
lower-priced subsidized imports are damaging their own producers.

Canada denies that its export ban is a subsidy. Although the United
States has never used the administrative action provision, Ottawa took
the case to the WTO to pre-empt any future use.

The WTO dispute resolution panel said in a 209-page report that the
U.S. ``statement of administrative action `` was in line with WTO
provisions because although it says an export ban ``can be'' a
subsidy, such a determination isn't mandatory.

However it agreed with Canada that a ban on exports of a material does
not meet the WTO's definition of a subsidy on goods made from that
material, leaving the possibility that Canada could take a new case to
the WTO if the United States ever invoked the rule.

Until March 31, U.S.-Canadian lumber trade was regulated by an
agreement which allowed Canada to ship 14.7 billion board feet of
duty-free lumber to the United States each year, with tariffs set for
shipments beyond that level. A board foot is equivalent to 144 cubic
inches of wood.

In return, the United States agreed not to launch any trade action,
including the imposition of protective duties.

Two days after the agreement ran out, the U.S. Coalition for Fair
Lumber Imports asked the Commerce Department to rule that subsidized
lumber from Canada was damaging the U.S. industry and to impose duties
to counter that.

The investigation is still continuing. On Thursday, the Canadian
government submitted 250,000 pages of evidence to the U.S. Department
of Commerce to support its claim that it does not subsidize its
industry.

``The U.S. industry has alleged that a Canadian 'wall of wood' would
cross the border. We have responded to their unfounded allegations
with a mountain of evidence to refute their claims,'' said Canadian
Trade Minister Pierre Pettigrew.

He had earlier claimed that the lower prices were because ``our
industry is more modern and, frankly, more efficient.''

U.S. producers have claimed that Canadian lumber imports increased by
26 percent in the two months following the end of the agreement.