US and Canadian Softwood Lumber Dispute
This controversy has been going on since about 1982 when the U.S. lumber companies started filing a petition to the U.S. trade organizations to do something about the dumping and subsidizing of softwood from the Canadian government. Unlike the U.S., Canada owns almost all of its own timber; in the U.S. it's broken up between private ownership and corporate ownership. The U.S. alleges that the Canadian government is allowing Canadian sawmills that make softwood lumber to buy trees from the government at extremely low fees. They are able to take those trees, run them through the sawmill, make lumber and ship it to the U.S. and keep their prices for lumber down, because they haven't paid much for it up front. Therefore they are able to undercut the U.S. lumber in the U.S. marketplace.
The last decision, which is still after two years being appealed by Canada to NAFTA and the WTO, is that Canada will have to pay a 19% duty for subsidization and a 9% antidumping duty that is a total of 28% tariff at the U.S. border. While this tariff is being disputed, Canada is sending in lumber and the U.S. is collecting the tariff. It is estimated that the U.S. has collected $2.5 billion in duties from Canadian companies. This money supposedly has remained untouched because of the appeals process. Basically, if NAFTA and the WTO find in favor of Canada by saying their import of lumber does not affect the U.S. market, then the U.S. will have to pay Canada back all the money that has been collected. Past decisions have leaned more towards the U.S., but it seems this time they may be leaning towards siding with Canada.
The last decision, which is still after two years being appealed by Canada to NAFTA and the WTO, is that Canada will have to pay a 19% duty for subsidization and a 9% antidumping duty that is a total of 28% tariff at the U.S. border. While this tariff is being disputed, Canada is sending in lumber and the U.S. is collecting the tariff. It is estimated that the U.S. has collected $2.5 billion in duties from Canadian companies. This money supposedly has remained untouched because of the appeals process. Basically, if NAFTA and the WTO find in favor of Canada by saying their import of lumber does not affect the U.S. market, then the U.S. will have to pay Canada back all the money that has been collected. Past decisions have leaned more towards the U.S., but it seems this time they may be leaning towards siding with Canada.
2 Comments:
At 12:41 PM, kylee45 said…
As an employee of an agricultural lending institution, whose portfolio consists of approximately 51% timber loans, it is scary that Canada can export lumber to the US at such a reduced cost. Despite the tariff imposed, Canadian lumber is still taking a chunk of the market that would be best held by the US. The costs of the low price lumber imports eventually trickle down throughout the economy. Sure, timber mills may close or employees may be out of jobs, but what about the fringe businesses (such as my own) that incur foreclosure losses because timber borrowers can no longer pay their note? I hope that NAFTA and the WTO will support and continue the tariffs on Canada's exported lumber. The US timber industry seems to need their protection, as do the other sectors of the economy.
At 1:14 PM, priestdarko1 said…
These low prices for timber are closing U.S. companies right? This article doesn't mention the benefit to consumers. With these lower prices aren't consumers going to pay less. Couldn't this mean that the companies in the U.S. that are shutting down are inefficient companies? Why is it that every time an industry suffers from outside (foreign) competition we want to throw up trade barriers (tariffs etc)? Doesn't this discourage U.S. companies to become more competitive? For example the steel industry in the U.S. is guarded so heavily, they have no real reason to make advancements. In this case if the Canadian government has given the Canadian companies an unfair advantage I agree with the tariffs. But if it is the lack of efficiency on the part U.S. companies, than we will only hinder ourselves.
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