US gets tough on import of softwood from Canada

The United States has moved toward ``management'' of another major market -- the softwood lumber industry. Already the US limits the imports of automobiles and steel through so-called ``voluntary'' quota systems. Now, by planning to impose a countervailing 15 percent duty on Canadian softwood lumber imports, the Reagan administration intends to roll back the growing Canadian share of the American lumber market.

The US Department of Commerce issued a preliminary ruling last Thursday that Canada was subsidizing its lumber exports, primarily by charging low provincial ``stumpage fees'' on the harvesting of timber on government-owned land.

Representatives of four lumber-exporting provinces (British Columbia, Alberta, Ontario, and Quebec), federal International Trade Minister Patrick Carney, and lumber producers and unions met in Toronto Monday to decide on a response.

At this writing, their decision was not known. One expert, however, suspected they would suggest the Canadian industry work out a deal with the American industry that would boost Canadian lumber prices and thereby trim Canada's share of the US market.

Previous talks between Canadian and American industry representatives failed. A Canadian offer last month that would have raised provincial stumpage fees high enough to raise Canadian lumber export prices 10 percent was rejected as insufficient. The US industry has been seeking duties of up to 32 percent of the value of Canadian softwood, the type of lumber used in housing.

This week the US Customs Service will start collecting 15 percent in cash or bonds on Canadian lumber imports, setting the funds aside until a final deterimination of the dumping charge by the Department of Commerce Dec. 30. This gives negotiators some time to deal.

If there is no way to avoid countervailing duties on the nearly $4 billion of Canadian lumber exports to the US, Canadians would rather collect the money in Canada through higher stumpage fees or some other device than turn over the money to the US Treasury.

The National Association of Home Builders in Washington says the action will drive up the median cost of a US home, which was $86,900 last year, by up to $1,300.

(In a separate action last spring, the US raised duties on Canadian red cedar shakes and shingles 35 percent.)

Besides the possible economic losses in Canada, Canadian diplomats object to the US action on two grounds:

First, they feel the so-called ``quasi-judicial'' decision was based more on political necessity in the US than economic facts. They note that in 1983 the US Department of Commerce made an opposite decision based on the same situation.

Second, they are concerned by the expansion of the concept of ``subsidy'' to include a ``sovereign matter'' of resource taxation.

Gary Horlick, a former US Commerce Department official responsible for the 1983 contrary decision, notes that such a broader subsidy definition could cover tax-free industrial development bonds or less-than-cost irrigation water, both widely used in the US.

You've read  of  free articles. Subscribe to continue.