Canada united in quest for free trade in lumber
Copyright 2001 Reuters
December 17, 2001
By Robert Melnbardis
MONTREAL, Dec 17 (Reuters) - Canada and its provinces stand united in their quest for free trade with the United States in softwood lumber, hoping to end two decades of cross-border disputes over the key construction commodity, a top government minister said on Monday.
International Trade Minister Pierre Pettigrew said Canada's softwood lumber producing provinces are unanimous in hopes of negotiating a pact with the United States.
In August, the United States slapped Canada with nearly 32 percent of import duties on softwood lumber, accusing its timber-rich northern neighbor of unfairly subsidizing some C$10 billion ($6.3 billion) of annual shipments of the homebuilding product.
A 19.31 percent countervailing duty on Canadian softwood lumber expired on Saturday, but could be resumed in March. Canada and its big lumber exporting provinces such as British Columbia and Quebec want to erase those duties and replace an earlier quota system with trade that is free of any constraint.
``We want an agreement that will be without limit in quantities or time period,'' Pettigrew told reporters after meeting with his provincial counterparts.
``What we need is a guarantee of our market access to the United States.'' Such a deal would end a bitter dispute in which Canada has had to face quotas or penalties from the United States for alleged market protectionism. The provinces deny the subsidy allegation. They say the United States is using the duties to allow inefficient sawmills in the South to protect their markets at the expense of U.S. consumers.
Big lumber retailers such as Home Depot Inc. (NYSE:HD - news). want to maintain a free flow of wood from Canada, saying U.S. homebuilders and homeowners benefit.
The U.S. argument centers on what is alleges are low Canadian ``stumpage fees.'' Washington accuses the provinces of subsidizing sawmills by charging below-market rates to cuts trees in Canada's vast publicly owned forests. To forge a free trade pact, Canada, the provinces and the domestic lumber industry are prepared to modify their forest management practices, Pettigrew said.
``We are set on making changes in our provincial forestry management if we are guaranteed market access,'' Pettigrew said. ``Why would we go through all this exercise if it was to be challenged in 18 months again through these trade remedies, which we find quite punitive and unfair?''
Pettigrew would not provide details, but key provincial officials involved in talks on the Canadian side have said they are considering changes to the criteria used to set tree-cutting rates charged to lumber companies. Pettigrew acknowledged that Canada and the provinces are examining a range of issues related stumpage fees.
``There are some people in our industry here who believe that some of our jurisdictions have put too much on the table,'' he said. While Canada pursues a negotiated free trade deal with the United States on softwood lumber, it will continue to press for remedies through the U.S. courts, before the World Trade Organization and under the North American Free Trade Agreement, Pettigrew said.