NAFTA Panel Finds No Grounds for Lumber Tariffs
The nation’s home builders on March 20 called on the Bush Administration to rescind punishing tariffs on Canadian lumber imports following a unanimous ruling by a North American Free Trade Agreement panel that Canada does not subsidize its lumber industry.
“This marks the sixth time in the past three years that a NAFTA panel has found no justification for the U.S. to be imposing countervailing duties on Canadian lumber shipments into the American marketplace,” said NAHB President David Pressly. “It’s time for the U.S. to honor its legal obligations by eliminating these border taxes that are unnecessarily raising the cost of housing and refunding to Canada the duties that have been collected.”
Currently, there is an 8.7% countervailing duty on Canadian lumber imports and anti-dumping duties average about 2.1%.
The U.S. government imposed countervailing and anti-dumping duties totaling 27% on softwood lumber in May of 2002, charging that Canadian imports represented a “threat” to domestic lumber producers. The percentage was subsequently reduced on two separate occasions but remains above 10%.
U.S. law permits countervailing duties to be imposed only if a foreign supplier is benefiting from subsidies and U.S. producers are being injured, or threatened with injury, as a result.
On March 17, the NAFTA panel determined that the subsidy is below 1%, which under U.S. law means that the lumber imports are not subject to duties.
The U.S. has until April 27 to file an appeal to the decision. Last week’s ruling has no effect on anti-dumping duties.
Several NAFTA panel decisions have unanimously determined that the Commerce Department was using flawed calculations to reach the conclusion that Canadian lumber is subsidized. And on Aug. 10, a NAFTA Extraordinary Challenge Committee upheld an earlier NAFTA ruling that found no threat of injury from Canadian imports. It also stipulated that the U.S. was required to refund the billions of dollars of duties that Canada has paid to date.
Although a NAFTA ruling carries the weight of law in Canada, the U.S. and Mexico, the Administration has failed to implement decisions that invalidate the lumber duties and return all duties paid out by Canadian firms.
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252.