Commerce Department Agrees Canadian Lumber Unsubsidized
Although the U.S. Commerce Department on Nov. 22 agreed to comply with a North American Free Trade Agreement (NAFTA) verdict finding that Canadian softwood lumber is not subsidized, countervailing duties amounting to 17.2% and anti-dumping tariffs averaging 4% are expected to remain in effect for the foreseeable future.
“While this is a positive step, several NAFTA panels have previously ruled that the Administration must rescind these punishing tariffs on Canadian lumber that inflate housing costs and harm consumers,” said NAHB President David Wilson. “It’s time for Washington to end its stalling tactics and to comply with its legal obligations by eliminating these border taxes and refunding to Canada the duties that have been collected.”
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. The percentage was subsequently reduced but remained above 20%.
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.
Last month’s action by the Commerce Department implements an Oct. 5 NAFTA ruling which determined that the subsidy is below 1%; under U.S. law this means that the lumber imports are not subject to duties.
Both sides now have up to six weeks to issue comments on the verdict, and the U.S. would then have an additional 30 days to challenge the panel’s final order calling on the Commerce Department to eliminate countervailing duties on imports. The ruling has no effect on anti-dumping duties of 4%.
Even after this time period, the U.S. could seek further delays by taking its case to an Extraordinary Challenge Committee. While no extraordinary challenge has ever been successful, it could drag the case out an additional six months before the panel’s verdict is finally upheld.
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.
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