April 7, 2009 / 7:23 PM / in 8 years

U.S. slaps 10 percent duty on some Canada lumber imports

WASHINGTON (Reuters) - The United States will slap a 10 percent duty on some imports of Canadian lumber after Ottawa failed to abide by a trade tribunal ruling, the U.S. Trade Representative said Tuesday.

The new tax in the long-running bilateral dispute between the world’s two biggest trading partners comes amid growing concerns over nations around the world walling off their borders to protect jobs.

The U.S. economic downturn and collapse of the U.S. housing construction market has led to massive layoffs in both the U.S. and Canadian lumber industries.

“We regret that Canada has chosen not to meet its commitments and has made this action necessary,” USTR Ron Kirk said in a release.

The duty will remain until the United States collects $54.8 million, the statement read.

”Current conditions ... only make it clearer that Canada needs to fulfill its obligations under the agreement and not continue to avoid the market consequences of its earlier

breach,” Kirk said.

Canada was found in breach of its softwood lumber trade deal with the United States earlier this year, when the LCIA, formerly the London Court of International Arbitration, ruled Canada miscalculated quotas for some lumber exports for the first half of 2007.

The LCIA said Canada should collect a 10 percent tax on the value of its softwood lumber shipments from Quebec, Ontario, Manitoba and Saskatchewan until C$68.26 million was collected.

The U.S. dollar equivalent based on the exchange rate at the time of the ruling is $54.8 million, the USTR said.

Canada offered last week to pay C$46.7 million ($37.7 million) to the United States to comply with the ruling, but the USTR rejected the offer.

Ottawa has said it wants the LCIA to rule whether its offer is adequate, and will pay more if the tribunal so orders.

Canada and the United States signed a seven-year deal on softwood lumber in 2006 to settle a prolonged fight over allegations Canada improperly subsidizes its lumber producers, which supply about 30 percent of the construction lumber used in the United States.

U.S. producers say Canada has failed to live up to the agreement, but Canada denies that charge.

($1=$1.24 Canadian)

Editing by Russell Blinch and Christian Wiesser

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