April 2, 2009 / 12:44 AM / in 9 years

U.S. senator, lumber group urge tax on Canada lumber

WASHINGTON (Reuters) - The U.S. government should impose a new tax on certain Canadian lumber imports, a senior lawmaker and a U.S. trade group said on Wednesday, rejecting Ottawa’s offer to make amends for breaching the softwood lumber deal.

Canada said late on Tuesday it would pay C$46.7 million ($37.06 million) to satisfy an international trade tribunal ruling that it had miscalculated quotas for lumber exports from four provinces for the first half of 2007.

But Senator Olympia Snowe and the Coalition for Fair Lumber Imports each said Canada should instead impose a 10 percent duty on lumber exports from the provinces until it collects C$68.26 million, as the LCIA had directed.

“Canada’s attempt to pay off the U.S. government to make this problem go away constitutes another, yet especially insidious, gambit to subsidize its lumber industry,” said Snowe in a statement.

The U.S. Trade Representative should assess tariffs on Canadian lumber imports from the provinces, said Snowe, a Republican senator from Maine who is on the Senate Finance Committee, which oversees trade.

The office of USTR Ron Kirk did not provide comment on the issue on Wednesday.

The collapse of the U.S. housing construction market has badly hurt lumber producers on both sides of the border. Canada supplies about 30 percent of construction lumber used in the United States.

The two countries have fought for decades about whether Canada improperly subsidizes its lumber producers. They signed a seven-year deal in 2006 to settle the legal battle.

The deal requires Canada to impose taxes and volume caps on exports to the United States when prices drop below set rates.

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

Canada’s payment offer is a subsidy to producers in Ontario, Quebec, Manitoba and Saskatchewan, and won’t crimp their exports, a trade group said in a release.

“The Canadian government is playing games of smoke and mirrors and trying to cover its contempt for the final LCIA award in a cloak of alleged conformity,” said Steve Swanson, chairman of the Coalition for Fair Lumber Imports.

Ottawa said its lumber industry would face shutdowns and job losses if it imposed export charges on top of the 5 percent already levied on lumber shipped south from the provinces.

Trade Minister Stockwell Day said Canada was prepared to pay more than C$46.7 million in damages if the LCIA tribunal rules the payment insufficient.

($1=$1.26 Canadian)

Editing by Christian Wiessner

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