The International Trade Commission issued a preliminary finding yesterday that Canadian subsidies to its timber industry are hurting American lumber producers, opening the possibility of Canadians having to pay duties on lumber exports to the United States.
The ITC acted on a complaint by American softwood lumber producers, who charged that more than $1.8 million in subsidized Canadian imports are undercutting them in the U.S. market. They said that Canadian producers are able to buy standing timber, largely owned by the Canadian government, at one-sixth the price that American lumber companies have to pay.
The case adds one more irritant to America's relations with its northern neighbor, which are strained already over a prevailing belief in Canada that the United States tries to exercise economic imperialism over it.
The Canadians consider the low "stumpage" fees Canada charges private companies to cut timber on public lands a method of conserving natural resources, not a subsidy. But with 95 percent of Canadian timber owned by provincial and federal governments, American lumbermen argue those low fees allow Canadians an unfair advantage in the U.S. market.
The United States Coalition for Fair Canadian Lumber Imports, which filed the compaints, said Canadian producers pay $24.42 for 1,000 board feet of lumber because of the subsidies while the free market costs to Americans are $138.20. As a result, they argued, the Canadian share of the U.S. softwood lumber market jumped from 18.6 percent in 1975 to 30.5 percent last year.
With close to $2 billion in imports at stake, this is one of the largest cases ever handled by the ITC.
Yesterday's unanimous ITC decision is the second step to America imposing tariffs on Canadian lumber. Last month, the Commerce Department's International Trade Administration issued a preliminary ruling that there are grounds to believe Canada subsidizes its lumber industry. Commerce has until May to make a final determination on whether subsidies exist and how great they are. Then in July, the ITC will make the final determination on whether the subsidies injure U.S. producers