Timber policy tiff
WASHINGTON - The Bush administration is asking Canada to implement forest practices that could raise timber prices and eliminate the need for stiff U.S. tariffs on lumber imported to build homes.
The administration last year imposed tariffs averaging 27 percent on imports from four Canadian provinces, contending that government subsidies kept Canadian lumber prices artificially low and threatened the U.S. industry.
Lumber from pine, spruce, fir and hemlock trees is used to frame houses. The United States imported nearly $6 billion of lumber in 2001, about one-third of the American market.
Canadians say lumber exports to the United States plunged by an average 25 percent after the tariffs were imposed, forcing mills across the country to lay off thousands of workers. The United States contends that the Canadian government now sells timber as much as 75 percent below market value.
Most U.S. timber is harvested from private land at market prices, while in Canada the government owns 90 percent of timberlands and charges fees for logging. The fee is based on the cost of maintaining and restoring the forest.
To resolve the dispute, Grant Aldonas, U.S. undersecretary of commerce for international trade, proposed that Canada open bidding on cutting rights for lumber, a move he hopes would raise the price.
In a draft document presented to the Canadian government this week, Aldonas also asked that Canada eliminate restrictions on how lumber is cut and processed.
Canada has rejected similar proposals in the past and is challenging the U.S. tariffs through the World Trade Organization.
Aldonas called the proposal "a road map for changes" aimed at improving relations between the countries and, ultimately, eliminating what he acknowledged were punishing tariffs on Canadian exports.
But for the tariffs to be dropped, Canada must significantly change its forest policies to be more market-oriented, Aldonas said.
"Minor changes in provincial timber sales and pricing programs will not suffice," the draft report said.
Aldonas is scheduled to discuss the proposal with Canadian officials Friday at a meeting in Toronto.
A spokesman for Canada's trade minister, Pierre Pettigrew, declined to comment on the proposal until officials had time to review it.
British Columbia and Quebec, which together account for three-quarters of Canada's annual lumber exports to the U.S. market, have already proposed policy reforms.
"Conceptually, this approach could form the basis of a long-term solution. However, the devil is in the detail," Mike de Jong, forests minister for British Columbia, said in a statement. "We're looking forward to a Friday meeting with Grant Aldonas to discuss these specifics."
Deborah Burns, spokeswoman for the Coalition for Fair Lumber Imports, a U.S. industry group, called the U.S. proposal a good start.
"It provides a good framework. Between that and what the B.C. government has proposed, there are enough elements that we need to sit down and talk about it," Burns said.
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