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Archive for Saturday, August 11, 2001

Tariff could escalate home-building costs

August 11, 2001

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— The Bush administration, contending that Canada is unfairly subsidizing its lumber industry, announced on Friday the imposition of a 19.3 percent penalty tariff on Canadian softwood lumber, saying it would make the trade sanction retroactive to mid-May.

An economist for the National Association of Home Builders said the decision could add as much as $1,000 to the cost of building a new home, but members of Congress from lumber-producing states praised the administration for taking decisive action to protect domestic producers.

Softwood lumber, commonly used for home construction, comes from fir, pine and other cone-bearing trees.

In announcing the decision, Commerce Secretary Donald Evans said it had been reached "after careful consideration of the law and the facts on the record."

Officials said the penalty tariffs are expected to take effect for new shipments on Aug. 20, the date they will be published in the Federal Register. The department ruled that because of a surge in imports this spring, the tariffs would also apply retroactively to mid-May.

Canadian lumber imports could be hit with further penalties next month. The administration is scheduled to rule on Sept. 24 on a separate complaint from the U.S. industry that in addition to receiving unfair government subsidies, Canadian lumber mills are dumping wood in this country below fair market prices.

The U.S. International Trade Commission ruled in May that the U.S. industry was facing harm from the Canadian imports. That ruling, as well as the Commerce Department rulings to set actual tariff levels, will not become final until further review. The Commerce Department indicated it would issue its final ruling in the subsidy and dumping cases on Dec. 8.

"Canadian Trade Minister Pierre Pettigrew said that the action was unjustified because the government is not subsidizing Canada's lumber mills. Canadian officials would not say how they planned to appeal the ruling, although they have several options, including bringing a case before the World Trade Organization.

In 1999, there were 807 softwood lumber producers in the United States, concentrated in the West. The United States imported 36 percent of its supply last year with 94 percent of imports coming from Canada.

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