B.C. pitches softwood solution

U.S. producers also tire of tariffs

JN what many are considering the lfirst real thaw in the Canadian and U.S. softwood dispute, a British Columbia official has proposed a sliding border tax as an alternative to the increasingly unpopular 27 .2Vo tariff on imported Canadian lumber.

B.C. forests minister Mike de Jong made a proposal last month to the Coalition for Fair Lumber Imports, a consortium of U.S. producers that originally supported the tariffs, declaring a solution was needed "that enjoys a degree of support among U.S. producers."

The proposal seeks to have the current tariffs replaced with a border tax running up to l7.5Vo as lumber prices drop along with the establishment of a bilateral softwood lumber council that would resolve future trade disputes.

Under the new proposal, de Jong said the tariff would remain in place, but the rate would be jVo to allow Canada to resurrect its legal case if necessary.

Although no U.S. or Canadian government official has commented publically on the proposal, de Jong said Ottawa has been kept informed ofhis actions.

A representative for U.S. producers had no comment, stressing that his group was in no position to negotiate directly with British Columbia, that it was a matter for the two federal governments to hammer out.

The proposal comes in the wake of news that the The Coalition for Fair Lumber Imports is suggesting that the tariffs have not worked and that an alternative is needed.

"The Coalition is changing its attitude," said western region vice-chair Dick Bennett. "At this time, we are looking for a volume restraint. The old Softwood Lumber Agreement, or a renewed version of it, is starting to look pretty good right now."

Under the old agreement from 1996 to 2001, Canada imported 14.7 bd. ft. of lumber before incurrins a duty.

"We have to do something to keep our industry alive and right now we are getting killed," said Bennett.

On the Canadian side. the duties have been "a catalyst for dramatic change in our industry," according to John Brink, owner, Brink Forest Products, Prince George, B.C.

Brink said the tariffs have forced his firm to become more efficient. Brink's Prince George plant recently underwent a $2 million expansion so that it can produce 2x4s 24 hours a day, seven days a week.

It is precisely this kind of energetic production, particularly from British Columbia, that has U.S. producers looking to put a cap on the volume of Canadian softwood imports.

Although de Jong has said that he is open to a new lumber deal, he will not consider the idea of a quota as suggested by American producers.

Steve Crombie, International Forest Products, Vancouver, B.C., reiterated that quotas were unacceptable. "We've been saying all along that the U.S. wasn't really interested in policy reform in Canada," he said. "They simply wanted to restrict supply coming into the U.S."

The U.S International Trade Commission also weighed in on the dispute last month by holding hearings on the impact Canadian softwood lumber tariffs have had on lumber dealers, builders and home buyers.

The ITC, whose hearings focused on the competitiveness of the U.S. structural building components industry, surveyed homebuilders, lumber dealers, and other interested parties from the structural building components industry.

The domestic anti-tariff coalition, American Consumers for Affordable Housing, whose members include Home Depot and the National Lumber & Building Material Dealers, among others. told the commission that the 27Vo duty on Canadian imports is hurting consumers.

"The imports are not just on lum- ber users; the current duties amount to a federally imposed sales tax on new home construction, remodeling and other applications for lumber," said ACAH spokesperson Susan Petniunas. "It is a tax on homebuyers and homeowners."

To date, over 100 members of the U.S. House and Senate have written to President Bush asking his administration to drop the tariffs and open up free trade.

This past summer, the World Trade Organization found that the U.S. Department of Commerce's countervailing duty was contrary to U.S. trade rules, and should be amended.

The ITC is expected to submit its findings to the Senate Finance Committee in April.

Trade officials on both sides of the border have hinted that neeotiations may soon start up again.