Some U.S. companies oppose lumber tariff

Allison Linn

Monday, March 25, 2002 | 9:50 a.m.

SEATTLE -- For 50 years, a tiny company called Shakertown has produced and sold cedar shingle panels, employing nearly 50 people in the small southwest Washington town of Winlock.

Now, the company says, a government decision to impose duties averaging 29 percent on Canadian softwood lumber could cost it $1 million, making the business unprofitable. To survive, Shakertown said Friday it may be forced to move to Canada and put its U.S. work force -- already reduced to 32 people because of temporary tariffs -- out of work.

"I'm assuming (the government) would like to create jobs for people," operations manager Brian Gabbard said Friday. "The way this decision affects us, it gives the appearance that we don't like to keep jobs here."

The U.S. government issued the duties Friday in an effort to protect American jobs and retaliate against what it says are unfair trade practices such as selling wood below market prices, known as dumping.

The duties will take effect if the U.S. International Trade Commission rules that the U.S. industry was harmed, a decision expected in May.

The U.S. Coalition for Fair Lumber Imports, which says it represents 75 percent of U.S. lumber production, has been pushing hard for the duties and says they don't go far enough to offset the injury the Canadian imports are causing U.S. companies.

But other U.S. companies, ranging from tiny Shakertown to massive Weyerhaeuser, allege that the duties will cost the timber companies that depend on Canadian wood millions of dollars.

Weyerhaeuser, the timber giant based in Federal Way and one focus of the government's investigation of Canadian dumping, said it would be forced to pay a 35 percent duty on wood products from its Canadian operations if the decision is finalized in May.

"The 35 percent tariff on wood products from Canada is unfair," Weyerhaeuser spokesman Frank Menizabal said.

The U.S. government also alleges that the Canadian government essentially subsidizes the timber business there by charging low fees to log public lands. But Mendizabal says the Canadian government simply uses a different system, and it's impossible to compare that to the U.S. system.

Mendizabal said Weyerhaeuser hadn't yet determined exactly what the financial impact of the tariffs would be on a company already struggling with a strong downturn in the lumber market. But he said the company was considering appealing the decision because it does not know if it could continue its Canadian timber operations in the long term if the tariff stands.

"We're very disappointed that the two governments were not able to find a long-term and enduring solution," he said.

Mendizabal conceded the ruling could have the short-term impact of helping its U.S. operations. But he said that over time, it would hurt more than it helped.

Shares in Weyerhaeuser dropped $1.08 to close at $61.89 in trading on the New York Stock Exchange Friday. Shares in rival Georgia-Pacific dropped 24 cents to $29.10.

Shakertown's Gabbard said his tiny company is simply caught in the middle. The company has tried to find a U.S. source for the cedar it needs to make its shingle panels, he said, but has been unsuccessful.

Ironically, he said, the company could move its operations to Canada and then export a finished cedar shingle product and pay no duty at all.

"I don't think the intent of the softwood lumber agreement ... is to harm us," he said. "But, unfortunately, that's what's happening."