U.S. duties on Canadian lumber can stay

Wednesday, Aug. 31, 2005 | 9:38 a.m.

U.S. duties on Canadian lumber don't violate global trade rules, the World Trade Organization ruled, bolstering the position of the Bush administration as it fends off a series of legal challenges to the tariffs.

The WTO's decision, which was described in broad terms by the U.S. and Canadian governments, said the United States complied with international rules when it determined that its producers are harmed by subsidized imports of Canadian lumber. The ruling contradicts findings by a North American Free Trade Agreement panel, which said the U.S. erred in imposing the duties.

"This is big. It shifts everything," said Harry Clark, a lawyer for the U.S. Coalition of Fair Lumber Imports in Washington. The WTO ruling is still confidential and is scheduled to be made public later this year.

The U.S. began imposing tariffs in 2002, claiming Canadian provinces give sawmills an unfair subsidy by not charging market rates to harvest timber on government land. Canada filed complaints to the WTO and Nafta, arguing that the U.S. violated trade rules in making that determination.

The United States, which has kept its levy of an average of 21 percent on Canadian timber imports while the dispute is being litigated, has collected $4 billion in duties.