Canada cancels lumber meeting with U.S.

TORONTO — Canada yesterday suspended talks with the United States on their lumber dispute to protest Washington, D.C.'s refusal to heed a NAFTA panel ruling that sided with the Canadian position.

A meeting that had been scheduled for next Monday has been canceled, Canada's Trade Minister Jim Peterson announced.

Last week, a NAFTA panel dismissed D.C.'s claims that Canadian softwood exports are subsidized by Ottawa and damage the U.S. lumber industry.

Ottawa called on the U.S. to immediately return about $4.1 billion in anti-dumping duties collected from Canadian lumber companies since 2002. U.S. builders say the duties drive up the cost of constructing or remodeling homes.

The U.S. refused, saying the ruling didn't end the matter because it did not deal with a 2004 decision by the U.S. International Trade Commission which supported the U.S. case.

U.S. Trade Representative Rob Portman pledged to keep in place punitive tariffs on Canada and seek a negotiated settlement.

Canada has questioned the U.S. commitment to the North American Free Trade Agreement (NAFTA), the trade pact between Canada, the United States and Mexico adopted in 1993.

The Bush administration imposed the tariffs in 2002 after accusing Canada of subsidizing its lumber industry.

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.

A spokesman for the National Association of Home Builders decried the U.S. tariffs on Canada's softwood lumber as a "hidden tax" that has cost U.S. homebuyers and consumers more than $4 billion.

"We feel like the U.S. should honor the NAFTA ruling and give back the duties and immediately end the tariffs that have been placed on softwood lumber," said Michael Strauss, a spokesman for the homebuilders group. Last week's ruling "should have been the end of the line."

The association said the tariffs add about $700 in additional costs for a typical wood-frame house.

Last Thursday, an Extraordinary Challenge Committee of NAFTA dismissed U.S. claims that an earlier NAFTA ruling in favor of Canada violated trade rules.

Canadian trade officials last week said the victory would be the final blow to the U.S. timber industry's claims, although they acknowledged the Americans still could mount a formal constitutional challenge under WTO regulations.