FTC Sides With Canadians on Wood Exports

The Federal Trade Commission stepped into a bitter trade dispute between U.S. lumbermen and Canada on Tuesday and declared that alleged Canadian subsidies of wood exports have nothing to do with the economic troubles of the U.S. domestic industry.

Keith Anderson, an assistant director of the FTC’s economics bureau, said at an International Trade Commission hearing that “the U.S. lumber industry is not threatened or injured” by the low fees that the Canadian government charges for the privilege of taking lumber from government forests, the source of about 95% of Canadian lumber.

The low fees enhance Canadian lumber profits but have no impact on the quantity of lumber harvested or on the price at which it is sold, he said.

However, the Coalition for Fair Lumber Imports, a U.S. industry group seeking import duties to offset what it says is an unfair Canadian price advantage, has claimed that the low fees are as little as one-tenth of what American lumbermen must pay to harvest privately owned forests.

“We want Canada to take the thumb off the scales,” said Alan W. Wolff, testifying on behalf of the coalition. “These past three years should have been the biggest boom in the history of this industry.”

Charles Ervin, director of operations for the ITC, an independent agency, noted that Canadian wood imports in the United States have increased by 22% in recent years. But Anderson replied that import increases, along with low lumber prices generally, were the result of other economic causes and that Canada’s fee schedules had nothing to do with it.

Thus, FTC staff attorney Steven Feirman said, “imposing countervailing duties on Canadian imports is inappropriate.”

The Commerce Department last week opened an investigation into the U.S. industry’s complaints, a move that drew a quiet protest from Canada’s external affairs minister, Joe Clark. But the FTC statement Tuesday, in response to the ITC’s general request for outside commentary on the case, suggests that the Administration is not anxious to slap more import duties on Canadian wood products.

Last month, when House Democrats were forging a November election issue by passing an omnibus trade bill designed to shrink imports from around the world, President Reagan infuriated the government of Prime Minister Brian Mulroney by imposing stiff tariffs on Canadian wood shingles and shakes.

Under existing trade laws, the Commerce Department must open an inquiry if an industry claiming injury from imports presents enough information to justify an investigation. The decision on whether to proceed with an investigation will be based on a ruling by the quasi-judicial ITC, which has until July 3 to decide whether the domestic industry is injured by Canada’s low government lumber fees.

If the ITC finds no injury, the case would be dismissed with no further action. If injury has been determined, however, the issue would be referred to the Commerce Department for a detailed investigation into the charges that Canada is exporting lumber with an unfair subsidy.

Meanwhile, in a speech to the Economic Club of New York, Secretary of State George P. Shultz said the dispute over U.S. tariffs on shakes and shingles--which was followed by Canadian retaliation--demonstrates the “slippery slope you can go down if you aren’t careful.”

Shultz attacked the trade bill passed by the Democratic-controlled House as a dangerous protectionist measure that, if enacted over Reagan’s promised veto, could touch off a trade war far more extensive than the controversy with Canada.

The secretary said the legislation would require quotas on imports from countries running substantial trade surpluses with the United States, including Japan, West Germany, Taiwan and Canada.

“What would those countries do then?” he said. “I don’t have to answer that question, do I? . . . Protectionism is on the march.”

Times staff writer Norman Kempster contributed to this story.