Cheap Lumber and Free Trade
The Bush administration’s often-repeated support for free trade is about to undergo its first serious test. The Department of Commerce is being asked to impose hefty punitive levies on lumber imports from Canada, based on the lumber industry’s claim that its Canadian competitors are unfairly subsidized by their government. A similar claim has been made three times in the last 20 years and never succeeded. True, Canadian softwood lumber--which accounts for about a third of the U.S. market--is a formidable competitor. But stifling competition with punitive import duties would serve neither U.S. consumers nor free trade. The industry’s request should be rejected.
The timber industry’s pressure on Washington to curtail Canadian lumber imports started the moment a five-year “voluntary” softwood lumber agreement with the United States expired at the end of March. That deal set a quota on duty-free lumber imports, putting an end to 15 years of fighting but satisfying nobody except the U.S. timber industry. Understandably, both governments are eager to get out of the business of regulating the lumber trade and do not want the agreement extended.
The U.S. timber lobby--a heavy contributor to both political parties--renewed the fight to keep the lid on lumber imports by reviving a claim, never conclusively proven, that Canadian lumber is unfairly subsidized because timber companies are charged such low fees for trees cut on public lands. The U.S. companies want the Commerce Department to slap on prohibitive import duties. The industry has a poor chance of winning on economic grounds, so it enlisted the help of Sen. Max Baucus (D-Mont.) and other senators to bring political pressure on the Bush administration. The Commerce Department has amply demonstrated in the past it is susceptible to political arm-twisting in deciding dumping cases.
Punitive tariffs would hit American consumers hardest. The lumber import restrictions, according to a recent study by the University of Washington, increased the price of softwood lumber by as much as 15% and added between $800 and $1,200 to the cost of a new home.
Canada wants a negotiated rather than imposed solution to the lumber trade dispute, and Washington, hoping to regain leadership in the creation of a hemispheric free-trade area, should accept.
