Canadian Lumber Trade - Essay Example

Several meetings were held between the Trade officials of both the countries in order to get to a mutual understanding, which would benefit both the parties, but until today both the parties are seeking for solution for this issue. By May 2002, US International Trade Commission took a stand against Canadian Lumber Producers by stating that the imports from Canada threaten material injury to US industry. The Commission was convinced that Canadian softwood lumber imports are unfairly subsidized.

During the same year, Bush administration slapped average tariffs of 29 percent on Canadian softwood lumber imports in a bid to protect US lumber jobs from subsidized Canadian imports. According to Mary Crawford1, the tariffs, known as countervailing duties will be 19.34 percent and the additional dumping penalty of 9.6 percent will be applied to Canadian lumber exporters for selling their softwood lumber at prices below fair market value. The imposition of the tariffs over the Canadian softwood lumber definitely was going to protect the US lumber industry in the longer run, but the most effected ones were the US consumers, as they were going to face the hike in prices of lumber, hence overall construction cost would be high.

The NAHB2 believed that the tariff would serve as a hidden tax on US homebuyers and renters. According to NAHB, the overall 29 percent tariff was adding $1000 to the cost of building a new home. NAHB pointed out different types of lumber for house framing is not interchangeable, and the types of lumber being imported from Canada are different from US lumber, and are used in different structural uses in home construction, hence the tariff is going to affect the overall quality of a house. According to Barry Rutenberg3, for house framing the Canadian SPF4 is better than US SPF, and satisfies the requirement.

He said, "Homebuilding and remodeling account for two-thirds of lumber consumption in the U.S., and lumber is the primary building material used in home building. Because there are not enough trees available in the U.S. to produce the lumber needed for home building, Canadian lumber imports are critical for the construction of affordable new homes and to make improvements on existing homes in America". As the price of Canadian SPF raises the overall house construction prices also rises, which will decrease the number of homebuyers.

Recently US Department of Commerce published a second administrative review in the Federal Register, according to which, for softwood lumber shipped from Canada to the U.S., the combined countervailing and anti-dumping duty rate of 10.8 percent is now in effect. The countervailing duties will be collected at a rate of 8.7 percent, and the "all-other" anti-dumping rate is now 2.1 percent. The real question now is whether the Canadian government is going to tackle the trade dispute issue in a way which enable the Canadian lumber industry to regain the power it needs to shape the economy in the interests of Canadian citizens, the majority of which are women and men who work for wages.

Analysis shows that there are certain key points which are going against the Canadian lumber industry interests and overall Canadian labour community. Firstly, the U.S. still manages trade in their own interests whenever they want to do so.