U.S. And Canada Sign a Deal on Lumber Matter

GENEVA: Canada and the United States on Saturday signed a deal on the sidelines of World Trade Organization (WTO) talks, capping a long-standing trade row over softwood lumber.

Canadian Trade Minister, David Emerson, and U.S. Trade Representative, Susan Schwab, initialed the agreement on Saturday night following two months of talks.

Emerson said the deal would put an end to decades of "squabbling and trade wars" over softwood lumber and help to enhance border ties.

The lumber dispute began after U.S. authorities ruled that its northern neighbour dumped softwood on the American market.

The dispute has been festering since 2002, with the American lumber industry accusing Canada of wrongly subsidizing its softwood producers; a charge Ottawa flatly denies.

Washington imposed anti-dumping and countervailing duties totaling more than 27 percent in May 2002 and Canada has been fighting to chop them ever since.

The U.S. imposed duties on the lumber and has collected $ 5 billion.

About $ 4 billion will be returned. Some of the remainder will go to a coalition of U.S. lumber firms that first launched complaints about what it said was Canadian dumping.

U.S. tariffs on Canadian lumber started at an average of 27 percent in 2002 but now average 11 percent because of various reviews and trade-panel rulings.

Canada has agreed to impose taxes on its lumber exports to the United States if the price of lumber falls below a specified level. Softwood lumber is currently averaging $ 370 per 1,000 board feet.

The trigger point for Canadian taxes to be imposed would be about $ 10 below the current sales price. The tax would start at 5 percent and go to 10 percent and as high as 15 percent, depending on how low lumber prices fall.

The aim of the system would be to protect U.S. producers by boosting the price of Canadian lumber.

The agreement signed on Saturday will undergo a legal review in August. No U.S. legislation is required for the deal to come into force, but the Canadian Parliament's approval is required for the new export-charge system.