The US commerce department has put forward a plan aimed at ending the softwood lumber crisis with Canada.
It follows growing evidence that its 27% duties on Canadian softwood imports are not working, with plunging profits reported at many big US lumber companies. Profits at International Paper and Georgia-Pacific fell by up to 66% in the July-September quarter due to rising imports from Europe and Canada.
The US plan suggests Canadian provinces adopt a market-based system for timber sales, with countervailing duties being removed as each province sells a significant amount of wood through auction or log markets. American lumber companies have always complained that their Canadian counterparts are subsidised by low Crown stumpage fees.
European companies have increased their share of the US market since the crisis started. In July last year shipments from Estonia rose 373%, while Russian and German exports went up 200% and 185% respectively.
The American Consumers for Affordable Homes has welcomed the US plan, saying duties have added US$1,000 to the average cost of new homes. It wants to see a free and open market between the two countries.
Meanwhile, the World Trade Organisation will hold a fourth trade panel in the dispute to hear Canadian complaints against the anti-dumping element of duties, which average 8.43%.
