Tax On Lumber Deal Holdouts

The American lumber industry that triggered the duties because of complaints Canadian lumber is subsidized will get to split about US$500 million and the U.S. government will keep about US$450 million to spend on “meritorious initiatives” to be determined jointly with the Canadian government. The deal requires companies that are due refunds to sign waivers allowing Ottawa to kick money back to the Americans because otherwise they would be entitled to a 100 per cent refund. The holdouts have argued the agreement is a bad deal for the industry and refused to sign the waivers or withdraw trade litigation underway in U.S. courts. Emerson’s communications director, Bob Klager, said the ``special charge” is being imposed at the request of the ``overwhelming majority” of lumber exporters who support the agreement. “Industry has been urging government to create a mechanism such as this to ensure equity, a level playing field and deter free riders,” he said from Ottawa. Prime Minister Stephen Harper announced last month Ottawa is proceeding with legislation to implement the agreement’s border tax and other provisions after a “clear majority” of lumber producers agreed to sign on to the deal. Klager said legislation will likely be introduced next week when Parliament resumes sitting but could not say what percentage of companies due duty refunds had formally signed onto the agreement. The tax, roughly equivalent to the amount being funnelled back to the Americans, came as no surprise to the deal’s critics within the lumber industry. Ottawa had warned during negotiations over the summer that it would not tolerate free riders who expected to get all their money back while other exporters compromised to reach an agreement with the Americans. But dissenters saw it as another example of high-handedness and arrogance by the Tories, who pushed the pace of negotiations since reaching a framework agreement with the U.S. side in late April. They didn’t have a majority of people with unqualified support for letting the Americans keep 20 per cent of the duties, said Vancouver mill owner David Gray, a spokesman for the Free Trade Lumber Council. “Now what they’re doing is saying, well, in the interests of Canada we’re taking 20 per cent from everybody,” said Gray. It’s expected to take many months for U.S. Customs to return lumber duties to eligible companies and Ottawa will advance the refunds through the Export Development Corp. http://tinyurl.com/zrnw3

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