Curb Canadian subsidies.

Byline: The Register-Guard

Canadian mills have captured about a third of the U.S. lumber market, and it's not because workers or forests north of the border are more productive. Canada's success is partly the result of policies that give public timber to wood products companies at subsidized prices. American mills and millworkers suffer because of this unfair competition, and the Bush administration should continue to seek redress.

Canada denies that it provides a subsidy, even while it guarantees sawmills long-term access to government timber at low prices. While a variety of other factors influence Canadian mills' competitive position - notably the relatively low value of the Canadian dollar - Canada's public lands have been managed as a jobs program: Timber is priced to keep millworkers employed. Canada sends unemployment south, along with all that low-priced lumber.

The World Trade Organization is supposed to act as a referee in trade disputes like this one. It ruled last week that the United States had miscalculated tariffs imposed in response to the Canadian subsidy. Canada's trade minister read the ruling as an endorsement of his nation's timber pricing practices. A U.S. trade official countered that the WTO had not rejected the tariff, but had concluded that a different method for setting its level is needed.

There's no reliable way to evaluate this difference of interpretation. This was an interim WTO ruling that was not made public. To make matters worse, the U.S. trade official quoted in The Associated Press article about the ruling spoke only on condition of anonymity. American millworkers whose jobs depend on a fair resolution of the cross-border timber pricing dispute are left to sift through an unnamed official's comments on a secret ruling. So much for openness and transparency in the global trade regulation system.

While the WTO's methods of determining whether a subsidy exists are shielded from view, the circumstantial evidence is abundant: Despite a weak Canadian dollar, despite the distance of Canadian producers from primary markets and despite record-low lumber prices, Canadian softwood continues to prevail in the American marketplace. In international trade, Canada can't place its thumb on the scale. The Bush administration acted properly last year when it retaliated with a 27 percent tariff on lumber imports from four Canadian provinces.

American homebuilders oppose the tariff on grounds that it adds to the price of raw materials for housing construction. The tariff undeniably makes Canadian lumber more expensive - but low prices do not justify unfair trade practices.

A final WTO report is expected in July. In the meantime, the Bush administration will apparently have to re-examine its calculation of the Canadian subsidy to justify a tariff, but it should continue to press its case. While both the United States and Canada have a strong interest in free trade, the long-term interests of workers in neither country are served by unfair practices.