WTO rules against U.S. tariffs on Canadian lumber imports.

Byline: From Register-Guard and news service reports

The United States will have to change how it calculates tariffs on $7 billion a year of lumber imports from Canada, the World Trade Organization said in a ruling that may cause the 27 percent duties to be lowered.

Any lowering of the duties would probably make Canadian lumber less expensive in the United States - and that would likely hurt wood products factories in the Pacific Northwest and elsewhere.

Both nations claimed victory in the latest development in a two-decade-long dispute over what the U.S. says are illegal subsidies by the Canadian provinces.

Lumber companies in the two countries said they hoped the decision would spur negotiators to settle a disagreement that has strained the world's largest trade partnership.

``This decision puts pressure on the Americans to sit down at the negotiating table and find a solution,'' said Georges Courteau, chairman of the Quebec Forest Industry Council, which represents 90 percent of that province's lumber producers.

Canada a year ago challenged an 18.8 percent tariff the U.S. Commerce Department levied on lumber exports. The United States alleged that Canadian sawmills such as Canfor Corp. and Domtar Inc. were being charged unfairly low rates to cut on government-owned land. Canada is also fighting a separate duty of 8.43 percent to punish alleged dumping, or selling below cost.

The Geneva-based trade arbiter's decision Tuesday was confidential, and the final ruling won't be published until July.

According to U.S. industry officials familiar with the decision, the WTO panel found that Canadian provinces such as Quebec and British Columbia are subsidizing the industry. However, the panel objected to the way the U.S. Commerce Department calculated the amount of that subsidy. The subsidy size determines the level of retaliatory tariffs imposed.

Canadian officials and industry representatives said the decision would mean at least a steep reduction in the duties.

``We won the practical victory,'' said John Allan, president of the British Columbia Lumber Trade Council, which represents Canfor, West Fraser Timber Co. Ltd. and other companies based in Canada's biggest timber-producing province.

A U.S. lawyer disagreed. ``We've already shown that we can recalculate the subsidies and come up with duties'' that are even higher, said John Ragosta, an attorney for the 300 U.S. timber companies.

CAPTION(S):

A worker directs a fork-lift loading a trailer with cedar for export to the U.S. at Interfor's Mill in Squamish, B.C.