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Byrd on its way out the window: the law allowing the White House to give softwood duties to American mills is being phased out and duties have been cut in half, but the Canadian industry isn't dancing in the streets yet.

American lumber producers are appealing the United States Commerce Department's decision to drop the Canadian softwood lumber penalties and repeal the contentious Byrd Amendment.

The Commerce Dept. slashed the duties collected on softwood lumber being exported to the United States from 20.15 per cent to 10.81 per cent in November.

The reduction as opposed to the elimination of the duties was a result of pressure from the American lumber producers, Buchanan Forest Products CFO Russ York says.

"Enough is enough," he says. "If the American industry would stop pressuring their government and allow the (North American Free Trade Agreement) NAFTA decisions to follow its lawful end, then justice will have been served. We are supposed to be exonerated. We would like for them to respect the rule of law, give us back our money and stop harassing us."

In the same vein, American legislators have reported they will phase out the contentious Byrd Amendment, which allows the government to transfer duties collected at the border directly to U.S. lumber mills and other industrial operators.

The Amendment will not be fully eliminated until Oct. 1 2007.

Calling the phase-out inadequate, federal Trade Minister Jim Peterson demanded an immediate repeal.

"The WTO ruling was clear: disbursements of money under Byrd are illegal," Peterson says. "The world continues to watch."

As it stands, the United States has another two years to collect illegal duties, says Ontario Forest Industries Association president Jamie Lim.

"How is this good news?"

Canadian softwood producers have won numerous World Trade Organization (WTO) rulings and free trade agreements panels including the Extraordinary Challenge Committee made up mostly of American judges.

"There are no more appeals, there are no more get-out-of jail cards, it is the end of the road," Lim says. "If they understood their responsibilities, then the United States government would have respected the Aug. 10 Extraordinary Challenge (decision)."

The ruling found no threat of injury from Canadian softwood lumber exported to the United States and demanded three changes occur: That the White House revoke the countervailing and anti-dumping duties now; that it halt the collection of illegal duties; and that it return the $5 billion that Lim says was illegally collected.

Bickering between the two countries cost Canadian lumber producers billions of dollars, thousands of job and has forced companies to delay modernizing plants, which potentially threatens their global position, industry officials say.

Even with a 50 per cent reduction in tariffs, there are still incentives for American lumber producers to keep the fight going, York says. A portion of the $5 billion in duties collected "is a nice windfall," for American companies.

Canadian companies have been paying an average of $100 million every month, Lim says. The reduction in tariffs means a saving of approximately $600 million a year for Canadian producers.

"This just means less pain."

She says it indicates a sign of American arrogance when it comes to respecting the NAFTA agreement.

"Where is the good faith here?"

U.S. Customs is still collecting the duties, which have not been revoked.

It took almost a full year before any compensation came from the 1991 lumber dispute. Money will only start funneling back to the Canadian industry when pressure mounts to follow the NAFTA rulings, York says.

When the 2002 duties were levied on Canadian softwood lumber, the United States dollar was trading between $1.40 and $1.60. Today the exchange rate is $1.20.

"Even if we (get the duty money back), we will have lost the average exchange difference to what we get now," because of the stronger Canadian dollar, York says.

The reimbursed duty dollars will also be taxed by the Canadian government.

"Even if we win, we lose."

www.ofia.ca

By KELLY LOUISEIZE

Northern Ontario Business
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Title Annotation:Byrd Amendment
Author:Louiseize, Kelly
Publication:Northern Ontario Business
Geographic Code:1CANA
Date:Jan 1, 2006
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