U.S. wins timber ruling

TORONTO — Canadian officials were seething Tuesday over a preliminary World Trade Organization ruling that found the United States had properly complied with international law by imposing billions of dollars in duties against Canadian lumber companies.

The confidential ruling, released to both countries on Monday, has fueled further talk of an outright trade war between the world’s largest trading partners and concerns that the rules of free trade under the North American Free Trade Agreement between the United States, Canada and Mexico were now unraveling.

A NAFTA panel on Aug. 10 dismissed Washington’s claims that Canadian softwood exports are subsidized by Ottawa and therefore damage the U.S. lumber industry.

But Canada’s thrill over the perceived victory was short-lived, when Washington shrugged off the ruling, saying it didn’t deal with a 2004 decision by the U.S. International Trade Commission which found in favor of Washington and U.S. Trade Representative Rob Portman pledged to maintain punitive tariffs.

Further supporting the U.S. position is the WTO, which found U.S. lumber mills were in fact threatened by government-subsidized lumber imports from Canada.

“The panel’s finding confirms that dumped and subsidized imports of softwood lumber from Canada threatened to materially injure the U.S. industry,” Neena Moorjani, a spokeswoman for the U.S. Trade Representative’s office, said in a statement Tuesday.

“Despite this win, the United States believes that back-and-forth litigation won’t solve this 20-year-old issue. The best course of action is to come to a negotiated solution and we look forward to the resumption of talks as soon as possible.”

The finding has infuriated Canadian officials, who still insist the Aug. 10 NAFTA ruling means Washington must reimburse more than $4.1 billion in punitive tariffs levied against Canadian lumber companies since 2002.