The Spokesman-Review Newspaper
The Spokesman-Review Newspaper The Spokesman-Review
Spokane, Washington  Est. May 19, 1883
Current Temperature
39°F
Current Conditions
Clear sky
View complete weather report

Color Scheme

Subscribe now

Lumber fight looms

Hank Coleman, a grader at the Riley Creek Lumber mill in Chilco, checks boards as they move past his station. He looks for defects and marks the boards accordingly. U.S. mills know they have to produce a better quality board than Canadian lumber mills to compete with the flood of timber from Canada, where stumpage costs are much lower. (Photos by Jesse Tinsley / The Spokesman-Review)
By Becky Kramer beckyk@spokesman.com(509) 459-5466
Hank Coleman, a grader at the Riley Creek Lumber mill in Chilco, checks boards as they move past his station. He looks for defects and marks the boards accordingly. U.S. mills know they have to produce a better quality board than Canadian lumber mills to compete with the flood of timber from Canada, where stumpage costs are much lower. (Photos by Jesse Tinsley / The Spokesman-Review)

American lumber producers are taking a fight against imported Canadian two-by-fours to a new level, by challenging the constitutionality of part of the North American Free Trade Agreement.

Four years ago, the Bush Administration determined that Canadians were illegally dumping low-cost lumber on the U.S. market. The 2002 determination led to heavy tariffs on Canadian lumber imports, but Canada successfully challenged the tariffs to a NAFTA dispute resolution panel, made up of attorneys from both countries. As a result, most of the tariffs were lifted.

In a closely watched case, a U.S. industry group has filed suit against the Bush Administration, contending that the NAFTA dispute panel violates the U.S. Constitution by circumventing the U.S. legal system. Panel decisions cannot be appealed to U.S. courts.

“We want juries by Americans, not Canadians and Mexicans,” said Dick Bennett, the owner of a sawmill in Grangeville, Idaho. “We think we’ll win the case … There’s no question that (the panel) is illegal.”

The suit was filed by the Coalition for Fair Lumber Imports, of which Bennett is a member. The timing is critical, he said, because the U.S. housing market is expected to slow down this year, which means less demand for wood and lower prices.

Most Inland Northwest mills would lose money if lumber prices drop $100 per thousand board feet in the coming months, Bennett said. “If that happened, most of Idaho would shut down.”

Canadians, not surprisingly, are skeptical of the lawsuit.

“It’s the ultimate sign of sheer desperation,” John Allan, president of the BC Lumber Trade Council, said in a statement earlier this month.

“The U.S. Industry continues to assert that Canada is flooding their markets with ‘cheap wood,’ when the reality is that Canada’s share of the American market has remained at an average of about 34 percent over the past 10 years,” Allan said.

The suit could go to trial as early as this summer, said Barry Cullen, executive director of the Coalition for Fair Lumber Imports. It was filed last fall in the federal Court of Appeals in Washington, D.C., so that any appeal to the outcome will automatically bounce to the U.S. Supreme Court, according to Cullen. If American producers win, the Canadians are certain to appeal, he said.

“Among trade attorneys here in Washington, there’s a lot of interest in the suit,” said Chuck Verrill, an international trade attorney with Wiley Rein & Fielding in Washington, D.C.

However, “I’m skeptical that they have much of a case,” he added.

Since NAFTA’s dispute resolution system was adopted by Congress, “I tend to think the courts will say this is something we can’t interfere with,” he said.

Verrill sat on several NAFTA dispute resolution panels dealing with magnesium imports from Canada. The five-member panels had two attorneys each from Canada and the United States, with citizenship of the fifth attorney decided by coin toss.

The system, though controversial, has fielded very few challenges, noted another attorney, Chris Paparella of New York, who specializes in international disputes and arbitration.

Since NAFTA was passed in 1994, the dispute resolution system – also known as NAFTA’s Chapter 19 – has been invoked more than 80 times. If a consensus had emerged questioning its constitutionality, attorneys would have filed numerous lawsuits, Paparella said.

This is the second time that the Coalition for Fair Lumber Imports is challenging the dispute resolution system. An earlier lawsuit, filed in 1994, was dropped when the Canadians agreed to a quota limiting lumber imports.

Trade fights over lumber date back decades. In Canada, provincial governments own the majority of the timberland. The provinces sell logs to sawmills through long-term leases.

“They subsidize their trees, and they can manipulate the price of those trees in the ground to keep their mills running,” Cullen said. “It’s really a jobs system up there, where ours is a market-based system.”

Canadians deny that their logs are subsidized. Their allies include U.S. homebuilders’ associations, who say that without Canadian lumber, the cost of new homes would rise.