Edmonton Journal

2006.09.13

Steve Mertl

Canadian lumber deal holdouts face special tax: Exporters signing duty deposit waivers to get rebate from Ottawa

VANCOUVER - The federal government plans to levy a 19-per-cent special tax on lumber companies that withhold their co-operation with the newly signed softwood lumber deal with the United States, The Canadian Press has learned.

A federal official confirmed Tuesday the tax will be imposed in a way that penalizes lumber exporters who refuse to sign a waiver that allows Ottawa to leave about $1 billion US in lumber duties in American hands after the agreement comes into force.

Under the deal, signed Tuesday by International Trade Minister David Emerson and U.S. Trade Representative Susan Schwab in Ottawa, Canadian exporters will get back about 80 per cent of the roughly $5 billion US in punitive duties they've paid to U.S. Customs since May 2002.

The deal requires companies that are due refunds to sign waivers allowing Ottawa to kick money back to the Americans because otherwise they would be entitled to a 100-per-cent refund.

The holdouts have argued the agreement is a bad deal for the industry and refused to sign the waivers or withdraw trade litigation underway in U.S. courts.

Emerson's communication's director, Bob Klager, said the "special charge" is being imposed at the request of the "overwhelming majority" of lumber exporters who support the agreement.

"Industry has been urging government to create a mechanism such as this to ensure equity, a level playing field and deter free riders," he said from Ottawa.

The tax, roughly equivalent to the amount being funnelled back to the Americans, came as no surprise to the deal's critics within the lumber industry.

Ottawa had warned during negotiations over the summer that it would not tolerate free riders who expected to get all their money back while other exporters compromised to reach an agreement with the Americans.

But dissenters saw it as another example of high-handedness and arrogance by the Tories.

They didn't have a majority of people with unqualified support for letting the Americans keep 20 per cent of the duties, said Vancouver mill owner David Gray, a spokesman for the Free Trade Lumber Council. "Now what they're doing is saying, well, in the interests of Canada we're taking 20 per cent from everybody," said Gray.

Letters signed by Marie-Lucie Morin, a senior bureaucrat at the Department of International Trade, and sent by courier Tuesday to Canadian lumber exporters, says firms that sign their duty deposit waivers will get a rebate from Ottawa.