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Last Updated: Wednesday, 13 October, 2004, 22:15 GMT 23:15 UK
US to fight Nafta lumber ruling
Lumber yard worker in front of timber stacks (Eyewire)
Canadian wood imports face punitive US duties
The US is to take the unusual step of challenging a Nafta ruling that Canadian imports are no threat to the US timber industry.

The US will now file an "extraordinary challenge" to the decision delivered in August by the North American Free Trade Agreement panel.

Nafta's original decision - if it is upheld - could mean an end to punitive duties on Canadian softwoods.

Only two other extraordinary challenges have been mounted in Nafta's history.

Both were lodged by the US - which subsequently lost.

"The office of the US Trade Representative intends to request the formation of an extraordinary challenge committee to address deficiencies in the Nafta panel decision," said US Trade Representative spokeswoman Neena Moorjani.

She added that the US trade secretary had decided to take action following a ruling in a similar case surrounding magnesium.

Imports probed

Although, the US lost that case "for technical reasons" it believes that "irregularities" highlighted during the review could be applied to its Canadian lumber challenge.

The US launched an investigation of Canada's lumber marketing practises in 2001 following a request from American timber landholders and lumber firms.

The Commerce Department investigation concluded that Canada's provincial governments were giving unfair subsidies to their domestic industries.

It also found Canadian firms were selling approximately $6bn of wood a year in the US at below market prices.

The findings were used to justify steep new import duties on Canadian wood.

Imports of spruce, pine, fir and other woods are used in the US mainly to build and remodel homes.

However, Canada has denied the Commerce Department's allegations and took its battle against the US taxes to Nafta and the World Trade Organization.

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