MONTERREY, Mexico (CNN) - The Bush administration Friday slapped average tariffs of 29 percent on Canadian softwood lumber imports in a bid to protect U.S. lumber jobs from subsidized Canadian imports.
Mary Crawford, chief spokesman for the Commerce Department, told CNN the tariffs are due to take effect in mid-May, following a formal U.S. International Trade Commission determination that Canadian softwood lumber imports are unfairly subsidized. The trade commission issued a preliminary ruling against Canada in May of 2001.
The tariffs, known as countervailing duties, will average 19.34 percent. These are to punish Canada for unfairly subsidizing its softwood lumber industry. A separate dumping penalty of 9.6 percent will be applied to punish Canada for selling its softwood lumber at prices Crawford described as "below fair market value." Together, the penalties will average 29 percent, Crawford said.
The United States imported $5.6 billion in softwood lumber from Canada in 2001, according to the Commerce Department. The new duties could significantly increase the prices U.S. consumers pay for homes, flooring, outdoor decks, and other products made with Canadian softwood.
Crawford said the duties are assessed based on a "scientific formula" and that the Commerce Department had "no discretion" once it was determined Canadian imports were illegally subsidized and being dumped on the U.S. market.
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The United States also recently imposed duties on European steal imports to shield domestic steel producers for three years from subsidized imports. The duties were imposed under World Trade Organization procedures and arose after the ITC concluded that subsidized European steel resulted in lost jobs and profits for U.S. steel makers.
The steel and lumber moves have prompted some U.S. trading partners to question the Bush administration's commitment to free trade, but a senior administration official said support for free trade policies can only be sustained in Congress if the White House enforces existing agreements.
"This is one of the most free trading administrations in a long time," the senior official told CNN. "But it's not free trade if agreements are not followed and rules are not enforced. If rules are not followed, trade agreements are hollow and it's not free trade."
The duties will remain until the United States and Canada negotiate a new trade pact on softwood lumber.
U.S. and Canadian negotiators here and in Washington sought to resolve the dispute up until the deadline, Crawford said.
"We've been working along the United States Trade Representative to find a permanent solution to this long-running problem," Crawford said. "That effort will not stop."
The International Trade Commission issued a preliminary ruling on May 18 against the Canadian lumber imports. The Commerce Department followed with its own ruling against Canadian imports on Oct. 30 and slapped a preliminary tariff of 19.3 percent on Canadian imports.
Canada sought much lower duty and anti-dumping penalties in talks with the United States.
The preliminary tariffs have already had a noticeable effect on softwood imports. Based on January import data, Canadian softwood lumber imports will be about $4.7 billion this year, almost $1 billion less than last year.
Softwood lumber is used to build homes, outdoor decks and flooring. A coalition of U.S. lumber companies has been pressuring the Bush administration to intervene. A formal petition triggering the U.S. investigation was filed in April. The Commerce Department's deadline to create permanent tariffs was March 21.