The U.S. on Tuesday submitted, under protest, to a trade panel's ruling that the Commerce Department said would largely eliminate duties...

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The U.S. on Tuesday submitted, under protest, to a trade panel’s ruling that the Commerce Department said would largely eliminate duties on $7.6 billion in lumber imports from Canada.

Commerce officials said the decision to comply with a ruling made under the North American Free Trade Agreement (NAFTA) won’t immediately reduce lumber duties and left open the possibility that the U.S. may appeal.

Under the methodology ordered by the organization that enforces NAFTA, what is now a 16.4 percent import duty used to compensate U.S. lumber companies for subsidies given to Canadian producers would fall to 0.8 percent. Under U.S. law, duties of less than 1 percent aren’t collected. The U.S. also has a separate anti-dumping duty on Canadian lumber that averages 3.8 percent.

“We are complying with NAFTA, but we don’t agree with it,” John Sullivan, general counsel of the U.S. Department of Commerce, said on a conference call. “We start off with the premise that Canada subsidizes lumber.”

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Despite its action, the Commerce Department said tariffs will continue to be collected during a public comment period of up to 45 days. U.S. officials also said they retain the right to appeal the ruling.

The NAFTA panel had given the U.S. until today to recalculate its duties using a set of numbers and methodology different from what the U.S. had been using. The judges said the U.S. calculation method led to distorted figures. In its response, the U.S. argues that the formula adopted by the NAFTA panel would under-report the size of Canadian subsidies.

Information from The Associated Press is included in this report.