WASHINGTON – The Commerce Department said Tuesday it will comply with a NAFTA panel's order to drastically cut U.S. duties on imports of Canadian softwood lumber.
U.S. officials said they disagree with the rationale behind the ruling but respect its authority. Canada accounts for about one-third of the U.S. market for softwood, which is easily sawed pine, spruce and other wood used in homebuilding.

 
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"We have serious concerns about the panel's decision. However, consistent with our NAFTA obligations, we have complied with the panel's instructions," said Commerce Secretary Carlos Gutierrez. "We will continue to enforce our trade laws to ensure that U.S. industry receives relief from unfair imports and we are reviewing all options to do so."

The decision, announced Tuesday, means the United States will reduce the punitive duties, which average about 16 percent, to less than 1 percent. Separate antidumping tariffs averaging about 4 percent will not be affected.

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 NAFTA ruling.

A group representing the U.S. lumber industry said it was disappointed at the Commerce Department's decision.

The Bush administration imposed the tariffs in 2002, accusing Canada of subsidizing its lumber industry. Most U.S. timber is harvested from private land at market prices, while in Canada, the government owns 90 percent of timberlands.

Lifting the duties will "further threaten the domestic industry and its workers with renewed injury – especially in light of Canada's announcement to provide its lumber industry with an additional $1 billion dollars worth of taxpayer-funded subsidy," said Steve Swanson, chairman of the Coalition for Fair Lumber Imports.

John Allan, president of the British Columbia Lumber Trade Council, called the decision "a signal to Canada that the U.S. is prepared to go forward in good faith to negotiate a fair and lasting solution to this dispute."