US delays Canadian lumber decision until Oct 30

The United States agreed on Friday to delay a decision on new penalties on imports of Canadian softwood lumber, another sign the countries are moving to resolve the latest flare-up in a long-running trade fight. The U.S. Commerce Department had been set to decide on Monday whether to impose an anti-dumping penalty on imports of the key construction material, but said that action will now be delayed until Oct. 30 with an announcement a day later.

A delay had been widely expected, with the forestry minister in British Columbia -- Canada's largest lumber-producing province -- praising the decision before it was even officially announced. "I interpret this as a positive development,'' Michael de Jong told the Vancouver Sun newspaper on Thursday, saying he had been tipped to the decision. The United States has already imposed a 19.1% duty on shipments of Canadian softwood lumber such as pine and spruce, which it alleges are subsidized. Canada and its producers deny the allegation. U.S. lumber producers have also asked Washington impose a 39% penalty against Canadian firms that have allegedly been selling softwood lumber in the United States at below-market prices. Canada also denies the dumping charge and alleges all the penalties are simply an attempt by inefficient U.S. lumber producers to protect their domestic market and keep prices artificially high.

The countries have been at odds over lumber trade for decades in a dispute rooted in different ownership traditions for their forests. Canada's forests are mostly publicly owned, while those in the United States are largely in private hands. Canada supplies nearly a third of the softwood lumber used in the United States, and the current dispute erupted at the end of March with the expiration of a five-year accord that had limited Canadian shipments. U.S. and Canadian trade officials have held a series of meetings in recent weeks and there is widespread speculation they will soon appoint special envoys to resolve the dispute. A major U.S. demand is that Canada switch to a more ``market-oriented'' system for charging private companies for the trees they cut on public land. U.S.-based Weyerhaeuser Co. (NYSE:WY - news), a major producer in western Canada that opposes the U.S. duties, proposed on Friday to relinquish 25 percent of its cutting rights in coastal British Columbia to help the province create a new pricing system. Weyerhaeuser wants other companies to do the same to create a large pool of timber that would be used for an auction of cutting rights. The price set at the auction would establish rates for timber cut on lands that remained under the traditional tenure system.