Canada totally refutes US Senators’ claims on subsidized lumber exports

VANCOUVER (Scrap Monster): The provincial and territorial leaders have urged Prime Minister Justin Trudeau to refute the latest action by US Senators demanding legal action against Canadian lumber exporters.

In a letter written to the Prime Minister the premiers including Christy Clark and two key members of the Senate Finance Committee termed the latest action as ‘inaccurate’ and ‘unfair’. The letter condemned the action by US Senators, seeking reduction in the cap on Canadian lumber sales into the US. It noted that earlier investigations by trade bodies including NAFTA and the World Trade Organization (WTO) had found that the Canadian subsidies of less than a percent makes it ineligible for any trade action.

Meantime, the Canadian ambassador to the US, David MacNaughton, in a separate letter noted that the claims of ‘adverse impacts’ of Canadian lumber exports into the US has been well documented over the years. No investigation or litigation carried out during the past 35 years has been able to find that subsidized Canadian imports tend to harm the US market. The US has failed to prove legally, the countervailing subsidy finding and adverse impact determination. The comments made in the letter written by 25 US Senators will only complicate the efforts to arrive at a mutually agreeable solution by both the countries, MacNaughton added.

According to trade analysts, thousands of lumber jobs are at risk if the two countries fail to reach an agreement on renewal of the 2006 deal before October this year. The action by the US Senators and the widespread protests from Canadian leaders are feared to diminish the chances of a possible settlement before the deadline ends.

Earlier in March this year, U.S. President Barack Obama and Canadian Prime Minister Justin Trudeau had reaffirmed the governments’ initiative to resolve disputes between the countries on renewal of the lumber agreement. The leaders had then decided to launch 100 days of talks in order to clear the deadlocks. In the joint press conference held after the meeting, Trudeau had stated that talks are very much on tracks towards final resolution of the deal. Obama too had assured that the issues pertaining to the deal would be resolved soon. The 100-days deadline had expired on June 18^th. The two leaders had met during the Three Amigos Summit, but had failed to make any announcement on the deal.

The bilateral agreement was signed by the two countries in September 2006, as an attempt to settle disputes regarding Canadian softwood lumber imports. As part of the agreement, the US must terminate collection of countervailing and antidumping duties on subsidized and dumped Canadian softwood lumber. Also, Canada must impose taxes and quantitative restrictions on lumber exports to the United States. In addition, the provinces were encouraged to move to a fully open, competitive, and non-subsidizing timber-pricing system.

The SLA was a seven-year agreement with an optional two-year extension upon consensus by both parties. In 2012, the US and Canada had agreed to extend the deal for additional two years from 2013. In case of failure to reach an agreement before October this year, the US will be entitled to impose tariffs on lumber imports from Canada as per US trade laws.