Lumber war seems imminent as US Lobby group files trade petition

SEATTLE (Scrap Monster): The US Lumber Coalition has filed a trade petition, requesting US Department of Commerce (DOC) to initiate investigation on lumber imports from Canada. The petition is lengthy one, but the contents are not known, said reports. The press release issued by the US lobby group alleged that Canadian lumber is being sold for less than fair value in the US, thereby causing harm to the country’s domestic forestry industry and thousand of associated workers.

The petition blames Canadian imports for the lumber mill closures and job losses in US forestry sector. Rise in imports of subsidized lumber from Canada has also led to drop in domestic lumber prices, the group alleged. The Canadian imports which accounted for 29.5% of total US lumber consumption during Q3 last year, surged higher to 33.1% during the fourth quarter. Also, market share of Canadian lumber has increased to 34.1% during year-to-date period in 2016. The US aims to cap the market share of Canadian lumber to less than 22%.

Meantime, Susan Yurkovich, president, B.C. Lumber Trade Council stated that the Canadian lumber industry is prepared to address whatever is there in the petition. Further, she noted that the claims by the US trade group are based on unsubstantiated arguments. The country will now have to spend time and energy on litigation. B.C Lumber Trade Council also announced that efforts are already underway to promote B.C lumber products in other markets including Asian countries. Steve Thomson, BC Forestry Minister reminded that the US has failed in the past to prove their allegations against the country. It must be noted that softwood lumber is the key export item from the B.C to the US since long time. Also, the province accounts for more than 50% of the lumber shipped from Canada to the US.

According to sources, the US government could impose preliminary duties on Canadian softwood lumber imports into the country, six months after a trade case is commenced with the Department of Commerce. The filing of trade case by the US Lobby group implies that duties could be levied from as early as spring of March or April next year. Also, the duties could be retroactive for up to 90 days. The imposition of duties will force Canadian timber companies to pay millions of dollars for exporting their lumber. Further, it may lead to job losses in the region due to mill closures. The imposition of duty by the US administration in early 2000s had led to almost 15,000 job losses in the province of B.C alone.

Canada is expected to challenge the duties on several forums including the the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO). The litigation process is expected to result in months and years of legal battle.

The lumber trade dispute between the two countries is dated back to 1982. The two countries had signed a bilateral agreement in September 2006. The original seven-year agreement had an optional provision to extend for a period of two years upon consensus by both parties. Accordingly, the deal which came to an end in 2013 was extended until 2015. As per the terms of the deal, parties were prohibited from engaging in trade actions for one-year grace period, which has already come to an end on 12th October, 2016.