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Rubber and Wood September 05, 2016 11:30:26 AM

Rising US anti-trade sentiment puts breaks on new softwood lumber treaty

Carolina Curiel
ScrapMonster Author
Freeland hinted that there is very less likelihood of both the sides reaching an agreement before the deadline.

Rising US anti-trade sentiment puts breaks on new softwood lumber treaty

VANCOUVER (Scrap Monster): Canada’s International Trade Minister Chrystia Freeland stated that protectionist sentiment is on the rise in the US. The rising anti-trade sentiment in that country seems to complicating the US-Canada deal on softwood lumber trade. Not much progress has been made so far in bilateral talks. It is quite unsure as to whether a new deal could be signed before the end of the mid-October deadline, Freeland noted. However, efforts are still on to make a deal, Freeland added. She was speaking on the sidelines of the G-20 summit currently being held in Hangzhou, China.

Freeland hinted that there is very less likelihood of both the sides reaching an agreement before the deadline. She stated that discussions were being held Sunday with the U.S. Trade Representative Mike Froman. Another meeting is being scheduled after two weeks. Freeland stated that all attempts are being made to solve the disputes that hinder the announcement of a new softwood lumber deal between the two countries. However, the anti-trade and protectionist stands by the US continue to threaten the prospects of a deal. Further, similar protectionist sentiments are found to impede the progress of concluding a free-trade agreement with the EU region. Any failure to reach a deal would lead to the US imposing new tariffs, which in turn may prove harmful to Canadian exporters, Freeland added.

In a statement, the Trade Minister noted that the issue is long-pending and complicated. The protectionist anti-trade sentiment across the world, especially within the US, has led to creation of a difficult environment.

Earlier, while addressing the all-party, international trade committee, Martin Moen, the Canadian chief negotiator in softwood lumber talks with the US, had stated that despite continuous deliberations, the two sides have so far been unable to enter into a deal. He had noted that the ongoing talks have only led to better understanding of the concerns, but have never taken the matter closer to settlement.

The dispute is basically centered on the difference in forestry management in both the countries. In Canada, much of the forested land is held by provincial governments and leased to forestry companies by charging stumpage fees for harvesting them. On the other hand, 70% of the forested lands are privately held. For years, many US trade organizations including Coalition for Fair Lumber Imports have been alleging that forest companies in Canada are charged extremely low stumpage rates, which makes their export cheap. According to them, Canadian companies have been dumping products into the US market at cheaper rate, which in turn has caused significant damage to domestic US lumber producers.

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 is about to come to an end on 15th October, 2016.

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