Softwood Lumber Deal Likely To Be Concluded Before Mid-August

VANCOUVER (Scrap Monster): A fresh deal on softwood lumber trade could take shape before the North American Free Trade Agreement (NAFTA) renegotiation, says Raymond Chretien, Quebec’s softwood lumber envoy and Canada’s former ambassador to the US. The optimism is based on the recent comments by U.S. Trade Representative Robert Lighthizer stating his intentions to conclude a deal on softwood lumber before initiating discussions on NAFTA. Incidentally, the renegotiation on NAFTA is scheduled to commence by mid-August this year.

According to Chretien, adequate modernization of NAFTA is largely impossible without resolution of softwood lumber deal. Moreover, informal dialogues between the two governments have already opened up path for negotiation, he noted. At the same time, he warned that a failure to arrive at a deal before mid-August may prolong the lumber dispute between the two countries for a number of years. He expressed the hope that US trade officials may take the initiative in resolving the lumber dispute before NAFTA negotiations, mainly due to the difficulty in carrying out two sensitive negotiations simultaneously. The Ottawa’s recently announced $876 million financial assistance package to softwood lumber industry will not act as a stumbling block in negotiations between Ottawa and Washington, Chretien added.

Meantime, Canadian Foreign Affairs Minister Chrystia Freeland did not respond to Chretien’s comments.

The report released last week by the Conference Board of Canada predicts fewer jobs and declining profits for lumber industry, in the wake of US duties. According to the report, the exports are likely to decline by $700 million in 2018. Also, wood products industry is likely to witness a reduction of nearly 2,200 jobs.

Recently, Jim Carr, Natural Resources Minister had announced a financial assistance package of $867 million to softwood lumber industry and employees working in the sector in an attempt to shield them from the punitive tariffs imposed by the US administration on Canadian softwood exports. The package, comprising of loan and loan guarantees, is intended to help lumber firms in exploring new markets and bring about innovations in their mode of operation.

The Trump administration had earlier imposed tariffs up to 24% on Canadian softwood lumber. A duty of 24.12% was applied to West Fraser, followed by Canfor (20.26%), Tolko (19.50%) and Resolute (12.82%). All other Canadian exporters were subject to 19.88% duties with the exception of J.D Irving whose duty was fixed at 3.02%. The anti-dumping duties to be announced June 23 is expected to take the tariffs to over 30%.

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.