US Lumber groups get ready for fresh softwood lumber war with Canada

SEATTLE (Scrap Monster): The negotiations between the US and Canada on a new lumber deal has produced no concrete signals of chances of reaching an agreement between the two countries. With the October 12 deadline fast approaching, the US forestry trade groups are getting ready for the next softwood lumber battle between the two countries- the fifth one since 1980’s.

According to sources, the US Lumber Coalition has already started the process of collecting documents against Canadian lumber industry, which it plans to submit to the government authorities upon expiry of the deadline. This will result in government actions which may lead to imposition of duties on lumber imported from Canada by next year. The Coalition officials noted that such an action would place a cap on Canadian lumber exported through south of the border, which has long been impacting the domestic lumber producers in the US.

The US Lumber Coalition has sought for countervailing duty and an anti-dumping duty on Canadian lumber. In addition, it also has sought for remedial action for the injury caused by Canadian exports to the US lumber sector. In the most recent dispute between the two countries, the US had imposed up to 27% duties on Canadian lumber. After five years of litigation by Canadian authorities, the duty was finally reduced to nil. The coalition stated that it is free to file on October 13, but a final decision on the date of filing is yet to be decided.

The coalition is primarily concerned with the rising lumber exports from B.C. According to them, the dollar value of Canadian lumber exports from the B.C to the US has surged higher by over 40% during the initial six-month period of the current year, in comparison with 2015. The B.C lumber producers accounts for almost one-fourth of the dollar value of US lumber consumption, rising sharply in comparison with the market share of 17.5% during the previous year.

Meantime, Canadian lumber organizations pointed out that 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.

Last week, Canada’s International Trade Minister Chrystia Freeland had stated that the rising anti-trade sentiment in the US seems to complicate the US-Canada deal on softwood lumber trade. While stating that the talks between the two sides are still on, it is quite unsure that a new deal would be signed before the mid-October deadline. She even hinted that there is very less likelihood of both the sides reaching an agreement before the deadline.

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 12th October, 2016.