September 22, 2017
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Canada set to sue US on lumber if trade negotiations fail

By Jen Skerritt, Bloomberg
John Clarke Russ | BDN | BDN
John Clarke Russ | BDN | BDN
Two-by-fours cut from spruce firs make their way along a conveyor after being graded and stamped with an American flag at Pleasant River Lumber in Dover-Foxcroft.

Canada, the world’s largest softwood-lumber exporter, affirmed its willingness to sue the U.S. if trade talks on the homebuilding material fail.

The U.S. has “mischaracterized” what Canada has proposed in terms of defined market share, Canada’s Ambassador to the U.S., David MacNaughton, said Thursday at a press conference in Washington. The only qualification Canada wants for defined market share is that the country can supply excess lumber to the U.S. in the event that American suppliers can’t meet domestic demand fully, he said.

“What we can’t understand is why is it that some elements of the U.S. lumber industry would rather see imports from countries like Russia rather than their closest ally and friend, Canada,” MacNaughton said. “We’re going to try really hard in the next little while to get a fair and balanced agreement. If that is not possible, we have all agreed that we will take all necessary steps to litigate this matter.”

The U.S. is importing more after imposing tariffs on Canadian supplies, making them more expensive. Russian shipments are 42 percent higher in 2017, according to U.S. government data. In October, Chrystia Freeland, Canada’s trade minister, said the country will bring the U.S. tariffs before the World Trade Organization if negotiations fail.

Trade in softwood lumber between Canada and the U.S. has caused intermittent friction for years. Tensions escalated in April when the Trump administration imposed countervailing duties of as much as 24 percent on Canadian imports. Additional duties of as much as 7.7 percent followed in June.

Prospects for an accord have faded, according to some analysts. Speculation had swirled that the countries may resolve their differences before talks this month aimed at renegotiating the North American Free Trade Agreement.

The U.S. is Canada’s top buyer of softwood lumber. The industry provides jobs in many Canadian communities from coast to coast, and often the sawmill is the only company in many of those towns, MacNaughton said.

In the U.S., the additional cost of Canadian lumber is forcing U.S. consumers to pay more. The American homebuilding industry hasn’t fully recovered from the recession amid inconsistent supplies of lumber and higher prices for materials, which slows construction, Jerry Howard, chief executive officer of the National Association of Home Builders, said at the press conference.

Current U.S. forestry policies make buying more lumber domestically prohibitive, “if not impossible,” and the industry’s second choice would be to buy more from Canada, he said.

Lumber futures in Chicago have gained 13 percent this year, topping most agriculture commodities.

“It’s time for a negotiated agreement,” Howard said. “It bothers the American homebuilding community to have to buy their lumber” from Russia, he said.

 


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