U.S. Files Trade Action Against Canadian Softwood Lumber

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By Peter Menyasz

Nov. 25 — A coalition representing the U.S. softwood lumber industry filed new subsidy and dumping allegations against Canadian exports.

The petition to the Department of Commerce alleges that Canadian provincial governments provide standing trees to producers at fees far below market value, as well as other subsidies, the coalition said Nov. 25 in a statement.

Canadian lumber is also being sold in U.S. markets at below fair value, it said. “Canada’s gain in market share came at the direct expense of U.S. producers,” the group said.

Subsidization and dumping of Canadian goods since the October 2015 expiry of a 2006 bilateral agreement has pushed Canada’s share of the U.S. market from 29.5 percent in the third quarter of 2015 to 33.1 percent in the fourth quarter and 34.1 percent to date in 2016, it said.

The ad hoc coalition includes the U.S. Lumber Coalition, an alliance of large and small producers and their employees, as well as timberland owners and the Carpenters Industrial Council of the United Brotherhood of Carpenters and Joiners. The group claims it represents the companies that produce 70 percent of U.S. softwood lumber.

The petition has been expected since the end of the 12-month standstill period after expiry of the agreement, Alex Lawrence, a spokesman for International Trade Minister Chrystia Freeland, said Nov. 24.

“Canada is prepared for any situation, and our government will vigorously defend the interests of Canadian workers and producers,” he told Bloomberg BNA in an email. “The softwood lumber industry is vitally important.”

Canada has never lost a legal battle over its softwood exports to the U.S., and international dispute panels have always sided with the Canadian industry in the past, he said.

The government has worked hard to negotiate a new agreement with the Obama administration, most recently through meetings on the sidelines of the Asia-Pacific Economic Cooperation summit in Lima between Freeland and U.S. Trade Representative Michael Froman and between Prime Minister Justin Trudeau and President Barack Obama, he said.

The negotiations have been difficult because an agreement would require the approval of the U.S. lumber industry to suspend its legal rights to petition for trade remedy relief, Lawrence said.

“The reality is that the U.S. industry is not where we need them to be,” he said. “At the same time, the protectionist climate in the United States does complicate any trade negotiation, including this one.”

Debate in Parliament

The pending U.S. trade action spurred spirited debate Nov. 25 in the Canadian Parliament. Opposition politicians criticized the government for failing to secure a new softwood agreement, potentially putting the Canadian industry and thousands of forestry workers at risk.

Conservative Party Member of Parliament Todd Doherty, who represents a constituency in British Columbia that relies heavily on the lumber sector, particularly questioned the “measly” C$30 million ($22 million) the government has set aside to cover the legal costs of a new softwood case. “How vigorously are you going to defend Canadian jobs?” Doherty asked.

The government will continue to follow the appropriate strategy of consulting with industry and workers and continuing negotiations with the U.S., according to David Lametti, parliamentary secretary to the trade minister. “We’re going to defend our position strongly before tribunals,” Lametti said. “We’re confident moving forward.”

Lametti said that, despite the “righteous indignation” of its opponents, the government won’t take advice on the file from the Conservatives, as the previous government failed to launch negotiations to replace the expired softwood deal. He also ducked a question from a Quebec Member of Parliament on whether a new agreement would include an exemption for that province and whether it would extend to secondary processors.

The 2006 Canada-U.S. Softwood Lumber Agreement expired Oct. 12, 2015, and a standstill provision that blocked U.S. producers from launching complaints under U.S. trade remedy law for a 12-month period expired Oct. 12, 2016.

To contact the reporter on this story: Peter Menyasz in Ottawa at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

For More Information

The coalition's statement is available at http://src.bna.com/kiI.

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