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It’s the trade issue that keeps on giving: softwood lumber. The U.S. Lumber Coalition has filed petitions with the U.S. International Trade Administration against Canada for Anti-dumping (AD) and Countervailing (CV) relief on importation of various lumber products from Canada. On the government’s side, Washington D.C. says it will be launching an investigation to determine whether softwood lumber products were dumped into the American market and thus harming the American forestry sector.
On the other side, the U.S. Commerce Department is working with the U.S. International Trade Commission to look into allegations that wood was dumped at lower value on the American market and that unfair funding was received by Canadian forestry industries via provincial governments. The first will determine whether or not the dumping took place, while the latter will expose if the U.S. forestry industry was threatened or not.
The petitions from the coalition request that AD and CV duties be applied imminently. “CV duties could be applicable to entries filed as early as December 15, 2016, and AD duties could appear as early as February 3, 2017.”, states the petitions. If the U.S. International Trade Commission determines that Canadian softwood harmed the American industry, it will issue CV duties as of February 21 and preliminary AD duties as of May 4, 2017. Odds are, following the imposition of AD’s and CV’s, the dispute will end up with the World Trade Organization.
Coalition Believes Canada has Unfair Advantage
The coalition believes that Canadian lumber producers receive an unfair advantage due to the fact that the trees they use are cut from timberlands owned by provincial governments, who provide the trees below market value. They also allege that Canadian producers receive additional subsidies from provincial governments in addition to the low tree cost.
Consequently, the coalition believes that Canadian lumber is sold cheaper on the U.S. market – hurting local producers – affecting mills, communities and workers. In the last year, Canada exported about US$4.5 billion worth of softwood lumber to the U.S. according to the Commerce Department.
In the U.S.-Canada Softwood Lumber Agreement (SLA) 2006-2015, Canada had agreed to impose certain export measures on softwood products when the price of lumber fell below a certain level. It also agreed not to circumvent those measures by providing grants or other benefits to producers. The “standstill period” of one year, following the expiration of the SLA, which should have been used for negotiations, proved to be useless for both sides.
Canadian Producers Claim Free Trade
On the Canadian side, producers are arguing that they pay market prices for their lumber and that they should have access to free trade with the U.S. The B.C. Lumber Trade Council allege that the claims by the U.S. Lumber Coalition are based on arguments that have been previously been rejected by independent NAFTA panels.
Considering the next U.S. President’s stance on free trade and his widely shared views on NAFTA, it is clear that an SLA between the two countries is not about to be concluded.