Canada Publicly Intensifies Push for Concluded Softwood Lumber Agreement
Canada redoubled its efforts this week to conclude a softwood lumber deal with the U.S., as officials wrote to all U.S. senators that duties would translate to higher U.S. home prices and huge job losses, and made the case publicly that Canada has submitted fair softwood proposals to the U.S. Canadian Ambassador to the U.S. David MacNaughton said during an Aug. 24 panel discussion at his embassy that Canada is willing to negotiate a cap on the allowable U.S. market share of Canadian softwood, but also wants cap flexibility in case the U.S. homebuilding industry experiences “excess demand" for the good. “We are going to try really hard in the next little while to get a fair and balanced agreement with the United States, and if that is not possible, we have all agreed that we will take all necessary steps to litigate this matter until we get a fair arrangement, as we have in the past,” MacNaughton said.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
A Commerce Department preliminary countervailing duty determination issued in April indicated illegal subsidization of Canadian producers (see 1704270022). Commerce in June made a preliminary affirmative antidumping determination that softwood lumber from Canada is being sold in the U.S. at less than fair value (see 1706290025). Canada could challenge the duties through U.S. courts, NAFTA Chapter 19 binational AD/CV duty dispute settlement, or through the World Trade Organization, said Jim Peterson, Ontario’s chief softwood negotiator, during the embassy panel. Peterson indicated favor for the Chapter 19 process. “The beauty of the NAFTA [dispute settlement process] is that it applies retroactively,” he said. “In other words, duties assessed can be refunded. This doesn’t take place under the WTO. Having said that, I think … we have to be able to speed up the process considerably.” The Canadian government is pushing during the NAFTA renegotiation for the maintenance of Chapter 19, a position at odds with the U.S. position (see 1708140022).
A letter sent from Union of Quebec Municipalities Vice President Alexandre Cusson to all U.S. senators says that the softwood lumber situation raises home prices and reduces U.S. jobs. Cusson also said the U.S. has increased imports of softwood from Russia, “undermining” the U.S. trade relationship with its largest trading partner in Canada. “It is now essential, therefore, to end the uncertainty that has prevailed for some 35 years, by reaching a ‘win-win’ agreement for both our countries,” Cusson wrote. “May I respectfully urge you, in the coming weeks, to make the necessary representations, as I myself will be doing, to defend the economy and vitality of our respective regions.”
If Canada starts challenging U.S. duties, it would be “inconceivable” for the country to come back to the table and agree to any tariff-rate mechanism, British Columbia’s softwood envoy David Emerson said. “I think that we would be back into long-term litigation and we believe we would prevail over time,” he said. “But it’s not our preferred route at this stage.” National Association of Home Builders CEO Jerry Howard said during the embassy event that the U.S. homebuilding industry needs the certainty that would come with another softwood lumber agreement, and noted that inconsistent lumber supplies have contributed to a slow sectoral recovery since the Great Recession. He added: “We’ve slowed the homebuilding process, which increased the costs of homebuilding, which cost American jobs, and therefore, even cost us in the American demand side of the housing sector.” Commerce didn’t comment.
Email ITTNews@warren-news.com for a copy of Cusson's letter to the Senate.