U.S. and Canada Say Divisions Remain in Softwood Lumber Dispute

The U.S. and Canada have “significant differences” amid talks toward a new softwood-lumber trade pact, according to the countries’ top trade officials.

U.S. Trade Representative Michael Froman and Canadian International Trade Minister Chrystia Freeland released a joint statement Friday stressing that negotiations continue on what they described as an important part of both economies.

The previous softwood lumber deal expired in October 2015, and the file has historically been one of the thorniest between the two trading partners. Both countries have until October to iron out a new trade accord, after which U.S. companies can file new trade cases against Canadian imports.

“While significant differences remain between us, this period of intensive engagement has helped define shared goals and explore options for several key components of any new agreement,” Froman and Freeland said. “The United States and Canada are committed to continuing negotiations in an effort to achieve a durable and equitable solution for North American softwood lumber producers, downstream industries and consumers.”

The two nations have long sparred over softwood lumber, with the dispute gaining steam in the early 1980s when U.S. lumber companies complained Canada gave producers access to cheap timber on government land. Since the deal expired last year, there’s been little sign of an imminent agreement.

‘War’ Ahead?

“It will be an absolute miracle if they get something done in time,” said Kevin Mason, managing director ERA Forest Products Research, a Vancouver-based financial research company. “I think we’re definitely heading for a trade war that will be long and extended and nasty.”

Canadian lumber exports to the U.S. have risen sharply since the expiration of the agreement, which is stoking American fears about Canadian lumber taking market share away from U.S. producers, Mason said in a telephone interview.

The U.S. has already challenged Canada on other trade issues, including tariffs on supercalendered paper, and it would not be surprising for duties on lumber to be as high as 30 percent this fall, he said.

“We’re not doing ourselves any favors by how aggressively we’ve been pushing ourselves into the market,” Mason said.

Canadian lumber exports to the U.S. gained 24 percent from October to April from a year earlier, Bloomberg Intelligence analyst Joshua Zaret said in a June 16 report. April exports were up 31 percent to the highest level since April 2007, according to the report.

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