U.S.-Canada Lumber Negotiations Continue Past Deadline

  • U.S. can file trade cases against Canada as standstill expires
  • Officials from both countries to meet in Washington this week

Canada and the U.S. pledged to continue negotiations after failing to agree on a softwood lumber trade accord at the end of a 12-month period that allowed tariff-free imports from north of the border.

A previous pact ended in October 2015, and the subsequent yearlong moratorium allowing tariff-free trade expired Wednesday. Officials from both countries are meeting in Washington this week.

“The U.S. and Canadian governments 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,” U.S. Trade Representative Michael Froman and Canadian Trade Minister Chrystia Freeland said Wednesday in a statement.

The U.S. Lumber Coalition, a group representing producers and woodland owners, said in September that any new trade agreement should maintain Canadian exports at or below an agreed U.S. market share. Producers in British Columbia want to choose between an export tax model and a restriction on volumes, similar to the structure of the 2006 agreement.

Trade Action

Trade cases will be filed “at the most effective time” now that the standstill period has expired, the U.S. Lumber Coalition said in a statement, a move Canada expects as soon as Thursday. The group said the industry has “no choice” in taking action against Canadian imports.

Canada is prepared for any situation, and the government will “vigorously defend” the interests of workers and producers, Alex Lawrence, a spokesman for Freeland, said in a statement.

“We will continue to negotiate for the best deal and not just any deal,” Lawrence said.

Western Forest Products Inc. was cut to sector performer from sector outperformer by CIBC World Markets amid growing political risks in the industry and the cloudy outlook for prices of cedar lumber. Other Canadian lumber companies face more pressure as the trade dispute persists, CIBC said.

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