Canada-U.S. Softwood Deal May Come Before Nafta Renegotiations

  • Both sides working hard to reach a settlement, Trudeau says
  • Chance of deal framework put at more than 50% by CIBC analyst

U.S. Decision on Canadian Lumber Duties Nears

The long-running trade dispute over softwood lumber may be nearing an end, with Canada indicating it wants to settle the issue with the U.S. before the renegotiation of the North American Free Trade Agreement begins later this year.

“We’re going to continue to work very hard towards that,” Canadian Prime Minister Justin Trudeau said to reporters in Providence, Rhode Island, on Friday. "I’m not going to speculate, but I will say this is an issue that Canadians and the American administration are taking very seriously, and there are constant back-and-forths on this issue."

Canada is the world’s largest softwood lumber exporter and the U.S. is its biggest market. The dispute, which has been going on intermittently for decades, reignited in November when the U.S. lumber industry filed a petition asking for duties, alleging Canadian wood is heavily subsidized and imports were harming American mills and workers.

As a result, the U.S. imposed punitive tariffs on Canadian shipments \earlier this year. Since then, trade between the two countries has become an increasingly fraught issue, with President Donald Trump pushing to renegotiate Nafta.

There’s a more than a 50 percent chance both sides will agree on a framework to resolve the dispute by the end of August, CIBC analyst Hamir Patel wrote in two separate notes earlier this week. A deal could be close if Canada moderates its position on excluding New Brunswick from any restrictions, he said.

The U.S., meanwhile, may be encouraged to sign up to a quota giving Canada 27 percent to 28 percent of the U.S. market, as the Trump administration “feels it has a fair deal on the table and has far more substantial trade irritants” for Commerce Secretary Wilbur Ross to focus on, Patel said.

"The best scenario is this issue would be settled before the beginning of the negotiation of Nafta,” Christine St-Pierre, Quebec’s minister of international relations, said Friday in an interview with the Canadian Broadcasting Corp. “So we are optimistic, but this is a situation that is, as you know, very difficult."

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