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00:00Well the U.S. International Trade Commission has ruled there's a reasonable indication softwood lumber imports from Canada materially injure the American forestry industry. How significant is that. Just there it is a senior industry analyst for packaging paper and paper products at Bloomberg Intelligence . Great to have you with us. So this ruling means what in the context of our lack of a current softwood lumber agreement thanks Amanda. Yes it's very significant. Not unexpected but very significant because this is the first ruling in the investigation whether kind of veiling and any dumping duty should be placed on Canadian lumber imports. And what this does given the threat of material injury the case can go forward . Had the panel found no threat this case would be over today . But now it goes forward and now we have we're gonna have preliminary rulings down the road on both the countervailing duty and anti-dumping duty followed by final final determinations. So as you note a huge chunk of the lumber used in construction in America is Canadian lumber that cuts both ways on the one hand it makes this a matter of some urgency to US lumber producers on the other end raising the cost of that product is going to hurt a hugely important part of the economy. Where's this off between those two things. OK. Well first I would dispute the second part of that statement. Yes it does hurt consumers of lumber but it's minor. I mean it's not a big number. The amount of the cost of framing lumber and a house today might be between seventy five hundred to ten thousand dollars. And so if you put that up 10 15 20 30 40 percent it's not a deal breaker. On the other hand to the Canadian industry if they're faced with duties let's say as high as 30 35 percent maybe even higher that will have a material impact on the Canadian lumber industry. So tell me we did. I mean it took us years to get that lumber agreement that expired . Why why not just extend it. Why didn't both sides just say look we've hammered this all out before. Let's just keep this same agreement in place. OK first let's understand this has been a dispute that's been going on for decades and decades and decades. I think with the previous agreement the 2006 agreement was which expired at the end of 2015. I believe the Canadians would have liked to have extended that mechanism. But I think the U.S. side was unhappy with it. And I think one of the things that happened during this period was starting in mid 2014 the Canadian dollar devalued 20 percent versus today. And that's a big advantage on the Canadian side. And so so as you said when you look at the lumber the incremental lumber that demand this year in the U.S. from rising housing starts and an improved repair and remodeling market. Two thirds of that demand that incremental demand has been filled with Canadian lumber. And I think that sort of peeved off the U.S. side . Fair enough. We've only got about 45 seconds here Josh but one quick kind of overarching question that dogs this debate is is Canadian lumber actually subsidized or not. Many August trade bodies have said no. Now the ITC is saying yes. What are we to believe. RTS said yes for a long time. Canada has said no I'm here's what I'm going to say to you. Canada is not a monolithic structure of of timber mechanism pricing mechanism. Each province is different. I think Quebec has a legitimate argument . Maybe they should be exempt. This time around. So that complicates the issue. But it is a very controversial issue it's a very difficult issue to settle as well. All right. And as I said exchange rates confuse the whole thing .

U.S. ITC Rules Material Injury on Canadian Lumber Imports

The U.S. International Trade Commission has ruled there is a reasonable indication that softwood lumber imports from Canada materially injure the U.S. industry. How significant is this ruling to the trade dispute between the two countries? Joshua Zaret, senior industry analyst for packaging, paper and paper products, Bloomberg Intelligence speaks on The Daily Brief. (Source: Bloomberg)