U.S. Industry Rejects Canadian Proposal on Lumber Share Cap

By: | at 01:44 PM | Maritime  

The U.S. lumber industry says it won’t accept the latest Canadian government proposal for a deal on softwood lumber, downplaying expectations any agreement is imminent.

Canada’s ambassador to Washington said in an interview this week the sides are close to an agreement on a deal that would cap Canada’s share of the U.S. lumber market at 30 percent, but remained at odds over what will happen if U.S. producers can’t fulfill their 70 percent share.

The comments by David MacNaughton to The Canadian Press news agency come as U.S. Commerce Secretary Wilbur Ross pushes to reach a deal ahead of North American Free Trade Agreement talks due to begin Aug. 16. U.S. industry, however, must approve any deal and is signaling there is nothing imminent.

“It is disappointing that Canada continues to negotiate through the media,” U.S. Lumber Coalition spokesman Zoltan van Heyningen said in a written statement. Canada initially agreed to negotiate a deal that saw it receive at or below its current market share, and the latest Canadian proposal is for it to receive at or above that share, he said. “The industry will not accept” such an agreement, van Heyningen said.

Richard Garneau, chief executive officer at Montreal-based Resolute Forest Products Inc., said the U.S. is at best able to supply 68 percent of its own lumber requirements.

“There’s room for Canada to continue to supply this market at the same levels,” Garneau said in an interview Thursday, citing 31 percent or 32 percent. “Hopefully our government is going to be successful to make sure that the Canadian workers are going to be able to continue to have employment” in the industry.

A previous lumber deal between the two countries expired in 2015, and a tariff-freeze expired a year later. Prime Minister Justin Trudeau and former President Barack Obama were unable to reach an agreement on a new pact. Trudeau said this month the softwood issue is one the governments of both countries are taking “very seriously.”

No Deal Yet

Adam Austen, a spokesman for Canadian Foreign Affairs Minister Chrystia Freeland, declined to comment on MacNaughton’s remarks and said Canada continues to favor a negotiated deal to end a dispute that has seen the U.S. levy tariffs on Canadian lumber. “While‎ there is no deal at this time, we continue to raise this important issue with the United States,” Austen said.

U.S. President Donald Trump’s administration imposed countervailing tariffs in April of as much as 24.1 percent on imports from Canadian companies, followed in June by preliminary anti-dumping duties of as much as 7.7 percent. A final ADD rate is scheduled for release on Sept. 7.

Michael Froman, a former U.S. Trade Representative in Obama’s administration, said a deal that caps Canadian market share would make sense, although he opposed such an arrangement in previous talks with the government of British Columbia, one of the country’s major lumber producers.

Market-Share Cap

“I do think it’d be good to resolve that issue once and for all before it gets wrapped up into a Nafta renegotiation effort,” Froman told Bloomberg TV Canada in an interview Wednesday. “It does make sense for there to be a market share cap that allows for real benefit on both sides of the border.”

Canada has regularly argued the U.S. simply can’t meet its domestic demand, and that choking off Canadian wood imports would raise home prices and trigger shortages. Van Heyningen argued in his statement a deal would allow the U.S. sector to expand production “and thus supply more U.S. wood made by U.S. workers.”

Garneau says Nafta probably needs to be updated, given the pact was signed more than two decades ago, but the Resolute CEO implored negotiators to preserve market access for Canadian producers. “Canada needs to have access to 31 percent to 32 percent in the U.S. market,” he said. “I hope that it’s going to be this level as the end result is negotiated by our government but I don’t know. It’s a very difficult issue on both sides of the border.”


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