U.S.-Canada lumber dispute still smoldering

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   The Canadian government has requested consultations with the United States at the World Trade Organization in an effort to counter the U.S. Commerce Department’s recent implementation of antidumping and countervailing duties on imports of Canadian softwood lumber.
   Global Affairs Canada called the U.S. imposition of these duties, which were announced early this month, “unfair, unwarranted and deeply troubling.”
   The Canadian ministry emphasized in a press statement on Tuesday that it will “forcefully defend Canada’s softwood lumber industry. We recently challenged the countervailing duties under Chapter 19 of the North American Free Trade Agreement, and today we are beginning litigation via the WTO.‎”
   At the time of announcing the U.S. antidumping and countervailing duties, U.S. Commerce Secretary Wilbur Ross said “a negotiated agreement could not be made between domestic and Canadian softwood producers,” adding that the U.S. decision was “based on a full and unbiased review of the facts in an open and transparent process that defends American workers and businesses from unfair trade practices.”
   Commerce determined that exporters from Canada have sold softwood lumber in the United States at 3.2 percent to 8.89 percent less than fair value. In addition, the department determined that Canada is providing subsidies to its softwood lumber producers at rates from 3.34 percent to 18.19 percent.
   To counteract these anticipated duties, the Canadian government in early June announced $867 million in measures to support its forest industry workers and communities. This included up to $500 million in loans and loan guarantees to forestry companies from Export Development Canada (EDC) and $105 million in short and medium term commercial financing from the Business Development Bank of Canada. In addition, the Canadian government said it would put up more than $260 million to expand promotion of Canadian softwood lumber exports worldwide.
   Both sides had hoped to avoid the imposition of U.S. import duties by implementing a new Softwood Lumber Agreement, which expired Oct. 12, 2015. In early August, the Canadian government proposed to cap its share of the U.S. lumber market to 30 percent, but the U.S. Lumber Coalition, which represents U.S. lumber interests in this trade dispute, rejected the proposal. 
   The decades-old U.S.-Canada lumber trade spat has also been a flash point during the current North American Free Trade Agreement (NAFTA) renegotiation rounds.


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