Fresh cut lumber is pictured stacked at a mill along the Stave River in Maple Ridge, B.C. April 25, 2019. The federal government says Canada will challenge recent increases to softwood lumber duties by the United States.JONATHAN HAYWARD/The Canadian Press
Canada has launched two fresh legal challenges in its long-running dispute with the United States over softwood lumber after Washington nearly doubled the punitive duties it slaps on Canadian timber imports in August.
International Trade Minister Mary Ng on Monday announced the Canadian government would challenge the results of the U.S. Department of Commerce’s fifth softwood lumber review.
The United States alleges, as it has since the early 1980s, that Canada subsidizes and dumps its softwood lumber products in the U.S. at cut-rate prices, distorting the American market and causing injury to U.S. sawmills, their employees and surrounding communities.
In August, Washington dramatically increased the duty it charges Canadian companies shipping softwood lumber to the United States, setting the rate at 14.54 per cent. That’s up from 8.05 per cent.
Canadian lumber producers have already paid the United States more than $9-billion in duties – money that is held in deposit until this latest dispute is resolved – according to the BC Lumber Trade Council.
Ms. Ng said Canada on Monday took the necessary steps to begin two legal challenges under the United States-Mexico-Canada Agreement (USMCA) of the U.S. Commerce Department’s review, the deliberations that led to the latest duty hike.
She called the duties “unfair and unjust” and said the United States’ actions are “hurting Canadian industry and jobs” and driving up the cost of housing in both Canada and the U.S.
Ms. Ng said Canada is always prepared to strike a deal. “Canada remains ready to seek a resolution that would provide the stability and predictability the sector needs to ensure its continued growth and success.”
The last time Canada and the U.S. reached an agreement on softwood trade was in 2006. That agreement expired in October, 2015, with no replacement.
Most forests in Canada are on Crown land, where buyers pay “stumpage fees” to provincial governments for the right to log. The U.S. alleges that the fees are too low, and that they amount to government subsidies.
The Canadian government is challenging the lumber tariffs under the USMCA, which allows Canada and the U.S. to set up trade panels to settle disputes. One legal challenge contests U.S. anti-dumping duties and the other contests U.S. countervailing duties.
International trade lawyer Lawrence Herman said that under the USMCA, governments and private parties have the right to challenge the final decisions rendered by trade agencies such as the U.S. Commerce Department. In this case, the government of Canada is taking up the case on behalf of Canadian industry, he said.
He said the only way to stop the endless cycle of duties and appeals is to cut a deal with the United States like the one that expired in 2015.
“This will be a perpetual problem as long as there’s a well-organized, deep-pocketed American lumber industry that can keep this dispute going,” Mr. Herman said. For the U.S. timber interests, fighting Canadian imports is about protecting their market share.
“Only a bilateral deal – like the one we had until 2015 – can resolve this ongoing and costly irritant.”