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Canadian Lumber Envoys Push for Negotiated Settlement, Warn of Litigation Otherwise

Posted September 05, 2017

At a recent meeting in Washington, DC with the National Home Builders Association, Canada’s ambassador to the U.S. David MacNaughton and envoys from several lumber-producing provinces urged the Trump administration and the Trudeau government to quickly resolve their outstanding differences and find a negotiated settlement of the softwood lumber dispute separate from the process to modernize the North American Free Trade Agreement.

In a statement, the group called the longstanding lumber dispute “a diversion from our many areas of alignment and cooperation on trade” and said that with the NAFTA talks underway, “now is the time to focus on the future and put this dispute behind us.”

“All parties have agreed that negotiated solution on softwood lumber trade is in the best interest of workers, consumers and industry in both countries,” the group stated, adding that “the coming weeks will be critical to determine whether we have a partner in the United States prepared to advance our shared interests.”

During an online Facebook discussion, MacNaughton said he and the envoys from British Columbia, Quebec, Ontario, Alberta and New Brunswick were speaking with a single voice in pushing for a prompt resolution because of what they called the steep preliminary anti-dumping and countervailing duties announced by the Commerce Department earlier this year.

Although the Canadian ambassador expressed optimism that the countries were approaching a negotiated settlement on lumber, he warned that if one cannot be struck litigation would follow.

“We are going to try really hard in the next little while to get a fair and balanced agreement with the United States, and if that is not possible, we have all agreed that we will take all necessary steps to litigate this matter until we get a fair arrangement as we have in the past,” MacNaughton said.

This point was also made in the statement issued by the group, which said that while a negotiated solution is preferred, “we must also be clear that provinces are prepared to proceed with litigation on all fronts if a fair solution cannot be achieved.”

The two sides have been at odds over the basic framework of a new softwood lumber agreement (SLA) since before the previous deal expired in October 2016, with the U.S. advocating for a quota-only deal and Canada asking for one that resembles the previous agreement’s mix between a quota and an export tax system.

Several weeks ago, MacNaughton had suggested that the U.S. and Canada were close to reaching a new SLA that would cap Canada’s share of the softwood lumber market at about 30%; however, significant questions remained unaswered about what would happen in the event that the U.S. lumber industry was unable to produce sufficiently to meet its designated 70% share of the market.

During the Facebook discussion, MacNaughton said “the only qualification that we have put on the table in terms of a defined market share is if and when the market for the U.S. lumber industry cannot supply the market and Canada’s market share is limited that we have an opportunity to supply that excess” to the U.S. home building industry. He added the U.S. Lumber Coalition has “mischaracterized what we have been saying and doing,” noting Canada is unified and has pitched an arrangement defining its market share.

Canada, the provincial envoys said in their statement, “has demonstrated a willingness to be flexible in these discussions. We have tabled solid offers that respond to U.S. industry demands for a hard defined market share approach. Canada’s proposals would provide predictability to U.S. lumber mills while also ensuring safety valves to protect the U.S. housing and construction sectors in the event that the U.S. market is undersupplied.”