The Canadian forestry industry said on Monday it is seeking a simple roll-over of an expired 2006 softwood lumber export agreement with the United States in hopes of preventing a fresh trade fight over the product.
Canada and the United States have a long history of battling over softwood lumber, which in Canada generally comes from government-owned land and which the U.S. side says is subsidized or underpriced.
A 2006 agreement that ended the last dispute expired on Oct. 12. The U.S. lumber lobby has taken the position that the 2006 agreement is no longer good enough and is pressing for freshly negotiated limits on Canadian pine and other softwood.
While Canada has a broader free trade agreement with the United States and would prefer no limits, David Lindsay, the president of the Forest Products Association of Canada, said the industry would at least want the certainty a softwood deal provides.
The industry group represents major Canadian producers including Canfor Corp CFP.TO, Tembec Inc TMB.TO, Resolute Forest Products Inc RFP.N and West Fraser Timber Co Ltd WFT.TO.
“A roll-over is probably the least painful and would result in more certainty and less legal and negotiating costs,” Lindsay said in an interview, adding that the United States would likely launch trade actions against Canadian lumber without a deal.
The U.S. Lumber Coalition put out a statement when the agreement expired saying that timber and lumber markets have evolved “and the 2006 agreement is now outdated.”
“If Canada continues to stay away from the negotiating table, the U.S. industry will eventually have no choice but to use our rights under U.S. trade laws to offset the unfair advantages provided to Canadian industry,” said Charlie Thomas, the coalition’s chairman.
Lindsay said Canadian government officials clearly had expressed to their U.S. counterparts a willingness to roll the old agreement over.
Canada’s position is complicated by the change of government that will take place on Nov. 4, following the Oct. 19 Liberal election victory over the Conservatives. That means Canadian government policy is largely on hold for now.