By Ezra Black
On Nov. 25, the U.S. Lumber Coalition filed a petition with the U.S. Department of Commerce alleging Canadian lumber is being sold at below market prices in the United States.
In the latest round of the long-running softwood lumber dispute, it asked the government to protect American mills by imposing additional duties on Canadian lumber.
The petition alleges U.S. industries and workers suffered because of unfairly traded Canadian softwood lumber imports in the aftermath of the expiration of the last U.S.-Canada Softwood Lumber Trade Agreement, which was in effect from 2005 to 2016.
“The domestic industry experienced a decline in several key trade and financial indicators as a result of the low-priced Canadian imports, including lost sales and revenues, which resulted in U.S. mill closures and job losses,” said the U.S. Lumber Coalition in a statement.
It alleges Canadian imports caused the price of lumber to decrease, even as demand was increasing.
“The volume of imports from Canada in the first eight months of 2016 was more than 33 per cent higher than in the same period of 2015,” said the statement. “Canada’s gain in market share came at the direct expense of U.S. producers.”
But the Canadian lumber industry is denying these allegations.
Susan Yurkovich, President of the B.C. Lumber Trade Council, said she was “disappointed,” but not “surprised,” by the actions of her American counterparts.
“The claims levelled by the U.S. lumber lobby are based on unsubstantiated arguments,” she said in a statement.
Yurkovich said that reaching a new agreement would be in the best interests for both sides.
She argued that with a growing U.S. economy and more houses being built, the American lumber industry would not be able to meet the demand of domestic consumers.
“Unfortunately, this new action by the U.S. lumber lobby will only serve to limit access to Canadian lumber products, driving up prices for U.S. consumers,” she said.
B.C. is the largest Canadian exporter of softwood lumber to the U.S. and a major employer that provides about 145,000 direct and indirect jobs, said the statement.
Now that the petition has been filed, the American government could launch an investigation into the claims and impose additional taxes on Canadian lumber exports.
Calgary economist Trevor Tombe said softwood lumber disputes in B.C. and Alberta could be avoided if the provinces adopted a market-based approach to their stumpage systems.
The provinces own most timber in Canada and the prices charged to harvest the timber – the stumpage fee – is set by the government rather than by the competitive market, explained Tombe, whereas in the United States the stumpage fee is decided by the market.
“A market-based auction system would do a better job,” said Tombe. “This would alleviate the concerns of American producers and really clear up the softwood lumber dispute. We shouldn’t forget that other parts of Canada, the Maritimes in particular, are not caught up in this dispute because they have a more market-based approach to auctioning off stumpage rights; we should just do the same.”