Industry Groups Urge More Talks in Softwood Lumber DisputeJuly 11th, 2018 by Editor
The recent focus of international trade disputes has been on aluminum and steel tariffs, which are affecting the door and window industry. However, another long-simmering trade controversy, the softwood lumber dispute between the U.S. and Canada, is taking a toll on residential construction as the housing market continues to shake off the effects of the Great Recession.
In June, more than 170 members of Congress sent a letter to Commerce Secretary Wilbur Ross and Ambassador Robert Lighthizer, the U.S. Trade Representative, asking for the U.S. to resume negotiations with Canada for a new softwood lumber agreement. The letter followed efforts by the National Lumber and Building Material Dealers Association (NLBMDA) to build support for more talks, and it comes as lumber prices have reached record highs.
The Random Lengths Framing Lumber Compose Price has increased 44 percent over the past year, and the Random Lengths Structural Panel Composite Price has risen 41 percent over the past year. Additionally, since the Department of Commerce investigation started in December 2016, domestic softwood lumber prices have increased 30 percent according to the Producer Price Index (PPI) published by the U.S. Bureau of Labor Statistics (BLS). Oriented strandboard (OSB) prices have increased 32 percent over the same period according to the PPI.
Both the Window and Door Manufacturers Association and the National Association of Home Builders (NAHB) have urged the U.S. and Canada to negotiate an end to the softwood lumber dispute, which has boosted the cost of housing, as well as the price of moulding and millwork products. According to NAHB, rising lumber prices have increased the cost of an average single-family home by nearly $9,000 and added more than $3,000 to the price of the average multifamily unit.
David MacNaughton, Canada’s Ambassador to the U.S., said Canada remains “open to talks for a new softwood lumber agreement that include a reasonable approach on the part of U.S. industry.”
In late June, NLBMDA staff met with officials from the Canadian province of Alberta regarding the dispute. NLBMDA is exploring next steps, including building support for a Senate letter asking the administration to return to the negotiating table with Canada. The ongoing dispute will be a focal point for lumber dealers when they meet with federal lawmakers during the August recess.
The U.S. International Trade Commission (ITC) slapped combined antidumping duties (AD) and countervailing duties (CVD) of 20 percent on most Canadian lumber producers importing to the U.S. For the five companies (Canfor, J.D. Irving, Resolute, Tolko, and West Fraser) that were directly involved in the investigation, the rates vary between 9 percent and 23 percent. Duties do not apply to softwood lumber from the Atlantic Provinces of Newfoundland and Labrador, Nova Scotia and Prince Edward Island.
Canada has responded on two fronts in the dispute. First, it has requested a bi-national panel review of the AD/CVD determination as provided under Chapter 19 of the North American Free Trade Agreement (NAFTA). Second, at the Canadian government’s request, the World Trade Organization (WTO) has created dispute settlement panels to review the softwood lumber duties.
Canada has expressed confidence that it will prevail in the NAFTA dispute settlement process. The country views the continuation of NAFTA Chapter 19 panels as essential to any updated version of the trade agreement. Despite extensive talks to renegotiate NAFTA, the three countries have not reached a new deal and the deadline has passed for Congress to approve a renegotiated agreement this year. That means any NAFTA deal will be approved in 2019 at the earliest.
Enforcement of U.S. trade law is a prime focus of the White House. The Commerce Department has initiated 118 new antidumping and countervailing duty investigations sinceJanuary 2017. This is 59 percent more than the 74 initiations in the last 508 days of the Obama administration.
In 2016, softwood lumber imports from Canada to the U.S. were valued at an estimated $5.66 billion.
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