Fate of US–Canada Softwood Lumber Agreement still in limbo

Dive Brief:

  • Amid the uncertainty about the renewal of U.S.-Canada Softwood Lumber Agreement comes word from British Columbia’s softwood trade envoy that there is a chance a new deal could be reached quickly – by summer or fall – but if that doesn’t happen, the talks could stretch into next year, News 1130 reported

  • No formal talks have taken place, but officials from both countries are on top of the issue.

  • Complicating the issue further is uncertainty over how the Trump administration’s trade policies might impact future agreements and the North American Free Trade Agreement overall. British Columbia’s softwood envoy tells News 1130 that he hopes the Softwood Lumber Agreement will be negotiated outside of any reworking of NAFTA.

Dive Insight:

The Softwood Lumber Agreement, which imposed tariffs on Canadian lumber imports to the U.S., expired in October 2015 and was followed by a grace period through October 2016. The tariffs were in response to concerns by U.S. lumber mills that because Canadian manufacturers receive subsidies from their government, they can sell their products at a lower rate in the U.S. than can domestic manufacturers.

Currently, there is no new agreement in place. That is creating concerns about pricing and supply volatility in the U.S. as Canadian manufacturers anticipate retroactive duties when a new deal is eventually reached.

Some of the impact is already being felt in the market. Softwood lumber prices rose 4.8% in February, the largest increase in four years, the National Association of Home Builders’ economics and policy blog Eye on Housing reported, attributing the gains primarily to the trade dispute. Curtis Lumber, a building material dealer in New York and Vermont, is witnessing the increase firsthand, though it notes that customers don’t always experience the spikes immediately, depending on dealer inventory and other factors.  

A decision on countervailing duties for Canadian softwood imports is due from the International Trade Commission by April 24 and on antidumping duties by May, ProSales reported. U.S. building material dealers say they hope for a speedy replacement of the agreement that is fair to U.S. lumber producers without affecting supply or the cost of housing.

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Filed Under: Residential Building Economy