With no U.S.-Canada deal,
lumber talks to run parallel to NAFTA
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[August 16, 2017]
By David Lawder
WASHINGTON (Reuters) - The United States
and Canada have failed to settle a festering trade dispute on softwood
lumber ahead of talks to modernize the North American Free Trade
Agreement (NAFTA), but will keep the lumber negotiations on a separate,
parallel track, officials from both countries said.
U.S. Commerce Secretary Wilbur Ross had been pushing for a lumber deal
before Wednesday's start to NAFTA talks to avoid complications from the
But both U.S. lumber producers and Canadian officials say they are not
close to completing a quota deal that would limit Canadian lumber mills
to a specific percentage of the U.S. market.
"We're still a ways apart. I think the NAFTA is going to go ahead and
get started without us," Joe Patton, vice president of Westervelt Lumber
in Tuscaloosa, Alabama, told Reuters.
U.S. lumber producers are seeking a "clean quota" deal that would limit
Canadian producers' share to a level at or below a yet-to-be-negotiated
share of the U.S. market - a principle that U.S. and Canadian
negotiators agreed last year.
Zoltan van Heyningen, executive director of the U.S. Lumber Coalition,
said that Canada has insisted on exceptions to a straight quota deal
that could lift Canadian producers' market share well above its current
"Thus far, everything that we understand that Canada has tabled
constitutes an at-or-above market share agreement," he said.
Canadian sources familiar with the softwood lumber talks said it was
impossible to predict when there would be a lumber deal and that there
were no plans for any softwood discussions on the sidelines of the NAFTA
The lumber talks are aimed at reaching a negotiated settlement of U.S.
anti-dumping and anti-subsidy charges against Canadian producers that
have resulted in preliminary duties of 17 percent to 31 percent on
U.S. producers have long accused Canada of unfairly subsidizing its
lumber producers through low fees for timber cut on public lands. U.S.
producers get most of their timber from private land, where costs are
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Barges of logs in Howe Sound near Squamish, British Columbia, Canada
April 25, 2017. REUTERS/Ben Nelms
Canadian Foreign Minister Chrystia Freeland said on Monday that she thought the
lumber talks would continue "in parallel" to the NAFTA negotiations.
"We donít want just any deal and the Americans know that. We want a deal that is
good for Canadians," Freeland said.
James Rockas, a U.S. Commerce Department spokesman, said that Ross would
continue to seek a negotiated settlement to the dispute until it issues final
anti-subsidy duties and anti-dumping duties - deadlines currently scheduled for
"Once Commerce announces a final determination on countervailing and/or
anti-dumping duties, a softwood lumber agreement would have to be negotiated
under other authorities," he said.
The last lumber quota deal in 2006 was negotiated by the U.S. Trade
Representative's office - the same agency leading the NAFTA talks with Canada
The hefty duties on Canadian lumber come at a time when rising lumber prices are
causing concern among U.S. home builders, suppliers and their investors, with
companies frequently mentioning them as pressuring margins
Hilla Sferruzza, chief financial officer at Meritage Homes Corp, told investors
on the company's Aug. 1 earnings call that the company was hesitant to forecast
much upside for gross margins because of the tight lumber situation, which she
said was driven by the tariffs on Canadian lumber and more recently by wildfires
in Canadian timberlands.
"We are cautious due to potentially rising lumber prices that could pressure
margins and the continued tight labor supply," Sferruzza said.
(Additional reporting by David Ljunggren in Washington and Lewis Krauskopf in
New York, editing by G Crosse)
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