The long-standing softwood lumber trade war between Canada and the U.S. is heating up again, with Washington expected on Tuesday to issue tariffs against Canadian lumber exports.
And a U.S. professor who specializes in international trade and is an expert in Canada-U.S. relations said it is time to end Canada’s longest-running trade dispute that has been running since the 1980s, and predates NAFTA.
The U.S. lumber industry is demanding an extra duty to offset what it says are lower stumpage fees in Canada because logs are harvested from Crown land and provinces set the fees, compared with the U.S. where most lumber comes from private land and market forces dictate the price.
The duties together with anti-dumping fees likely to be imposed in June — to compensate U.S. producers because they also allege Canadian lumber producers are selling softwood in the U.S. for less than it costs American mills to produce it — are expected to run as high as 30 to 40 per cent.
The last softwood lumber agreement expired in 2015 and after a year of standstill, the U.S. industry in November again demanded duties.
“What we’ve done in the United States many times with softwood is: We will hit you with a tariff, make you take us to some body, NAFTA or WTO (World Trade Organization), we lose, we go back and have the option of either accepting your countervail back, or make a tweak and do it again,” said Christopher Sands, director of the Centre for Canadian Studies at Johns Hopkins University.
“What’s interesting in this round is that it’s also occurring while we have NAFTA negotiations in the offing and there has been a lot of talk about whether we could fold softwood into the larger NAFTA context,” he said.
“Because coming back to this every 10 years is really costing both of us way too much money.”
Last week, B.C. Liberal Leader Christy Clark blamed greedy American “lumber barons” for the dispute, saying they want to drive up the price of lumber at the expense of the middle class, who would pay more for their homes if Canadian lumber was assessed tariffs.
Sands agreed. “It’s not the majority of the American softwood sector that is fighting Canada. It’s a well-organized minority that knows the rules and is capable of wreaking havoc.”
“We can’t keep having important sectors of the relationship hijacked by people who are just looking to shake it down and get a little bit more money and subsidies for themselves,” he said.
“The bigger problem for Canada is building a consensus between the provinces,” which set their own stumpage fees, said Sands, who was in Vancouver to speak on a panel about U.S. trade at a Vancouver Board of Trade luncheon.
Without a united front, “it’s too easy for the U.S. to play you off against each other,” he said.
“The thing that we know about (U.S. President) Donald Trump is that, and he’s said as much in his autobiographies, he is a bit of a bully. He’ll sense the weakness of a divided Canadian position and he’ll take advantage of it. He’s a good negotiator that way. That’s what he does really well.”