The National Lumber and Building Materials Dealer Association issued the following update on the state of the Softwood Lumber Agreement between the U.S. and Canada:
Background: The Softwood Lumber Agreement (SLA) between the United States (U.S.) and Canada expired on October 12, 2015. There was a one-year cooling off period where neither country was allowed to engage in litigation on the issue. That cooling-off period expired on October 12, 2016. The U.S. Lumber Coalition, an alliance of softwood lumber producers in the United States, has expressed support for a new agreement but in a recent statement suggested it may have “no choice but to move to initiate trade cases against unfairly traded imports from Canada.”
At the center of the dispute is the claim that the Canadian lumber industry is unfairly subsidized by its federal and provincial governments, as most timber in Canada is owned by the provincial governments. The prices charged to harvest the timber (stumpage fee) are set administratively, as opposed to in the U.S. where prices are set mostly through the competitive marketplace. American lumber producers, as well as the U.S. government, claim this constitutes an unfair subsidy, and is thus subject to U.S. trade remedy laws, where foreign goods benefiting from subsidies can be subject to a countervailing duty tariff, to offset the subsidy and bring the price of the commodity back up to market rates.
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