The forecast calls for tariffs
The one-year tariff standstill period that prevented the U.S. from initiating trade action against Canada has expired. This means that, as of October 13th, 2016, the United States is free to launch a case against Canada for unfair trade practices and can begin the process for imposing steep import tariffs on Canadian softwood.
The previous deal, which expired in October 2015, was struck in 2006. Before that, the U.S. had imposed both anti-dumping and countervailing duties on Canadian softwood lumber, which added approximately 27% to the cost of those imports.
Now that the 12-month tariff-free period is over, and the two countries still have not reached a new agreement, the U.S. lumber industry can file a petition to the U.S. Department of Commerce, which will initiate an investigation to determine the duty amounts to be imposed.
New agreement, new terms
The U.S. Lumber Coalition, a group representing producers and woodland owners, has said that any new agreements should maintain Canadian imports at or below an agreed upon U.S. market share. In 2015, Canada’ share of the U.S. softwood lumber market was about 30%. The U.S. reportedly wants to lower that share to 22%, which is significant.
Both Canada and the U.S. have pledged to continue negotiations, and are optimistic that they can reach an agreement that satisfies both parties. However, the general consensus is that this bilateral conflict is unlikely to end any time soon.
As Livingston continues to monitor the progress of discussions regarding the softwood lumber dispute between Canada and the Unites States, we will keep you informed of any updates. If you have any immediate questions please contact our Regulatory Affairs group at regaffairscda@livingstonintl.com.