U.S. delays final duties on Canadian lumber to buy time for settlement

Barges of logs in Howe Sound near Squamish, British Columbia, Canada April 25, 2017. (Ben Nelms/Reuters)

WASHINGTON (Reuters) – U.S. Commerce Secretary Wilbur Ross this week announced a 2-1/2 month delay in determining final anti-dumping and anti-subsidy duties on Canadian softwood lumber to buy more time to negotiate a settlement of the trade dispute.

The Commerce Department had previously been scheduled to announce final lumber duties on Sept. 6, a step that would have ended the current negotiating process with Canada’s government. Ross set a new deadline of no later than Nov. 14.

“I remain hopeful that we can reach a negotiated solution that satisfies the concerns of all parties,” Ross said. “This extension could provide the time needed to address the complex issues at hand and to reach an equitable and durable suspension agreement.”

U.S. and Canadian softwood lumber producers and government officials have all said they want to reach an “equitable” arrangement to settle U.S. claims that Canadian lumber is unfairly subsidized and dumped onto U.S. markets below cost.

But both sides say they are unwilling to settle for a “bad deal,” pushing the talks past the start of negotiations to modernize the North American Free Trade Agreement. As long as the Commerce Department is negotiating on behalf of the United States, the lumber talks can continue on a separate track to the NAFTA talks, which are being handled by the U.S. Trade Representative’s office.

The decades-old dispute centers on the fees paid by Canadian lumber mills for timber cut largely from government-owned land. They are lower than fees paid on U.S. timber, which comes largely from private land. The Canadian government argues that its fees are fair and is prepared to litigate the matter if a settlement cannot be reached.

U.S. lumber producers want a “clean quota” system that limits Canadian mills to a specific share of the U.S. market.

Canada’s ambassador to the United States and envoys from major lumber-producing provinces said last week in a joint statement that the coming weeks “will be critical to determine whether we have a partner in the United States prepared to advance our shared interests.”

The U.S. Commerce Department is collecting preliminary duties of 17 percent to 31 percent on Canadian softwood lumber.