U.S. seeks to expedite lumber deal with Canada

‘LONG WAY AWAY’

JOSH WINGROVE OTTAWA • Canada’s envoy to Washington says President Donald Trump’s administration is interested in a quick deal to end a softwood lumber dispute although Prime Minister Justin Trudeau’s government sees no imminent agreement.

Ambassador David MacNaughton said last week U.S. Commerce Secretary Wilbur Ross told him it would be good to get a softwood deal before renegotiation of the North American Free Trade Agreement, due to begin as early as August.

However, MacNaughton said a deal is “a long way away” with a second round of duties on Canadian lumber expected this month. Canada Foreign Minister Chrystia Freeland also said a new pact on softwood — one of the most persistent trade spats between the U.S. and its second-largest trading partner — isn’t imminent.

The dispute is raising the cost of lumber in the U.S., contributing to a more than 18 per cent surge in wood prices from the end of January to mid-May, according to a Bloomberg Intelligence report. Additional U.S. duties are expected to further lift lumber prices as Canadian companies including West Fraser Timber Co. and Canfor Corp. offset the cost.

The U.S. is scheduled to decide on new anti-dumping penalties by the end of this month that may bring combined duties to more than 30 per cent, according to RBC Capital Markets, after an initial round in April of as much as 24.1 per cent. Canada announced an $867 million funding package in June to cushion companies and workers. Final U.S. lumber duties are expected by January of 2018.

“There is still a lot of work to be done,” Freeland told reporters Friday in a conference call from Miami. Canadian officials are bracing for a lengthy dispute and continue to both threaten legal action and say they would prefer a negotiated deal.

Ross is “rolling up his sleeves” and is engaged personally on the lumber file, MacNaughton told reporters in Ottawa last week. U.S. industry needs to approve any deal, a reality that complicates any preference by Ross for a quick pact.

“Everybody’s going to have to figure out whether there is a deal to be done there, but at least when you’ve got somebody who is personally taking the time, making the effort, it gives me some hope,” he told reporters. “So we’ll see.”

Former Canadian prime minister Brian Mulroney, who signed the NAFTA accord and has acted as something of an adviser and intermediary to Trudeau on the U.S., said slow lumber talks could stall the upcoming NAFTA process.

“I think both sides recognize that if we can, we must solve the softwood lumber case now, otherwise it runs the risks of poisoning the larger negotiations,” he said on CTV’s Question Period in an interview that aired Sunday.