Canadian-U.S. lumber trade dispute simmeringFriday 21 Nov 2014 A recent dispute over “country of origin labelling” for meat products underscores the fact that Canada and the U.S. still have their share of trade disputes. Yet lurking in the background is a massive trade issue that you haven’t heard about for a while: softwood lumber, the granddaddy of all Canadian-U.S. trade disputes. Canada exported $7.4-billion worth of lumber in 2013, the highest amount since 2006.The United States is the destination for the bulk of that wood, and U.S. lumber producers have for decades demanded the U.S. government collect tariffs on Canadian lumber. After decades of dispute, Canada and the U.S. agreed to a nine-year truce in 2006. Under the agreement, the U.S. agreed to return more than $5-billion in duties collected from Canadian lumber companies, and a ceasefire in trade litigation. If you thought we’ve achieved lumber peace in our time, you might be premature. We’ve now entered the final year of that truce, which is set to expire on Oct. 12, 2015. There are signs this historic trade grievance is set to return with a vengeance. U.S. housing starts are heating up. As U.S. construction grows, demand for Canadian lumber increases, something that will inevitably antagonize U.S. lumber producers who have long argued that Canada’s industry is unfairly subsidized. “The dragon is never slain. It just goes to sleep sometimes for a while,” Paul Lalonde, a trade lawyer with Dentons Canada LLP in Toronto, said of the dispute. Next year’s expiry date will come at a crucial time. U.S. new home construction, which peaked at 2.1 million units in 2005, collapsed to 554,000 units in 2009 with the financial crisis. Demand for Canadian lumber tanked right along with it, along with lumber prices. Things changed in 2013, when lumber prices rebounded as U.S. housing starts gathered momentum. “For the first time in years, we actually see new housing starts in the United States past the one-million mark,” said William Polushun, an international business expert and lecturer at the Desautels faculty of management at McGill University. More >> Source: Financial Post
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