Canadians Propose Compromise In New Effort To Avert Lumber War

The Canadian government is proposing new concessions to head off yet another U.S. trade case against Canadian softwood lumber.

In return, Canada wants a guarantee that the U.S. lumber industry will stop filing complaints under U.S. trade law claiming Canadian 2-by-4s and other lumber are unfairly subsidized.

But there’s only weeks left to strike a deal, which would require provincial agreement, senior Canadian officials said.

That could include boosting the amount provinces charge lumber companies to cut trees on public land, raising export prices in other ways or simply limiting lumber exports to the United States.

“The American government has indicated they are under considerable pressure from the industry to make a decision on where to go next soon,” said a Canadian official.

The U.S. industry has warned it’s ready to file a complaint that could lead to import duties on Canadian softwood lumber.

Mike Apsey, president of the Canadian Forest Industries Council, said proposals have been exchanged with Washington and nothing was being ruled out, including a voluntary limit on exports.

But he said the provinces and Canadian industry aren’t willing to pay any price to avoid another lumber case.

“It’s not peace at any price - the provinces don’t want that nor does the industry want that,” he said.

But it’s unclear how far major producing provinces, such as British Columbia and Quebec, will go.

The U.S. industry has argued for years that Canadian stumpage fees are kept artificially low to subsidize the lumber industry and undercut the U.S. market.

Canadian softwood lumber, used mainly to build homes, now accounts for about 37 percent of the U.S. lumber market, up from 27 percent in 1992. Those exports are worth about $8 billion a year and 300,000 jobs in Canada.

“The U.S. objective is to see if there can be some modifications made in these schemes to increase the cost of softwood lumber down here or reduce the supply,” a Canadian official told a briefing.

Canada wants to buy some peace in return.

“We would be looking for an assurance from the U.S. side which would include assurances from the U.S. industry that they would not initiate further litigation on softwood lumber.”