US-Canada softwood lumber dispute expected to continue

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Bloomberg/Fordaq
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Despite speculation that a deal over the softwood lumber shipments from Canada to the US is to be reached soon, the longstanding dispute might drag on.

According to Bloomberg, major hurdles remain before a new agreement would be possible, said a Canadian government official who asked not to be identified because they weren’t authorized to comment publicly on the subject. The U.S. lumber industry has yet to put forth a proposal Canada would accept, raising the prospect of litigation, according to Vancouver-based ERA Forest Products Research. Bloomberg Intelligence analysts say the dispute is likely to get mired in efforts by the Trump administration to renegotiate the North American Free Trade Agreement.

“I don’t think we’re anywhere close to a deal,” ERA Managing Director Kevin Mason said.

Other rumours say that the US Commerce Secretary Wilbur Ross wants to conclude a new softwood lumber deal before Nafta talks start in August. Moreover, Canada's ambassador to the US confirmed this and added that a new deal is unlikely.

The decades-long dispute is one of the thorniest between the two countries and escalated this week when the U.S. imposed additional duties on lumber imports from Canada. U.S. producers allege Canadian wood is heavily subsidized and imports are harming American mills and workers. The dispute took on a new dynamic in November, since when trade has become an increasingly fraught issue with President Donald Trump seeking to renegotiate Nafta, Bloomberg reported.

On the 27th of June, Prime Minister Justin Trudeau said that he was focused on "ensuring that we’re moving towards a deal" on lumber and that talks will continue over 2017's summer.

This dispute might reduce the competitiveness of Canadian lumber companies such as West Fraser Timber Co., Canfor Corp., Resolute Forest Products Inc. and Interfor.

It is most likely that the US will delay an announcement on final duties until November “due to the case’s complexity and to provide more time for a settlement,” they added.

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