U.S. and Canadian officials have signed a final agreement that seeks to end a lengthy trade dispute over softwood lumber. But some steps remain before the pact would take effect, including approval by Canada's Parliament of implementing legislation and U.S. action to pay Canada 80% of the more than $5 billion in duties it has collected since 2002.

US Trade Representative Schwab and Canadian Minister Emerson signed lumber agreement.
(Photo: Canadian Ministry of Foreign Affairs and International Trade )

The agreement, signed Sept. 12 in Ottawa by U.S. Trade Representative Susan C. Schwab and Canadian Minister of Foreign Affairs and International Trade David L. Emerson, would lift quotas on Canadian lumber shipments to the U.S. when market prices exceed $355 per thousand board feet (MBF).

But when prices are lower than that benchmark--as they have been since May--lumber exports would be subject to export charges or limits on volume shipped. That is one of the reasons why the National Association of Home Builders objects to the agreement.

Emerson said the pact "delivers predictable access to the U.S. market; guarantees the repayment of more than $4.4 billion (U.S.) in disputed duties; provides provincial and regional flexibility in forestry policies; and brings an end to years of uncertainty and costly litigation."

Schwab noted that "there is still much work to be done to bring the agreement into force. But once it is operational, this will be a good agreement for the United States, for Canada, and for the relationship between our two countries." Canadian officials plan to ask Parliament to improve the necessary legislation after it returns to session Sept. 18.

She added, "For those who would criticize this agreement, I ask them to consider the alternatives." In Schwab's view, those alternatives include more litigation, either new lawsuits or continued anti-dumping and countervailing duty actions. She also said without the pact, future duties "could be substantially higher than those applied under the settlement and would be susceptible to greater volatility."

The two countries announced the agreement in April, and initialed a text for the pact on July 1. But Canadian timber companies or organizations were unhappy about some provisions, prompting the governments to make changes. That won enough backing so that Prime Minister Stephen Harper could claim Aug. 22 that "a clear majority" of the Canadian industry supported the revised agreement.