A simmering trade disagreement between the U.S. and Canada has escalated since a U.S. lumber group filed a petition asking for penalties against Canadian softwood lumber exports, which it alleges are being sold in the U.S. at less than fair market prices.

The Committee Overseeing Action for Lumber International Trade Investigations or Negotiations on Nov. 25 submitted the petition to the U.S. International Trade Commission and Commerce Dept., seeking duties on the Canadian exports to counteract the harm the group says has been done to its members.

Weyerhaeuser Co., Potlatch Corp. and the Carpenters Industrial Council, a unit of the carpenters’ union, are among the coalition's members.

But Canada is taking a strong position. Alex Lawrence, spokesman for the country's ministry of international trade, said via email that the government "is ready for any situation, and...will vigorously defend the interests of Canadian workers and producers." 

Susan Yurkovich, president of the Vancouver-based BC Lumber Trade Council, said in a statement, “The claims levelled by the U.S. lumber lobby are based on unsubstantiated arguments.”

Softwood lumber is used in housing construction.

Canadian lumber exports to the U.S. were governed from 2006 to 2015 by a bilateral trade agreement. That pact expired in October 2015 and was followed by a standstill agreement of one year, during which the two sides pledged not to file formal lumber-trade actions against each other.

During the standstill period, U.S. and Canadian trade officials held negotiations aimed at reaching a new lumber agreement. Despite a push from President Obama and Prime Minister Justin Trudeau, those talks, so far, have not produced a deal.

The U.S. industry group now is asking the Commerce Dept. to act quickly—within 45 days—arguing in its petition that Canadian firms are selling low-priced lumber “in massive amounts,” in anticipation of the trade filings.

The coalition says Canadian exports’ share of the U.S. market has risen to 34.1%, from 29.5% in the third quarter of 2015.

The group also contends that the exports have resulted in serious harm to the U.S. industry “and could have a disastrous impact if left unaddressed” until the Commerce Dept. issues a preliminary finding in the case.

BC Lumber's Yurkovich said, “We believe that reaching a new agreement is in the best interests of producers and consumers on both sides of the border."

She added that Canada has made proposals in the negotiations that “could provide a durable resolution to this dispute.” But she also observed that no agreement has been achieved yet.

The talks aren't dead, however. Lawrence said that during the Asia-Pacfic Economic Cooperation (APEC) talks, held in Lima, Peru, Nov. 14-20,  Chrystia Freeland, Canada's Minister of International Trade, met with U.S. Trade Representative Michael Froman "to continue negotiations." Lawrence added that Trudeau "also raised the issue with President Obama while at APEC."

But Lawrence also noted that U.S. industry must endorse any new lumber pact and agree to hold off on petitions for relief while such an angreement is in effect. "The reality is that the U.S. industry is not where we need them to be," he said. "At the same time, the protectionist climate in the U.S. does complicate any trade negotiation, including this one."

Story updated on Nov. 28 with comments from Canadian Ministry of International Trade