Construction Materials
Trade Panel Ruling Favors Canada in Challenge to US Lumber Tariffs
A World Trade Organization panel has ruled mainly in Canada's favor and against the United States in the long-running dispute between the two countries over pricing, shipments and alleged subsidies of softwood lumber.
[View summary of WTO panel's report here. Full report here.]
The WTO dispute-resolution panel’s decision, issued Aug. 24, drew praise from Canadian government and timber industry officials but a sharp rebuke from U.S. Trade Representative Robert Lighthizer and a blast of criticism from a U.S. lumber industry group.
Softwood lumber is an important material in housing construction.
Mary Ng, Canada’s minister of small business, export promotion and international trade, hailed the WTO panel’s decision, which was initiated in 2018 by her country's government, challenging U.S. tariffs on Canadian softwood lumber.
Ng called on the U.S. to end the duties it imposed on Canadian lumber exports in 2017. She said in a statement, “Canada remains unequivocal: U.S. duties on Canadian softwood lumber are completely unwarranted and unfair. This decision confirms that.”
Ng denied U.S. claims that Canada subsidizes its lumber industry.
Susan Yerkovich, president and chief executive officer of the BC Lumber Trade Council, said in a statement, “For more than three years, our industry has paid billions of dollars in countervailing duties that today’s decision confirmed should never have been paid in the first place.”
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Lighthizer shows no signs of relenting, however. He said in a statement, “This flawed report confirms what the United States has been saying for years: the WTO dispute settlement system is being used to shield non-market practices and harm U.S. interests.”
Lighthizer’s office said that the U.S. “is evaluating options in response to the panel report.”
The U.S. Lumber Coalition, in a statement, slammed the WTO panel report as “the latest example of judicial overreach within the WTO seeking to undermine the U.S. trade laws, which makes it harder for U.S. producers to address unfair trade.”
Jason Brochu, the lumber coalition’s co-chair, noted that the WTO ruling isn’t binding on the U.S.
The WTO ruling and the two countries’ sharply divergent reactions to it come as lumber prices in the U.S. have soared by more than 130% since mid-April, according to the National Association of Home Builders. The reasons include a rise in homebuilding and do-it-yourselfers’ increased interest in home improvement projects as the coronavirus pandemic has kept many at home.
In an attempt to slow or halt the surge in lumber costs, NAHB recently urged Lighthizer and Commerce Secretary Wilbur Ross to restart talks with Canada in search of a new lumber trade pact.
But Lighthizer's strong reaction to the new WTO decision doesn't bode well for negotiations between the two countries.
The WTO panel, among other things, found fault with the factors the U.S. used to determine Canadian stumpage—payments by companies to provincial governments for harvesting timber on government land—and thus to calculate the tariff levels.
