Ruling favors Canada in latest softwood lumber dispute

U.S. Canada softwood lumber agreement world trade organization

A World Trade Organization ruling Monday on the U.S./Canada softwood lumber dispute doesn’t look to help resolve the high cost of lumber in the U.S., but the decision does look good for Canadian producers.

In a settlement statement released by the WTO, the organization determined that duties put in place to help balance Canadian subsidies were in breach of global trading rules because the U.S. had not provided evidence that prices paid by Canadian firms for timber on government-owned lands were artificially low.

According to an article in Bloomberg, the U.S. responded by announcing that it is “considering options including an appeal of a World Trade Organization dispute ruling that backed Canada’s claim the U.S. imposed unfair tariffs on its imports of softwood lumber.”

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“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,” U.S. Trade Representative Robert Lighthizer said in a statement following the ruling. The statement said the U.S. is “evaluating options in response to the panel report.”

The softwood lumber dispute dates back to the 1980s and has included a previous round of WTO cases lasting from 2001 to 2006, a Reuters report says. That concluded with a settlement under which Washington suspended duties as long as lumber prices were sufficiently high.

The agreement expired in 2015, prompting the subsequent Trump administration to slap tariffs of up to 17.99% against what it saw as unfair subsidies for Canadian exporters of softwood lumber, which is used in home construction.

The softwood lumber agreement has long been a contentious issue in the industry, with dealers often left feeling the effects of higher prices. Since April, lumber prices have increased 30% and have added $16,000 to the cost of a new home.

While the U.S. Lumber Coalition called the ruling a “posterchild for need to reform the WTO,” Forest Economic Advisors says the ruling will have little effect on duty rates in the U.S., and points out that “As in the past, we expect the appeals process will take a long time.”

Earlier this month, the National Association of Home Builders called on President Trump to intervene in hopes of curtailing rising lumber prices.

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