American softwood lumber companies file legal challenge against Canadian producers

American softwood lumber companies asked the U.S. Department of Commerce today to take action against what they call “unfair” trade in softwood lumber between the U.S. and Canada.

The request comes in the form of a lengthy petition to the department alleging that Canadian provincial governments are producing and selling their products at artificially low prices in the U.S.

The complaint comes at an uncertain time for softwood lumber trade between the two countries.

Last October, a softwood lumber agreement between Canada and the US expired, giving Canadian producers unfettered access to the American market.

The U.S. Lumber Coalition alleges Canadian imports surged after the agreement expired, and that “Canada’s gain in market share came at the direct expense of U.S. producers.”

On November 9th, B.C.’s Minister of Forests Steve Thomson, said his government will try to renegotiate a new deal before Donald Trump, who is seen as much less favourable to an agreement than America’s current president, Barack Obama, is sworn in.

Because B.C. produces 55 per cent of softwood lumber production in Canada, Thomson said the agreement is crucial and will be reached despite Trump’s seemingly anti-trade mentality.

“[The American election] won't change our efforts at all in terms of continuing to push forward for a new agreement,” he said. “It’s been challenging all along in terms of having a substantive level of engagement from the U.S. on this file.

Today, Thompson said he is “disappointed” with the US lumber industry’s legal challenge,

“We encourage the U.S. government to review previous cases and determine that the U.S. industry allegations against Canada and B.C. are unfounded. If the U.S. government pursues this case despite Canada's wins of previous cases on appeal, we are confident that, as we have in the past, we will successfully defend B.C.'s market-based forest policies,” he said.

While Thompson admitted the legal dispute would be costly, during a press conference today he refused to say exactly how much of an impact ongoing trade dispute will have.

Now that U.S. lumber industries have filed their petition, the US Department of Commerce has 20 days to decide whether or not to investigate. The U.S. International Trade Commission will also make a preliminary decision on whether Canadian lumber is injuring U.S. industry within 45 days.

If the U.S. International Trade Commission finds that Canadian lumber is injuring the U.S. lumber industry, and the Department of Commerce finds that Canadian lumber is subsidized, the U.S. Department of Commerce will start imposing tariffs on Canadian products.

Although such a decision is by no means a certainty, the earliest tariffs could start is April 2017.