Canada-U.S. lumber deal extended until 2015

REUTERS/Andy Clark

REUTERS/Andy Clark

Bryn Weese, Senior Washington Correspondent

, Last Updated: 6:29 PM ET

WASHINGTON, D.C. - Canada and the United States have extended their softwood lumber agreement until 2015.

Canadian International Trade Minister Ed Fast announced the extension in Washington, D.C., on Monday, calling it "great news for Canadian lumber workers and their families."

"This extension agreement will bring much-needed stability and predictability to the lumber industry," he said in a statement.

The original seven-year deal, signed in 2006, put an end to years of legal trade disputes -- 25 in total -- over duties and other barriers to selling Canadian wood in the U.S.

"Anyone who remembers those days can tell you stories of families struggling to make ends meet," Fast said.

The deal was originally set to expire Oct. 12, 2013, but will now be in effect until October 2015.

Monday's announcement comes less than a week after U.S. President Barack Obama angered the Canadian government by rejecting the Keystone XL Pipeline application, which would have shipped 700,000 barrels of crude a day from Alberta's oilsands to American refineries along the Gulf of Mexico.

"What people should read into this is the fact that the trade relationship between Canada and the United States remains strong. It's still the most successful trading relationship in the world," Fast said when asked about the timing of this extension and the rejection of Keystone last week.

"I share the prime minister's deep disappointment that the decision was made to turn down the application, but I also note that President Obama went out of his way to invite TransCanada to re-apply."

The softwood lumber agreement, the first deal Prime Minister Stephen Harper negotiated with the U.S., returned to Canadian wood exporters $5 billion in duties previously collected by Washington.

Before the deal was struck, the U.S. argued that Canadian lumber is publicly subsidized and therefore should be susceptible to tariffs under the North American Free Trade Agreement.

In response, the lumber agreement established charges Canadian exporters would have to pay if wood prices in Canada fell below a certain amount.

The U.S. Lumber Coalition, an association of American lumber mill workers and owners, has been very critical of Canada's lumber industry, saying government subsidies in Canada have caused "hundreds of U.S. lumber mill closures, thousands of U.S. job losses, and have suppressed the market for thousands of private timberland owners."

But the group welcomed news of the softwood lumber deal extension Monday, provided Canada complies with the rules.

"Multiple rulings by independent dispute resolution panels confirm that Canada has repeatedly violated its obligations under this trade agreement. It is essential that Canada complies with, and lives up to, its obligations under this trade deal," said coalition chair Steve Swanson in a news release.

"Improved Canadian compliance would give U.S. industry the confidence it needs in Canada's compliance with its trade obligations to pursue long-term trade agreements instead of returning to traditional trade litigation."

Last summer, the U.S. government sought international arbitration against the B.C. lumber industry and is seeking nearly $500 million because of what it felt were unfairly low prices set by the province for pine-beetle-damaged timber.

The three-member London, England, arbitration panel will hear the case next month, and is expected to rule this fall.

Softwood lumber exports from Canada to the U.S. totalled $2.6 billion in the first 11 months of 2011, according to government figures. Exports from B.C. accounted for nearly 60% of that trade.

But Canada now exports more lumber to Asia than it does to the U.S.

bryn.weese@sunmedia.ca


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