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Canadian lumber CEOs to press Ottawa to start softwood talks with U.S.

CANADA (From news reports) -- The chief executive officers of Canada's top lumber producers are set to meet on Thursday with International Trade Minister Mary Ng to spur the Canadian government to start talks with the United States to resolve the long-running softwood dispute.

The chief executives are seeking to get the softwood file onto the agenda later this month for the summit in Ottawa between Prime Minister Justin Trudeau and U.S. President Joe Biden.

Scheduled to participate in a virtual round table discussion late Thursday with Ms. Ng are lumber chief executives from West Fraser Timber Co. Ltd., Canfor Corp., Resolute Forest Products Ltd., Interfor Corp., Tolko Industries Ltd. and J.D. Irving Ltd., according to a source familiar with the meeting plans.

Others slated to join the discussion include officials from provincial forestry organizations, as well as from the Meadow Lake Tribal Council in Saskatchewan.

The 2006 Canada-U. S. softwood agreement expired in October, 2015, with no replacement.

"Minister Ng will host a round table with softwood lumber industry leaders to continue working hand in hand towards a solution," Global Affairs Canada confirmed in a statement.

The protracted trade fight dates back more than 40 years. In the latest round, the U.S. Department of Commerce started imposing duties on Canadian lumber in April, 2017. The countervailing and anti-dumping duty rates have fluctuated since then.

Current combined U.S. tariffs total 8.59 per cent, consisting of 3.83 per cent in countervailing duties and 4.76 per cent in anti-dumping levies, imposed against most Canadian lumber producers sending shipments south of the border. Irving's current tariff rate totals 14 per cent, while it's 8.25 per cent at West Fraser and 5.87 per cent at Canfor.

Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, said the tariffs are necessary.

"A level playing field against subsidized and dumped imports is particularly important during times of down markets when U.S. mills can least afford to lose sales to Canada's harmful unfair trade practices that endanger U.S. jobs and communities who depend on a vibrant U.S. forestry industry," he said in a statement on Wednesday.

Ms. Ng suggested that the U.S. lumber lobby's viewpoint is misguided. "Canada is disappointed that the U.S. continues to impose unwarranted and unprovoked duties on Canadian softwood lumber," she said in an e-mail sent by Global Affairs Canada. "The U.S. claims that Canadian industry is subsidized have been refuted time and again by neutral international tribunals."

Lumber prices reached record highs in May, 2021, but as the economy gradually reopened amid the COVID-19 pandemic, consumers began reallocating their renovation budgets to travel, restaurants and sporting events.

Since peaking nearly two years ago, lumber prices have fallen 75 per cent to trade recently at US$400 for 1,000 board feet of two-by-fours made from Western spruce, pine and fir, according to Vancouver-based newsletter Madison's Lumber Reporter, which monitors cash prices - what sawmills charge wholesalers.

After adding interest to duties already held by the U.S. government, the accumulated tariffs paid by Canadian producers since 2017 recently hit a value of US$6.5-billion, according to CIBC Capital Markets Inc.

"The fact that the pot of duties is so large now, that in turn creates an incentive on both sides to want to try to find a settlement," said former Interfor chief executive Duncan Davies.

U.S. lumber producers and timberland owners who complained about Canadian softwood ended up receiving 10 per cent of the US$5-billion in lumber tariffs paid in the previous round of the dispute from 2001 to 2006. Canadian companies recouped 80 per cent of the funds while 9 per cent went to "meritorious initiatives" in the U.S. and the remaining 1 per cent went to promoting lumber in both countries.

Keta Kosman, publisher of Madison's Lumber Reporter, said it appears that supporters of the U.S. lumber lobby have been willing to play a waiting game, judging by what she has heard from U.S. forestry observers over the years. She said the possibility of U.S. players getting a portion of the duties on deposit is attractive to them, providing what amounts to a relatively reliable dividend, including to U.S. timberland owners.

"It's not chump change," Ms. Kosman said.

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