Bipartisan Letter Urges Softwood Lumber Negotiations With Canada

A bipartisan group of a dozen senators have asked the secretary of commerce and the U.S. trade representative to open negotiations with Canada with an eye to renewing a softwood lumber agreement similar to the one in place between 2006 and 2015. Sen. James Inhofe, R-Okla., and Sen. Jack Reed, D-R.I., led the letter, which they released publicly on Sept. 12. The old agreement protected domestic producers through quotas, but had escape valves tied to the market price. The senators noted that with antidumping and countervailing duties on Canadian imports (see 1801020034), it has become more expensive to build houses or make window frames.

This letter follows one from 171 House members in June (see 1806140062). "With no follow on agreement in place and new tariffs being imposed averaging just over 20 percent, lumber prices have skyrocketed, hitting an all-time high in June of this year," the senators wrote. "As part of [U.S.-Canada] negotiations, we understand that you are required to consider the perspective of domestic producers. It is our hope that in negotiating a new agreement with Canada, you will take into account not only the impact of price fluctuations on the domestic lumber industry, but also on those secondary industries and consumers that rely on softwood lumber for their economic well-being."

Jeff Weiss, a partner in Venable's international trade practice, worked on the 2006 softwood lumber agreement when he worked at the Office of the U.S. Trade Representative. He said that congressional pressure is not that relevant to whether negotiations restart; instead, the companies -- and their political champions -- from both countries watch the status of court challenges to the calculation of AD and CV duties, or the determination of injury. Back then, he said, "you really weren't able to get a negotiation going until there had been enough losses in the key cases to get people to the negotiating table." The negotiations were done before final appeals were over, because if the duties had gone away, Canada would have had no motivation to negotiate. But there had been enough of a reversal for U.S. firms that it seemed less risky to agree to a quota system than to start again with another AD/CVD case if they lost the current duties. USTR didn't immediately comment.