Softwood lumber dispute fires up trade fight between Canada, U.S.

News 25 Apr 2017
Softwood lumber dispute fires up trade fight between Canada, U.S.

Canadian Prime Minister Justin Trudeau speaks to the media during a visit to the Manhattan borough of New York, U.S., April 6, 2017. REUTERS/Lucas Jackson By David Ljunggren | OTTAWA

OTTAWA Canada will fight back against U.S. tariffs on softwood lumber and win again, top officials said on Tuesday, noting that international trade authorities have always ruled in its favor in the long dispute.

Ottawa will consider all options, including a World Trade Organization or NAFTA challenge, and help companies and workers who lose their jobs because of the move by the U.S. administration on Monday to impose duties on Canadian softwood,

The renewed trade dispute, which comes just days after U.S. President Donald Trump took aim at Canada's "unfair" dairy system, sent the Canadian dollar to a 14-month low as investors braced for tense negotiations with Canada's largest market.

"We have prevailed in the past and we will do so again," Natural Resources Minister Jim Carr told a news conference. "In ruling after ruling since 1983, international tribunals have disproved the unfounded subsidy and injury allegations from the U.S. industry," Carr said.

U.S. Commerce Secretary Wilbur Ross on Tuesday called Canada a close ally, but said that did not mean Canadians do not have to play by the rules. Ross said that while no immediate further actions against Canada are being contemplated, the trade disputes point to the need to renegotiate NAFTA sooner rather than later.

The two countries and Mexico are also preparing to renegotiate the 23-year-old North American Free Trade Agreement.

While the currency fell, shares in Canadian lumber companies rose as the level of the new tariffs came in at the low end of what investors were expecting.

The United States said Monday it will impose preliminary anti-subsidy duties averaging 20 percent on imports of Canadian softwood lumber, a move that affects some $5.66 billion worth of imports of the construction material.

Speaking to a technology company in Ontario, Trudeau said he would defend the national interest.

"Standing up for Canada's interests is what my job is, whether it's softwood or software," Trudeau said, prompting applause and cheers.

The dispute sideswiped the Canadian currency, reflecting the importance of lumber to the nation's economy. The Canadian dollar CAD=D4 weakened to C$1.3613 to the greenback, or 73.46 U.S. cents, nearly a full Canadian cent weaker than Monday's close.

While Carr said he was confident the two countries could come to an agreement on softwood lumber, he said Ottawa would make a "renewed effort" to expand exports to other markets, particularly China, with aggressive marketing.

While Canadian officials shrugged off the U.S. offensive on softwood lumber and recent attacks by Trump on Canadian dairy exports as typical negotiation tactic, others urged Canada to get tougher.

"In Canada, the perception is that we're always very nice. But we can't get trampled by this guy (Trump)," said Jerry Dias, president of the Unifor union that represents more than 20,000 forestry workers across Canada.

"This is going to have a devastating impact on certain communities," he added. According to Unifor, 600 communities in Canada are dependent on forestry.

Softwood lumber joins dairy as a key target for Trump, who tweeted a new attack on Canada's supply management system for dairy on Tuesday. Last week the president called Canada's dairy protections "unfair."

"Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!" Trump tweeted Tuesday morning.

(Additional reporting by Leah Schnurr in Ottawa, Alastair Sharp and Fergal Smith in Toronto and Allison Lampert in Montreal; Writing by Andrea Hopkins; Editing by Andrea Ricci)

Comments are closed