Explainer: Why The Trump Administration Says They Need A New Lumber Deal with Canada Explainer: Why The Trump Administration Says They Need A New Lumber Deal with Canada – NTK Network

Explainer: Why The Trump Administration Says They Need A New Lumber Deal with Canada

NTK Network acquired a 124-page report of an investigation into accusations of dumping Canadian lumber...

By NTK Staff | 04.27.2017 @4:12pm
Explainer: Why The Trump Administration Says They Need A New Lumber Deal with Canada

This week, the Department of Commerce released an analysis of their investigation into the accusations of dumping and countervailing duties of Canadian lumber. NTK Network acquired the 124-page report outlining the results of the Department’s investigation which led to President Trump’s announcement of a 20 percent tariff on Canadian softwood lumber.

Top Takeaways:

British Columbia Log Export Ban

An issue that is not receiving a lot of attention but that the Commerce Department believes is driving much of the imbalance is the British Columbia log export ban. The report noted the since the late 1800s, the Canadian government and the government of British Columbia has been restricting log exports from the province, forbidding private timber harvesting companies from providing their products to sawmills in the U.S. The report stated that some exceptions exist, including a surplus exception, but the exemptions require timber companies to go through a host of bureaucratic red tape that makes it difficult to export their logs and prevents them from entering into any long-term agreements with sawmills based outside of Canada.

As a result of British Columbia’s export restrictions, the Commerce Department report stated the stumpage market in British Columbia was “distorted.” The Department found that the restrictions created a countervailing situation by flooding the British Columbian log market with cheap wood that the United States can’t compete with.

Log Stumpage Fee

The main issue in the Commerce report is the issue of stumpage prices in Canada. The Commerce report noted that the vast majority of Canadian timber is harvested from government-owned land and the government sets the prices for the stumpage. The Commerce Department found that the Canadian government was unfairly benefitting their sawmills by not requiring adequate reimbursement for the logs from their land.

Department of Commerce Analysis: “The provision of stumpage provides a benefit within the meaning of section 771(5)(E)(iv) of the Act to the extent that the provincial government received less than adequate remuneration from the sale of standing timber when measured against an appropriate benchmark for stumpage.”

The Canadian government strongly denies that their timber is underpriced and contends it is priced to at market rates.

“The U.S. Lumber Coalition, a powerful lobby group, claims this has led to Canada’s pricing of lumber being artificially low. The Canadian government maintains that timber sold at Crown auctions are designed to reflect market rates.”

The Commerce Department, in response to these findings, is implementing a tariff to offset the practices they say are harming the U.S. lumber industry. The news of the tariff has led to swift backlash from the Canadian government. This will be an area to watch as the U.S. and Canada enter preliminary negotiations for a re-vamped NAFTA this year.

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