The Forestry Source - June 2017 - 4
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government and benefit from timber pricing policies and other subsidies which
harm US manufacturers and workers," said
Cameron Krauss in a press release. Krauss
is legal chair of the US Lumber Coalition
and senior vice president of legal affairs
for Seneca Sawmill in Eugene, Oregon.
The coalition represents a number of US
softwood lumber manufacturers, timberland owners, and the Carpenters Industrial
Council of the United Brotherhood of Carpenters and Joiners of America.
The US Lumber Coalition contends
that provincial governments make timber from Crown lands available to mills at
lower than market rates, effectively giving
"The coalition is hopeful that the duties imposed by today's decision will begin
the process of creating a level playing field
for the future and allow for US manufacturers to make essential investments and
expand the domestic lumber industry to
its natural market and protect and grow
the jobs that are so essential to our workers and our communities," added Krauss.
Derek Nighbor, chief executive officer of the Forest Products Association of
Canada, countered with a press release in
which he stated that "These duties stand
to hurt hard working men and women in
our mill communities across Canada. The
duties are unwarranted and without merit.
We 100% support the federal government's
'Team Canada' position and we must have
a fair and equitable trading structure for
In addition to countervailing duties on Canadian softwood lumber, the US Department of Commerce is considering the imposition of antidumping duties.
both our industry and US customers."
Random Lengths' associate editor
Jeff Redd has been tracking the softwood lumber dispute for many years. He
views it as having several distinct periods,
such as the years during which the USCanada Softwood Lumber Agreement was
in force, from 2006 to 2015.
"This is the fifth go-'round [or episode of the trade dispute] since the early
1980s, and each time has had a little bit
different feel to it. Every time this happens,
you have to look at what the wood-products market is doing already-the supply-
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demand balance-and that's a big indicator of how [the dispute] is going to affect
things. If the market is weak already, it's
hard for producers to tack on X percent
to make up for [a duty]. In this go-'round,
housing starts are up and lumber production is flat to off a little bit, so Canadian
producers have tacked on X percent to
their [price] quotes, and they've had pretty
good success, because it's a good demand
market. People are looking for wood-
housing starts are improving, and there's
not a lot of new lumber production on the
During the first quarter of this year,
lumber prices have "made quite a run,"
Redd said. But calculating how much of
the increase in lumber prices is due to the
duties is not so simple.
"It's hard to quantify what the market
would have done without the duties," he
said. "I don't know, but obviously this adds
one more element to the equation, and it's
a very emotional element. Markets tend to
be more volatile when you add an emotional element to it."
Redd continued: "Even if you add on a
20 percent duty, and you look at where the
exchange rate is and where current prices
are, and if you look back over the last 10
years, this is still one of the better return
years for Canadian mills, because the market has been good. It's been good on both
sides of the border. But as we all know, that
can change-you never know what's going
to happen down the road."
Redd, who noted that Random Lengths
does not forecast future wood-products
market activity, suggested that Canadian
and US negotiators likely are waiting until
the Commerce Department's decision on
the antidumping duties, as well as whether
the Trump administration will withdraw
from or attempt to renegotiate the North
American Free Trade Agreement (NAFTA),
before beginning negotiations over a new
lumber trade agreement. NAFTA does not
cover softwood lumber.
"I wouldn't be surprised if the two
sides did come back to the table to see if
they can find a compromise," said Redd. "It
seems to me that there is a lot more peace
in the market when you're operating under an agreement. Under the last lumber
agreement, which lasted nine years, the
duties would move up or down based on
what lumber prices were doing, but sawmill owners knew what they were going
to be dealing with. With these new duties,
there will be constant legal challenges and
maybe changes in the duties. That means
there's a lot of uncertainty in the market."
The Impact of Imports
Gordy Sanders is resource manager at Pyramid Mountain Lumber, which produces
a wide range of lumber at its mill in Seeley Lake, Montana. Sanders says imports
of lumber from Canada have a significant
impact on US mills.
"The northern tier of states are the
most affected, primarily because we're
producing the same kinds of products that
are produced across the border in Canada.
The Softwood Lumber Agreement [which
expired in October 2015] was intended to
level the playing field, so we had fair market conditions."
Under the 2006-2015 Softwood
Lumber Agreement, the US agreed to lift
countervailing and antidumping duties if
lumber prices stayed above a certain range.
If prices fell below the specified range, Canadian firms paid an export tax, and in
some cases, export restrictions.
"The [new duties] have provided a little bit more stability in the lumber market,
to where it's become less volatile," Sanders
According to Sanders, there has been
much speculation on both sides of the border about the impact of the antidumping
duties that may be imposed in June.
"After that, there's a six-month data
collection period where the Department
of Commerce will be gathering data [on
the lumber trade], and some final determination will be made in December of this
year," he said. "In the meantime, what is
absolutely certain is uncertainty."
For the forest-products industry,
Sanders says that uncertainty might best
be allayed by a lumber import quota.
"I think mills in the US are pretty
much on board with a volume quota, a cap
on the amount of Canadian lumber that
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