Stumpage Spat Continues

In the latest development of a decades-long trade dispute between Canada and the United States, the Canadian government has filed for a judicial review of last month's U.S. Commerce Department's assessment on softwood lumber duties. International Trade Minister Mary Ng described the levies as "unfair, unjust, and illegal" in a statement released earlier this week.

The U.S. Commerce Department's fourth administrative review established a combined duty rate of 7.99%, a slight decrease from the previous rate of 8.59%.  Canada’s softwood producers say they have paid more than $8-billion in lumber duties to the U.S. from 2017 to 2022.

This decision has been lauded by U.S. lumber producers. Andrew Miller, chairman of the U.S. Lumber Coalition, stated that such duties are necessary for "enduring expansion of U.S. lumber manufacturing" and to "maintain confidence in the expansion of the U.S. sawmilling capacity."

Canadian-owned sawmills south of the border now account for 22 per cent of lumber capacity across the U.S., according to The Globe and Mail.  Canadian-based companies now control 35 per cent of sawmill capacity for softwood in the U.S. South, according to the same research.

Ng framed Canada's legal action as an attempt to escalate the concerns of Canadian exporters while encouraging the U.S. to consider a negotiated solution to the enduring issue. "Canada is taking the necessary steps to actively defend the interests of our softwood lumber industry and the workers and communities that rely on it," Ng said.

The U.S. Lumber Coalition responded by saying that they remain open to a new agreement on softwood lumber but claim that Canadian producers have yet to agree on a unified position that would allow negotiations to commence.

The longstanding dispute centers on Canada's stumpage fee system, which U.S. producers argue amounts to an unfair subsidy. These fees are set by Canadian provinces for timber harvested from Crown land. In contrast, U.S. lumber producers pay market rates for timber. Canada has successfully argued at the World Trade Organization in the past that its stumpage fee system is not a subsidy.

For years, the United States has imposed unfair, unjust and illegal duties on Canadian softwood lumber, hurting Canadian industry and increasing housing costs in both countries, Ng said in her statement.