The United States is open to fresh negotiations with Canada to resolve a longstanding dispute over U.S. tariffs on softwood lumber but a core sticking point remains, U.S. Trade Representative Katherine Tai said on Wednesday.
Tai told a U.S. Senate Appropriations subcommittee meeting that a new lumber trade agreement requires the Canadian government to address U.S. concerns that its policies amount to subsidies for Canadian producers.
“When and if Canadian industry and the Canadian government are ready to address those issues, we stand ready and willing to enter into negotiations to see if we can once again come to some kind of an agreement with Canada,” Tai said.
Canada’s trade ministry had no immediate comment on Tai’s remark.
U.S. homebuilders, beset with price inflation for lumber and other building materials, have clamored for President Joe Biden’s administration to remove the anti-subsidy and anti-dumping duties in place on Canadian softwood lumber, ranging from 6.75% to 20.24%, depending on the producer.
U.S. Treasury Secretary Janet Yellen said on Tuesday that Biden was not considering cutting the lumber duties as he deliberates potential tariff relief on Chinese imports to help control inflation.
The softwood lumber tariffs are the legacy of a decades-long trade dispute over the structure of Canada’s timber sector that could not be resolved when a quota agreement expired in 2015.
The United States has said that Canadian timber harvested from federal and provincial lands with low government-set stumpage fees constitutes an unfair subsidy, while most U.S. timber is harvested from private land at market rates.
“I talk lumber almost every time I see my Canadian counterpart,” Tai told the hearing, referring to Canadian Trade Minister Mary Ng.
Indicating that the fundamental subsidy dispute is still a major hurdle, Tai said any resolution would depend on Canada’s willingness to address “an unlevel playing field for our industry with respect to how they govern their harvesting and their industry, which has the impact of subsidies for (U.S.) competitors.”
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