U.S. and Canada are prepared to extend a shaky softwood lumber trade agreement put in place seven years ago to benefit local mills, a U.S. lumber lobbyist said Thursday in Longview.
If approved, both sides will revisit the contract in 2015. The deal is designed to give U.S. manufacturers a level playing field with subsidized Canadian timber, said Zoltan van Heyningen, executive director of the U.S. Lumber Coalition.
"Canada has repeatedly violated the agreement by providing new subsidies," van Heyningen said in an interview at The Daily News.
Those subsidies tamp down Canadian lumber prices, putting more pressure on U.S. mills, such as Weyerhaeuser Co., Simpson Lumber and RSG mills in Cowlitz County, he added.
In 2006, the United States and Canada signed the seven-year Softwood Lumber Agreement, which both sides hoped would end a long-standing spat over Canadian lumber subsidies. The agreement imposed a 5 percent tariff on Canadian lumber producers who limit production within a quota. A 15 percent tariff is imposed on the rest of Canadian lumber.
The vast majority of Canadian timber is grown on government-owned lands, which U.S. lumber companies say gives Canada an unfair advantage. In 2002, the trade war reached a heated peak when the United States slapped a 27 percent duty fee on imported Canadian lumber, which led to the two sides coming to the 2006 agreement.
It's not perfect, van Heyningen said, largely because it lacks teeth to prevent Canadian lumber subsidies from entering the U.S. market.
Canadian lumber officials say they don't like the agreement either because of the tariffs, but they support the extension and hope that the U.S. housing market will have recovered by the time it expires.
"Neither side really likes the agreement, but both sides accept that it's a lot better than not having it," Avrim Lazar, president of the Forest Products Association of Canada, told The Winnipeg Free Press.
On two separate occasions since 2006, an arbitration court ruled Canada violated provisions of the trade agreement. American officials allege a third violation that British Columbia improperly lowered prices — known as stumpage fees — on wood damaged by mountain pine beetles. An arbitration court will hear that complaint in February.
Even if the United States wins — which van Heyningen is predicting — U.S. mills still suffered by forced competition with cheap Canadian lumber, he said.
"It's been an unfortunate, continued cycle of the provinces in Canada helping industries, because times are difficult," van Heyningen said.
Canadian lumber officials deny the latest allegation of violating the agreement. A decision is expected next spring or summer.