Lumber deal has Canada confident Subsidy fix sought by industry in U.S.

OTTAWA – The Canadian government thinks it can reach a lumber trade agreement with the United States.

Such a deal would end years of legal and trade wrangling between Canada and the United States, which has drawn concern from elected officials including U.S. Sen. Olympia Snowe.

The Maine Republican says Canadian price supports and subsidies have kept prices of softwood lumber imports artificially low. Snowe has said that the future of Maine’s softwood lumber industry depends on remedying the Canadian subsidies.

“The government is confident that it will receive quite substantial support from the industry to move ahead,” Michael Wilson, Canada’s U.S. ambassador, told a Commons committee on Monday, the final day before an Ottawa-imposed deadline.

The federal government had set the deadline for Canada’s lumber producers to endorse the deal, which has faced heavy criticism in some circles even though it is backed by forest giants like Canfor Corp. and producing provinces such as British Columbia and Ontario.

Ottawa has not yet formally announced whether it has enough support to go ahead with the deal but was expected to outline its final position Tuesday after the deadline expired.

The agreement replaces punitive U.S. import duties with a combination of Canadian border taxes, quotas and other restrictions designed to shield American producers from what they allege is subsidized Canadian lumber, especially when market prices fall.

Under the deal, Ottawa needed support from 95 percent of the companies owed duties by the U.S.

In Canada, a reported split within the British Columbia Lumber Trade Council has made it impossible for council President John Allan to express a position on the new agreement on behalf of his members. Allan had been expected to appear at a House of Commons committee hearing with other softwood industry representatives Monday but did not show up.

A senior Ontario industry official who did appear called the deal a “capitulation,” one which eliminates Canada’s numerous legal victories before international trade panels.

A Quebec counterpart said the agreement follows a “bastardized” process where the industry faced frequent take-it-or-leave-it threats from the federal government.

The head of Canada’s Free Trade Lumber Council said the federal government’s own political calculations were behind the deal.