WTO Rules In Canada’s Favor in Lumber Price Dispute

Melodie Yvonne

UPDATE (Sept. 3, 2020) — In a recent dispute settlement, the World Trade Organization found the United States inappropriately applied countervailing duties on Canadian softwood lumber. A three-person panel concluded the duties put in place to counter Canadian subsidies violated global trading regulations.

“Canada expects the United States to comply with its WTO obligations,” said Mary Ng, Canada’s trade minister. “U.S. duties on Canadian softwood lumber must not persist.”

U.S. Trade Representative Robert Lighthizer published a statement critical of the ruling and the WTO system of settling disputes.

“This flawed report confirms what the United States has been saying for years: the WTO dispute settlement system is being used to shield non-market practices and harm U.S. interests,” said Lighthizer.  “The panel’s findings would prevent the United States from taking legitimate action in response to Canada’s pervasive subsidies for its softwood lumber industry.”

The National Association of Home Builders recently contacted Lighthizer and U.S. Commerce Secretary Wilbur Ross, requesting the U.S. re-engage with Canada over a long-term agreement on softwood lumber prices. NAHB officials are optimistic the WTO’s decision will motivate both parties to resume trade negotiations.

“The WTO report could not have come at a more important time,” said NAHB Chairman Chuck Fowke. “America’s home builders need a sound trade agreement to ensure a consistent supply of reasonably priced lumber. The WTO ruling could provide the impetus for a resumption of trade talks between the United States and Canada.”

Home Builder’s Association Seeks White House Action on Lumber Prices

(Aug. 19, 2020) — Complications from the coronavirus pandemic and booming housing production have sent lumber prices skyrocketing in recent months. These high costs are particularly hampering the home building industry, and a prominent home builder’s association has officially asked the White House to do something about it.

The National Association of Home Builders wrote an open letter to President Donald J. Trump detailing how rising lumber prices might be mitigated by the federal government. In the letter, NAHB CEO Gerald Howard calls for action so that housing can assist in an economic recovery.

“Housing can do its part to create jobs and lead the economy forward, but in order to do so, we need to address skyrocketing lumber prices and chronic shortages,” said Howard.

The letter also pointed out how home building is uniquely positioned to create jobs and put money back into the economy.

“Building 1,000 average single-family homes creates 2,900 full-time jobs and generates $110.96 million in taxes and fees for all levels of government to support police, firefighters and schools,” said Howard.

Lumber shortages have caused an 80 percent increase in lumber prices since mid-April. Framing lumber prices easily surpassed a record high in late July, and oriented strand board prices increased 138 percent over the past year.

The NAHB made two main requests of the White House. The first calls on domestic lumber producers to ramp up production so supply can catch up to demand. The second asks for the U.S. to resolve a softwood lumber dispute with Canada. A 2006 agreement between the nations expired in 2015, and negotiations for a new deal have yet to produce one.

“Returning to the negotiating table with Canada to achieve a new softwood lumber agreement with our northern neighbor and end tariffs averaging more than 20 percent on Canadian lumber shipments into the U.S. would be a significant step forward,” said Howard. “Such a multi-pronged approach would help ease market concerns for builders and consumers alike.”

At the time of writing, the White House had offered no formal response to the NAHB’s request.