Fast on the heals of British Columbia’s new NDP Premier John Horgan’s assertion last week that Canada and the US were “close” to a new softwood lumber trade deal, Canadian Prime Minister Justin Trudeau said on Tuesday he was “very hopeful” of getting a deal with the United States on softwood lumber, which has become an escalating trade dispute ahead of NAFTA talks this month.
The two countries must chop down one big, remaining impediment to a deal on softwood lumber and this obstacle involves wood from neither country but from other places: Germany, Sweden, Chile, Brazil and Russia, said GlobalNews Tuesday.
This sticking point involves third-country imports. according to CBC also Tuesday. More specifically, it’s about who gets to fill the US demand for lumber in the event of a hot construction market like the present one, when American supply falls short.
The two governments have already agreed to split the US lumber market by percentage. According to Canada’s ambassador to Washington, Americans would supply around 70 per cent; Canadian imports would be capped around 30 per cent, which falls somewhere in the historical average.
The basic point, when US lumber sales are high, is to allow Canadian exporters to surpass that regular cap of 30 per cent, rather than have other countries fill the gap. Other countries, including Germany, Sweden, Chile, Brazil and Russia, currently supply a minuscule share of US imports.
In such an event, Canada is adamant that the agreement should contain what’s called a hot-market provision. There are different ways to design it. One example appears in a sugar deal struck between the US and Mexico this June — if the US seeks additional sugar imports, Mexican suppliers would get a right of first refusal.