Softwood Lumber, Storms, and NAFTA

News out late in the afternoon Thursday suggests that some Canadian negotiators are considering trying to add softwood lumber in the North American Free Trade Agreement, or NAFTA.

According to Global News, Canada’s ambassador to the US, David MacNaughton, expressed frustration at the US industry using what is effectively its veto power to block any deal between the national governments and he raised the possibility of working around it to achieve a long-term solution.

As for demand for wood needed to rebuild storm-ravaged areas of the US, Canada’s Natural Resources Minister Jim Carr said demand for wood products to help rebuild will put pressure on the parties to get a deal. Carr made the comments in Ottawa at a meeting of the Canadian Council of Forest Ministers.

Softwood Lumber, Storm Rebuilding Needs, NAFTA

Indeed, the US government is facing increasing pressure to reach a deal with Canada on softwood lumber, as demand for construction materials is expected to spike higher in Texas and Florida in the wake of hurricanes Harvey and Irma, said the Globe and Mail also late Thursday afternoon.

However, during a visit to Washington, DC, Thursday, Ontario Premier Kathleen Wynne said to the Globe and Mail that a resolution to the softwood stand-off currently looks unlikely.

Ms. Wynne met with US Commerce Secretary Wilbur Ross at his office in Washington.

“He didn’t hold out, I would say, a clear hope that there is an easy resolution on the horizon,” the Premier said in an interview at the Canadian embassy.

US Post-Storm Rebuilding

Hundreds of thousands of homes in Texas and Florida were damaged when hurricanes Harvey and Irma struck in recent weeks. The insurance industry estimated it could be on the hook for up to US$250 billion in damage claims from the two storms, which doesn’t take into account uninsured losses.

On Wednesday, Paul LePage, the Republican governor of Maine, asked the US to at least suspend the tariffs until the hurricane rebuilding has been completed, according to Canadian Press Thursday.

LePage said “corporate greed from a coalition of big lumber companies” has already sent softwood market prices soaring.

“Making a profit is the goal of any company — and it should be,” LePage wrote in an op-ed in The Maine Wire. “But it is unconscionable that this coalition is in a position that could lead to price-gouging Americans in distress.”

The National Association of Home Builders in the United States made a similar plea to the White House earlier this month.

Early estimates of the damage by the Texas Division of Emergency Management reports that the storm there destroyed 9,407 single family homes in that state. Another 44,013 experienced major damage. Moody’s Analytics estimates that the cost of the hurricane will be in the US$51–$75 billion range. Statewide, more than 21,000 households have checked into temporary housing paid for by FEMA.

Texas had been on pace for 30,000 housing starts in 2017. Now, an estimated 200,000 more homes suddenly need to be repaired or rebuilt.

Softwood Lumber Tariffs

Meanwhile, Montana’s two US senators testified Wednesday before a federal commission tasked with investigating Canadian lumber export practices, said Idaho’s Daily Inter Lake.

Senators Steve Daines (R) and Jon Tester (D) were joined by colleagues from other western states and representatives of American timber producers at a hearing held by the US International Trade Commission (USITC), currently investigating whether Canadian softwood lumber imports have adversely affected US producers.

Mineral County, he continued, had gone from timber-powered prosperity to having “just a single lumber mill and folks there today are watching the very resources be mismanaged and are facing unfair competition from subsidized Canadian lumber.”

Their testimony marked a step forward for the investigation, and the latest turn in a long-running dispute between the US and Canada about trading this natural resource.

One of the Commission’s investigators, Fred Ruggles, told the Daily Inter Lake that

“The committee will wait until Commerce makes its final determination on subsidies and countervailing,” and on dumping, due on November 13 at the latest. “Once they do that, the commission will make its final determination about who is adversely affected,” within 45 days.