U.S. industry seeks duties on Canadian lumber, reignites dispute

November 25, 2016 3:13 PM EST

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WASHINGTON/OTTAWA (Reuters) - A group representing the U.S. lumber industry and some of its workers on Friday called on authorities to impose duties on Canadian softwood lumber, reigniting a long-standing trade dispute between the two nations.

U.S. producers complain Canadian lumber is subsidized, and have in the past launched trade challenges that resulted in the United States imposing billions of dollars in tariffs.

In a widely expected move, a group that includes the U.S. Lumber Coalition petitioned the U.S. Commerce Department and the U.S. International Trade Commission to impose duties to "offset the harm caused to U.S. mills, workers and communities by Canadian softwood lumber production subsidies."

The most recent round of arguments ended with a 2006 deal that expired in October 2015. Both sides agreed to take no action for a year after that but talks on a new agreement stalled, opening the way for the group to act.

The prospects for more negotiations once Donald Trump becomes president are unclear at best. Trump has vowed to tear up or renegotiate the North American Free Trade Agreement, calling it a disaster for the United States.

The Canadian government, which rejects the notion of unfair subsidies, said it would defend the interests of workers and producers.

"The U.S. industry is not where we need them to be. At the same time, the protectionist climate in the U.S. does complicate any trade negotiation, including this one," said Alex Lawrence, spokesman for Canadian Trade Minister Chrystia Freeland.

Exports of softwood lumber to the United States totaled C$5.9 billion ($4.4 billion) in 2015, up from C$5.5 billion in 2014, according to Statistics Canada data.

Canada has in the past won softwood challenges against the United States at the World Trade Organisation and under NAFTA, only for Washington to launch new legal challenges each time.

The group that filed the petition said low-priced Canadian exports resulted in U.S. mill closures and job losses.

Chicago Mercantile Exchange lumber futures rose by their daily price limit of $10 per thousand board feet (tbf) to $334.40, roughly a 1-1/2 month high.

Shares in Canadian lumber firms such as Canfor Corp (NYSE: CFP), West Fraser Timber Co (NYSE: WFT) and Interfor Corp dipped on the news, dropping by up to 1 percent.

The Lumber Trade Council in the province of British Columbia said U.S. producers could not meet domestic demand.

"(The petition) will only serve to limit access to Canadian lumber products, driving up prices for U.S. consumers," it said in a statement.

(Reporting by Roberta Rampton in West Palm Beach, Florida; David Ljunggren in Ottawa and Michael Hirtzer in Chicago; Writing by Susan Heavey and David Ljunggren; Editing by Andrew Hay and Lisa Shumaker)



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