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Reps. DeFazio and Zinke Lead Bipartisan Letter Pressing for Fair Trade Agreement for U.S. Softwood Lumber Producers

Sep 28, 2016
Press Release

Rep. Peter DeFazio (D-OR) today led a bipartisan letter with Rep. Ryan Zinke (R-MT) urging U.S. Trade Representative Michael Froman to ensure that any new U.S.-Canada Softwood Lumber Trade Agreement ensures fair competition and a level playing field for U.S. softwood lumber producers.

The lawmakers wrote in the letter, “Without an effective agreement to counter this [the Canadian government’s] subsidy, Canadian trade practices would yield ever increasing market shares for Canadian product and producers, displacing and harming U.S. manufacturers, mill workers, loggers, and many local businesses and jobs in their communities…We continue to support negotiations between the United States and Canada aimed at a new, stable, and sustainable Softwood Lumber Agreement.  No one should expect the U.S. industry to voluntarily give up its rights under current U.S. trade laws in return for an agreement that fails to meet this objective. Therefore, it is essential that a key feature of any new agreement is for it to be designed to maintain Canadian exports at or below an agreed U.S. market share.”

“Unfairly traded lumber from Canada continues to impact Seneca and other local lumber manufacturers by flooding our markets with lumber that is directly subsidized by the government of Canada,” said Todd Payne, CEO of Seneca Sawmill Company.  “We appreciate Congressman DeFazio’s continued leadership in this fight and are steadfast in our position that any agreement must maintain Canadian imports at or below a market share which effectively offsets the unfair government subsidies.  This position is consistent with the joint statement of President Obama and Prime Minister Trudeau as well members of the United States Congress.”

“Stoltze Lumber has suffered firsthand because of the now expired Softwood Lumber Agreement,” said Chuck Roady, Vice President and General Manager of F.H. Stoltze Land and Lumber Company. “The Canadians have held an unfair advantage for far too long. We need a new agreement that will give American timber a fighting chance to compete in the lumber market and stand firm with the U.S. industry’s fight for an effective agreement. We thank Congressman Zinke for leading this effort in the House of Representatives and supporting the interests of Montana’s lumber companies.”

The full text of the letter can be found below. For a PDF version of the letter, click here.

BACKGROUND

Because of the difference in timber pricing and market structures between the two nations—most of the United States’ timberlands are privately owned, while the majority of Canadian timberlands are owned by the provincial government —the two nations have a long-standing series of trade agreements, or Softwood Lumber Agreements (SLA) between them.

Canadian provinces set the price of their timber through a government-subsidized fee, based on the volume of trees harvested which keeps prices artificially low and gives Canadian lumber manufacturers a distinct advantage over U.S. timber producers, especially in down-market cycles.

Without a strong Softwood Lumber Agreement (SLA) to level the playing field, Canada would have an oversized share of the timber market, displacing or harming thousands of U.S. timber producers, mill workers, loggers, and other businesses.

The most recent trade agreement with Canada on softwood lumber expired in October 2015. Without a new agreement, U.S. producers will have no choice but to file trade cases in court to offset the advantages provided by the Canadian government’s unfairly-subsidized lumber.

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The Honorable Michael Froman
United States Trade Representative
600 17th Street, N.W.
Washington, DC 20508

Dear Ambassador Froman:

We applaud your efforts to negotiate a new Softwood Lumber Agreement to offset unfair Canadian lumber trade practices. U.S. timber, whether from private or government land, is sold in a competitive free market system. Canadian timber is heavily subsidized and sold or contracted at pennies on the dollar compared to the free market, competitive pricing of U.S. timber of comparable quality. In addition to subsidized stumpage the Canadians have adopted various other measures to shield their industry from competitive forces. As a result, border measures against subsidized and unfairly traded lumber imports are critical for our domestic industry. 

Without an effective agreement to counter this subsidy, Canadian trade practices would yield ever increasing market shares for Canadian product and producers, displacing and harming U.S. manufacturers, mill workers, loggers, and many local businesses and jobs in their communities.  This effect can already be seen borne out in trade statistics. Therefore, it is essential that a key feature of any new agreement is for it to be designed to maintain Canadian exports at or below an agreed U.S. market share.

We continue to support negotiations between the United States and Canada aimed at a new, stable, and sustainable Softwood Lumber Agreement.  No one should expect the U.S. industry to voluntarily give up its rights under current U.S. trade laws in return for an agreement that fails to meet this objective.  Short of an effective agreement, U.S. industry will have no choice but to file petitions for relief to offset the inequitable advantages provided to its Canadian counterpart by government subsidies and log export restrictions. 

A negotiated agreement is preferable to new trade cases, provided the agreement is an effective offset to the underlying trade distortion of Canadian public timber pricing systems and other subsidy practices.  We commend the dedication and hard work you and your entire team have put into negotiating a trade agreement that works for the men and women of our forestry industry. We encourage you to continue to press for an agreement that allows the U.S. timber industry to compete on a level playing field.  We produce some of the highest quality lumber in the world but our industry cannot continue to grow and survive when subsidized lumber floods our market. 

Sincerely,