Looking for Tenders

News

Reports on softwood lumber encouraging, offer hope of a deal: CIBC analyst

0 41 Resource

by The Canadian Press

WASHINGTON — The latest news on softwood lumber is being greeted as an encouraging sign by one analyst, who points to several developments that increase hope of a deal between Canada and the United States.
Reports on softwood lumber encouraging, offer hope of a deal: CIBC analyst

That sense of optimism is being expressed by Hamir Patel, the director of paper and forest products research at CIBC Capital Markets, who points to three recent signs: Comments from Prime Minister Justin Trudeau, comments by B.C. Premier John Horgan, and a report by the Canadian Press on what's holding up a deal.

"We have been encouraged by signs of further progress," Patel said in a newsletter.

He referenced the CP report, which quoted the Canadian ambassador to Washington describing the state of affairs. Ambassador David MacNaughton said the countries' governments had agreed to a roughly 30 per cent cap on Canadians' share of the U.S. softwood market.

MacNaughton said a main outstanding irritant involves whether Canadian suppliers would get to exceed the 30 per cent cap under emergency conditions, when the construction market is hot and American producers can't keep up to supply the other 70 per cent.

MacNaughton said it would be unfair to sign a deal without that so-called hot-market provision. In his view, such a deal could simply steer business off the continent, to the benefit of producers elsewhere: "It's got to do with making sure we're not having mills idled in Canada in order to create jobs in Russia and Brazil."

He said Canada is awaiting a response to its insistence on that set of conditions.

Patel said that sounds like a manageable irritant: "We are encouraged by these reports as we do not believe a 'hot-market provision' is a deal breaker, especially if Canada is granted 30% market share (only modestly lower than the country's 31.9% share of the U.S. market in 2016)," said his statement.

He predicted that Canada would give up its hot-market demand, in return for adjustments to the timetable for reducing the market share to 30 per cent.

The national governments have said they want a quick deal so that they can start NAFTA negotiations in two weeks without the cloud of a major trade dispute lingering overhead.

But the U.S. industry is another matter.

Since any deal would require a guarantee from U.S. companies not to launch trade complaints against their Canadian competitors, the industry has a de-facto veto, and some industry-watchers have warned that its interest here is a prolonged, drawn-out dispute — not a quick deal.

Canadian insiders are not optimistic, having seen fruitful negotiations stymied repeatedly by the U.S. industry.

Despite that glum outlook, Canadian politicians are sounding positive, as noted by Patel's newsletter.

After two days of meetings in Washington, the new B.C. premier said last week: "They're very close to an agreement but there are challenges with the representatives on the (U.S. Lumber) Coalition that brought the dispute to a head."

Trudeau, meanwhile, said in a Global News interview this week: "We are very hopeful that we are going to be able to get to a deal."

The talks towards a deal are only the latest round in years of haggling over how much lumber Canada should be allowed to sell into the United States.

American producers accuse Canadian governments of illegally subsidizing lumber exports by granting access to cheap public land. Recently the U.S. coalition won its fight to have stiff duties slapped on Canadian sales. Canada hopes to negotiate limits on exports through a multi-year agreement that would put the interminable trade skirmish on hold for the medium term.

Related tags

Leave a comment

Or register to be able to comment.

Copyright ConstructConnect TM. All rights reserved. "ConstructConnect" is a dba for CMD Holdings.
The following rules apply to the use of this site:
Terms of Use and Privacy Statement