Canada weighing trade actions over lumber

WASHINGTON — The Canadian government is threatening multiple trade actions against the United States in retaliation for duties on softwood lumber, warning that several American industries could be targeted in the event of a protracted dispute.

A first salvo came from Prime Minister Justin Trudeau, who in a letter Friday informed B.C. Premier Christy Clark that he’s seriously considering her request for a ban on exports of U.S. thermal coal and that federal trade officials are examining it.

A broader threat is also in the works, said two government sources. It involves possible duties against different industries in Oregon, which is the home state of a Democratic senator who has been a hardliner on the lumber dispute.

That state’s plywood, flooring, wood chips, packaging material and wine are among the potential targets as the Canadian government has launched a search for evidence of illegal subsidies to businesses in that state.

The sources insisted these threats are not indicative of any additional hostility to President Donald Trump and are simply a one-off measure — specific to one dispute over softwood lumber, and one state, and one Democratic senator.

There’s an easy solution: a long-term softwood-lumber deal would put the issue to rest, one source said.

“We hope we don’t have to act,” said the source, speaking on condition of anonymity in order to discuss matters not yet made public. “We hope this dispute can be resolved.”

The course of action being considered by the Canadian government is similar to the process used in the U.S. that slapped a 20-per cent duty on northern lumber.

It involves a request to the Canada Border Services Agency to study illegal subsidies in Oregon, a process that would take several months.

The government says it has identified nine programs in Oregon that assist businesses, primarily in lumber.

They include: the Oregon Underproductive Forestland Tax Credit, the Oregon Forest Resource Trust, the Oregon Tree Farm Program, the Pacific Forest Trust, property tax exemptions for standing timber, a small winery tax exemption program and other tax credits.

The senator’s office replied that one party has a legitimate point here — and it’s not Canada. A Wyden spokesman, Keith Chu, said American lumber companies are advancing the case on its merits: that Canadian competitors get subsidized by cheap access to public land, and the U.S. Commerce Department has agreed to duties.

“These threats (from Canada) appear to be pure political retaliation,” Chu said.

It’s all happening in a broader climate of trade tension.

Trump’s recent digs at Canada — coupled with his embrace of ‘America First’ trade nationalism, his full-throated support of what was a widely expected duty on lumber, and his complaints about Canadian dairy — have drawn reactions north of the border.

The strongest responses have come from provincial governments.

One federal official said there’s no need to let things escalate.

He said Canada’s government intends to maintain its general posture toward Trump, of low drama and active co-operation: ”This is not about the president. This is about the state… The strategy (with Trump) is still one of positive engagement…

”(That being said), we still have to respond to these issues as they come.”

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