Canada to challenge extension of US softwood lumber duties

OTTAWA (Reuters) -Canada will challenge what Ottawa described as an “unfair, unjust and illegal” extension of U.S. import duties on Canadian softwood lumber products, the trade ministry said on Tuesday.

The softwood lumber tariffs are the legacy of a decades-long trade dispute over the structure of Canada’s timber sector that could not be resolved when a quota agreement expired in 2015. U.S. producers say Canada unfairly subsidizes its lumber sector.

The U.S. Commerce Department in July set a duty rate of 7.99% on the product.

Canada on Monday filed notices of intent to commence judicial review of those duties, the trade ministry said in a statement, adding that Ottawa remained willing to discuss a negotiated outcome with Washington. The ministry has routinely filed challenges under the rules of U.S.-Mexico-Canada Agreement on trade.

“For years, the United States has imposed unfair, unjust and illegal duties on Canadian softwood lumber, hurting Canadian industry and increasing housing costs in both countries,” Trade Minister Mary Ng said in the statement.

The United States has based its tariffs on a finding that Canadian timber harvested from federal and provincial lands with low government-set stumpage fees constitutes an unfair subsidy, while most U.S. timber is harvested from private land at market rates.

The U.S. Trade Representative’s office said it was trying to ensure a level playing field.

“We are prepared to discuss another softwood lumber agreement when Canada is ready to address the underlying issues related to subsidization and fair competition so that Canadian lumber imports do not injure the U.S. industry,” a USTR spokesperson said in an emailed statement.

The U.S. Commerce Department did not immediately respond to a request for comment.

(Reporting by Ismail Shakil in Ottawa and Urvi Dugar in Bengaluru; editing by Susan Heavey, Devika Syamnath and Andy Sullivan)