Question Period Note: Softwood lumber trade dispute

Current status of softwood lumber (SWL) dispute including support of market diversification by Canadian SWL industry and of provincial trade missions.

• Canada is extremely disappointed that the U.S. decided to nearly double the combined anti-dumping and countervailing duty rate for most of the Canadian SWL industry in August 2024.
• U.S. duties on Canadian SWL are unjustified. They not only hurt Canadian businesses and communities, but they are a tax on U.S. consumers - including U.S. home buyers - that makes housing less affordable for American families.
• Canada believes that a negotiated resolution to the SWL trade dispute is in the best interests of both countries to provide stability and predictability to the sector.
• Canada will continue to vigorously defend our SWL industry, including through litigation under Chapter 19 of NAFTA, Chapter 10 of CUSMA and before the WTO and the U.S. Court of International Trade.
• The Government of Canada is committed to diversifying markets for softwood lumber exports with Trade Commissioners in key export markets facilitating and enhancing market access for Canadian forest products.

In 2023, the value of Canada's softwood lumber exports to the United States was $7.4 billion. Since 2017, most exports of softwood lumber from Canada to the United States have been subject to U.S. countervailing and anti-dumping duties (softwood lumber from Nova Scotia, Newfoundland and Labrador and PEI is excluded from the U.S. duties). Currently, most Canadian companies are subject to a combined duty rate of 14.40%. Duty rates are expected to increase significantly in summer 2025 as a result of the U.S. Department of Commerce's sixth administrative reviews of the duty orders. The impact of the U.S. duties as well as other challenges facing the Canadian forestry sector (e.g. fires, fibre shortages, low lumber prices) have led some producers, particularly in British Columbia and Quebec, to curtail softwood lumber production in recent months.

Resolving the softwood lumber dispute continues to be a priority for the Government of Canada, and it is being raised at all levels and at every opportunity with the U.S. Administration. The federal government works closely with provinces, territories, industry and other partners to resolve the dispute. To date, the U.S. government and the U.S. softwood lumber industry have not demonstrated a willingness to negotiate a resolution. In the meantime, Canada is continuing to pursue legal challenges against U.S. duties, with a total of 15 ongoing cases proceeding under Chapter 19/10 of NAFTA/CUSMA, at the WTO and through the U.S. Court of International Trade. Canada's litigation efforts have already yielded legal victories. Impartial WTO and NAFTA Chapter 19 panels have found U.S. duties to be inconsistent with the U.S. international trade obligations and with U.S. law.

The Trade Commissioner Service supports the development of international markets for traditional and new or innovative forest products from Canada, with an emphasis on assisting SMEs. There are approximately 14 full time-equivalent Trade Commissioners in 40 Canadian missions responsible for forest product exports.

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