Canada applauds trade dispute panel’s ruling on US softwood lumber policy review

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Canada welcomed on Thursday a trade dispute panel ruling which said the U.S. should review parts of its policy on softwood lumber which includes duties on most such products exported from its northern neighbor.

The duties 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 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.

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Softwood lumber is processed at Groupe Crete, a sawmill in Chertsey, Quebec, Canada January 17, 2018.  (REUTERS/Christinne Muschi/File Photo)

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On Thursday, the ruling said that it was directing the U.S. to review the treatment of export taxes. The U.S. Commerce Department in July set a duty rate of 7.99% on the product.

“Canada is pleased that the NAFTA (North American Free Trade Agreement) dispute panel agrees that elements of the U.S. dumping determination are inconsistent with U.S. law,” Trade Minister Mary Ng said in a statement.

NAFTA was substituted by the United States-Mexico-Canada Agreement (USMCA) in 2020.

The U.S. commerce department did not immediately respond to a request for comment from Reuters.