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''We’re working on it,'' says US Trade Representative Susan Schwab

WASHINGTON, DC – 10/13/-06 – The US and Canada are trying desperately to resolve the issues that have delayed the implementation of the softwood lumber agreement that was supposed to go into effect several days ago.

Several US lumber industry groups including the Coalition for Fair Lumber Imports (CLFI), which had lobbied extensively for the pact, have expressed their anger at the decision last week by Washington and Ottawa to acquiesce to a request by some Canadian producers to delay the launch of the recently concluded trade pact by up to a month.

The CFLI has accused its Canadian rivals of delaying the pact's start so they can export more wood into an already weak US softwood lumber market, boosting US housing construction inventories and adding pressure on prices in an already volatile lumber market.

Sen. Max Baucus (D-Montana) said US lumber companies were facing a crisis because of a dramatic and unexpected rise in Canadian lumber imports ahead of the pact’s original implementation date.

"This sudden surge has caused the price of lumber to fall to artificially low levels. US lumber producers are at risk of closing operations and laying off workers. An additional one-month delay threatens to exacerbate an already unsustainable situation," Baucus said in a recent letter addressed to US Trade Representative Susan Schwab.

He urged the US government quickly to issue regulations allowing Customs officials to monitor Canada's compliance with export tax and quota rules under the accord.

Several Canadian lumber trade organizations have charged the agreement has resulted in the closure of several sawmills in eastern Canada, a claim denied by Prime Minister Stephen Harper.

Both Harper and Trade Minister David Emerson said the industry is caught in a cyclical downturn of North America's housing market, and that the situation “would be worse without the deal.”

The softwood lumber agreement “is necessary to provide stability for our industry in the future, but it's not sufficient, and the government will be coming forward with additional measures to help," Harper told reporters yesterday in Toronto.

According to industry sources, at current prices, the seven-year deal will see many Canadian producers begin paying a 15% export tax on their southbound shipments instead of the US duties of just over 10% they had been paying prior to the agreement.

The trade deal will also refund about $4.3 billion of the $5.3 billion in US duties Canadian producers paid since 2002, and firms are expected to receive the money by the end of the year.

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