In a recent letter to U.S. trade representative Michael Froman, a group of 25 U.S. senators wrote that the latest softwood lumber agreement had "harmful effects" to the American forest industry.
The letter says a new agreement will only be acceptable if it addresses the "adverse impacts of Canada's subsidized lumber" and if it's sustainable over the long term.
"Should Canada and the United States be unable to reach an agreement that meets these conditions, the U.S. industry has made clear that it is prepared to exercise its rights under U.S. trade law," says the letter. "It is critical that U.S. trade laws be fully enforced against unfairly traded imports."
The letter also states that the adverse impacts on U.S. producers, workers, and communities have been "well-documented for decades."
Canadian ambassador David MacNaughton fired back, saying the senators' letter contained "inaccurate language."
According to a letter obtained by The Canadian Press, MacNaughton challenged the assertion that the softwood lumber agreement has harmed the U.S. forest industry.
“It is clear to me that inflated rhetoric can only complicate efforts to reach a solution,” MacNaughton wrote back to one of the senators. "It is for this reason that I am disappointed with some of the inaccurate language that is contained in your letter to ambassador Froman."
MacNaughton added that despite repeated investigations and litigation over the past 35 years, there have never been findings of a countervailing subsidy or of an adverse impact that has survived legal challenge.
The last softwood lumber agreement between Canada and the U.S. expired on Oct. 12, 2015. This means the United States will be free to launch trade action against Canada this October.
According to Steve Zika, Chief Executive Officer of Hampton Affiliates – company that owns Babine Forest Products and Decker Lake Forest Products -, if trade litigations are launched against Canada, any additional taxes or tariffs could have a negative effect on individual operations of Hampton Affiliates in B.C.
“Depending on market or economic conditions at the time, these additional costs could result in less operation hours or closures of some facilities,” Zika said earlier this year.
When prime minister Justin Trudeau visited the U.S. last March, Trudeau and U.S. president Barack Obama said they were confident that an agreement would be reached soon.
On June 17, 2016, however, Canada's minister of international trade Chrystia Freeland and U.S. trade representative Michael Froman released a joint statement saying that "significant differences remain" between the two countries.
Susan Yurkovich, President and CEO of the B.C. Lumber Trade Council, said that if a reasonable agreement cannot be reached, the B.C. Lumber Trade Council is prepared to work alongside the Canadian government to defend the industry against any potential trade actions brought by the United States.