March 10, 2016 / 8:55 PM / 2 years ago

U.S., Canada vow to fix long-standing softwood lumber dispute

WASHINGTON, March 10 (Reuters) - The United States and Canada on Thursday vowed to settle a long-standing dispute over Canadian exports of softwood lumber which could erupt again this October when an earlier agreement on the problem expires.

U.S. producers complain that Canadian softwood lumber, which tends to come from government-owned land, is subsidized. A 2006 deal that ended the last dispute expired in October 2015 but both sides agreed to take no action for a year after that.

Faced with the prospect of the U.S. timber lobby pressing for penalties when the grace period runs out this October, President Barack Obama and recently elected Canadian Prime Minister Justin Trudeau asked officials to work out possible solutions and report back within 100 days.

“This issue of softwood lumber will get resolved in some fashion ... undoubtedly to the dissatisfaction of all parties concerned,” Obama told a news conference after holding Oval Office talks with Trudeau.

“Each side will want 100 percent, and we’ll find a way for each side to get 60 percent or so of what they need, and people will complain and grumble, but it will be fine,” he said.

Trudeau said he was confident both sides were “on the right track towards a solution in the next weeks and months to come”.

Major companies operating in Canada which could be affected if the U.S. lobby pushed for higher duties on lumber include Canfor Corp, Tembec Inc, Resolute Forest Products Inc and West Fraser Timber Co Ltd.

“We’re pleased we’re getting this high level of attention,” said Susan Murray, spokeswoman for Forest Products Association of Canada.

The Coast Forest Products Association, which represents forestry firms operating along the coast of British Columbia, said the announcement was good news.

The lumber dispute is an irritant in a relationship worth some $2 billion a day in two-way trade and investment.

Obama said he and Trudeau had also told officials to work out ways to make it easier for goods and people to move back and forth across the borders, including reducing bottlenecks and streamlining regulations.

“When so many of our products, like autos, are built on both sides of the border in an integrated supply chain, this co-production makes us more competitive in the global economy as a whole. And we want to keep it that way,” he said. (Additional reporting by Julie Gordon in Vancouver; Editing by James Dalgleish)

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