Tariffs, Trade and Son of NAFTA
Pro Dealers get an accelerated course on international trade issues.
Chicago — Why is there no solution to the U.S.-Canada softwood lumber trade dispute? And can President Trump unilateral withdraw from the North American Free Trade Agreement?
These were some of the questions posed during a presentation called Lumber and Wood Products Trade Issues Update, the final presentation of the 2018 ProDealer Industry Summit. And the answers to these and other questions were complicated.
Stephen Claeys, a partner at Wiley Rein LLP and expert on international trade law, provided background on the softwood lumber dispute – a long-running dispute that dates back to the 1930s and represents about $15 billion in annual trade.
“It comes down to who owns the trees,” he explained. “In Canada, it’s the Queen of England. In the U.S., it’s private landowners.” In the Canadian provinces, the government is accused of setting the stumpage price artificially low, giving Canadian lumber producers an unfair advantage.
A previous trade agreement expired in 2015, and a getting a new deal might take a while. Why? Claeys pointed to several reasons. First, there are many seats at the table. The national governments, the provinces, Canadian industry and the U.S. industry. Just among the provinces, each province has its own type of tree and its own pricing. And the issues add up quickly. There are many complications from dealing with privately owned Canadian lumber to lumber that comes from old barns, and third-country imports.
And then there’s the issue of what happens to the duties that have already been collected.
“These are real issues that you have to work out,” Claeys said. “It’s kind of crazy, but that’s why it’s so hard to do. “
Why can’t we just return to the old agreement? Claeys said that’s what it appeared the Canadian government had hoped to do. But there was objection from U.S. industry.
In the meantime, anti-dumping duties range from 3.2% to 7.28% on these products, and countervailing duties designed to offset subsidies range from 3.34% to 18.19%.
On the topic of Chinese tariffs, Claeys laid out the recent history.
On July 6, the U.S. slapped 25% tariffs on $34 billion of Chinese imports. China retaliated.
On Aug. 23, the U.S. slapped another 25% tariffs on $16 billion of Chinese imports. China retailiated.
And effective September 24, the U.S. slapped another 10% tariffs on $200 billion of Chinese imports. And that tariff will increase on 25% on Jan. 1. And whether or not China will retaliate remains to be seen.
“As you can imagine with each list, it’s getting harder and harder to avoid affecting products used in home building. Sinks, granite counter tops and a whole range of products used in home building are now included in list 3.
He described both sides now in a sort of holding pattern over international trade. But there is a real possibility that China could again retaliate. And there is still $267 billion of Chinese imports that have not been identified for tariffs yet.
Other high and low points from international trade as recounted by Claeys include the North American Free Trade Agreement – NAFTA, and “Son of NAFTA.” The U.S.-Canada-Mexico Agreement, which is expected to replace NAFTA, would preserve North American supply chains and continue tariff-free trade among the countries. It will probably receive congressional approval next year. As a bargaining chip, the President could conceivable withdraw unilaterally from existing North American Free Trade Agreement, but at an uncertain and perhaps expensive economic and political cost.
Summit kicks off in Chicago
Pro dealers from around the country gather to share, learn and grow.
Chicago — The 2018 ProDealer Industry Summit gets underway here at the downtown Radisson Blu Aqua Hotel. Three days of networking, education and planning for the growth of an industry are on tap through Friday.
Hosted jointly by the National Lumber and Building Material Dealers Association and HBSDealer, the summit officially kicks off with a Wednesday nigh welcome reception followed by the NLBMDA Officer Installation dinner and HBSDealer ProDealer of the Year event.
NLBMDA incoming chair Bob Sanford of Connecticut-based Sanford & Hawley will receive the gavel from outgoing chair Rick Lierz, of Boise-based Franklin Building Supply. Lierz
“It has been an honor and a humbling experience to represent America’s lumber and building materials dealers as this year’s chairman of the NLBMDA,” said Lierz. “Our association is the voice of the industry in Washington and we need this unified voice more than ever right now. I urge all dealers to get involved in their local associations and to consider attending NLBMDA events, particularly the Legislative Conference in the spring. The good it will do any dealer to be involved is well worth the time invested.”
Other highlights of the three-day conference include a keynote address from Commander Mark Nutsch, the Green Beret whose experiences in Afghanistan were portrayed in the Hollywood film “12 Strong.” The event also includes presentations on competing against Amazon; and best practices for succession planning and attracting talent.
At PDIS, leadership in action
The 2018 ProDealer Industry Summit, slated for Oct. 17-19 in Chicago, will include an opening keynote address from Green Beret Commander Mark Nutsch. The soldier’s story was made famous in the movie “12 Strong” and the best-selling book “Horse Soldiers.”
The summit is hosted jointly by the National Lumber and Building Material Dealers Association and HBSDealer.
Commander Marek Nutsch is expected to bring the audience behind the scenes of the first successful special forces campaign that took place n the immediate aftermath of the Sept. 11 attacks. In a strategic partnership with their Afghan counterparts, Nutsch’s 12-man team leveraged unique guerilla tactics on horseback to obtain their military objectives.
On stage, Nutsch will share insights on leadership and team dynamics in overcoming the odds. (Watch the movie trailer here.)
The ProDealer Industry Summit is an exclusive three-day educational and networking forum designed to promote the growth of lumber & building product dealers, distributors, wholesalers, and the manufacturers who supply them. LBM dealers will benefit from sharing insights and best practices from leaders in the industry in a relaxed format that encourages networking and personal interaction.