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Approximately 500 jobs supported by Montana’s wood products industry have dried up this year alone, and with the expiration Monday of the 2006 Softwood Lumber Agreement between Canada and the U.S., even broader repercussions are expected to hit the state’s economy.

In a nutshell, the U.S. wood products industry has a long-standing trade dispute – going back to the 1950s – with the Canadians because the Canadian lumber industry is subsidized by its government. The prices charged to harvest timber – called the stumpage fee – are set by the government there, rather than being determined by the free market, which is the case in the U.S. Therefore, without the agreement in place, Canadian mills can sell timber products to U.S. buyers for low prices that U.S. mills cannot compete with.

To solve the dispute, the two governments agreed in 2006 to impose a tariff on Canadian softwood lumber that was exported into the U.S. to keep American-made lumber competitive.

“The Canadian government subsidizes stumpage prices and we have a system where the market dictates prices, so their prices are artificially low,” explained Julia Altemus, executive vice president of the Montana Wood Products Association.

To complicate things, many Canadian mills ship similar products, made from the same tree species, as American mills. They get a further advantage because the Canadian government has attempted to boost exports through a weaker currency for the past two years.

From the Missoulian: http://missoulian.com/news/local/montana-wood-products-industry-concerned-about-expiration-of-canadian-trade/article_bc5a6749-72d4-5ee8-902c-41d6c55db42d.html