By Steve Scherer and Ismail Shakil
OTTAWA (Reuters) -Canada sees the potential for some movement toward settling a longstanding dispute with the United States over softwood lumber tariffs as the cost of building materials spikes south of the border, adding to four-decade high inflation.
"Given what we are facing around inflationary concerns... this is an issue that we could actually find some movement on," Canada's International Trade Minister Mary Ng said in a telephone interview on Friday.
Ng was due to meet with U.S. Trade Representative Katherine Tai later in the day. The two ministers along with Mexican Deputy Economy Minister Luz Maria de la Mora met on Friday in Vancouver, marking the two-year anniversary of the new North American trade pact.
"The argument I also make to the U.S. is that the rising housing costs are a concern," Ng said. "Lowering those tariffs can actually be a part of the solution."
U.S. inflation accelerated in May at its fastest pace in more than 40 years.
With prices surging for lumber and other building materials, U.S. homebuilders have clamored for President Joe Biden's administration to remove the anti-subsidy and anti-dumping duties in place on Canadian softwood lumber, ranging from 6.75% to 20.24%, depending on the producer.
The softwood lumber tariffs are the legacy of a decades-long trade dispute over the structure of Canada's timber sector that could not be resolved when a quota agreement expired in 2015.
Last month U.S. Treasury Secretary Janet Yellen said that Biden was not considering cutting tariffs on Canadian lumber as part of potential tariff relief he is considering to fight inflation.
"Our priority has always been ensuring that U.S. softwood lumber producers can compete on a level playing field," Tai told reporters at a news conference in Vancouver. "Subsidized lumber and dumped imports undermine their ability to compete fairly. This is not a new issue."
The United States has said that Canadian timber harvested from federal and provincial lands enjoys an unfair subsidy due to low government-set stumpage fees, while most U.S. timber is harvested from private land at market rates.