Hard knocks

Commerce department slaps countervailing duties on Canadian lumber

By: Chris Gillis
Photo: Benoit Daoust / Shutterstock.com
   It will now become more expensive to import softwood lumber products from Canada into the United States with the U.S. Commerce Department set to begin imposing countervailing duties on those imports.
   The U.S. government and domestic industry have for years alleged that Canadian lumber producers have unfairly benefited from financial assistance from the Canadian government to lower their production costs and encourage the flow of these exports across the border into the United States.
   Countervailing duties will now be applied to Canadian softwood lumber products of 24.12 percent for West Fraser Mills, 20.26 percent for Canfor Corp., 19.5 percent for Tolko Marketing and Sales and Tolko Industries, 12.82 percent for Resolute FP Canada, and 3.02 percent for J.D. Irving. All other Canadian softwood lumber producers and exporters received a subsidy rate of 19.88 percent.
   The countervailing duties apply to a wide variety of softwood lumber products, including siding and flooring; drilled, notched and angle-cut lumber; lumber stacked on edge and fastened together with nails; stringers; box-spring frame components, fence pickets, truss pieces; pallet components; and door and window framing.
   It’s estimated that U.S. imports of Canadian softwood lumber products amounted to $5.7 billion in 2016.
   The petitioner for the Commerce Department’s countervailing duty investigation was the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations (COALITION), which is an ad-hoc association whose members include the Washington, D.C.-based U.S. Lumber Coalition; Collum’s Lumber Products of South Carolina; Hankins in Mississippi; Potlatch Corp. and Weyerhauser of Washington; Rex Lumber Co. of Florida; Sullivan Forestry Consultants of Georgia; and Seneca Sawmill Co., Stimson Lumber Co., Swanson Group, Carpenters Industrial Council and Giustina Land and Timber Co. of Oregon. The petition was filed by the COALITION in November 2016.
   Cameron Krauss, the coalition’s legal chairman and senior vice president of legal affairs of Seneca Sawmill, said the association is hopeful that the duties will “begin the process of creating a level playing field for the future and allow for U.S. manufacturers to make essential investments and expand the domestic lumber industry to its natural market.”
   However, Jim Carr, Canada’s minister of natural resources, along with Chrystia Freeland, the country’s minister of foreign affairs, called the Commerce Department’s action “baseless and unfounded.”

Currently, American demand for lumber far exceeds what the American industry is able to produce. They need Canada’s softwood lumber.

   “The forest industry is one of the most innovative sectors of our economy, developing new products and expanding its markets overseas while ensuring our environment is protected for future generations,” the officials said. “The government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty.”
   The Forest Products Association of Canada warned these duties will have a negative impact not only here in Canada but also on U.S. consumers.
   “Currently, American demand for lumber far exceeds what the American industry is able to produce,” the association said. “They need Canada’s softwood lumber.”
   The U.S. National Association of Home Builders estimated that the countervailing duties assessed against Canadian lumber imports will add $1,000 to the cost of a new house.
   “With housing and construction starts on the rise, demand for lumber is expected to continue to grow in the years ahead,” said Susan Yurkovich, president of the BC Lumber Trade Council. “The fact is, Canadian lumber imports don’t pose a threat to the U.S. lumber industry. There is enough North American demand to grow the U.S. industry while also allowing Canada to supply its U.S. customers as we have been doing for decades.”
   “The government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation,” Carr and Freeland said. “In ruling after ruling since 1983, international tribunals have disproved the unfounded subsidy and injury allegations from the U.S. industry. We have prevailed in the past and we will do so again.”
   The Canadian government said it has implemented measures to protect its softwood lumber producers from damage, including the provision of existing financing initiatives for forest products companies through the Business Development Bank of Canada and Export Development Canada. In the country’s 2017 budget, the government provided $40 million Canadian to promote wood use in building construction.
   The country is also actively seeking new overseas markets for its softwood lumber products. International Trade Minister François-Philippe Champagne recently oversaw a delegation of Canadian lumber representatives in China, and Carr will follow with another delegation of forestry companies to China in June.
   The Canadian government, meanwhile, remains hopeful that this recent spat with the United States over softwood lumber trade can still be settled quickly.
   “We remain confident that a negotiated settlement is not only possible but in the best interests of both countries,” Carr and Freeland said.