Canada prepares for Round 2 of softwood duties

28 June, 2017, 01:57 | Author: Lorena Waters
  • Canadian lumber producers face average 27 per cent duties with second wave

The new duties range from 4.59 percent to 7.72 percent, the department said in a statement, further escalating a long-running trade dispute between the two neighbors.

"Adding this new tariff to the proposed 20 percent countervailing lumber duty that the Trump administration slapped on imports of lumber this spring means that total tariffs would be a whopping 27 percent".

In June, the government of Prime Minister Justin Trudeau unveiled an $867-million aid package to the Canadian forestry industry to offset the effect of American duties on Canadian softwood producers.

West Fraser will have the highest combined duties at 30.88 per cent, followed by Canfor at 27.98 per cent and Tolko at 27.03 per cent.

Rustad said the government is prepared to buy lumber for future government projects while it argues its case with the U.S.at the negotiating table or in the courts, but that won't happen immediately.

"We welcome the step by the U.S. Department of Commerce regarding consultations on an exclusion for Nova Scotia, Prince Edward Island and Newfoundland & Labrador from anti-dumping and countervailing duties on softwood". "A final decision on the matter is expected by late summer".

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This is the fifth time the US has accused Canada of unfairly subsidizing its softwood industry.

Canada's current share of the US market has been shrinking. As Reuters notes, the bilateral dispute is the fifth over lumber in less than 40 years.

"We will vigorously defend Canada's softwood lumber industry, including through litigation", the government said in a statement. Instead, U.S. producers have continued to raise longstanding claims of countervailing and antidumping by their Canadian competitors.

Lumber prices have increased over the past year in anticipation of duties being placed on Canadian softwood lumber imports into the U.S. The Random Lengths Framing Lumber Composite price is now $397 per thousand board feet, an increase of 14 percent over the past year. USA stocks were little changed on news of the tariffs, which were well below what the petitioners requesting the investigation had asked for. The alternative is to be subject to USA legal processes created to favour a few select timber barons. Industry experts say the punitive duties could linger throughout 2018 and possibly into 2019, until Canada and the United States negotiate a solution.

Canada's softwood lumber industry is bracing for a second wave of USA duties expected to come Monday that could put further pressure on producers, particularly smaller ones, to cut jobs.

Miller said the White House's very public rollout of the Canadian lumber duties is a way of flexing its muscles ahead of renegotiations of the North American Free Trade Agreement.

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