International Trade Minister Mary Ng and B.C.’s lumber producers say they are disappointed that the U.S. Department of Commerce has decided to increase duties on Canada’s softwood lumber producers. The U.S. government announced that its final combined anti-dumping and countervailing duty rate for most Canadian producers will be 17.9%. That’s slightly below the 18.32% preliminary rate issued in May but double the initial 8.99% rate.
The new rates are expected to take effect on Dec. 1, adding to the upward pricing pressure over the past two months in the volatile lumber market. Final rates for four Canadian producers have been slightly reduced from May. The final rate for Canfor Corp. is 19.54%, down from 21.04%; West Fraser Timber Co. Inc. is 11.12%, down from 11.38%; Resolute Forest Products Inc. is 29.66%, down from 30.22%; and JD Irving is 15%, down from 15.82%.
The BC Lumber Trade Council says the final rates are not unexpected but still disappointing, especially since U.S. producers are unable to meet domestic demand. “Our strong hope is that the U.S. industry will end this decades-long litigation and instead work with us to meet demand for the low-carbon wood products the world wants, including American families,“ stated council president Susan Yurkovich. “Until then, we will continue to vigorously defend our industry against these meritless allegations.”
Ng said the Canadian government will continue to defend the softwood lumber industry including through litigation under Chapter 10 of the CUSMA trade deal with Canada, the U.S. and Mexico, NAFTA’s Chapter 19 and at the World Trade Organization. “At every step of the way, rulings have found Canada to be a fair trading partner,” she said in a news release.
“Canada has always been willing to explore ideas that allow for a return to predictable cross-border trade in softwood lumber and remains confident that a negotiated solution to this long-standing trade issue is in the best interest of workers in both our countries.”
Alberta Agriculture, Forestry and Rural Economic Development Minister Nate Horner said the higher tariffs are completely unacceptable. “Any amount of duties unfairly targets our softwood lumber exports and these decreasing and then increasing rates create uncertainty on both sides of the border,“ he said. Horner also said that the U.S. is a critical customer with 91% of softwood lumber exports valued at $1.2 billion going south.
“We believe the new rates will then be in effect until September, 2022, when the third administrative review’s rates would likely take effect,” CIBC World Markets Inc. analyst Hamir Patel said in a research note. Mr. Patel said that there will be options for Canada to seek trade remedies. “We do not believe the Canadian government or Biden administration is focused on solving this issue as the trade dispute is not currently causing any job losses in Canada, given healthy commodity prices,” Mr. Patel said.