Res­o­lute CEO con­fi­dent he can per­suade U.S. on soft­wood lum­ber


The head of East­ern Canada’s largest lum­ber pro­ducer said he is con­fi­dent he can demon­strate to Amer­i­can au­thor­i­ties this month that the re­gion de­serves free and un­en­cum­bered ac­cess to the U.S. mar­ket.

The fact that the forestry sec­tors of On­tario and Que­bec are sim­i­lar to the mar­ket-based sys­tems in the U.S. should con­vince the U.S. Com­merce Depart­ment that the re­gion doesn’t en­gage in the un­fair trade of soft­wood lum­ber, Res­o­lute For­est Prod­ucts CEO Richard Garneau said.

“So based on this, I think that we de­serve the right to have ac­cess in Cen­tral Canada - in Que­bec and On­tario - to the U.S. mar­ket,” he said in an in­ter­view af­ter Res­o­lute (TSX:RFP) re­leased its fourth-quar­ter and 2016 re­sults.

The Mon­treal-based com­pany was re­cently se­lected by the U.S. Com­merce Depart­ment - along with B.C. com­pa­nies West Fraser Tim­ber Co. Ltd. (TSX:WFT), Can­for Corp. (TSX:CFP) and Tolko In­dus­tries - to pro­vide de­tails on how they op­er­ate as part of its in­ves­ti­ga­tion into al­leged un­fair trade.

Canada’s four largest lum­ber pro­duc­ers are re­quired to re­spond to a ques­tion­naire by the end of the month that asks about their soft­wood lum­ber op­er­a­tions in­clud­ing sawmills, along with un­re­lated ques­tions on pulp, pa­per and other ac­tiv­i­ties. A U.S. au­di­tor will then visit the four com­pa­nies for fol­low-up.

The U.S. Com­merce Depart­ment is ex­pected to take the in­for­ma­tion into ac­count when it de­cides on the im­po­si­tion of pre­lim­i­nary du­ties on Cana­dian lum­ber im­ports in late April or early May.

Du­ties on the four pro­duc­ers will be based on their re­sponses. Other Cana­dian pro­duc­ers will be sub­ject to rates that are the av­er­age of those polled, said Garneau.

It marks a de­par­ture from past dis­putes when the rate of coun­ter­vail­ing du­ties was de­ter­mined af­ter polling prov­inces to cre­ate a coun­try­wide rate, said Su­san Yurkovich, pres­i­dent of the BC Lum­ber Trade Coun­cil, which rep­re­sents West­ern pro­duc­ers.

“It’s just a dif­fer­ent way of do­ing an eval­u­a­tion,” she said from Van­cou­ver, adding that the four com­pa­nies could face vary­ing du­ties.

Yurkovich said she still ex­pects Canada faces a lengthy bat­tle, as it did about a decade ago, since hav­ing a mar­ket­based sys­tem be­fore the last trade dis­pute didn’t pre­vent B.C. pro­duc­ers from fac­ing pre­lim­i­nary du­ties.

Fol­low­ing a decade of peace, the soft­wood lum­ber dis­pute erupted late last year af­ter ef­forts to come to a new agree­ment failed. Cana­dian forestry com­pa­nies have said hun­dreds if not thou­sands of sawmill jobs are at risk if the U.S. im­poses du­ties on Cana­dian soft­wood.

Con­cerns about lay­offs in the forestry sec­tor, an im­por­tant eco­nomic driver in Que­bec, prompted Premier Philippe Couil­lard to com­mit to pro­vid­ing loan guar­an­tees to help pro­duc­ers pay du­ties if the fed­eral gov­ern­ment doesn’t.

Garneau said loan guar­an­tees would help Res­o­lute bor­row the money needed to pay du­ties and pre­serve jobs at Que­bec’s many small lum­ber pro­duc­ers.

He also re­it­er­ated his op­po­si­tion to quo­tas, an is­sue that has emerged as a di­vide within the Cana­dian forestry in­dus­try. Tem­bec CEO James Lopez re­cently said he was pre­pared to ac­cept quo­tas to set­tle the trade dis­pute.

“If you are mar­ket-based, why set­tle for less than free, un­en­cum­bered ac­cess to the U.S. mar­ket?” Garneau said.

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