Soft­wood bailout tak­ing shape

Canada al­ways pre­vails in U.S. soft­wood dis­pute and will again, Trudeau says

Kingston Whig-Standard - - BUSINESS - MIA RABSON

OT­TAWA — A made-in-Canada so­lu­tion to help soft­wood pro­duc­ers and work­ers weather the storm of U.S. du­ties has been de­layed at least un­til the end of May.

It has been al­most a month since the U.S. Depart­ment of Com­merce slapped im­port du­ties of three to 24 per cent on Cana­dian soft­wood, ar­gu­ing Canada un­fairly sub­si­dizes its in­dus­try by keep­ing the price of log­ging ar­ti­fi­cially low.

Cab­i­net dis­cussed a pack­age of op­tions for up to $1 bil­lion in aid for the soft­wood in­dus­try ear­lier this week, but ne­go­ti­a­tions with in­dus­try and pro­vin­cial gov­ern­ments are still un­der­way.

A source with knowl­edge of the ne­go­ti­a­tions says Nat­u­ral Re­sources Min­is­ter Jim Carr had hoped to have the plan ready to present pub­licly by the end of this week, but things didn’t quite come to­gether in time.

The House of Com­mons is off next week for a break week, which means the ear­li­est cab­i­net can dis­cuss and fi­nal­ize the plan now is May 30.

Mul­ti­ple sources say there were meet­ings at the pro­vin­cial level to dis­cuss the pack­age op­tions this past week. A Quebec source told the Cana­dian Press the gov­ern­ment was reluc­tant at first to do any kind of aid pack­age, but has since changed its mind.

Quebec and On­tario have been press­ing Ot­tawa to get loan guar­an­tees ready since at least Fe­bru­ary.

The Amer­i­cans have been wrong about Canada’s soft­wood in­dus­try be­fore, and this time is no dif­fer­ent, Prime Min­is­ter Justin Trudeau said Fri­day.

“The fact that ev­ery time the U.S. has done this over the past decades they’ve been shown to be wrong in do­ing that and we know that we’re go­ing to be able to con­tinue to stand and de­fend Canada’s in­dus­try,” Trudeau said dur­ing a stop in Sur­rey, B.C.

Trudeau said the im­port tar­iffs the U.S. Depart­ment of Com­merce slapped on Cana­dian soft­wood im­ports last month are un­fair and puni­tive, and that Canada won’t back down on the is­sue with­out a fight.

He said Canada strongly dis­agrees with the U.S. Depart­ment of Com­merce de­ci­sion which took ef­fect April 28, im­pos­ing tar­iffs of three to 24 per cent on soft­wood im­ports.

Carr said this week “ev­ery­thing is on the ta­ble” when it comes to pos­si­ble help for the in­dus­try as Canada pre­pares to fight the U.S. tar­iffs in court, and with both the World Trade Or­ga­ni­za­tion and un­der the North Amer­i­can Free Trade Agree­ment.

He specif­i­cally men­tioned loan guar­an­tees, which are one of the more con­tro­ver­sial op­tions be­cause some fear the U.S. will see them as sub­si­dies and will sim­ply hike the tar­iffs more.

Frank Dot­tori, CEO of north­west­ern On­tario firm White River For­est Prod­ucts, called that non­sense.

“We want a loan guarantee,” Dot­tori said Fri­day.

He said the idea of loan guar­an­tees as a sub­sidy has been de­bated and reviewed by in­ter­na­tional trade pan­els and re­jected.

Still, the last time Canada and the U.S. en­gaged in a soft­wood bat­tle, the $1.5-bil­lion aid pack­age, in­clud­ing loan guar­an­tees, was im­me­di­ately called a new sub­sidy by the U.S. trade rep­re­sen­ta­tive.

In the end, it didn’t mat­ter then be­cause the U.S. and Canada were al­ready most of the way fin­ished ne­go­ti­at­ing a set­tle­ment on soft­wood that was fi­nal­ized just four months af­ter the pack­age was of­fered.

Dot­tori said his com­pany is pay­ing $500,000 a month in du­ties, a pun­ish­ing amount he can with­stand only be­cause the mar­ket is in­cred­i­bly hot and the Cana­dian dollar is low.

“What’s sav­ing us now is a 74-cent dollar,” he said.

A loan guarantee will help his com­pany keep peo­ple work­ing un­til Canada and the U.S. get a new deal, he said.

Canada can’t file an ap­peal of the tar­iffs un­til early next year be­cause the fi­nal de­ter­mi­na­tions from the U.S. gov­ern­ment on the soft­wood is­sue won’t be made un­til late fall. Ne­go­ti­a­tions to get a set­tle­ment agree­ment con­tinue in the mean­time.

An­other key el­e­ment of the aid ne­go­ti­a­tions in­volves as­sis­tance to bring more value-added work to Canada, so in­stead of ex­port­ing mostly raw logs, Cana­dian com­pa­nies turn those logs into door and win­dow frames, fur­ni­ture and coun­ter­tops, among other things, and sell the fin­ished prod­ucts.

Ear­lier this week, Canada ap­plied for ex­emp­tions to the du­ties for many of those fin­ished prod­ucts, such as bed frames and butcher block coun­ters. No de­ci­sion has yet been made on that is­sue.

It took Canada and the U.S. four years to reach a ne­go­ti­ated set­tle­ment on soft­wood from the time du­ties were im­posed the last time. Within a year of the du­ties be­ing im­posed, 15,000 work­ers were laid off.

Over the course of the dis­pute, Cana­dian pro­duc­ers paid more than $5 bil­lion in du­ties to the U.S. The set­tle­ment re­quired the U.S. to re­turn 80 per cent of that.

PAUL CHIASSON/THE CANA­DIAN PRESS

A worker ti­dies up a wood pile at a lum­ber yard in Montreal. Hun­dreds of Quebec forestry work­ers are pre­par­ing for lay­offs as the fed­eral gov­ern­ment dis­cusses op­tions to keep the in­dus­try afloat.

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