U.S. reduces duties on Canadian soft lumber after negotiations failed to reach deal

MONTREAL — The United States will continue to hammer imported Canadian softwood lumber, but the U.S. Commerce department said Thursday that it will impose smaller penalties than originally announced.

In its final determination, Commerce said most Canadian producers will pay a combined countervailing and anti-dumping rate of 20.83 percent, down from 26.75 per cent in the preliminary determinations issued earlier this year.

“While I am disappointed that a negotiated agreement could not be made between domestic and Canadian softwood producers, the United States is committed to free, fair and reciprocal trade with Canada,” Ross said in a news release.

“This decision is based on a full and unbiased review of the facts in an open and transparent process that def ends American workers and businesses from unfair trade practices.”

The Trudeau government responded by saying it will continue to defend the Canadian lumber industry against protectionist trade measures, including possibly turning to litigation.

Foreign Affairs Minister Ch ry st ia Freeland and Natural Resources Minister Jim Carr called the punitive duties “unfair, unwarranted and deeply troubling.”

“We urge the U.S. administra-- tion to rescind these duties, which harm workers and communities in Canada,” they said in a joint statement.

Carr plans to convene the Federal-Provincial Task Force on Softwood Lumber in the coming days to discuss developments.

The preliminary duties have forced Canadian companies to pay hundreds of millions of dollars in deposits, which could be refunded if they win a final ruling by the U.S. International Trade Commission around Dec. 18. The duties have driven up the price of lumber, adding to the cost of building a home in the United States. Canadian unions and lumber companies fear the issue will eventually cause layoffs.

West Fraser Timber( TS X: W FT) will continue to pay the highest duties, but its total is being cut to 23.7 per cent from 30.88 per cent.

Canfor (TSX:CFP) is next at 22.13, down from 27.98, Tolko at 22.07 vs. 27.03.

The rate for Montreal-based Resolute Forest Products (TS X: RF P) rises margin ally to 17.9 per cent from 17.41 per cent and J.D. Irving’s rate inches up to 9.92 per cent from 9.89 per cent.

B.C. lumber producers said they are disappointed by the revised duties, even though they are lower.

“As we have consistently said, these duties are unwarranted and this trade action is completely without merit,” said Susan Yurkovich, president of the B.C. Lumber Trade Council.

She said Western producers believe reaching a new agreement is the best solution but the U.S. industry doesn’t appear to be interested in finding a durable solution.

The U.S. Lumber Coalition countered that massive Canadian subsidies have caused real harm to U.S. producers and their workers.

“We are pleased the U.S. government is enforcing our trade laws so that the U.S. lumber industry can compete on a level playing field ,” said coalition co-chairman Jason Bro chu.

But Resolute called the final determination outrageous, saying it only benefits large timber bar ons whose land is more valuable from higher tariffs.

“It’ s helping a handful of companies motivated by their own narrow self interest sat the expense of the greater North American economy and millions of jobs,” spokesman Seth Kursman said in an interview.

The head of the Quebec Forest Industry Council was less critical.

“Of course, we would like the rates to be zero, but, the imposed rates do not cause the (commotion) like it did for Bombardier,” said former MP and council president Denis Lebel.

The softwood lumber duties are a double-whammy for the U.S. housing sector, which is expected to have mortgage interest deductibility on new home purchases capped at US$500,000 during the federal tax overhaul.