Canada’s $867 million in aid to lumber industry riles U.S. rivals

The federal government crafted its $867-million assistance plan for Canada’s forest sector to avoid the appearance of subsidy to its U.S. opponents in the softwood lumber dispute, but it has already annoyed the main American lobby group.

Natural Resources Minister Jim Carr unveiled on Thursday expanded loan guarantees, financing support and employment-insurance extensions to lessen the expected job losses caused by punishing duties attached to Canadian softwood exports to the U.S. starting at the end of April.

Carr characterized the portfolio of aid as “our pledge to take swift and reasonable action to defend our softwood lumber industry,” saying it “charts a stronger future” for workers and communities that depend on the sector.

The U.S. Lumber Coalition, however, said the assistance, offered through Export Development Canada and the Business Development Bank of Canada, amounts to additional subsidies in their complaint against the Canadian industry.

“Today’s announcement of a new government subsidy for Canadian softwood lumber producers only further tilts the trade scale in Canada’s favour,” said U.S. Lumber Coalition spokesman Zoltan van Heyningen.

That accusation will likely be added to the American industry’s case as it makes its way through the U.S. Department of Commerce and Court of International Trade.

The crux of the U.S. complaint is that the way provinces charge companies stumpage to log on Crown land effectively subsidizes Canadian producers, compared with American producers that have to buy logs from private landholders.

Canada will argue that Thursday’s measures are simply extensions of existing programs that companies affected by the dispute can use, not a specific aid package.

“In our world, this isn’t any kind of bailout,” said Carla Qualtrough, minister of sport and persons with disabilities, and the federal government’s spokeswoman on the issue.

Qualtrough said in an interview that the government believes the risk is “extremely low” that its measures will be deemed as subsidies.

They include $605 million in loans and loan guarantees through Export Development Canada and the Business Development Bank to help firms with cash flow in finding new markets or with making capital investments during the dispute.

That financing, however, will be offered on commercial terms, said Susan Yurkovich, president of the B.C. Lumber Trade Council, which should also rule it out as a subsidy.

B.C. NDP Leader John Horgan welcomed the federal announcement, calling it a “good start,” as he pledged to keep the softwood lumber dispute a top priority as his NDP-Green alliance prepares to take power.

Horgan said he has “every confidence” in David Emerson, the B.C. special trade envoy appointed by Premier Christy Clark in January.