U.S. whacks Canadian lumber with more duties
Anti-dumping levy for most producers called a ‘scare’ tactic prior to NAFTA talks
The Canada-U.S. softwood lumber trade dispute intensified Monday after the U.S. Department of Commerce boosted the levy it imposes on Canadian lumber shipments to 26.75 per cent from 19.88 per cent.
The U.S. Department of Commerce said Canada is “dumping” lumber on the U.S. market at below market prices, and imposed a duty of 6.87 per cent against most Canadian producers. That’s on top of the 19.88 per cent duty the U.S. slapped on Canadian lumber shipments in April.
Canadian industry officials deny the dumping allegation and vow to fight.
“The ongoing allegations levelled by the U.S. industry are without merit. This was proven in the last round of litigation and we fully expect it will be the case again,” said Susan Yurkovich, president of the BC Lumber Trade Council. “These duties result from the trade action which is part of the continued attempt by the protectionist U.S. lumber lobby to constrain imports of high-quality Canadian lumber into the U.S. market and to drive up prices for their benefit.”
The anti-dumping duty hits four producers with their own tariffs: Canfor Corp., 7.72 per cent; Tolko Industries Ltd, 7.53 per cent; West Fraser Timber Co., 6.76 per cent; and Resolute Forest Products Inc., 4.59 per cent. All other Canadian producers now face a blanket antidumping duty of 6.87 per cent.
The new levies are in addition to the “countervailing duties” the U.S. imposed on Canadian lumber shipments in April. The countervailing duty ranges between three and 24 per cent for five specific Canadian companies, and sits at 19.88 per cent against all others. These “temporary” countervailing duties were imposed after the U.S. Department of Commerce ruled that Canadian producers are unfairly subsidized because they source their timber on Crown lands — another claim that Canadian producers deny.
Combining the anti-dumping and the countervailing duties means that Canadian lumber shipments now face levies ranging from 26.75 per cent to 30.88 per cent for most Canadian producers.
Leading into Monday’s announcement, analysts expected the U.S. to impose high duties on Canadian lumber to put pressure on the Canadian government ahead of August talks to renegotiate the North American Free Trade Agreement. “Anti-dumping (duties) is a way to scare the Canadians and try to force them to get something done,” said Paul Quinn of RBC Capital Markets.
The duties imposed in April have already bit into the Canadian lumber business. Canadian producers made up 27 per cent of the U.S. softwood lumber market in May, down from 31 per cent a year ago.
The Conference Board of Canada has estimated U.S. softwood lumber duties will cost Canadian producers $1.7 billion a year and result in the reduction of 2,200 jobs.
In addition to the new duties, the U.S. government decided to exclude softwood lumber from the Atlantic Provinces from the ongoing trade dispute.
“The United States is committed to free and fair trade, as seen today with the preliminary decision to exclude softwood lumber from the Canadian Atlantic Provinces in the ongoing anti-dumping and countervailing duty cases,” said Wilbur Ross, U.S. Commerce Secretary. “While I remain optimistic that we will be able to reach a negotiated solution on softwood lumber, until we do we will continue to vigorously apply the AD and CVD laws to stand up for American companies and their workers.”