Canada weighs options to challenge U.S. softwood duties
OTTAWA — Canada is exploring how best to challenge the hefty import duties being slapped on Canadian softwood lumber exported to the United States, promising to support Canadian workers and companies in what is expected to be a lengthy – and difficult – battle.
Some people are going to lose their jobs, Natural Resources Minister Jim Carr warned Tuesday after the U.S. Department of Commerce announced import duties of as much as 24 per cent on Canadian softwood companies.
“If we look at the history of these trade actions there inevitably will be job losses,” Carr told a news conference in Ottawa.
“We will focus our efforts on doing whatever we can to ease the impact of those job losses. That is the reality of this countervail.”
It’s the fifth time since 1981 that Canada and the U.S. have sparred over softwood, and Canada has prevailed every time it has challenged the U.S. through the North American Free Trade Agreement, the World Trade Organization or in the U.S. court system. “We have won them all.” Canada’s best course of action, however, won’t become clear until after it receives the reasons for the U.S. decision. And any challenge likely won’t come before January at the earliest, since final U.S. determinations on softwood won’t be in place until November or December.
The U.S. is going to decide on any anti-dumping duties in June, which will be applied on top of the countervailing duties. Those duties will take effect as soon as the U.S. publishes them in what is known as the federal register, sometime in the next week.
Neither government nor industry was willing Tuesday to say exactly what the impact is going to be. In 2001 when the last softwood dispute exploded, British Columbia alone lost 15,000 jobs from the forest industry in just a matter of months.
There are some differences now compared to 2001, however. For one, softwood prices are at record highs, which could help soften the blow if they stay that way.
The duties were in the range of what was expected and will be a burden for lumber producers, said Derek Nighbor, president of the Forest Products Association of Canada
“There is no short term fix,” Nighbor said, noting it was almost five years the last time from when duties were first imposed until the negotiated agreement was in place.
Canada and the U.S. are still trying to negotiate another softwood deal and Canada is prepared to make concessions like in 2006 that would impose quotas and smaller tariffs on Canadian softwood.
So far, however, the American asks have been more than Canada considers reasonable.
“We remain confident that a negotiated settlement is not only possible but in the best interests of both countries,” said Carr.
On Tuesday, Trudeau and Trump spoke about the issues by phone, the Prime Minister’s Office said in a statement.
“On the issue of softwood lumber, the prime minister refuted the baseless allegations by the U.S. Department of Commerce and the decision to impose unfair duties,” the statement said.
“The two leaders agreed on the importance of reaching a negotiated agreement, recognizing the integrated nature of the industry between Canada and the United States.”
On dairy, the PMO noted that the trade balance “heavily favours” the U.S., with Canada importing more than $550 million of dairy products from the U.S. each year, but exporting just over $110 million.
“Canada,” it said, “would continue to defend its interests.”
Canada is pushing back hard at the U.S., arguing the duties will negatively affect the American economy in higher prices for new homes and job losses in the U.S. housing industry.
Canada’s smallest producers might be hit hardest. All but Canada’s four largest softwood producers have to pay the duties retroactively for 90 days. Nighbor said the big companies were exempted simply because the U.S. is writing up trade rules as it goes.