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Canadian lumber producers face average 27 per cent duties with second wave

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June 26, 2017 - 8:15 PM

MONTREAL - Canada's softwood lumber industry faces average duties of about 27 per cent after the U.S. Department of Commerce slapped it with an additional 6.87 per cent in preliminary average anti-dumping tariffs.

The new anti-dumping duty will overlap for about two months with average preliminary countervailing duties of 19.88 per cent announced in April that are set to expire on Aug. 27.

Final combined duties will be applied around the end of the year when all determinations have been made.

Resolute Forest Products (TSX:RFP) was assessed Monday with the lowest duties of 4.59 per cent while Canfor (TSX:CFP) gets the highest at 7.72 per cent.

Two other mandatory respondents, West Fraser Timber (TSX:WFT) and Tolko, were tagged with 6.76 and 7.53 per cent duties, respectively.

The rates are below the average 10 per cent forecast by industry analysts.

West Fraser will have the highest combined duties at 30.88 per cent, followed by Canfor at 27.98 per cent and Tolko at 27.03 per cent. All other producers will face combined average duties of 26.75, with the exception of Resolute at 17.41 per cent and J.D. Irving at 9.89 per cent.

Commerce Secretary Wilbur Ross announced separately that an internal investigation has determined that it was appropriate to exclude Atlantic provinces of Nova Scotia, P.E.I. and Newfoundland and Labrador from softwood lumber duties as requested by the U.S. industry and Canadian officials.

The duties will continue to be collected until a final decision is issued later this summer.

"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," he said in a news release.

Montreal-based Resolute continues to believe producers in Ontario and Quebec should have free access to the U.S. market.

"Anything above nothing is outrageous, unacceptable and simply politics at play," said spokesman Seth Kursman.

The BC Lumber Trade Council said it will continue to vigorously defend the industry.

"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," president Susan Yurkovich said in a news release.

"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."

Canada's share of the U.S. softwood lumber market was 27 per cent in May, down from 31 per cent a year earlier, according to monthly Canadian government reports. That represented a $165-million loss in exports for the month, including $105 million in B.C. and $18 million in Quebec.

Final duty rates have been lower than preliminary tariffs in the past. But Paul Quinn of RBC Capital Markets said that could change because the U.S. Lumber Coalition is pushing for a tough response to the Canadian government's $867-million financial support for the industry, mainly through loans and loan guarantees.

This is the fifth time the U.S. has accused Canada of unfairly subsidizing its softwood industry. The government says Canada has always prevailed against the accusations before the World Trade Organization or under the North American Free Trade Agreement.

A negotiated settlement on softwood expired in 2015, triggering the latest round of tariffs. The previous settlement took more than four years to negotiate.

Canada can't file an appeal of the tariffs until early next year after the final determinations from the U.S. government are issued.

The Conference Board of Canada has said U.S. softwood lumber duties paid at current export levels will cost Canadian producers $1.7 billion a year and cut about 2,200 jobs until a softwood settlement is reached.

After the countervailing duties were announced, Resolute said it would cut shifts at seven sawmills and delay the start of forest operations that will affect 1,282 workers.

News from © The Canadian Press, 2017
The Canadian Press

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