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Canadian shippers have paid C$500M in US softwood duties since April, but high prices, low Canadian dollar, federal aid package have cushioned impact, says minister, while US consumers 'feel the pinch' as duties drive 20% rise in building material costs

September 16, 2017 (The Globe and Mail Inc.) – Even though Canadian lumber producers have paid $500-million in duties since the end of April, high market prices have offset costs

Natural Resources Minister Jim Carr says forest producers in Canada have so far been largely unharmed by the duties the United States imposed on Canadian softwood imports earlier this year.

Mr. Carr said the consensus at a meeting of federal and provincial forestry ministers on Friday was the financial hurt thus far is “not significant.”

Canadian producers have paid an estimated $500-million in countervailing and anti-dumping duties since the end of April but those costs are offset by historically high market prices for wood coupled with a low Canadian dollar and ever-increasing demand.

In fact, the main people feeling the pinch are American consumers who are paying up to 20 per cent more for housing materials thanks to the duties.

Initially it was felt big Canadian companies would be able to withstand the hit but smaller producers would be forced to lay people off or even close up entirely.

That isn’t happening thus far, said Mr. Carr, as the best evidence of that is the fact that uptake on federal loans and loan guarantees to help producers weather the duties has been limited – only about $30-million has been disbursed out of $605-million made available.

“We have reached out, literally thousands of letters have gone out from the [Export Development Corp.] to the industry,” Mr. Carr said. “There is a lot of interest in understanding what might be available, but to this point there has been, I would say, not a significant number of transactions because there hasn’t been significant demand.”

In all, Mr. Carr announced $867-million in softwood aid in June including funds to help workers share jobs to prevent layoffs or transition to new positions. An official with Employment and Social Development Canada said on Friday it had received only two applications for funds for job sharing.

Information is not available for any of the other programs being offered.

Mr. Carr wouldn’t speculate on whether the fact Canadian producers aren’t suffering much at this point will have any impact on the continuing negotiations to get a settlement agreement with the Americans.

The previous agreement expired in 2015, and after a year’s grace period, the U.S. Lumber Coalition once again applied for penalties against Canada, accusing it of subsidizing its industry.

Canada rejects the claim and intends to fight it in front of international trade bodies but is also working to reach a new negotiated settlement.

A deal was close to being signed in the summer but the coalition rejected it over elements related to the quota for Canadian wood.

Susan Yurkovich, president of the Council of Forest Industries, told The Canadian Press on Friday she thinks there might be pressure mounting on the coalition to accept a deal.

First, it is being noted, including by U.S. Commerce Secretary Wilbur Ross, that demand for softwood will skyrocket owing to the two massive hurricanes which hit Texas and Florida in the last month, wood that will cost more as long as the duties are in place.

Ms. Yurkovich also said at a meeting of the U.S. International Trade Commission this week, U.S. producers were being forced to acknowledge they are making more money than ever, and it may be difficult – though not impossible – for the commission to make a final finding of injury if the industry is clearly not hurting.

She said if the commission doesn’t find any evidence of harm, there will be no duties and that would be worse for the coalition than accepting a softwood deal with Canada, because it would mean no quotas or tariffs at all on Canadian imports.

This article was written by Mia Rabson from The Globe And Mail and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

© 2018, The Globe and Mail Inc.

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