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Rubber and Wood December 20, 2016 09:30:24 AM

Investigation launched into Canadian softwood lumber imports

Carolina Curiel
ScrapMonster Author
The US Department of Commerce has decided to launch investigations into softwood lumber imports from Canada.

Investigation launched into Canadian softwood lumber imports

VANCOUVER (Scrap Monster): The US Department of Commerce has decided to launch investigations into softwood lumber imports from Canada. The decision is further to trade petitions filed by the US Lumber Coalition, which had alleged that Canadian lumber is being sold for less than fair value in the US, thereby causing harm to the country’s domestic forestry industry and thousand of associated workers. In addition, it was claimed that Canadian forestry firms receive unfair subsidies from the government.

The press release issued by the US Commerce Department states that it will work in collaboration with the UN International Trade Commission (ITC) to look into the allegations launched by the US trade lobby. The US government could impose preliminary duties on Canadian softwood lumber imports into the country, six months after a trade case is commenced with the Department of Commerce. The commission is scheduled to arrive at a preliminary decision by Jan 9th on whether Canadian softwood lumber has harmed the US lumber sector. In the event of a positive determination, preliminary countervailing duties will be issued by Feb 21st. Also, preliminary anti-dumping duties, if any, shall be imposed before May 4th.

Failure to reach a bilateral agreement would lead to imposition of trade actions such as imposition of additional duties on lumber imported from Canada or restrictions on lumber import volumes. These restrictions are likely to result in increased cost of exports to the US. Canadian softwood lumber producers are likely to feel the heat as softwood lumber accounts for more than 50% of the country’s total wood products exports into the US. Though major Canadian lumber firms including West Fraser, Interfor and Canfor are unlikely to have substantial impact, the small ticket lumber producers in the country who depend mainly on US markets, are likely to be impacted severely.

The imposition of duties will force Canadian timber companies to pay millions of dollars for exporting their lumber. Further, it may lead to job losses in the region due to mill closures. The imposition of duty by the US administration in early 2000s had led to almost 15,000 job losses in the province of B.C alone.

The latest report issued by the US National Association of Home Builders (NAHB) notes that trade actions including imposition of duties or volume caps on softwood lumber imported from Canada would result in heavy burden for US consumers and domestic lumber industry workers. Such trade actions would lead to rise in lumber prices, which may impact home buyers, NAHB added.

Meantime, the B.C Lumber Trade Council stated that the allegations leveled by the US Lumber Coalition are baseless. The Canadian softwood producers too refuted the charges. According to Resolute Forest Products, lumber producers in Quebec and Ontario pay market price and hence must be granted free trade access with the US.

The lumber trade dispute between the two countries is dated back to 1982. The two countries had signed a bilateral agreement in September 2006. The original seven-year agreement had an optional provision to extend for a period of two years upon consensus by both parties. Accordingly, the deal which came to an end in 2013 was extended until 2015. As per the terms of the deal, parties were prohibited from engaging in trade actions for one-year grace period, which has already come to an end on 12th October, 2016.

 

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