Provinces gear up in wake of punitive tariffs imposed on Canadian softwood lumber

VANCOUVER (Scrap Monster): The softwood lumber dispute between the US and Canada is most likely to lead to another trade fight between the two countries. Further, it is feared that the face-off may spill over to other sectors as well.

Incidentally, the Trump administration had earlier announced its decision to impose tariffs up to 24% on Canadian softwood lumber. A duty of 24.12% will be applied to West Fraser, followed by Canfor (20.26%), Tolko (19.50%) and Resolute (12.82%). All other Canadian exporters will be subject to 19.88% duties with the exception of J.D Irving whose duty will be 3.02%. The antidumping duties due to be announced in June could raise the total duties to as high as 30-35%.

The imposition of hefty CV duties on softwood lumber imported from Canada has led to widespread protests. Canadian Prime Minister Justin Trudeau condemned the US decision to impose unfair duties and noted that the allegations by the US DOC were completely baseless. Jim Carr, Natural Resources Minister noted that the federal government is vowed to fight for the interest of the domestic softwood lumber industry. The country is also mulling options including a WTO or NAFTA challenge, Carr added.

Meantime, the Quebec government has decided to offer as much as $300 million in loans and loan guarantees to province’s forestry sector. The announcement came immediately after the US decision to impose the duties. Terming the US move as unjustifiable and unreasonable, Economy Minister Dominique Anglade noted that the announced aid could benefit about 200 forestry firms likely to be badly impacted by the US decision.

New Brunswick Premier Brian Gallant stated that the province will fight back with facts in association with its counterparts across the country against the proposed tariff. The N.B government called upon the trade negotiators to speak with a very strong voice to the American industry and to the Trump administration. It must be noted that New Brunswick’s economy is closely connected with trade with the US. The tariff is feared to impact the forestry industry as a whole as well as other dependant industries. As per rough estimates, sawmills in NB rural areas offer more than 4,000 direct and indirect jobs, which are now under threat with the announcement of the tariff decision by the US.

The Nova-Scotia government expressed serious concerns as the province is not exempted from countervailing duties. It must be noted that the provincial exports were granted exemption from punitive tariffs for the past three decades upon assessment by US authorities that Atlantic Canada’s forest industry is not subsidized. In fact, the US Lumber Coalition had even recommended excluding Nova Scotia, P.E.I. and Newfoundland and Labrador from paying duties. Currently, producers in Atlantic Canada face duty of nearly 20%. Meantime, the US Department of Commerce (DOC) noted that the request for Atlantic region exemption is under consideration.

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.