US DOC to collect duties on Canadian lumber starting next week

SEATTLE (Scrap Monster): Finally, the US administration has announced its decision to impose countervailing duties on lumber imports from Canada. The US Department of Commerce has officially declared that recently concluded investigation determined that softwood lumber imports from the neighboring country are unfairly subsidized. The collection of duties at the border is expected to commence next week.

The US has decided to impose tariffs of up to 24% on Canadian softwood lumber. The antidumping duties which are to be announced in June could raise the total duties to as high as 30-35%, said industry experts.

The decision is based on the findings of the first investigation which was launched following petition by an industry coalition which includes US Lumber Coalition, carpenters union and a handful of American timber producers and sawmills. The investigation looked into four top Canadian exporters of softwood lumber products into the US-West Fraser, Tolko, Canfor and Resolute Forest Products. 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 18.88% duties with the exception of J.D Irving whose duty will be 3.02%. In addition, the US DOC also noted that smaller companies are likely to retroactive duties for all shipments made during the past three months.

The duties announced are preliminary. The results of the second investigation due to be announced in June this year will reveal DOC’s findings on anti-dumping investigation. A combined duty rate is expected to come into effect only by November this year. The US ITC is expected to make its final injury determination in January next year. Meantime, the Canadian administration plans to appeal before the NAFTA and WTO, urging them to disprove the subsidy and injury allegations by the US industry.

It must be noted that the softwood lumber prices have risen sharply over the past few weeks in anticipation of high duties. The lumber prices rose to a 12-year high last week. Also, lumber futures hit the level of $415 per thousand board feet last Monday, the highest since March 2005.

Meantime, Canadian Prime Minister Justin Trudeau spoke with his US counterpart over the phone to discuss the long-pending trade dispute between the two countries. Trudeau condemned the US decision to impose unfair duties and noted that the allegations by the US DOC were completely baseless. Also, Jim Carr, Natural Resources Minister stated that the US move was not at all a surprise. Expressing Canada’s strong disagreement with the US decision, he assured that the federal government will vigorously fight for the interest of the softwood lumber industry. However, he feared that imposition of duties may lead to job losses in the short-term.

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.