Ottawa to announce nearly $1B in aid for softwood lumber industry

The federal government’s aid package for the softwood lumber industry will be released tomorrow, and sources tell CBC News it will contain almost $1 billion.

As CBC News first reported last month, the aid package will include money for employment insurance benefits for workers in affected regions, according to sources speaking on a not-for-attribution basis because they were not authorized to speak publicly. There will also be money earmarked for lumber mills to innovate in the face of competition from the U.S.

Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland are to announce details at 1 p.m. ET in Ottawa. CBCnews.ca is carrying the announcement live.

U.S. duties were introduced on Canadian softwood exports a month ago following an investigation by the U.S. Commerce Department.

The Ontario and Quebec governments asked the federal government to set up a program to help companies offset the tariffs, which range from three per cent to 24 per cent for five major exporters, with all other companies facing countervailing duties of 19.88 per cent.

• Cabinet to review ‘substantial’ assistance package for softwood industry
• Quebec mayors make case for ‘win-win agreement’ in lumber dispute
• N.B.’s softwood lumber envoy will seek return of border tax exemption

Logs are unloaded at Murray Brothers Lumber Company woodlot in Madawaska, Ont. in April. Ottawa will announce an aid package today for the softwood lumber industry, hit by recent U.S. tariffs. (Sean Kilpatrick/Canadian Press)

Countervailing duties are used to level the playing field when a country believes that another country’s product is unfairly subsidized. U.S. lumber companies claim Canadian companies have an unfair advantage with preferential access to Crown-owned lands that charge lower stumpage fees.

“As you know, Canadian softwood lumber producers were forced to pay approximately $5-billion worth of duties during the last round of trade negotiations,” Kathryn McGarry, Ontario’s minister for natural resource and forestry, wrote in a letter to Carr.

“The legal process is a lengthy one and many companies will struggle to stay in business should the U.S. implement unreasonably high duties,” she added in her letter, sent in February, before the duties were announced in April. Quebec made a similar request.

All forms of aid on the table

After cabinet discussed the package on May 9, Carr said all forms of aid were on the table, including loan guarantees. On Wednesday, he would only hint at what was in the package.

“I think that there will be a full range of programs, very cognizant of the situation now for producers for communities and for workers,” he said. “Stay tuned, you won’t have long to wait.”

The federal aid package comes as the Conference Board of Canada released a new report this week, predicting fewer jobs and slower profits for the lumber industry in 2018.

“The end result is in 2018 we see about 2,200 fewer jobs in the wood products industry as a result of the tariff and about $700 million less in exports,” Michael Burt, the director of industrial trends, said in his report.

Burt he said the key difference from the last time the U.S. imposed tariffs is the overall strength of the industry. He points to five years of solid growth, stronger markets in Asia, and better productivity. He also said there are fewer, but much larger, companies operating, many of which are already diversifying their product range.

“The softwood lumber duties really only apply to softwood lumber. So there are a lot of other things the industry does. Everything from flooring, to the frames for doors and windows, those sorts of things,” Burt said.

Sources have told CBC News there will be money in the aid package to help the industry diversify its product offerings even more.

The Conference Board doesn’t have a specific list of what it would like to see in an aid package. The best thing the federal government could do, Burt said, is to reach a final agreement with the U.S. and end the longstanding dispute for good.

Carr heads to China this weekend to help promote Canadian lumber and wood products to that market. He is bringing with him members of the forestry industry.

Article source: http://www.cbc.ca/news/politics/softwood-lumber-announcement-1.4140300?cmp=rss