It’s the first of two much-anticipated decisions. The second, on\u00a0anti-dumping duties, was\u00a0delayed to June 23 at the request of the U.S. Lumber Coalition, an extension\u00a0the Canadian side had expected.\u00a0<\/p>\n
The powerful lobby group petitioned the American government in November, arguing U.S. producers and workers are injured by subsidized\u00a0imports from north of the border.<\/p>\n
Most\u00a0of Canada’s lumber comes from Crown lands, which\u00a0governments manage. However, Canada contends its pricing is\u00a0not artificially low:\u00a0Crown timber auctions\u00a0are designed to reflect\u00a0market rates.<\/p>\n
A\u00a0final, combined duty rate\u00a0won’t be set until November. The U.S. International Trade Commission will confirm it in January 2018. The Canadian government won’t be able to appeal\u00a0until the entire process is complete.\u00a0<\/p>\n
Preliminary duties: how damaging?<\/h2>\n
Canada’s lumber companies are bracing themselves for a\u00a0financial hit in the meantime.<\/p>\n
Some analysts are predicting countervailing duties of 10-15 per cent and anti-dumping duties of 20-30 per cent.<\/p>\n
For comparison: the combined duties prior to the last softwood lumber agreement in 2006 were about 27 per cent.<\/p>\n
Are the analysts right?<\/p>\n
“There are so many things that are\u00a0variable.\u00a0I’m not sure how they could actually put together a calculation. Plus there are\u00a0known unknowns for how they can gin up the duty rate,” said Susan Yurkovich, the president of the Vancouver-based Council of Forest Industries.<\/p>\n
“If it was based on facts and solid evidence, then there would be no duty, right?” she said.\u00a0“It’s what’s going to be in the make-believe minds of the department of commerce.<\/p>\n<\/p>\n
“Whatever the final duty rate is, we will begin the appeal as soon as that’s posted,” Yurkovich said.\u00a0“The full impact is not going to be felt until we start paying the combined duties next year.”<\/p>\n
![\"BC](\"https:\/\/i.cbc.ca\/1.4080619.1492807684!\/cpImage\/httpImage\/image.jpg_gen\/derivatives\/original_620\/bc-softwood-20170407.jpg\")
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Former cabinet minister David Emerson, left, who helped negotiate the last softwood lumber deal, is now B.C. Premier Christy Clark’s trade envoy, trying to sort out the file once again to Canada’s advantage. (Darryl Dyck\/Canadian Press)<\/p>\n
Punishing Canada’s industry too aggressively\u00a0could be risky for Trump.\u00a0<\/p>\n
“A lot of the people that voted for him are going to be negatively impacted when tariffs are placed on Canadian lumber,”\u00a0said\u00a0Naomi\u00a0Christensen, a senior policy\u00a0analyst with the Canada West Foundation.\u00a0<\/p>\n
Trump may champion the American dream, but research from the U.S. homebuilders\u00a0association found that\u00a0for every $1,000 increase in house prices (due\u00a0to higher\u00a0lumber costs), 153,000 families are priced out of purchasing a home.<\/p>\n
The same research suggests a 25 per cent lumber duty could cost 8,000 construction jobs. Other types of manufacturing could also be hurt: Canadian lumber is used for everything from pallets to mattresses (bed frames made of wood from cooler climates are, apparently, less prone to squeak.)<\/p>\n
U.S. timber producers\u00a0may have higher sales\u00a0in the short-term, but over the long-term, builders\u00a0may switch to cheaper materials, Christensen said, cutting everyone’s demand.<\/p>\n
“It’s really all very intertangled,” she\u00a0said. “Unfortunately, the lumber lobby is very loud. A lot of the time the consumer voices in the U.S. aren’t as vocal.”<\/p>\n
Less to fear now?<\/h2>\n
The last lumber deal\u00a0negotiated by the previous Conservative government expired\u00a0in 2015. A one-year litigation standstill prevented the U.S. lobby from petitioning for new duties until last fall.<\/p>\n
Efforts to negotiate a new deal continue\u00a0under the Liberals<\/a>. But\u00a0Trump’s trade representative still isn’t confirmed,\u00a0making talks difficult<\/a>.<\/p>\n “This is an important sector,” Canadian Finance Minister Bill Morneau said Friday in Washington. “You’ll see from all of us a continued focus on this issue.”<\/p>\n As Trump blasted away last week, Trade Minister Fran\u00e7ois-Philippe Champagne left for\u00a0China, to promote\u00a0Canadian wood in Canada’s largest\u00a0alternative market.<\/p>\n<\/p>\n An entire facility dedicated to the lumber biz using Can. softwood.Dropped in on workshop to promote + collaboration more buying #cndpoli<\/a> pic.twitter.com\/NiDNeokbq3<\/a><\/p>\n \u2014 Taller wood buildings with Canadian softwood lumber – reduces emissions grows our economy! #environment<\/a> #economy<\/a> https:\/\/t.co\/DxW5Dmum9A<\/a><\/p>\n \u2014 Vietnam, Thailand, Indonesia, the Philippines and even Mexico could pick up more\u00a0slack if American sales slip.<\/p>\n Both\u00a0financially and strategically, Canada’s industry is in a better place now than a decade ago.<\/p>\n Large Canadian companies have expanded into the U.S., so their overall balance sheets won’t be\u00a0so badly hit.<\/p>\n With U.S. housing starts on a bit of a march and the Canadian dollar relatively low, demand has been\u00a0strong and may remain so, even after duties are paid.<\/p>\n But Tuesday’s decision may still burn: duties may be\u00a0retroactive for up to 90 days. Price hikes after the fact can be hard to swallow.\u00a0<\/p>\n Canada’s timber supply also isn’t\u00a0what it once was, following\u00a0infestations and forest fires.<\/p>\n Smaller companies, particularly those in Eastern Canada (far from Asian\u00a0shipping ports), need\u00a0American customers.<\/p>\n Particularly troubling this time:\u00a0the Americans haven’t exempted the\u00a0Atlantic provinces, where\u00a0timber is mostly harvested on private land.<\/p>\n New Brunswick will fight for exclusion from border duties on softwood<\/a><\/strong><\/p>\n<\/li>\n<\/ul>\n The Canadian industry has\u00a0also been\u00a0fighting on a second front.\u00a0<\/p>\n Earlier this month, a NAFTA review panel ruled that U.S. tariffs should be lowered or dropped for several Canadian mills that manufacture\u00a0the kind of glossy paper used in magazines or catalogues.<\/p>\n Softwood lumber isn’t part of the North American Free Trade Agreement as it stands.<\/p>\n That didn’t stop Trump from framing it as part of the “trading disaster<\/a>” he’s going to renegotiate or scrap. What could he have meant, then?<\/p>\n Dispute settlement provisions included in NAFTA’s\u00a0Chapter 19 allow Canada to\u00a0appeal U.S. lumber duties to both a NAFTA review panel and the World Trade Organization.<\/p>\n\n
\n @FP_Champagne<\/a>\n<\/p><\/blockquote>\n\n
\n @cathmckenna<\/a>\n<\/p><\/blockquote>\nTied up in NAFTA\u00a0targeting<\/h2>\n
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