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'We're vociferously opposed': Softwood lumber tariffs will cut deep, says Alberta industry

On Monday, the U.S. Department of Commerce announced duties on Canadian softwood lumber imports, ranging from three to 24 per cent depending on the company. But Alberta's lumber heavyweights are confident Canada will win the war against Trump's new tariffs.

Canadian lumber imports are expected to face new duties ranging from three to 24 per cent, starting next week

Canadian softwood lumber jobs are at risk if the U.S. continues protectionist measures against imported lumber. In the wake of rising protectionism, politicians must convince Canadians that free trade creates more and better jobs. (The Canadian Press)

Washington's decision to slap Canada's lumber sector with new duties will hurt the Alberta industry, but the softwood spat is far from over.

Provincial lumber heavyweights are confident Canada will win the war against Trump's new tariffs.

"We think the arguments are completely baseless and we're vociferously opposed to them," said Brock Mulligan, director of communications with the Alberta Forest Products Association.

"They've been argued before international tribunals many times over in the past generations of this dispute and been found entirely without merit. It's kind of the same old, and we're expecting to be vindicated again.

"Canada will respond with litigation and diplomacy."

On Monday, the U.S. Department of Commerce announced its first batch of duties on Canadian softwood lumber imports, ranging from three to 24 per cent depending on the companies and where they operate in Canada.  

The Trump administration concluded Canadian operators benefit from subsidies ranging from three per cent in the case of J.D. Irving Ltd., to a high of 24.12 per cent for West Fraser Mills, with most companies coming in around 19.88 per cent.

Though unwelcome, the announcement was not a surprise — the softwood spat has been brewing for years.

'There's jobs on the line'

The decision to slap a duty of about 20 per cent on Canadian softwood bound for the U.S. stems from a long-standing dispute over whether Canadian companies' access to public land constitutes a subsidy.

The American forestry industry has always maintained that Canadian governments unfairly underwrite the industry and that Canada sells goods to the U.S. at an unfairly low rate, Mulligan said.

What comes next on softwood is a study of separate anti-dumping duties, followed by a final verdict by the U.S. Commerce Department. After that, the dispute could end with a negotiated agreement, a surprise retreat from the U.S. government, or a years-long court battle.

In the meantime, the Alberta sector will suffer losses, Mulligan said.

The value of the forest sector to Alberta's economy is approximately $5 billion, according to Mulligan. About 19,000 people work directly in forestry in Alberta, with another 38,000 depending on the industry, he said.

"There's jobs on the line in Alberta communities," Mulligan said Tuesday in an interview with CBC Radio's Edmonton AM.

"Anything that makes the industry less competitive jeopardizes jobs."

'Baseless and unfounded'

The U.S. lumber industry has argued for decades that because most Canadian timber is harvested on Crown lands, the harvests result in cheaper lumber.

However, operational changes have already addressed these concerns. Timber auctions are now used to better reflect current market rates.

Canada's government condemned the announcement. In a statement, the federal government called the move unfair, baseless and unfounded, and it promised to help the industry.

There are already requests for financial help for Canada's forestry sector.

A lumber mill in Quesnel, B.C. (Christer Waara/CBC)

"The government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty," said a joint statement issued by Natural Resources Minister Jim Carr, and Foreign Affairs Minister Chrystia Freeland.

"The accusations are baseless and unfounded."

This week's decision is the first of two investigations that began after a petition was launched last fall by the Committee Overseeing Action for Lumber International Trade or Negotiations (COALITION). The group includes the Washington-based U.S. Lumber Coalition lobby group, a carpenters union and about a dozen American timber producers and sawmills.

The two cases will result in a combined duty rate, which won't come until next winter.

'The proximity of the US market and its historical and ongoing importance makes it very important that this issue be resolved.' - Brock Mulligan, Alberta Forest Products Association

After the US made the final approvals on duties, Canada would likely challenge them at NAFTA and WTO panels in 2018. Until then, forestry companies in Canada will have to start paying the duties.

The statement from Ottawa late Monday promised immediate help through existing programs — like one that finances exporters, and an innovation-related program to develop the use of wood in tall buildings.

Ministers are also travelling to China, the United Kingdom and Europe to promote market diversification.

"There has been action to diversity markets, particularly in China ... and those efforts have begun to pay off," Mulligan said.

"But at the same time, the proximity of the U.S. market and its historical and ongoing importance makes it very important that this issue be resolved."

With files from the Canadian Press