New Brunswick

Proposed U.S. lumber duties provoke cautious response in N.B.

A new round of  punitive U.S. duties being considered for lumber imported from Canada, is generating a mild response from New Brunswick so far, with industry saying little and the province taking four full days to carefully fashion its own position.

Industry and government avoid fiery reaction used in similar 2017 dispute

Premier Blaine Higgs issued a statement late Tuesday saying he is disappointed in a U.S. proposal to impose stiff new lumber duties in November. (Government of New Brunswick)

A new round of  punitive U.S. duties being considered for lumber imported from Canada, is generating a mild response from New Brunswick so far, with industry saying little and the province taking four full days to carefully fashion its own position.

"As the U.S. consistently relies on Canadian lumber, including from New Brunswick, to meet its domestic demand for building materials, a rise in duties on softwood lumber products originating from Canada penalizes the American people," said a statement released by Premier Blaine Higgs late Tuesday.

"It comes at a time of unprecedentedly high lumber prices, when both countries should focus on finding a resolution to this long-standing trade issue in order to further aid economic recovery from the COVID-19 pandemic."  

On Friday the U.S. Commerce Department released proposed anti-dumping and countervailing duties to be applied in the fall on lumber made by 271 Canadian companies, including several in New Brunswick.   

Unless new information from the affected companies or a negotiated deal on lumber between the U.S. and Canada can head them off the new charges would take effect in November.

That triggered immediate reaction in western Canada and in Ottawa but no initial response in New Brunswick — even though the province's lumber industry, per capita, is nearly as large as British Columbia's.

J.D. Irving Ltd., New Brunswick's largest lumber producer, did not respond to a request for comment about the proposed new tariffs and neither it nor the New Brunswick government posted media releases addressing the tariff issue on their websites.   

Softwood logs are loaded for processing at the J.D. Irving Ltd. sawmill in Chipman. Proposed U.S. duties could cost New Brunswick sawmill operators millions of dollars each month if they are imposed. (Submitted by Gerard Sirois/GNB)

That's a significant departure from April 2017 when the province and industry both reacted strongly and instantly to a proposal to impose similar duties in the early days of the administration of former President Donald Trump.

Irving wrote in one statement that the "survival of our mills" was at stake in how the 2017 initiative was handled, rhetoric that has so far not surfaced this time.

Lumber prices have been at record highs for most of 2021, which would make duties imposed on companies more affordable now than they were five years ago. 

But it is not clear if that or a hope that the administration of President Joe Biden will be open to a negotiated settlement of the long running trade dispute is maybe dampening the use of fiery speech this time.

"We remain confident that a negotiated solution to this longstanding trade issue is not only possible, but in the best interest of both our countries," said Canada's International Trade Minister Mary Ng in a statement last week.

International Trade Minister Mary Ng is hopeful proposed U.S. lumber duties can be avoided if Canada and the US can negotiate a comprehensive lumber deal. (Sean Kilpatrick/The Canadian Press)

New Brunswick forestry companies have produced a record $461.1 million in treated and untreated lumber during the first three months of 2021, much of that destined for export into the U.S.   

On a per capita basis lumber production in the province is three times the Canadian average, making the issue especially important here.

New Brunswick used to enjoy an exemption from U.S. lumber duties which were mostly aimed at companies in western Canada but for the past several years companies here have become the target of accusations they are subsidized by access to cheap crown wood.

Since June of 2017, New Brunswick has had to mount a series of expensive fights on multiple fronts to prevent and in some cases undo duties imposed on its forest products and prevent the application of additional new tariffs being advocated by U.S. competitors.

Lawyers with Pillsbury Winthrop Shaw Pittman LLC in Washington have billed New Brunswick $3.26 million over the last two years to represent it in U.S. trade fights. The province is promising additional legal action over the current proposal to raise duties. (Google Streetview)

Last November there was a significant victory in those battles when the U.S. Commerce Department lowered a 20.2 per cent duty it had been applying to certain New Brunswick softwood exports to 8.9 per cent as part of its annual review of the rates.   

That followed another favourable ruling in June 2019, when the U.S. found low property tax assessments on privately owned forests in New Brunswick were not low enough to warrant special tariffs.

New Brunswick has paid Washington based lawyers $6 million over five years to carry on those and other fights and is likely to spend millions more before the current dispute is resolved.

"New Brunswick, as part of a team Canada effort, will continue to vigorously defend our industry, including through litigation," said Higgs.

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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