Wilbur Ross says Canada is 'dumping lumber,' as Ottawa vows to push back
'I'm confident that this is a good case,' U.S. commerce secretary says as Canadians call duties a 'shakedown'
U.S. Commerce Secretary Wilbur Ross said Tuesday the White House was hoping to get the softwood lumber dispute with Canada out of the way before NAFTA renegotiations began, appearing to blame Canada for not resolving the issue sooner.
But Canada's forest industry says there was no evidence of an American desire to get a deal prior to the U.S. Commerce Department's decision to levy countervailing duties of between three and 24 per cent on Canadian imports.
"Everything relates to everything else when you are trying to negotiate," Ross told reporters at a White House briefing in Washington. "What we had tried to do was to clear the air and get this dispute out of the way before the big NAFTA talks went on. That was not possible to achieve and that's why we went ahead and released the findings."
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"People don't realize Canada's been very rough on the United States," President Donald Trump said at an agriculture roundtable shortly after.
"But they've outsmarted our politicians for many years," he said, "so we did institute a very big tariff."
Ross told reporters Canada is "generally a good neighbour," but "that doesn't mean they don't have to play by the rules."
"Things like this I don't regard as being a good neighbour, dumping lumber."
"It's not a question of President Trump 'messing' with the Canadians. We believe the Canadians violated legitimate practice," Ross said, explaining his department's decision.
In Vancouver, representatives from the B.C. Lumber Trade Council took issue with the U.S. characterization of Canada's willingness to negotiate a new deal to settle the dispute.
"The challenge for us is we haven't really had a willing dance partner on the other side," said Susan Yurkovich, the industry association's president. "There was no desire to get a deal on the other side."
"The Canadian industry is not subsidized. Log costs in the United States are less than they are in Canada," said Duncan Davies, the CEO of Interfor Corporation. "We should all understand the work of politics in this whole situation."
Davies said he agreed with former cabinet minister David Emerson, now B.C.'s lumber envoy, who called these moves a shakedown. "This shouldn't be described as anything other than that."
Ready to fight back
Yurkovich said the decision to make duties retroactive was a particularly "egregious outcome" and "completely unprecedented," accusing the U.S. of pitting Canadian companies against each other in the way it made duties retroactive for some, but not all.
"It doesn't make any sense," she said, adding that until they've had a chance to actually read the U.S. rationale — it hasn't been made available to either companies or Canadian governments yet — they can't say further what their counter-arguments will be.
"These guys are deal makers," she said, suggesting the tough duties may be an American attempt to "rattle the cage" before talks begin.
"We're not going to be rattled," she said.
B.C. Liberal Leader Christy Clark, currently campaigning for re-election, told reporters she had spoken to Prime Minister Justin Trudeau today. The conference call with the rest of the premiers focused on Canada's next moves.
"We're only going to accept an agreement with the United States … that is good and fair for B.C. workers. We will fight and we will win," Clark said.
According to the PMO, Trudeau and the premiers agreed to work together to "strongly defend Canadian interests."
At a news conference in Ottawa, Natural Resources Minister Jim Carr told reporters the U.S. move was not a surprise, and that although he wasn't announcing anything immediately, Canada is exploring its legal options.
"Independent trade panels have repeatedly found these claims to be baseless. We have prevailed in the past and we will do so again," he said.
"Our government disagrees strongly with this decision," the minister said. "It is unfounded and we will vigorously fight for the interests of the Canadian softwood lumber industry, its workers, and their communities."
But the short-term effects will harm the industry and workers, he said.
"If we look at the history of these trade actions, there inevitably will be job losses, and we will focus our efforts on doing whatever we can to ease the impact of those job losses," Carr said.
Carr said there are "existing programs" to help the lumber industry and its workers — although any major effort to bail out the industry may spark further criticism from south of the border. "It's always a balance," he said.
Negotiated settlement still preferable
Because the Canadian government was unable to negotiate a new softwood lumber agreement with former president Barack Obama's administration, Canada and the U.S. were on a collision course before Trump was elected last fall.
NDP Leader Tom Mulcair said the government had not done enough to prepare for a day it knew was coming, saying Trudeau had 18 months since the expiry of the previous deal to work on a plan to support the Canadian industry and yet had nothing new to announce today.
"What has this government been doing for 18 months, that's the real question," Mulcair said. "Apparently the answer is nothing."
"We remember Obama and Mr. Trudeau talking about 100 days and we'd have this solved. Well they didn't solve it," said the Conservative critic for Canada-U.S. relations, Randy Hoback. "Now we have a lot of families sitting there without a certain future."
Liberal ministers have been making frequent trips to the United States in recent months to discuss trade issues with their U.S. and state counterparts.
Carr noted that softwood lumber has been a major trade irritant between the two countries for nearly two centuries and that Canada has won the dispute every time.
"We remain confident that a negotiated settlement is not only possible but in the best interests of both countries," the minister said.
The full extent of the potential damage to Canada's industry won't be known until a parallel anti-dumping duties investigation is complete. More duties are expected when that reports back in June, and then a combined duty rate will be determined in the fall.
The range of these preliminary countervailing duties — three to 24 per cent for five major importers, with all other companies facing duties of 19.88 per cent — is not wildly off the 19.31 countervailing duties imposed in the last round of this dispute in 2001. The eventual combined duty rate in that round was about 27 per cent.
It's too early to conclude that it will be higher this time, although some fear it will be.
There have been signs from the U.S. Commerce Department that it might be willing to exempt some Atlantic Canadian provinces from the new duties. But officials told reporters in Ottawa Thursday they've had no confirmation yet that such an exemption is coming.
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Trudeau also spoke with Trump by phone Tuesday. Both the White House and the Prime Minister's Office released statements after the call.
The U.S. statement simply said, "The two leaders discussed the dairy trade in Wisconsin, New York state and various other places. They also discussed lumber coming into the United States. It was a very amicable call."
The statement issued by the PMO was far longer and included details of the arguments Trudeau made in defence of the softwood lumber and dairy industries in Canada.
The release says Trudeau dismissed the U.S. Department of Commerce's "baseless accusations," on softwood and he also noted that U.S. has a dairy trade surplus with Canada. The pair also "agreed on the importance of reaching a negotiated settlement" on lumber.