Minister of Natural Resources Jim Carr speaks during a press conference in response to newly-levied U.S. tariffs on Canadian softwood lumber, in Ottawa on Tuesday, April 25, 2017.

Minister of Natural Resources Jim Carr speaks during a press conference in response to newly-levied U.S. tariffs on Canadian softwood lumber, in Ottawa on Tuesday, April 25, 2017.
Photo Credit: PC / Adrian Wyld

Government warns of job losses in lumber trade war with U.S.

The federal government warned forestry workers and lumber producers Tuesday to brace for another bruising trade war with the United States, as President Donald Trump’s administration announced that it is imposing duties of up 24 per cent on Canadian lumber imports.

Speaking to reporters in Ottawa Natural Resources Minister Jim Carr told the industry to prepare for inevitable job losses, saying the federal government stands ready to help cushion the blow.

“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.

“That is the reality of this countervail and it is going to result in some tough time for some operators across the country — we are aware of that.”

Thousands of ‘good, middle-class jobs’ at stake

Canada’s forest industry sustains hundreds of thousands of good, middle-class jobs in communities across the country, Carr said.

“We are prepared and well positioned to do whatever governments can reasonable do to help the workers, the industries and the communities who will be affected,” Carr said.

Carr said he is re-convening the Federal-Provincial Task Force on Softwood Lumber this week to examine additional measures.

“The task force was formed to share information and analyze and assess the needs of forest workers and communities,” he said.

‘Unwarranted and without merit’
Canada's forest industry sustains hundreds of thousands of good, middle-class jobs in communities across the country, says Natural Resources Minister Jim Carr.
Canada’s forest industry sustains hundreds of thousands of good, middle-class jobs in communities across the country, says Natural Resources Minister Jim Carr. © PC/RICHARD LAM

The U.S. Department of Commerce imposed on Tuesday punitive preliminary countervailing duty rates on Canadian softwood lumber in response to a petition filed by U.S. lumber producers in November 2016.

U.S. producers allege that Canadian lumber is subsidized because most of it is harvested on public provincially owned lands, unlike the U.S. where most of the timber is harvested on privately owned lands.

Ottawa, on the other hand, has successfully argued in both NAFTA and WTO trade tribunals that the fact that most of Canadian timber is harvested on public lands in no way amounts to a subsidy.

The new countervailing duty rates range from 3.02 per cent for JD Irving to a whopping 24.12 per cent West Fraser lumber company.

“These duties are unwarranted, and this determination is completely without merit,” said Susan Yurkovich, President of the British Columbia Lumber Trade Council.  “The allegations made by the U.S. lumber lobby are the same arguments they made in prior rounds of litigation, all of which were rejected and overturned by independent NAFTA panels.”

Hurting both sides of the border

The Department of Commerce is still considering U.S. industry claims that Canadian producers dump their product in the U.S. market, driving down prices. A preliminary antidumping ruling is scheduled for June 23, 2017.

“Today’s ruling confirms that Canadian lumber mills are subsidized by their government and benefit from timber pricing policies and other subsidies which harm U.S. manufacturers and workers,” said Cameron Krauss, legal chair of COALITION, an ad hoc association of U.S. lumber producers and related industries.

Carr said the U.S. accusations “are baseless and unfounded.”

“The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty,” Carr said.

“This decision will negatively affect workers on both sides of the border, and will ultimately increase costs for American families who want to build or renovate homes.”

Waiting for the other shoe to fall

During a technical briefing on the softwood duties Tuesday, officials said Canada is not likely to challenge legally under the North American Free Trade Agreement or with the World Trade Organization until next year.

They need to wait until the final determinations, which likely won’t happen until late 2017, officials say, which means a legal challenge wouldn’t come before January 2018.

The last trade dispute between Ottawa and Washington ended with a 2006 deal that expired in October 2015. At the time the Canadian lumber industry estimated that the dispute cost it over $5 billion.

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