The United States has decided to move forward with a plan to double the amount of duties it imposes on softwood lumber originating in Canada, based on what provincial politicians and experts foresters are calling unjustified and unfair allegations.
West Fraser does not expect the softwood lumber decision to impact its operations in Alberta, said Joyce Wagenaar, West Fraser’s director of communications.
The US Department of Commerce said on Nov. 24 it was imposing duties of an average of 17.9 percent on softwood lumber imported from Canada. The previous rate was 8.99 percent.
âPlain and simple: higher tariffs for our logging companies are totally unacceptable,â Nate Horner, Alberta Minister of Agriculture, Forestry and Rural Economic Development said in a press release.
Affected Alberta businesses will pay between 11.12 percent and 19.54 percent on future exports and will be assessed additional duties between 2.15 percent and 14.92 percent for exports that were made between 1 January 2019 and today to take into account the difference in rates.
âThe United States is a critical customer for us, accounting for 91% ($ 1.2 billion) of our softwood lumber exports. An estimated $ 5.6 billion in lumber duties have been collected from Canadian forest companies since 2017, âsaid Horner.
The tariff rates announced last week, as part of the second administrative review, will be in effect until the publication of the final results of the third administrative review, currently expected in August 2022.
The United States claims that Canadian lumber producers sell their product in the US market at a lower price than US lumber companies because they are subsidized. To increase the price of Canadian softwood lumber and encourage consumers to buy US lumber, the United States applies these tariffs.
âAlberta does not give subsidies to lumber producers. The Government of Alberta will continue to defend its forest management systems and forest sector as a fair and competitive trader through North American Free Trade Agreement (NAFTA) lawsuits and appeals. / Canada-United States-Mexico Agreement (ACCUM) and Trade Organization (WTO) Appeal Process, “said Lindsay Gunderson, communications advisor for Agriculture, Forestry and Rural Economic Development in the United States. ‘Alberta.
The allegations have proven to be unfounded in the past and continue to be so, she added.
Rising tariffs make Canadian products more expensive, which could mean lower demand in a declining market.
Fortunately, softwood lumber prices remain above historic levels, in part because of Canadian lumber duties, but also because of strong demand for Canadian lumber, Gunderson said. . Rising prices have resulted in increased profitability for businesses and higher revenues for the province. This was the case after the US real estate crash of 2006/2007.
Aspen Dudzic, director of communications at the Alberta Forest Products Association (AFPA), explained that there was a trade agreement with the United States from 2006 to 2015, which was not renewed. Since then, the United States has continued to impose new tariffs.
âThese tariffs are absolutely baseless, but they still risk harming the hard-working women and men in the province’s forest communities,â Dudzic said.
There are 70 communities across the province that depend on forestry, and it will be these communities that will be affected because although the demand is still very high, these costs are also very high, she added.
âIt’s going to be money coming out of the community instead of going towards salaries, wages, upgrading of facilities, all that sort of thing,â Dudzic said.
The combined anti-dumping and countervailing duty rates are almost 18%. Responding to the accusation that Canadian prices are artificially low, Dudzic said they did not take into account all the different factors at play.
âThe reality is that the structure of forest management operations in Canada and the United States, the way business is conducted, is fundamentally very different,â said Dudzic.
In the United States, much of the forest land is privately owned, and sawmill owners buy lumber directly from a private owner without having to pay for transportation, land management, or tree planting. , she said. Since this is private land, there are not the same kinds of reforestation rules in place as in Canada.
In Canada, most forest land is owned by the Crown and companies must enter into an agreement with the government to manage this land. Under this agreement, they pay stumpage fees to harvest a certain percentage of the forest each year, companies are responsible for transportation costs, reforestation costs, and all costs of land management. This is why allegations of subsidies have been dismissed in the past, Dudzic said.
Litigation is the next step in ongoing trade negotiations, and AFPA appreciates the government’s efforts to ensure that Canadian lumber is treated fairly. This is the fifth litigation process and each time Canada’s forest industry has been vindicated, Dudzic said.
The lumber industry is a key part of Canada’s forest sector, which contributed $ 25.2 billion to GDP in 2020 and employed 184,510 workers, Gunderson said.
In Alberta, sawmills have directly employed an average of 3,600 people each year for the past 10 years, while supporting jobs in other industries, including trucking, forestry, and even in pulp mills and mills. pelletizing, which depend on chips and sawmill residue for production.
Nine lumber exporters are participating in the third administrative review, with lumber production or wholesale operations in Hinton, Edson, Grande Prairie, High Level, High Prairie, Drayton Valley, Fort McMurray, Nampa, Grande Cache, Whitecourt, Acheson, Blue Ridge, Manning, Sundre and Edmonton.
Masha Scheele, reporter with the Local Journalism Initiative, The Hinton Voice