US Commerce Dept Announces Anti-Dumping Determination for Canadian Softwood Lumber

29 June 2017

The US Department of Commerce confirmed on Monday 26 June that Washington has made a preliminary anti-dumping determination on imported Canadian softwood lumber, with a final determination slated for early September.

In describing the move, US Commerce Secretary Wilbur Ross said that Washington will “vigorously apply” anti-dumping (AD) and countervailing duty (CVD) legislation, while noting the agency’s decision to exclude softwood lumber products from Canada’s Atlantic provinces, namely Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

“The United States is committed to free and fair trade, as seen today with the preliminary decision to exclude softwood lumber from the Canadian Atlantic Provinces in the ongoing antidumping and countervailing duty cases,” he added.

The duties confirmed on Monday would range from 4.59 to 7.72. Combined with preliminary countervailing duties determined in late April, this could total between 17.41 and 30.88 percent in duties on Canadian lumber producers. (See Bridges Weekly, 27 April 2017)

The probe followed complaints by US lumber industry that Canadian producers are selling softwood lumber below market value in the US, a practice known as “dumping,” and claims that the Canadian softwood producers are benefiting from unfair state aid.

The subsidy-related concern specifically involves government-set “stumpage fees” for harvesting the timber, which US producers have long argued are artificially low.

Canadian response

While Canadian officials lambasted the new duties, they did welcome the move to remove some products from the investigation’s coverage, and suggested that the same should be done for the maritime province of New Brunswick.

Canadian Minister of Natural Resources Jim Carr and Minister of Foreign Affairs Chrystia Freeland issued a statement that expressed disappointment in the US Commerce Department’s decision to levy “unfair and punitive” anti-dumping duties.

The officials highlighted the “flawed rationale that is damaging to workers, communities and consumers” in both countries and pledged to continue their defence of Canadian lumber producers. For example, Canada intends to invest several hundred million dollars to support the sector, while pledging that this aid will “comply fully with our international trade obligations,” they affirmed.

Private sector response

The US Lumber Coalition had previously criticised the Canadian government’s announcement that it would be undertaking new investments in domestic softwood, which includes steps like better loan guarantees, among other options.

The US lumber group called the move an act that “further tilts the trade scale in Canada’s favour” and claimed that this would put thousands of US jobs in jeopardy.

However, US companies who require the timber for construction purposes have warned that trade remedies on Canadian imports could increase US consumer costs and hurt upstream producers.

In a 26 June statement, the National Association of Home Builders’ Chairman Granger MacDonald opposed the duties as “basically another tax on the American home builders and home buyers that will jeopardise affordable housing in America.” 

Despite the escalated tensions, government officials from both sides have reiterated their interest in concluding a negotiated settlement. The softwood lumber debate dates back years, with disputes under both the WTO and the North American Free Trade Agreement (NAFTA), among other legal forums.

The row had been put to rest for nearly a decade after the two sides clinched the Softwood Lumber Agreement (SLA) in 2006 and later moved to extend it through 2015. The deal had helped manage trade in the timber while ending litigation.

The current phase of lumber disputes between the US and Canada began in late 2016 when US lumber producers requested the probes. This came after the end of a one-year “standstill” on trade remedy investigations, which had been in place following the expiry of the SLA. (See Bridges Weekly, 1 December 2016)

The new anti-dumping and countervailing duty probes have raised tensions between the neighbouring economies, which are due to begin negotiations this summer with each other and with Mexico to update the North American Free Trade Agreement (NAFTA). (See Bridges Weekly, 11 May 2017)

Canada is the largest exporter of softwood lumber to the US, totalling US$5.66 billion in 2016, according to US government statistics. However, its share of the US lumber market reportedly fell from 31 to 27 percent over the past year, according to data reported by Canada.

ICTSD reporting; “U.S. slaps dumping duties on Canadian wood, Ottawa vows to fight,” REUTERS, 26 June 2017; “America expected to play hardball with second round of softwood lumber duties today,” FINANCIAL POST, 26 June 2017.

 

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