Trudeau confident Canada will win on softwood

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OTTAWA – The fact that new anti-dumping duties slapped on Canadian softwood companies came in lower than expected has Natural Resources Minister Jim Carr hoping the United States is finally accepting that Canada isn’t subsidizing the industry.

The U.S. Department of Commerce added another seven percentage points to the total average import duties on Canadian softwood Monday, accusing the industry of selling wood in the U.S. at rates lower than in Canada.

Industry analysts expected the duties would be at least 10 per cent.

They come on top of countervailing duties imposed in April which averaged out at about 20 per cent and range from about three per cent to 24 per cent.

The U.S. argues most Canadian wood is harvested from Crown lands and is sold for less than market prices as a way to subsidize the industry and make Canadian wood more attractive compared to American domestic products.

Canada says there are no subsidies at all.

On Tuesday, Carr told The Canadian Press the fact that the anti-dumping duties were less than expected and the fact that Commerce Secretary Wilbur Ross also agreed to exempt companies in Nova Scotia, Newfoundland and Prince Edward Island from paying the duties, is a positive signal in favour of Canada’s argument that it is doing nothing wrong in the free and fair trade of softwood lumber.

“I hope it’s an indication that the U.S. Department of Commerce sees that really we’re not subsidizing the industry at all,” he said in a phone interview.

Carr went further than his boss, Prime Minister Justin Trudeau, who earlier in the day refused to speculate on whether the lower duties meant Canada’s arguments were hitting the mark.

“I’m not going to be a pundit on this,” Trudeau told a news conference.

Trudeau said despite the latest events, Canada is pressing on with negotiations seeking a new deal with the U.S. on softwood lumber trade to replace the one that expired in 2015.

This is the fifth time since 1981 the U.S. has accused Canada of unfair trade on softwood and Trudeau and Carr say Canada wins the dispute at international trade tribunals consistently. However Canada can’t challenge the latest round of duties until the final determinations are made by the U.S. later this year.

Thus far, both the countervailing and anti-dumping duties are preliminary assessments.

The current duties would cost Canadian producers an estimated $1.7 billion a year. Canada has put an $867-million aid package on the table with loan guarantees and direct assistance to help companies innovate and expand their markets beyond the U.S. None of that money has flowed yet but Carr said it will start flowing soon.

Trudeau remained confident Tuesday a new negotiated deal will occur.

“But this is still an issue that affects thousands of jobs across the country in small communities,” the prime minister said.

“It’s something we take very, very seriously and will endeavour … to continue to work very, very hard on with the American administration.”

Carr said Foreign Affairs Minister Chrystia Freeland talks to Commerce Secretary Wilbur Ross multiple times a week and believes it is possible for a negotiated settlement to come prior to the start of NAFTA renegotiations in mid-August.

Conservative MP Randy Hoback, the official Opposition critic for Canada-U.S. relations, said Trudeau had a deal in hand with the former administration of president Barack Obama and he let it slip away.

Hoback is in Montana for a meeting with western governors, where he said opinions of softwood vary depending on the state. But he said the general consensus there is that a deal would have been possible had Canada more quickly embraced the Trans Pacific Partnership, a trade deal Obama wanted but which the U.S. has walked away from under President Donald Trump.

“They were looking for us to show leadership on TPP,” Hoback said.

“If we would have done that instead of doing another year of consultations across Canada, it would have given Obama the cover to push it through, and then would have also given us the ability to negotiate a softwood lumber agreement.”

Hoback said he thinks the ultimate result will be more consolidation of the industry in Canada, with the biggest companies snapping up small outfits to get access to their wood quotas without necessarily keeping their sawmills open.

“We’re going to see small towns turn into ghost towns,” said Hoback.

NDP MP Nathan Cullen said eliminating as many Canadian companies as possible is the main goal of the U.S. action. And he said there are already mills in his northern B.C. riding that can’t afford the duty bills handed them by the U.S.

But Susan Yurkovich, CEO of the B.C. Lumber Trade Council, said layoffs and job cuts will be avoided for the most part until the U.S. government sets final duty rates later this year — unless lumber prices suffer a precipitous decline.

— with files from Ross Marowits in Montreal.

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