Canada Vows to Fight ‘Unjustified’ Duty Hikes on Softwood Lumber Proposed by Commerce

Trade Update • MAY 24, 2021

The U.S. Department of Commerce last Friday issued a preliminary determination in the second administrative review of Canadian softwood lumber imports. In it, the department proposes significant increases to the countervailing and antidumping rates currently levied against four of Canada’s top producers in addition to more than doubling the combined “All Others” rate to 18.32%.

These rates are only preliminary and may change in the final determination; therefore, there is no immediate impact on the duties companies are currently paying on their U.S. shipments. Once the final determination is published in the Federal Register — expected to be at the end of November — the new cash deposit rates will apply for shipments as of that date.

U.S. Trade Lobby Applauds Decision

News of the proposed rate hike was welcomed by the U.S. Lumber Coalition, the hugely influential trade association representing many of America’s sawmills and woodland operators, saying it “once again confirmed that Canadian imports are heavily subsidized and dumped into the U.S. market.”

The group applauded “the Commerce Department’s continued commitment to strongly enforce the U.S. trade laws against subsidized and unfairly traded Canadian lumber imports.” It furthermore argued that since being imposed in 2016, the latest round of softwood lumber duties had resulted in increased U.S. sawmill investment and capacity expansion.

Ironically, much of the growth in capacity is coming from Canadian firms such as Vancouver-based forestry giants West Fraser and Interfor expanding their U.S. operations to meet the surge in demand.

Canada Denounces ‘Unjustified’ and ‘Unwarranged’ Duties

In a statement, International Trade Minister Mary Ng called the proposed duty increases “entirely unjustified” and warned they “will hurt consumers, businesses and workers on both sides of the border.” Noting that the AD/CV duties are a tax, Ng said they “make housing less affordable for Americans and hinder economic recovery from the COVID-19 pandemic.”

That message was reiterated by B.C.’s Forestry Minister Katrine Conroy, and George Chow, the Minister of State for Trade, who said the province is “frustrated and very concerned about the continued effect these unjustified punitive duties are having on our forest sector.”

The two ministers vowed to work alongside the federal government to challenge the “unwarranted” duties, both through the World Trade Organization and the dispute settlement systems of the United States-Mexico-Canada Agreement.

The B.C. Lumber Trade Council also weighed in on the issue, saying it found the preliminary rates “troubling” and “particularly egregious given lumber prices are at a record high and demand is skyrocketing in the U.S. as families across the country look to repair, remodel and build new homes.”

Dismissing the claims of U.S. producers as “completely baseless” the group said its “strong hope” was for an end to the ongoing litigation and for a new cross-border softwood lumber deal, but until then it would “continue to vigorously defend our industry against these meritless allegations.”