The U.S. International Trade Commission has unanimously voted that the American lumber industry has been harmed by Canadian softwood lumber imports.
In a 4-0 vote Thursday, the agency sided with the U.S. lumber coalition that it was materially injured by imports from Canada.
The U.S. lumber coalition position is that Canada unfairly subsidizes its producers with low stumpage fees for harvesting trees on government land and that Canadian producers are selling wood into the U.S. at lower prices than they sell it at home.
The U.S. Commerce Department last month lowered preliminary duties. Most Canadian producers will pay a combined countervailing and anti-dumping rate of 20.83 per cent, down from 26.75 per cent in the preliminary determinations issued earlier this year.
West Fraser Timber pays the highest duties at 23.7 per cent. Canfor is next at 22.13 per cent, followed by Tolko at 22.07, Resolute Forest Products at 17.9 per cent and J.D. Irving at 9.92 per cent.
Exports down but prices up
Reasons supporting the vote are expected to be released in two weeks.
Canada’s softwood lumber exports to the U.S. have fallen since the Americans first imposed new duties earlier this year, but near-record wood prices have meant there has been less pain to the industry than expected.
Trade data from the United States Department of Agriculture shows the amount of Canadian softwood imported fell eight per cent for first nine months of 2017, compared with the same period in 2016.
However the value of those imports went up very slightly — 0.15 per cent — because even though less wood was shipped, each piece of lumber was worth more.
Demand from U.S. builders for lumber remains high and the additional cost is wrapped into the cost of new homes in the U.S.
No layoffs yet
Although workers in the Canadian industry fear layoffs, so far that hasn’t happened, says Joel Neuheimer, vice-president of international trade and transportation for the Forest Products Association of Canada.
“If we were not seeing the same kind of demand and the same kind of high prices we’re seeing then we might be in an entirely different type of situation,” said Neuheimer.
Canada and the U.S. continue to negotiate a new softwood trade agreement.
The complaints led to the current duties imposed by the U.S. Department of Commerce last spring and verified in November. Canadian producers paid about $500 million in deposits for the duties thus far, with more to come in 2018 if there is no settlement.
Canada is challenging the duties under both the North American Free Trade Agreement and at the World Trade Organization. The NAFTA dispute panel has to make a ruling by next fall. The WTO process could take years.