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Jobs on the line as U.S. slated to add new softwood lumber duty

Jobs on the line as U.S. slated to add new softwood lumber duty
Canada
Workers sort wood at Murray Brothers Lumber Company woodlot in Madawaska, Ont. on April 25, 2017. Natural Resources Minister Jim Carr is announcing $867 million in financial supports to help lumber producers and employees weather the impact of punishing new U.S. tariffs on Canadian softwood exports

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The U.S. will likely slap a 10 per cent anti-dumping duty on Canadian softwood lumber imports on Friday, after imposing a tariff of nearly 20 per cent on the industry in April.

Unifor, Canada’s largest private-sector union, has said the forestry sector employs over 200,000 people across the country but warned that some of those jobs may now be on the line.

Canada’s trade representatives should “roll up their sleeves and work with the Americans to reach a deal [on softwood lumber exports] so we don’t have carnage in Canada as a result of this,” said Brenda Swick of law firm Dickinson Wright. Swick has been appointed by the Canadian government as an expert arbitrator under Chapter 19 of the North American Free Trade Agreement (NAFTA).

In April, the Trump administration gave the green light to a 19.88 percent tariff that it said would counteract government subsidies to the forestry industry in Canada. In addition, Washington is slated to announce a duty later this week that would punish Canada for allegedly selling its lumber at below-market prices.

The total tariff rate is expected to be in line with the one Washington imposed during the last time the two sides butted heads on softwood prices, according to Swick. That was before the adoption of the 2006 Softwood Lumber Agreement (SLA), which expired on October 12, 2015.

The SLA, which provided stability and predictability to the industry, gave Canadian provinces the option of choosing between an export tax of up to 15 per cent and an export tax of up to 5 per cent in addition to a quota on softwood exports.

The U.S. was widely expected to revert back to punitive tariffs after the SLA expired, according to Swick. The current dispute, she said, has little to do with the particular views of the Trump administration.

U.S. Trade Representative Robert Lighthizer has said he hopes to have an agreement in place before the renegotiation of NAFTA, which will begin in mid-August, she added.

“But that will require the parties coming to a meeting of the minds — and so far, they’re not there,” Swick said, adding that Canada and the U.S. may be in for “a period of protracted litigation.”

The Conference Board of Canada released a report in March estimating that Canadian softwood producers would pay $1.7 billion in duties a year and cut 2,200 jobs and $700 million in U.S. exports over the next two years before the dispute is settled.

On June 1, the Liberal government announced $867 million in financial supports to help lumber producers and employees weather the impact of U.S. tariffs on Canadian softwood exports.

The package includes loans and loan guarantees to help cushion the blow for forestry companies and to help them diversify away from the U.S. by exploring new export markets.

The U.S. lumber industry has long maintained that Canadian producers enjoy an unfair advantage because most of their Canadian counterparts operate on public land. In the U.S., by contrast, producers must pay to harvest trees on private land.
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