By Maurice Deslauriers, Regulatory Affairs, United States
On November 25, 2016, the U.S. Lumber Coalition (USLC) submitted documentation to the Department of Commerce and the U.S. International Trade Commission asking them to impose duties to offset the harm to U.S. mills, workers and communities by what is an alleged result of subsidized Canadian softwood lumber.
This action renewed what has been the longest and most bitter trade war between the United States and Canada. The issues haven’t changed, nor have the arguments for them. According to the USLC, Canadian provinces have been subsidizing their forestry sectors. For those of us who have been following the softwood lumber dispute, this same argument was made in 1982 and in subsequent submissions.
Known as “stumpage fees”, it is the view of the USLC that the Canadian government is “giving away timber” to Canadian-based forest companies through these and other means. Time and again over the years, at both NAFTA review panels and before the World Trade Organization (WTO), the rulings have stated that Canada is not subsidizing its lumber industry and that it does indeed adhere to a market economy.
Unfortunately, both countries have different forms of forest land ownership, with Canada’s lands being owned by the country itself (called “Crown” lands), while in the United States, most of the land used for forestry is in private hands.
So what happens next?
The overall investigation process for antidumping and countervailing duty cases can be divided into five stages, each ending with a determination by either the Department of Commerce (DOC) or the International Trade Commission (ITC). The first stage, called the “initiation” stage has already occurred, when the DOC decided, on December 2nd, to initiate an investigation into the USLC allegations.
As of today, we know that a vote was taken by the U.S. International Trade Commission (USITC) on January 6, 2017 which resulted in a 5-0 vote to continue the investigation. This was published in the Federal Register on Monday January 9, 2017.
Until such time as a “Final Scope” for the Countervailing Duty is determined, and the decision on any antidumping duty has been decided, the increase in supposition and industry “guessing” will continue, and even heat up with many having expectations of between 25% and 40%, with reasoning that will include the political environment, the Canadian dollar currently trading at $1.38 US, and the ever “historical review” of what has happened in past years.
It’s important to note that this time around, Canada has found new buyers for softwood lumber products in other countries, reducing its dependency on the U.S. market. And some Canadian companies have simply decided to purchase existing mills in the United States. It’s also worth noting that the U.S. National Association of Home Builders believes that duties or volume caps on imported lumber will raise the price of lumber, adding over a thousand dollars to the cost of a new single family home.
But let us not forget; there’s no “Final Scope”, so we don’t know exactly what will be covered under any countervailing order, or antidumping order for that matter, nor are there are new rates in place so we cannot state how much it will cost. We continue to read, and follow, and wait.
Both sides are still at the negotiation table trying to hammer out an agreement that will prevent these duties from even starting and while hopes are dimmed right now, the negotiation teams must be commended for continuing to try and reach an agreement. If history has taught us anything in this continuing dispute, it will end with a negotiated settlement