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Two Canadian producers on next steps following softwood decision

Nov. 3, 2017 – Canadian softwood lumber producers Western Forest Products (WFP) and Interfor commented in separate news releases on the U.S. Commerce Department’s final decision to apply subsidies to all Canadian producers.

The average revised countervailing duty was lowered to 14.25 per cent, while the average revised anti-dumping duty was lowered to 6.58 per cent.

“Interfor is of the view that these duties imposed by the U.S. are without merit and are politically driven,” the company stated.

The U.S. government’s decision has prompted affected Canadian companies who once relied heavily on the U.S. market for profit, to visit global options.

WFP stated it has mitigated the duties by increasing lumber sales to China.

WFP's results for the third quarter of 2017 include countervailing duty expense of $2.9 million and anti-dumping duty expense of $3.6 million.

Interfor said it recorded $9.4 million of countervailing and anti-dumping expenses in its third quarter of 2017.

The softwood lumber agreement between Canada and the United States expired two years ago in October 2015. 

The US Lumber Coalition petitioned the American government in November 2016 to impose taxes on Canadian producers citing unfair subsidies provided by the Canadian government.

“The Canadian forest products industry and Canadian federal and provincial governments strongly deny these assertions which have previously been disproved in international courts,” WFP stated.

The Commerce Department launched an official investigation in December 2016. It decided to apply preliminary countervailing subsidies on all Canadian producers in April 2017 ranging from three to 24 per cent.

Preliminary countervailing duties of 19.88 per cent ended in August 2017, and the U.S. International Trade Commission will determine by December 2017 whether or not the revised duties will be paid going forward.

Anti-dumping duties of an average 6.87 per cent were implemented preliminarily in June 2017, and are required to be paid according to the revised percentages that were released Nov. 2.

“As we expect retroactive duty application to be reversed, consistent with the results of past softwood lumber disputes, we will recognize the retroactive duties as a deposit only upon payment,” WFP said.

“Interfor has not yet submitted any deposits in respect of retroactive duties relating to critical circumstances, which could total approximately US$3.0 million in respect of anti-dumping,” the company stated. “Interfor does not believe the retroactive application of such duties will stand up under final scrutiny which, in turn, should result in a full return to the company of any related deposits.” 

“We intend to maintain our strong balance sheet and diversified product and geographic sales mix as we await the outcome of the trade discussions,” WFP stated.

“Interfor intends to vigorously defend the company's and the Canadian industry's positions through various appeal processes, in conjunction with the B.C. and Canadian governments,” Interfor said.

November 3, 2017  By  Tamar Atik