In the referendum conducted by USDA from April 17 to May 14, 2018, to determine the future of the softwood lumber industry’s market promotion check-off known as the Softwood Lumber Board, a super-majority of manufacturing and importing companies established a strong new mandate to advance the program for another term.
In a notice to the trade issued today, USDA reported that 78 per cent of companies participating in the referendum representing 94 per cent of volume voted to continue the program. For comparison, when the program began in 2011, 67 per cent of voting companies and 80 per cent of voting volume, respectively, voted to establish the program. Additional details will follow.
This super-majority mandate to continue the program reflects strong industry confidence in the diligence, determination, and effectiveness of the SLB and its staff to increase market demand for softwood lumber by supporting pro-wood communications (Think Wood and Wood, Naturally), code and standards expansion (American Wood Council), educating and assisting architects, engineers and construction specifiers (WoodWorks), and supporting innovative new applications and markets for softwood lumber products.
“This vote shows the softwood lumber industry’s strong support for a nation-wide promotion program," said chairman of Idaho Forest Group and chairman of the SLB Marc Brinkmeyer. "The vote affirms the industry’s view that the Softwood Lumber Board is an effective investment vehicle to grow the market for the benefit of all producers.”
“The industry has realized that we all have common competitors in the form of other building materials," said president and chief executive officer of Sierra-Pacific Industries George Emmerson. "The SLB has unified the industry’s efforts to compete in the marketplace — something that none of us can do acting individually.”
“With these changes the SLB is ready to move to ‘version 2.0’ and expand its activities to take advantage of new trends to more off-site construction and factory-built housing, the opportunities awaiting with mass timber applications and expansion to off-shore markets," said Don Kayne, president and chief executive officer of Canfor and chair of the SLB Programs Committee. "We are posed to build on our strong and successful campaign results of the last six years to ensure that softwood lumber is the material of choice not only in residential construction but also non-residential market segments.”
The agenda items include trade, softwood lumber, and the North American Free Trade Agreement (NAFTA).
“New Brunswick is Canada’s most trade-driven province and the United States continues to be our province’s biggest trading partner. This economic relationship is important to New Brunswickers,” Gallant said in a statement. “New Brunswick’s and Maine’s integration of softwood lumber is a great example as to how the tariffs imposed on New Brunswick softwood lumber will hurt the American economy.
This is Gallant’s third meeting with Ross in the past year.
The International Trade Administration (ITA) published documents outlining the Commerce Department’s decision of final countervailing and anti-dumping duties on certain softwood lumber products from Canada.
Canada responded by saying it will not back down.
“The Government of Canada will continue to vigorously defend our industry and its workers against protectionist trade practices,” Minister of Foreign Affairs Chrystia Freeland said in a statement.
“U.S. duties on Canadian softwood lumber are unfair, unwarranted and troubling.
“They are harmful to Canada’s lumber producers, workers and communities, and they add to the cost of home building, renovations and other projects for American middle-class families,” Freeland said.
U.S. Congress-themed newspaper The Hill reported that the U.S. Lumber Coalition’s co-chairman Joe Patton called the duties “a fair enforcement of U.S. trade law.”
Patton also said that, “For decades, the Canadian government has abused the law and provided massive subsidies to its lumber industry, harming U.S. producers and workers.”
The United States Trade Representative Tweeted, “We are completely confident that @CommerceGov and the U.S. International Trade Commission closely followed U.S. law and that their actions are consistent with our WTO obligations. We will of course defend this case and expect to prevail.”
We are completely confident that @CommerceGov and the U.S. International Trade Commission closely followed U.S. law and that their actions are consistent with our WTO obligations. We will of course defend this case and expect to prevail. https://t.co/jsIcoo24gh— USTR (@USTradeRep) January 3, 2018
Amid the final duty announcement, Commerce also marginally amended West Fraser’s countervailing, and Canfor’s anti-dumping duties.
West Fraser “submitted a timely, properly filed allegation that Commerce made certain ministerial errors,” according to the document.
Commerce investigated and agreed that an error was made, thus decreasing West Fraser’s subsidy rate from 18.19 per cent ad valorem to 17.99 per cent ad valorem. The “all-others” rate was consequently decreased to 14.19 per cent ad valorem.
Canfor also submitted an allegation citing errors in Commerce’s decision. Commerce agreed with Canfor’s submission as well and decreased its subsidy rate to 7.28 per cent. The “all-others” rate in this case was decreased to 6.04 per cent.
Nevertheless, the fact remains that final duties were imposed and Canada said it will be taking legal action.
“Canada has already begun legal challenges of these duties under NAFTA and through the WTO, where Canadian litigation has proven successful in the past,” Freeland said.
“We will continue to work with the provinces and territories, as well as with Canadian industry and workers, to find an enduring solution.
“Canada will also continue to engage with the U.S. Administration and with American legislators to come to a new agreement on softwood lumber,” she said.
She recently wrote a Letter to the Editor which was published in The Chronicle-Journal in response to an opinion piece criticizing the forest industry's views on saving caribou populations while still implementing sustainable forestry practices.
In an excerpt from her letter she writes, "The misrepresentation of the purpose and content of our informational website at www.cariboufacts.ca is unfortunate. To be clear, on behalf of Canada’s forest sector and our 230,000 direct employees, we are asking for three simple things:
1. Any land use decision must be based on the most recent and comprehensive science that looks at all factors, including incorporating unique local forest realities and the impacts of action on other species in the forest.
2. All impacted groups should be meaningfully engaged in the discussion, including governments, Indigenous communities, scientists, industry, tourism and recreation groups, and labour organizations.
3. Socio-economic analysis should be conducted to understand what, if any, impacts might be felt by local communities."
Read the full piece here.
The ITC holds the position that the Canadian government’s subsidies to its softwood lumber producers have harmed U.S. producers.
The U.S. Lumber Coalition supports the decision. “The massive subsidies that the Canadian government provides to its lumber industry and the dumping of lumber products into the U.S. market by Canadian companies cause real harm to U.S. producers and workers,” said the U.S. Lumber Coalition’s Jason Brochu. “Now, with a level playing field, the U.S. lumber industry, and the 350,000 hardworking men and women who support it, can have the chance to compete fairly.”
“With the enforcement of U.S. trade laws, lumber mills across the country will be able to make important investments in employees and mill operations so we can expand production to meet demand,” the U.S. Lumber Coalition’s Joe Patton said.
The National Association of Home Builders (NAHB) said the tariffs will increase the price of an average single-family home built in 2018 by $1,360.
"We are disappointed by the ITC ruling and believe this is a protectionist measure designed to safeguard the interests of major domestic lumber producers at the expense of American consumers,” chairman Granger MacDonald said.
“The U.S. and Canada need to hammer out an equitable agreement to resolve this ongoing trade dispute that will provide American consumers a steady supply of lumber at a reasonable price," he said.
BC Lumber Trade Council president Susan Yurkovich said the decision “is completely without merit.”
“The ITC finding of ‘injury,’ despite the current record-setting profitability of the U.S. lumber industry, makes it very clear that this was not an objective evaluation of the facts,” she said. "There can be no doubt that this process is biased in favour of the U.S. industry.”
The BC Lumber Trade Council said it plans to fight the decision and initiate appeals as soon as possible.
“The U.S. Coalition’s claims of injury ring particularly hollow given the extraordinary financial performance that the U.S. lumber industry is enjoying, and given that Canadian imports are at a lower level today than at the levels deemed non-injurious under both the 2006 Softwood Lumber Agreement and by the ITC itself in the last round of litigation,” Yurkovich said.
The Lumber Coalition petitioned the U.S. Commerce Department in November 2016 to launch an investigation to determine whether or not the Canadian government was providing unfair subsidies to its lumber producers.
The Commerce Department launched its official investigation in December 2016.
Over the course of the investigation, preliminary countervailing and anti-dumping duties were applied to Canadian producers.
The average preliminary countervailing tax was 19.88 per cent, while the average preliminary anti-dumping tax was 6.87 per cent. Combined, that meant most Canadian producers were paying 26.75 per cent in duties.
West Fraser, Canfor, Tolko, Resolute and J.D. Irving were individually investigated and paid combined taxes ranging from 9.89 to 30.88 per cent.
The Commerce Department ruled in November 2017 that the two softwood markets are unequal due to Canadian producers having unfair advantages over their American counterparts and announced its final duties.
However, the overall rate dropped from 26.75 to 20.83 per cent for most Canadian producers.
So far, Canadian companies are reported to be doing well thanks to record-high lumber prices and a steady demand for wood from the U.S.
Recently, a co-ordinated effort by groups opposed to forestry has attempted to label Ontario’s forest sector as unsustainable. On Oct. 25 an opinion piece in the Toronto Star, authored by the David Suzuki Foundation and Environmental Defense, asked, “will anyone act to save the caribou? Ontario is not.” Similar comments were made by CPAWS Wildlands League and the American activist group Natural Resources Defence Council (NRDC).
In response, Federation of Northern Ontario Municipalities (FONOM) president and mayor of Kapuskasing, Ont., Al Spacek said, “To claim Ontario has not acted to save caribou is conveniently ignoring over 20 years of work, 600 tracked animals and $11 million dollars of government research.”
On Oct. 18, Ben and Jerry’s ice cream wrote a letter to provincial ministers and premiers to say that they are concerned about “unsustainable logging practices” in Canada’s boreal forest. Northwestern Ontario Municipal Association (NOMA) president and mayor of Shuniah, Ont., Wendy Landry, stated, “These attacks on forestry are extremely concerning. Decisions on policy need to be made on the best available science and informed by the people who are most impacted.” She went on to say, “Arguments presented by those with special interests and no skin in the game cannot be viewed as credible. We are forestry. This is our backyard and we deserve to have a say in the policy that governs it.”
Chair of Rural Ontario Municipal Association (ROMA) and mayor of the Township of Rideau Lakes, Ont., Ron Holman, said, “Each day, we grow more concerned with how activist rhetoric may threaten forest sustainability. New policy based on misinformation will have unintended consequences for communities in every region of this province.”
Chief Ed Wawia, from Red Rock Indian Band, stated, “The socio-economic impacts of the proposed species at risk rules have the potential to negatively impact Indigenous communities. If these proposed new regulations are implemented, the sustainable forestry businesses we have built and the jobs dependent on them will be lost.”
Jamie Lim, president and chief executive officer of the Ontario Forest Industries Association (OFIA) said, “Since 2013, we have been asking the Ministry of Natural Resources to act on their commitment to establish a panel that would review the linkages between the Crown Forest Sustainability Act (CFSA) and the Endangered Species Act (ESA). A change in timelines and an extension to the current Section 55 Rules in Regulation is required to take the appropriate amount of time to get things right.” She continued, “These are the affected stakeholders that need to form the panel. 57,000 direct jobs in this province are at stake and we can’t let misinformation get in the way of evidence-based policy decisions.”
Unifor’s research director, Bill Murnighan, concluded by saying, “Forestry is one of the most important sectors of the Canadian economy, shapes many of our communities, and affects a wide and diverse range of stakeholders. Policy can dramatically affect forestry and workers need to ensure their views are heard and their interests are represented. Their livelihoods should not be threatened and undermined by misinformation and policy should be based on solid science.”
Minister Carr and the other members of the Federal–Provincial Task Force on Softwood Lumber denounced the unfair and punitive duties on Canadian softwood lumber imports that threaten the livelihoods of workers and communities that depend on the forest industry across our country.
The ministers and the Task Force discussed the economic impacts of the dispute and the rollout of the Softwood Lumber Action Plan, which made available $867 million to diversify Canada's forest products and international markets and support affected workers and communities.
The ministers and the Task Force reaffirmed their commitment to forest workers and communities that rely on softwood lumber and reiterated the importance of coordinating and consulting with forest sector stakeholders and engaging with Indigenous communities and companies affected by the dispute. They also declared their continuing commitment to helping the industry transform and use wood in new ways, by selling to new international markets and continuing to lead as a major player in the low-carbon and bioeconomy. Market diversification for wood products will create Canadian jobs and benefit the communities that rely upon the forest industry.
The ministers and the Task Force will continue to consult closely on Canada's response to these duties. Canada will remain in close contact with the provinces, territories, Canadian industry and its workers on this issue.
The Government of Canada maintains the view that a negotiated agreement that brings stability to the softwood lumber industry is in the best interest of both countries. The government will also continue to engage our American counterparts to encourage them to come to a durable, negotiated agreement on softwood lumber.
The decision is final, following preliminary taxes that were announced in April.
Anti-dumping taxes are required to be paid right away, but the decision on countervailing duties will be made in December 2017.
“The U.S. Department of Commerce’s decision on punitive countervailing and anti-dumping duties against Canada's softwood lumber producers is unfair, unwarranted and deeply troubling,” Canada’s Minister of Foreign Affairs, Chrystia Freeland, and Minister of Natural Resources, Jim Carr, said in a joint statement on Thursday.
“We urge the U.S. Administration to rescind these duties, which harm workers and communities in Canada,” the statement read.
A less dreary side of this decision is that the overall duty rates have been decreased from the preliminary round. They went down to 20.83 per cent from 26.75 per cent previously.
“While I am disappointed that a negotiated agreement could not be made between domestic and Canadian softwood producers, the United States is committed to free, fair and reciprocal trade with Canada,” commerce secretary Wilbur Ross said in a news release.
"This decision is based on a full and unbiased review of the facts in an open and transparent process that defends American workers and businesses from unfair trade practices.”
Ever since the softwood lumber agreement between Canada and the United States expired in October 2015, relations on this front – and chances for co-operation – have been dismal.
The U.S. Lumber Coalition’s decision to launch a petition in November 2016 asking the U.S. Commerce Department to impose duties on Canadian softwood lumber imports only made matters worse. The coalition cited unfair subsidies for Canadian lumber producers.
"We are pleased the U.S. government is enforcing our trade laws so that the U.S. lumber industry can compete on a level playing field," the coalition’s co-chair and co-president of Pleasant River Lumber Company Jason Brochu said in a statement.
"The massive subsidies the Canadian government provides to their lumber industries have caused real harm to U.S. producers and their workers,” he said. “With a fair-trade environment, the U.S. industry, and the 350,000 hardworking men and women who support it, have the ability to grow production to meet much more of our country's softwood lumber demand."
The National Association of Home Builders (NAHB) said the decision could not have come at a worse time amid rebuilding efforts in the aftermath of major hurricanes and wildfires in the U.S. “This tariff only adds to the burden by harming housing affordability and artificially boosting the price of lumber,” chairman Granger MacDonald said in a statement. “It is nothing more than a thinly-disguised tax on American home buyers, home builders and consumers.”
"This is particularly disappointing given that NAHB met recently with commerce secretary Wilbur Ross to express our concerns on this issue,” he said. “Unfortunately, the administration is taking protectionist measures to support domestic lumber producers at the expense of millions of U.S. home buyers and lumber consumers.”
In June 2017, the Canadian government announced it would be providing close to $870 million in support for all affected Canadian softwood lumber producers.
"Canada and the U.S. need to work co-operatively to achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced supply of lumber,” MacDonald said.
The Alberta Softwood Lumber Trade Council’s co-chair Paul Whittaker said the council is deeply disappointed by Thursday’s announcement. “Unfortunately, the U.S. lumber industry appears to have blocked all attempts at a fair resolution of this issue and we remain at an impasse. It now appears that the only path to resolution is through litigation,” he said.
The BC Lumber Trade Council echoed similar sentiments. “This trade action is being driven by the protectionist U.S. lumber lobby whose sole purpose is to constrain imports of high-quality Canadian lumber and to drive up lumber prices for their own benefit,” said president Susan Yurkovich. “Ultimately, this punishes American consumers who are now paying higher prices for Canadian lumber when they buy, build or renovate their homes.”
The U.S. Department of Commerce announced final combined anti-dumping and countervailing duty rates as follows:
Irving: 9.92 per cent;
Resolute: 17.90 per cent;
Tolko: 22.07 per cent;
Canfor: 22.13 per cent;
West Fraser: 23.76 per cent;
All others: 20.83 per cent
“We will forcefully defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past,” Freeland and Carr said. “We are reviewing our options, including legal action through the North American Free Trade Agreement and the World Trade Organization, and we will not delay in taking action.”
The Canadian government said Carr will convene the Federal-Provincial Task Force on Softwood Lumber in the coming days to discuss developments.
“There is a clear understanding that Canadian and American workers have both been injured by the siphoning off of manufacturing jobs to Mexico,” Dias said. “We agreed that Canada and the U.S. must work together to pressure Mexico to drive up wages significantly or face joint retaliatory measures.”
Unifor has previously called on both the Mexican government and on international corporations to end the exploitation of Mexican workers and create a level playing field for workers in all three countries. Dias and Ross believe that a united front is needed to raise Mexican living standards and forge a path to a new trade agreement.
Monday in Washington D.C., the Commerce Secretary acknowledged the benefits of trade with Canada, telling Dias that the U.S. wants to negotiate a new NAFTA deal.
During the meeting, the third between Dias and Ross, key trade issues were discussed including NAFTA, the auto sector and the unfair imposition of duties on Canadian softwood lumber exports to the U.S.
“We had a frank discussion but were unable to find common ground on the softwood lumber issue,” Dias said. “Given the wide difference in our positions I don’t anticipate a resolution to the dispute anytime soon.”
Unifor continues to maintain that all new trade deal must address the needs of workers and their communities.
For more information visit unifor.org/NAFTA.
Unifor is Canada’s largest union in the private sector, representing 315,000 workers in every major area of the economy. The union advocates for all working people and their rights, fights for equality and social justice in Canada and abroad, and strives to create progressive change for a better future.
This, according to West Fraser Timber chief executive officer Ted Seraphim.
Seraphim spoke Tuesday morning in a conference call saying the U.S. Lumber Coalition’s actions to date are damaging to U.S. homebuilders and home buyers in the long run.
“I want to reiterate that at West Fraser our preference continues to be to find a durable long-term solution. And as such we are prepared to be patient,” he said. “I can’t stress enough the appreciation we have for the support of our provincial governments in B.C. and Alberta and the Canadian government that work tirelessly to find a solution to this dispute.”
The softwood lumber agreement between Canada and the U.S. expired in October 2015. In November 2016, the U.S. Lumber Coalition launched a petition asking the American government to impose duties on Canadian softwood lumber imports, citing unfair subsidies to American lumber producers.
The U.S. Department of Commerce applied a 24 per cent countervailing duty on West Fraser in April 2017 — the highest of any other Canadian lumber producer affected. It also applied an antidumping duty of seven per cent in June 2017.
West Fraser has paid $65 million in duties so far in 2017. The countervailing duty requirement was suspended in August 2017 until the U.S. International Trade Commission comes to a final decision.
“The softwood lumber dispute has taken significant time and effort from many of our employees,” Seraphim said.
“The Coalition ultimately is the decision maker at least at this point in time in the U.S., and they haven’t shown a willingness to effectively negotiate,” he said. “I think patience on the Canadian side will be a virtue in the long run.”
West Fraser’s softwood lumber countervailing and anti-dumping duties cost the company $31 million for its current third quarter.
Its third quarter results also reported the company’s acquisition of six sawmills and a finger-joint mill in Florida and Georgia — all formerly part of Gilman Companies.
"After painful restructuring over the last decade, we see many opportunities to rebuild and create jobs that benefit our communities and sustain the environment," said Unifor's national president Jerry Dias.
The Future of Forestry: A Workers Perspective for Successful, Sustainable and Just Forestry is a report from Unifor's Forestry Industry Council, representing Unifor's 24,000 forestry members. The full document can be accessed from unifor.org/resources
Given the challenges faced by unjustified U.S. tariffs on softwood lumber, this timely publication argues that making the right policy choices will boost the value of the forestry industry and create good jobs by taking advantage of innovative technologies, new forest management practices and increasing skills.
Following a rigorous and wide-ranging consultation among forestry workers in every region, Unifor's report highlights the opportunities and challenges facing the nation's third largest export industry.
Unifor's key forestry recommendations include:
- Pursuing fair trade and higher global standards
- Improving forest management to ensure sustainability at home and globally
- Expanding public investments in forestry
- Prioritizing reconciliation with Indigenous communities
- Partnering with stakeholders to maximize job growth and skills development
- Reinstating National Forestry Council
Unifor is Canada's largest union in the private sector, representing more than 315,000 workers in every major area of the economy. The union advocates for all working people and their rights, fights for equality and social justice in Canada and abroad, and strives to create progressive change for a better future.
Lumber prices have surged and costs have increased for American buyers, while Canadian producers are benefitting from a profit boost.
At a time when the U.S. is dealing with the aftermath of Hurricanes Harvey and Irma, higher lumber prices are making re-building even more challenging for Americans who have lost their homes.
The U.S. Department of Commerce added preliminary countervailing duties on Canadian softwood lumber imports heading to the U.S. in April 2017. They ranged from three to 24 per cent across Canadian lumber companies and further increased in June.
Tensions between Canada and the U.S. have escalated with this new development.
Read the full story by Bloomberg.
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