Federal government set to help softwood industry with $1-billion aid package

OTTAWA – Natural Resources Minister Jim Carr is set to unveil about $1 billion in financial supports for softwood lumber producers and their employees.

Cabinet discussed the options for a package May 9 but the federal government wanted more input from the provinces via the special working group Carr established in February.

A government source confirms Carr will unveil the details Thursday in Ottawa along with Foreign Affairs Minister Chrystia Freeland.

It will include employment insurance enhancements for laid-off workers, loan guarantees in some form and funds to assist companies with exploring new markets and innovations.

The source — not authorized to discuss the matter in advance of the announcement and so speaking on condition of anonymity — characterized the money as a support package, not a bailout.

Were the United States to view the package as as bailout or subsidy, it could make the situation worse.

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On April 28, the U.S. Department of Commerce slapped countervailing import duties as high as 24 per cent on Canadian softwood, arguing Canada unfairly subsidizes its industry by keeping the price of logging artificially low.

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Carr has repeatedly called the allegations baseless, saying the U.S. has lost repeatedly when challenged by Canada before the World Trade Organization or under the North American Free Trade Agreement.

A negotiated settlement on softwood expired in 2015, triggering the latest round of tariffs. Canada and the U.S. continue to try to reach another negotiated settlement.

On Wednesday, the Conference Board of Canada released a report saying 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 9, the U.S. Department of Commerce is set to decide an anti-dumping claim against Canadian softwood producers, and is expected to add as much as another 10 per cent tariff on top of the countervailing duties.

Canada can’t file an appeal of the tariffs until early next year because the final determinations from the U.S. government on the softwood issue won’t be made until late fall.

It took Canada four years to reach a negotiated settlement the last time, and 15,000 workers lost their jobs in the first year alone. Canadian producers paid about $5 billion in duties then, 80 per cent of which had to be returned to them as part of the negotiated settlement.

This time around, a low Canadian dollar and high market demand for softwood is helping to cushion the blow.

The aid package will include a push to get Canadian companies to do more of the value-added work on softwood in Canada. That means instead of exporting raw logs, Canadian companies use the logs to make doors and window frames, furniture and countertops.