MONTREAL – Canadian softwood lumber producers will be hit only slightly less forcefully as the U.S. government reduced export duties for most Canadian producers after ongoing political talks failed to reach a deal.
In its final determination released Thursday, the Department of Commerce said most Canadian producers will pay a combined countervailing and anti-dumping rate of 20.83 per cent, down from 26.75 per cent in the preliminary determinations issued earlier this year.
Commerce Secretary Wilbur Ross said the revised duties were issued after the United States and Canada were unable to reach a long-term settlement to the dispute.
WATCH: Trudeau introduces plan to help softwood lumber producers
“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,” he 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.”
The Canadian government responded by saying it will continue to defend the lumber industry against protectionist trade measures.
“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,” Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr said in a joint statement.
“We urge the U.S. Administration to rescind these duties, which harm workers and communities in Canada. These duties are a tax on American middle class families too, whose homes, renovations and repairs will only be more expensive.”
The ministers said the government will turn to litigation if required to defend the industry and expects to prevail as it has in the past.
“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.”
Carr plans to convene the Federal-Provincial Task Force on Softwood Lumber in the coming days to discuss developments.
The U.S. agency said Canadian producers have exported softwood lumber to the U.S. at 3.2 to 8.89 per cent less than fair value. It also determined that Canada is providing unfair subsidies to its producers at rates of 3.34 to 18.19 per cent.
The preliminary duties forced Canadian companies to post hundreds of millions of dollars in deposits until a final ruling of harm is made by the U.S. International Trade Commission around Dec. 18.
The duties have driven up the price of lumber to cover the extra costs, adding to the cost of building a home in the United States. Canadian unions and lumber companies fear the issue will eventually cause layoffs once prices and demand falls.
The rate for Montreal-based Resolute Forest Products (TSX:RFP) rises marginally to 17.9 per cent from 17.41 per cent and J.D. Irving inches up to 9.92 per cent from 9.89 per cent.
West Fraser Timber (TSX:WFT) will continue to pay the highest duties, but its total is being cut to 23.7 per cent from 30.88 per cent.
Canfor (TSX:CFP) is next at 22.13, down from 27.98, Tolko at 22.07 vs. 27.03. Irving will pay 3.34 per cent in countervailing duties and no anti-dumping tariff, down from 9.89 per cent.
Lumber products certified by the Atlantic Lumber Board as being first produced in Newfoundland and Labrador, Nova Scotia or Prince Edward Island are excluded from any duties.
Also excluded is U.S. lumber shipped to Canada for some processing and imported back into the U.S., certain box spring kits, and box-spring frame components.
The United States imported US$5.66 billion worth of softwood lumber last year from Canada.
Softwood lumber importers will have to make cash deposits with the U.S. Customs and Border Protection based on the final rates.