Eacom Timber Corporation is hopeful that a new task force announced by the federal government last week will be able to dissuade the United States government from imposing stiff duties on Canadian softwood lumber exports.
The forestry company, which operates a large sawmill in Timmins, is worried that the U.S. Lumber Coalition will succeed in its push for punitive fees on Canadian lumber.
Eacom’s director of public affairs, Christine Leduc, said the newly-formed Federal-Provincial Task Force on Softwood Lumber, which is being chaired by federal Natural Resources Minister Jim Carr, will be able to negotiate a new softwood lumber deal with the US.
“We certainly welcome the announcement of a new task force. But it’s important that while the federal government negotiates with the U.S., the provinces are the ones that control the natural resources sector. And then you have companies that work in different provinces, so it can get really complicated,” said Leduc. “So from our perspective, we see this as continuing efforts on behalf of the Canadian government to position Canada’s best interests forward.”
In the announcement of the task force’s formation, the federal government said that new body is the next step toward a new softwood lumber deal — something that has been needed since the last one expired in October 2015.
“There has been ongoing engagement with the provinces, territories and industry over the past two years as the Government of Canada has sought to negotiate a new deal with the U.S. on softwood lumber. This is the next step in our strategic approach to this issue,” reads a statement from the federal Natural Resources Ministry.
Talk of new duties on Canadian softwood lumber is the result of a petition put out the U.S. Lumber Coalition in November calling on their government to put an end to what they see as “unfair” trade practises.
They allege Canadian provinces charge timber companies too little for the right to harvest trees on Crown land, and as a result Canadian imports are flooding the U.S. at below-market value, hurting American producers and causing job losses and mill closures.
“The coalition’s legal action seeks for the United States to impose duties to offset the harm caused to U.S. mills, workers and communities by Canadian softwood lumber production subsidies and Canadian producers dumping the subsidized merchandise on the U.S. Market,” reads a statement put out by the trade organization.
This petition spawned an investigation by the Department of Commerce which Eacom believes will likely lead to heavy import duties which will hurt it and other Canadian lumber companies.
“We will know by the end of April. And it seems very likely that by May, Canadian companies will be paying duties,” said Leduc. “There’s no way for us to estimate the impact of these duties because we don’t know what level they will be at. Will they be 15%? Will they be 20%, 25%, or go even as high as 50%? We don’t know.”
One serious complication for Eacom and other Canadian lumber companies hoping to put the kibosh on new duties is President Donald Trump.
Trump has taken an extremely hard line on international trading partners he perceives as trading unfairly with the U.S. He successfully shamed the Ford Motor Company out of moving a car plant to Mexico, and has derided China for flooding the American market with cheap steel at prices domestic producers cannot not compete with.
That last case sounds very similar to accusations the Lumber Coalition is making against Canadian lumber.
Leduc said the U.S. has to realize that it doesn’t have enough timber supply of its own demand, so it needs Canadian lumber to fuel its housing market. She says that as a real estate developer, Trump should be able to appreciate that fact better than most.
“We’re hoping that as a developer, Trump understands the importance of Canadian softwood lumber to the American economy. America needs Canadian softwood lumber,” she said.
But if duties are imposed, the Canadian lumber industry will be contesting their legality at the World Trade Organization, said Leduc, though that process could take a long, long time to be resolved. In the meantime, companies could be left to pay the duties.
That’s why Eacom wants the federal government to put in place a “Federal Loan Guarantee Program” that will provide money to companies so they don’t need to cut jobs or production to save money while the WTO process is ongoing.
“It’s important that the federal government is the one that develops this program, so producers are treated across the country,” she said.