Local sawmills nervously await softwood decision

Ontario’s lumber exporters are outraged over the U.S. response to proposals made by the Canadian government aimed at reaching a settlement on the softwood trade dispute.
The U.S. dismissed the Canadian proposals as totally unacceptable and came back with a counterproposal that would impose a 37 percent export tax on softwood lumber entering the U.S. from Canada.
“This is a slap in the face to Canada and all Canadians,” said Tim Millard, president of the Ontario Forest Industries Association (OFIA).
“The U.S. lumber coalition’s agenda is now fully exposed, and that agenda is to totally cripple Canada’s softwood lumber sector and to act directly against the principles of free trade.
“The proposed 37 percent export tax is proof of the U.S. forestry lobby’s plans for Canadian softwood lumber industry,” Millard charged.
The U.S. has proposed the tax would be reduced if the provinces’ forest management policies are reformed.
Although local reaction wasn’t as incendiary, fears still were evident in sawmills and lumber yards around the district.
In late March, the Ministry of Natural Resources was said to be considering a multi-billion dollar bailout of the industry, but not everyone agreed with this as a solution.
“Oh, definitely not, but according to [our broker], we don’t have to pay until this is settled,” said Kendal Lundy, owner of Nickel Lake Lumber east of Fort Frances.
Another complication from awaiting the pending decision is bonds are being waived until the issue is decided. Only then will the mills know what their bill might be.
“[A fax] right from our broker says we don’t have to pay until the whole thing is totally done,” Lundy noted. “Even our other tariffs, I don’t know how we’re going to pay it.
“The way we stand, I don’t have any intention of paying,” he stressed.
Roughly 50 percent of Nickel Lake’s customers are American.
“It used to be more but because of this, we’ve cut [down],” Lundy said. “We started budgeting a little bit at first but after a year, what are you supposed to do?
“If the U.S. gets what they want, our shipments are going to have to stop.”
Lundy said he also will have to consider layoffs or slowing production.
Meanwhile, Dale Kaemingh, general manager of Manitou Forest Products near Barwick, said they hope to continue to increase production and sales, but admitted much hinges on the softwood lumber decision.
“That’s if the Americans don’t push through with their plans. We were paying 20 percent duty, and from November to December, we’ve paid a duty of 33 percent,” he noted.
“Right now, it’s at 12-and-a-half percent. If the legislation is pushed through, it’ll probably kill our American trade,” Kaemingh warned.
Like Lundy, half of Manitou Forest Products’ market is in the U.S. And given this region’s geographical positioning, Canadian markets are too far away to be deemed viable.
International Trade minister Pierre Pettigrew announced Canada will launch formal proceedings under the North American Free Trade Agreement (NAFTA) challenging the U.S. Department of Commerce’s final determination of subsidy on Canadian softwood lumber.
“The Commerce Department decisions are punitive, unfounded in substance, and were made to mollify protectionist interests in the United States,” Pettigrew stated in a recent news release.
“I am fully confident in our NAFTA and WTO challenges, and I am taking this action today to best advance the interests of our industry.
“We have won before. We will win again.”
The Canadian government has called for the establishment of a binational panel under Chapter 10 of NAFTA to review the U.S. final determination subsidy.
The results of the panel review are binding on the U.S. If Canada is successful with the challenge, the U.S. administration will be required to rescind its trade action, refund the countervailing duties imposed, and cancel any bonds.
The next stage after final determination is the International Trade Commission’s ruling in May on whether the U.S. market has received injury from the Canadian forest practices.