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Canadian Lumber Duty Determined
Letter from Ed
By Ed Brindley Jr.
Date Posted: 8/31/2001
The air is full of news items that are worthy of a letter. The phytosanitary issue of exported pallets to the European Union continues to worry many in the industry. Starting October 1, the EU will not accept untreated softwood lumber in pallets and other non-manufactured wood packaging. For complete coverage, see Chaille’s article in this month’s attached Lumber Pages. While it doesn’t answer every question, it is the best coverage I have seen as of mid-August.
The sawmill industry, particularly the hardwood industry, is undergoing severe changes. While many hardwood people may be absorbing conditions as if it is just another glitch in the market, many facts suggest that hardwood mills face severe challenges as furniture manufacturers move their plants offshore. See my article on page 18.
At the Atlanta EXPO last month the Wood Promotion Network presented its case as a united voice to speak for and fight for the forest products industry. For years I have heard pallet and sawmill people say that we need to unite as an industry and tell the "rest of the story." The Wood Promotion Network deserves your ear because our industry is finally doing this.
The "Pallet Board" chatroom on the Pallet Enterprise’s Web site has been carrying a countdown over the last couple of weeks with some interesting historical quotes. A wide variety of guesses about what this count down means are proliferating. The intrigue is building. I guess all of us will have to wait and see. Maybe the launch event will be history before this letter reaches readers.
One topic that has loomed large over our industry recently reached a climax. Ever since the countervailing duty on Canadian lumber shipped into the U.S. ran out, people have wondered what would happen. Would another duty of some kind take its place? Organizations on both sides of the border were jockeying for position to be heard. As a rule, Canadians spoke out against the old duty and proposed new duties. They contend that the Canadian government does not subsidize Crown stumpage for an unfair competitive advantage.
In the U.S. groups spoke out on both sides of the issue. The Coalition for Fair Lumber Imports presented a strong case for a duty to counteract what they perceive has been an unfair subsidy for the Canadian sawmill industry. The fact that the Canadian government owns and controls so much of the country’s forests, particularly in the West, sets the stage for subsidy accusations. Other groups, such as the National Association of Home Builders, jump up and down about what the duty costs people who are building and buying new homes. There is a built-in bias behind each group and why it takes its stand.
Recently, the U.S. Coalition for Fair lumber Imports reported that "the U.S. Dept. of Commerce issued its preliminary ruling that Canada does subsidize softwood lumber, distorting the U.S. softwood lumber market and injuring U.S. sawmills and their employees. The Department decided on a 19.31% duty, effective immediately, to offset the unfair trade practices in response to a petition filed April 2 by the U.S. Coalition for Fair Lumber Imports."
The Commerce Dept. announced that the new duty would be retroactive to mid-May. As had already been stated, the decision will not affect imports from the Maritime provinces. Canadian shippers have to post bonds or deposits to cover duties on exports to the U.S.
Import increases from Canada of more than 15% precipitated a finding of critical circumstances by the Commerce Dept., which allowed the duty to be retroactive for 90 days.
The preliminary duty will become final if the Commerce Dept. supports it on October 23 and the U.S. International Trade Comm. delivers a final ruling on December 7 that the U.S. lumber industry was injured by Canadian imports.
The border war over Canadian lumber coming from a subsidized industry has been ongoing for many years. I see nothing here that suggests any real long term solution has been reached. This is the fourth time since 1982 that a countervailing duty has been placed on Canadian lumber.