Canada always prevails in US softwood dispute and will again: Trudeau

Natural Resources Minister Jim Carr says everything is on the table in terms of possible help for the industry.

OTTAWA — A made-in-Canada solution to help softwood producers and workers weather the storm of US duties has been delayed at least until the end of May.

It has been almost a month since the US Department of Commerce slapped import duties of three to 24% on Canadian softwood, arguing Canada unfairly subsidizes its industry by keeping the price of logging artificially low.

Cabinet discussed a package of options for up to $1 billion in aid for the softwood industry, but negotiations with industry and provincial governments are still underway.

A source with knowledge of the negotiations says Natural Resources Minister Jim Carr had hoped to have the plan ready to present publicly by the end of this week, but things didn’t quite come together in time.

The earliest cabinet can discuss and finalize the plan is May 30.

Multiple sources say there were meetings at the provincial level to discuss the package options. A Quebec source told the Canadian Press the government was reluctant at first to do any kind of aid package, but has since changed its mind.

Quebec and Ontario have been pressing Ottawa to get loan guarantees ready since at least February.

The Americans have been wrong about Canada’s softwood industry before, and this time is no different, Prime Minister Justin Trudeau said.

“The fact that every time the US has done this over the past decades they’ve been shown to be wrong in doing that and we know that we’re going to be able to continue to stand and defend Canada’s industry,” Trudeau said.

Trudeau said the import tariffs the US Department of Commerce slapped on Canadian softwood imports last month are unfair and punitive, and that Canada won’t back down on the issue without a fight.

He said Canada strongly disagrees with the US Department of Commerce decision which took effect April 28, imposing tariffs of three to 24% on softwood imports.

Carr said “everything is on the table” when it comes to possible help for the industry as Canada prepares to fight the US tariffs in court, and with both the World Trade Organization and under the North American Free Trade Agreement.

He specifically mentioned loan guarantees, which are one of the more controversial options because some fear the US will see them as subsidies and will simply hike the tariffs more.

Frank Dottori, CEO of northwestern Ontario firm White River Forest Products, called that nonsense.

“We want a loan guarantee,” Dottori said.

He said the idea of loan guarantees as a subsidy has been debated and reviewed by international trade panels and rejected.

Still, the last time Canada and the US engaged in a softwood battle, the $1.5-billion aid package, including loan guarantees, was immediately called a new subsidy by the US trade representative.

In the end, it didn’t matter then because the US and Canada were already most of the way finished negotiating a settlement on softwood that was finalized just four months after the package was offered.

Dottori said his company is paying $500,000 a month in duties, a punishing amount he can withstand only because the market is incredibly hot and the Canadian dollar is low.

“What’s saving us now is a 74-cent dollar,” he said.

A loan guarantee will help his company keep people working until Canada and the US get a new deal, he said.

Canada can’t file an appeal of the tariffs until early next year because the final determinations from the US government on the softwood issue won’t be made until late fall. Negotiations to get a settlement agreement continue in the meantime.

Another key element of the aid negotiations involves assistance to bring more value-added work to Canada, so instead of exporting mostly raw logs, Canadian companies turn those logs into door and window frames, furniture and countertops, among other things, and sell the finished products.

Canada applied for exemptions to the duties for many of those finished products, such as bed frames and butcher block counters. No decision has yet been made on that issue.

It took Canada and the US four years to reach a negotiated settlement on softwood from the time duties were imposed the last time. Within a year of the duties being imposed, 15,000 workers were laid off.

Over the course of the dispute, Canadian producers paid more than $5 billion in duties to the US. The settlement required the US to return 80% of that.

News from © Canadian Press Enterprises Inc. 2016

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