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British Columbia B.C. sawmill workers brace for punitive new U.S. duties on softwood lumber

A section of forest is harvested near Youbou, B.C., in 2015.

JONATHAN HAYWARD/THE CANADIAN PRESS

B.C. sawmill workers are bracing for an anxious summer after the United States increased tariffs on Canadian softwood lumber.

The U.S. Department of Commerce is imposing new anti-dumping duties, assigning specific rates for three major producers based in British Columbia: Canfor Corp. will pay 7.72 per cent; Tolko Industries Ltd. 7.53 per cent and West Fraser Timber Co. Ltd. 6.76 per cent.

Montreal-based Resolute Forest Products Inc. has been slapped with a 4.59-per-cent tariff, while other Canadian producers will pay a weighted average of 6.87 per cent for the anti-dumping duty. Combined with the 19.88-per-cent countervailing duty rate announced in April, that raises the overall punitive tariffs to an average of 26.75 per cent.

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"I'm not sugarcoating this. This isn't good," BC Lumber Trade Council president Susan Yurkovich said in an interview on Monday. "We shouldn't have this and it isn't fair. But at this point, we have had a bit of a mitigating impact from lumber prices being higher than they would otherwise be. That's the price response you get when you constrain supply."

British Columbia is Canada's largest lumber exporter into the United States, with a 55.2-per-cent share of sales volume last year, followed by Quebec (19 per cent), Ontario (7.9 per cent), Alberta (7.8 per cent) and New Brunswick (7 per cent).

Final determinations by the Commerce Department are expected in late 2017. Industry experts say the punitive duties could linger throughout 2018 and possibly into 2019, until Canada and the United States negotiate a solution.

Even if Canada wins the trade battle in the long term, smaller producers in the meantime will be especially vulnerable to the financial strain of the duties.

Ms. Yurkovich said it is too early to detail which B.C. sawmills might be affected, and among those that would be hurt the most, it is difficult to forecast potential job losses.

"We'll see what the markets do. Up until now, the markets have priced in the countervailing duties essentially," she said.

In the trade dispute dating back to the early 1980s, the United States complains that Canadian lumber is unfairly subsidized by provincial governments. That is because most of the trees in Canada are on publicly owned land, in contrast to the United States, where most timber is on private property and companies pay market rates to harvest it, U.S. producers say.

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West Fraser now has a combined duty of 30.88 per cent, Canfor 27.98 per cent, Tolko 27.03 per cent and Resolute 17.41 per cent.

"The instability that is being created right now in the province is not healthy for our industry," B.C. Forests and Lands Minister John Rustad said during a conference call on Monday. "When you've got the countervailing and anti-dumping duties in place that are obviously harming companies and their ability to be able to invest, that uncertainty in itself will create some challenges."

Mr. Rustad, whose BC Liberal government might soon be replaced by a political alliance of the NDP and Greens, cautioned about rocky times ahead for B.C. softwood producers.

"There may be situations where mills take some extended down time for maintenance and other things," he said. "Our industry is strong. We are competitive, and I do believe that we will be able to work through this. But if this extends for any length of time, it does put jobs at risk in this province."

The U.S. Lumber Coalition praised the tariffs announced by the U.S. Commerce Department. "We encourage the Department to continue strongly enforcing U.S. trade laws to respond to these unfair practices that have harmed U.S. companies and their workers," coalition spokesman Zoltan van Heyningen said in a statement.

The U.S. is imposing tariffs averaging 20% on Canadian softwood exports
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