The U.S. Department of Commerce is on the verge of imposing duties on Canada's softwood-lumber exports, a move that will send shock waves across forestry-dependent communities from British Columbia to New Brunswick.
The department will announce its preliminary determination on Tuesday on countervailing duties for Canada's alleged lumber subsidies.
Precisely how much pain is felt by Canadian producers will depend on how successful the U.S. industry is in swaying the department. U.S. producers allege there has been a surge of softwood exports from Canada into the United States – "massive" shipments that would constitute "critical circumstances" to warrant not only duties in the future, but retroactively up to 90 days.
Commerce selected four mandatory respondents in Canada in the cross-border lumber dispute: Three B.C.-based producers (West Fraser Timber Co. Ltd., Canfor Corp. and Tolko Industries Ltd.) and Montreal-based Resolute Forest Products Inc.
New Brunswick-based conglomerate J.D. Irving Ltd., a major lumber producer regionally, is a voluntary respondent.
"Based on the most recent information received from the company respondents, the department should make an affirmative critical circumstances finding as part of its preliminary determination in the countervailing duty investigation," a group led by the U.S. Lumber Coalition said in a letter last week to the U.S. Commerce Department.
Industry analysts predict the United States will slap a preliminary countervailing-duty rate of least 20 per cent on Canadian exports, followed by an announcement in late June for an anti-dumping rate that is expected to be 10 per cent or higher. Analysts also forecast a ruling of critical circumstances, meaning punitive tariffs would be backdated 90 days from the effective date of duties on new exports.
The Canadian government denies the U.S. industry's allegations of a surge of lumber shipments south of the border. Ottawa counters that the U.S. producers have cherry-picked statistics to suit their pro-tariff agenda by creating new measurements that go well beyond traditional methods of gauging exports after an investigation is launched.
The U.S. industry group's "proposed comparisons appear to be solely aimed at finagling a way to show an increase in imports greater than 15 per cent, but that increase bears no relationship whatsoever to the purpose of the critical circumstances provision," the Canadian government said in a letter Thursday to the U.S. Commerce Department.
The 2006 Canada-U.S. softwood-lumber agreement expired in October, 2015. The U.S. lumber sector petitioned the Commerce Department to begin its probe this past November, after the expiration of a one-year litigation moratorium.
With tariffs anticipated to total at least 30 per cent on Canadian lumber exports, the stakes are enormous for forestry communities such as Quesnel in the B.C. Interior.
West Fraser, founded in Quesnel in 1955 by the Ketcham family, has grown over the decades to become one of the largest lumber producers in the world.
"Look what you've accomplished," B.C. Liberal Leader Christy Clark told West Fraser employees in Quesnel on Friday, while campaigning for the May 9 provincial election.
Brian Balkwill, West Fraser's vice-president of Canadian lumber, proudly pointed out the 400 jobs at the sawmill – one of the largest in British Columbia.
Forestry management and employees across Canada are nervously awaiting the details of punitive duties.
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).
The Atlantic provinces have escaped U.S. tariffs and quotas over the decades in the long-running softwood dispute dating back to 1982, but New Brunswick is being targeted this time around by the influential U.S. industry group named COALITION, which stands for Committee Overseeing Action for Lumber International Trade Investigations Or Negotiations.
COALITION said it isn't asking the U.S. Commerce Department to take action against Nova Scotia, Prince Edward Island and Newfoundland.
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