As BC faces increased duties on softwood lumber, Canada seeks a resolution to protect its economy
Canada's International Trade Minister, Mary Ng, has criticized the US Department of Commerce for nearly doubling duties on Canadian softwood lumber, calling the increase unfair and unwarranted, as reported by Financial Post.
The duties have been raised from 8.05 percent to 14.54 percent, which Ng describes as “groundless and unfair,” arguing that they harm both consumers and producers on both sides of the border.
This development is the latest in a long-standing bilateral dispute that Ottawa claims hinder efforts to improve the cost and supply of housing.
The increase in the “all others” combined duty rate has sparked strong reactions from the government and industry in British Columbia. BC Forests Minister Bruce Ralston reiterated that the only solution to the dispute is the removal of the unfair softwood lumber duties.
The US Department of Commerce determines duties under the Tariff Act based on whether goods are being sold below fair value or benefiting from subsidies provided by foreign governments. In Canada, lumber-producing provinces set stumpage fees for timber harvested from Crown land.
US producers argue that these fees constitute an unfair subsidy since they are lower than market rates.
Canadian lumber producers have already paid over $9bn in duties, which remain in deposit until the dispute is resolved. The BC Lumber Trade Council has stated that the increase exacerbates already challenging conditions for the industry.
Canada is challenging the increased rates through a dispute panel under the Canada-US-Mexico Agreement (CUSMA). Ottawa has previously seen success at World Trade Organization dispute panels, which ruled that Canada's stumpage-fee system is not a subsidy.
Last year, a North American Free Trade Agreement (NAFTA) dispute panel found aspects of the US calculation of duties to be inconsistent with federal law.
The fifth administrative review of the duties by the US Commerce Department, released recently, set the new rate slightly higher than the preliminary rate of 13.86 percent announced in February.
This rate is expected to remain in effect until mid-August 2025, when the sixth administrative review will be applied.
The move has been welcomed by the US lumber industry, including the US Lumber Coalition. The coalition's chairperson, Andrew Miller, stated that the US does not need unfairly traded Canadian lumber imports to meet current levels of home construction.
Minister Ng emphasized that it is in the best interests of both Canada and the US to find a lasting resolution to the dispute. She reaffirmed Canada's commitment to defending the interests of Canadian workers, businesses, and communities reliant on softwood lumber.
Ng stated, “We will always fight for the best interest of Canadians and continue to use all available avenues to vigorously defend the workers, businesses, and communities who rely on softwood lumber for their livelihoods.”
