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Province seeking federal protection for softwood lumber industry

The Ministry of Natural Resources and Forestry is asking for a federal loan guarantee program to protect Canadian producers impacted by the Canada-U.S. trade dispute.
The province is anticipating Canadian softwood lumber producers will be subject to U.S. countervailing and anti-dumping duties as early as May.EACOM photo

The Ministry of Natural Resources and Forestry is lobbying the federal government for a loan guarantee program to help protect Canadian softwood lumber producers.

In a letter to federal Minister of Natural Resources Jim Carr, released on Feb. 10, Kathryn McGarry, Ontario’s minister for natural resource and forestry, said she anticipates countervailing and anti-dumping duties will be levied by the U.S. against Canadian softwood lumber producers, following U.S. investigations that are currently underway.

McGarry said Canadian producers could be paying duties by May.

On Oct. 12, 2015, the nine-year agreement — which outlined tariffs and guidelines for the lumber trade between the two countries — expired. Failing to negotiate a new arrangement, a one-year “standstill” period set in, allowing free trade while a solution could be found. But no new agreement was negotiated in that time.

American producers allege the lumber industry in Canada is subsidized by the provincial and federal governments, while in the U.S., prices are set by the market, a situation the U.S. contends is unfair. It believes Canadian lumber should be subject to a tariff to offset the subsidy.

McGarry said Canadian producers paid $5 billion in duties following the last round of negotiations.

“My ministry continues to work proactively to respond to the legal challenge from the U.S. in an effort to help minimize the duty rates that will negatively impact hundreds of companies and thousands of workers across the country,” McGarry writes.

“The legal process is a lengthy one and many companies will struggle to stay in business should the U.S. implement unreasonably high duties. Mitigating the risks stemming from trade measures imposed by the U.S. is of great interest to the Ontario government,” she added.

“I understand that Global Affairs Canada is considering options for supporting the forest industry during this trade dispute.”

The province wants to see a federal loan guarantee program that would “help support the industry confidence and hundreds of communities during a time of uncertainty,” McGarry writes, noting that this would allow for more equitable treatment among all producers, rather than provincially based programs.

“We must work together to mitigate the potential impacts and we join Québec in the call for this program in a timely capacity,” McGarry said.

The minister closes her letter saying she looks forward to working with the federal government on this item.