By Molly Priddy
The U.S. timber industry scored a win on April 9 in the decades-long battle with Canada over softwood lumber, after the World Trade Organization ruled in its favor.
On April 9, the WTO decided that the United States Department of Commerce had done the correct calculations when it determined anti-dumping duties on Canadian softwood lumber.
“It’s a victory for the United States and the forest products industry,” said Chuck Roady, general manager of F.H. Stoltze Land and Lumber, as well as the president of the Montana Wood Products Association. “It was great to see an excellent decision on our part, because the U.S. rarely prevails in the WTO.”
Softwood lumber has been the subject of an enduring trade dispute between the two countries, and the most recent Softwood Lumber Agreement (SLA) lapsed in 2016 after 10 years.
The roots of the dispute come down to two different forms of government having two different methods of lumber harvest. Canada’s provincial government owns the majority of timberlands that provide trees to Canadian producers, charging an administered fee. In the U.S., the timberlands are typically privately owned, and the market determines the price of those logs through public sales.
“Both systems work until you sell the lumber in the United States,” Roady said.
In November 2017, the U.S. Commerce Department determined that Canadian exporters had sold lumber in the U.S. for 3.2 percent to 8.9 percent under fair market value, and that Canada is subsidizing softwood lumber producers at rates of 3.34 percent to 18.19 percent. The department determined that Canadian lumber producers should then pay a combined tariff of 20.83 percent.
In its mixed ruling on April 9, the WTO determined that the U.S. use of “zeroing” to calculate the anti-dumping duties is not prohibited. In the past, the organization had ruled against the methodology.
The ruling also determined that the U.S. had violated international trade rules when it calculated the tariffs on softwood lumber imports, which Canada applauded.
By ROSS MAROWITS
The head of Eastern Canada’s largest lumber producer said he is confident he can demonstrate to American authorities this month that the region deserves free and unencumbered access to the U.S. market.
The forestry sectors of Ontario and Quebec are modelled after the market-based systems in the U.S., and that should convince the U.S. Commerce Department that the region doesn’t engage in the unfair trade of softwood lumber, Resolute Forest Products Inc. CEO Richard Garneau said.
“So based on this, I think that we deserve the right to have access in Central Canada – in Quebec and Ontario – to the U.S. market,” he said in an interview after Resolute released its fourth-quarter and 2016 results.
The Montreal-based company was recently selected by the U.S. Commerce Department – along with B.C. companies West Fraser Timber Co. Ltd., Canfor Corp. and Tolko Industries – to provide details on how they operate as part of its investigation into alleged unfair trade.
The producers are required to respond to a questionnaire by the end of the month. A U.S. auditor will then visit the four companies for follow-up.
Contact Hakan Ekstrom, Wood Resources International LLC
China imported record-high volumes of softwood lumber in 2016 and softwood log imports reached their second highest level on record. Despite relatively pessimistic forecasts for wood demand early in 2016, China’s need for imported wood picked up during the summer and fall with import volumes of both logs and lumber being up about 20% in the 4Q/16 as compared to the 4Q/15. Total importation of logs and lumber (in roundwood equivalents) reached almost 76 million m3 in 2016, which was up 17% from 2015, and almost 38% higher than five years ago, according to the Wood Resource Quarterly (WRQ).
Over the past decade, the importation of softwood lumber has grown much faster than that of softwood logs. From 2006 to 2016, lumber imports were up from just over two million m3 to over 21 million m3, while log import volumes were up from 20 million m3 to 34 million m3 during the same period.
From 2015 to 2016, Russia has increased its shipments of lumber to China by over three million to a total of 11.6 million m3 (this includes logs that have been canted to avoid log export taxes). With lumber markets in the Middle East and Northern Africa (the MENA countries) and Europe having been relatively weak the past few years, many sawmills in the Nordic countries have increased their presence in the Chinese market with shipments being up over 35% in 2016 from the previous year. Although lumber supply from Finland and Sweden still account for only six percent of the total lumber imports, the share can be expected to increase in the coming years because of more intense marketing of predominantly higher-quality spruce lumber for the Chinese furniture, millwork and construction industries.