Castlegar’s mayor is worried that proposed duties on softwood lumber exported to the U.S. will negatively impact the local economy.
“Without a doubt in my mind, I’m worried,” Mayor Lawrence Chernoff told the CBC Wednesday. “The forest industry plays such a big role in the community.
“Our community depends on small business and small business depends on the employers that surround our community … We lose employment, people leave.
“People are feeling, how many times will this happen?”
The U.S. Department of Commerce announced Monday that it had “determined that exports of softwood lumber from Canada received countervailable subsidies of 3.02 percent to 24.12 percent” in its preliminary decision in the countervailing duty investigation of softwood lumber from Canada.
In a subsequent statement, Wilbur Ross, the U.S. secretary of commerce, said “… the Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us.”
Stephen Harris, instructor in the Selkirk College School of Business and a consultant for the Interior Lumber Manufacturers Association, says that if Commerce confirms its initial decision when it makes its final determination, expected Sept. 7, it would have big effects locally.
“It’s certainly going to have some big effects for some of the local mills across the Kootenays,” he says. “Right here in the region, mills like Kalesnikoff, a percentage of their products goes into the U.S., but they’ve spent a bunch of time and effort over the past few years to diversify.”
Other companies in the region will experience an even bigger impact.
“We also have forestry companies across the Southern Interior who’ve got a majority of their product going into the U.S. and for those companies, this is a really big blow,” Harris added. “Those duties are going to add up, put a real crimp on their ability to operate competitively in the U.S. market.”
In 2016, Canada exported “an estimated $5.66 billion” in softwood lumber to the U.S., according to the U.S. Department of Commerce. The $1 billion in duties, if imposed, are expected to lead to significant job loss in the Canadian forestry industry.
“In the Castlegar region, the West Kootenay region, we’ve got several mills right here that employ hundreds of people directly and thousands of people indirectly when we look at logging contractors, and truckers, and service providers, and suppliers — and so anything that impacts the ability to get your product to your market has a ripple effect across the economy and that’s a real challenge for local employers,” says Harris.
But Harris says it’s hard to tell when locals will start feeling an impact.
“One of the challenges with these types of international trade deals is the process can take years sometimes to work through, especially if it ends up in court,” he says. “There’s a long process of back and forth negotiation. It can take a while for some of the effects to be felt. So right now, it’s a bit early to say what’s going to happen, but I know that everyone in the industry is watching this very closely because if you count on that U.S. market as a major customer base for your company, you’re probably pretty concerned right now about what the future looks like.”
The petitioner for the U.S. Department of Commerce’s investigation was the Committee Overseeing Action for Lumber International Trade Investigation or Negotiations (COALITION) — an organization made up of U.S. forestry companies, the Carpenters Industrial Council and the U.S. Lumber Coalition, Inc., which is itself “an alliance of large and small softwood lumber producers from around the United States that formed in 1985 to respond to the devastating effects of Canada’s lumber subsidies on the U.S. lumber industry.”
In response to the announcement from Commerce, Jim Carr, Minister of Natural Resources, and Chrystia Freeland, Minister of Foreign Affairs, issued a statement in which they said the following:
“The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty. The accusations are baseless and unfounded.
“This decision will negatively affect workers on both sides of the border, and will ultimately increase costs for American families who want to build or renovate homes. The U.S. National Association of Home Builders has calculated that a $1,000 increase in the cost of a new house would put home ownership beyond the reach of more than 150,000 American families, and jeopardize thousands of jobs in the American home construction industry.
“The Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation. In ruling after ruling since 1983, international tribunals have disproved the unfounded subsidy and injury allegations from the U.S. industry. We have prevailed in the past and we will do so again.”