Smaller Canadian lumber companies will soon be required to cough up duties on lumber exported to the U.S. over the past 90 days.
The U.S. Department of Commerce announced Monday, April 24 that it would impose preliminary subsidy rates on Canadian lumber companies exporting lumber and certain wood products to the U.S. Those rates were expected to go into effect Monday, once notice was published in the U.S. federal register, but so far notice has not been given.
The rates will be imposed on West Fraser Mills, Ltd. (24.12 per cent), Resolute F.P. Canada, Inc. (12.82 per cent), Tolko Marketing and Sales Ltd. and Tolko Industries Ltd. (19.50 per cent), Canfor Corporation (20.26 per cent), J.D. Irving, Limited (3.02 per cent) and “all others” (19.88), but only J.D. Irving and all other Canadian lumber companies are being charged retroactively.
Ken Kalesnikoff, owner of Kalesnikoff Lumber in Thrums and board chair of the Interior Lumber Manufacturers’ Association (ILMA), isn’t sure why.
“We don’t understand how a situation where four of the big companies that were being investigated are now exempted of that and everybody else in Canada has to pay,” he said.
“Commerce preliminarily found that ‘critical circumstances’ exist with respect to J.D. Irving, Limited, and companies subject to the ‘all others rate,’” according to a fact sheet attached to the release put out by the U.S. Department of Commerce last Monday.
Commerce has not yet provided the rationale for its finding of critical circumstances.
Castlegar Mayor Lawrence Chernoff also reacted to local companies paying retroactively.
“For the small operators in the communities that’s … going to be a little difficulty, because, you know, they’re running on a shoestring now … and you’re just adding something else to the pile,” he says.
“To me it’s an unfair practice,” he adds.
Kalesnikoff says the duties will impact members of the ILMA differently.
“Some guys’ exposure to the U.S. market is maybe less than five per cent, where others are close to 100 per cent,” he explains. “So those that don’t have a lot of exposure into the U.S. market are going to be fine, those that have a lot of exposure to the U.S. market are the ones that are going to get hurt the most. The other ones that are going to get hurt really bad, are the ones that are doing specialty products.”
Specialty products — such as decking, paneling, siding, flooring and trim — are more expensive, therefore a 19.88 per cent duty calculated on such products would be higher than the same duty calculated on the same amount of a lower-valued, non-specialty product.
“High-value products are taking a real hit right now, and that’s what a lot of companies in the ILMA rely on to be able to survive,” says Kalesnikoff.
Commerce is expected to release its preliminary determination on anti-dumping duties on June 23, according to the B.C. Ministry of Forests, Lands and Natural Resource Operations. It’s expected that J.D. Irving and “all others” would be expected to pay the anti-dumping duties retroactively as well.