OTTAWA — Natural Resources Minister Jim Carr has announced $867 million in financial support to help lumber producers and employees weather the impact of punishing new U.S. tariffs on Canadian softwood exports.
The package announced Thursday includes $605 million in loans and loan guarantees to help cushion the blow for forestry companies and to help them explore new markets and innovations.
There is also $260 million over the next three years to expand existing programs to help diversify the market base for lumber products, allow the indigenous forestry sector to explore new initiatives and extend work-sharing agreement limits to minimize layoffs.
Carr said the package isn’t just about responding to the U.S. tariffs but to position Canada’s industry for the future.
“Our government recognizes the importance of finding new markets for our forest products,” he said at a news conference where he was flanked by Foreign Affairs Minister Chrystia Freeland and International Trade Minister Francois-Philippe Champagne.
“By diversifying into a variety of markets, we will be less vulnerable to actions from any one market and today we stand with softwood companies, their employees and their communities to support good jobs to create new opportunities and ensure sustainable prosperity for generations to come.”
The loans and loan guarantees come from the Export Development Bank of Canada and the Business Development Bank of Canada to help with things such as building up inventory or improve operational efficiencies.
The package also includes $80 million to support workers who want to upgrade skills and move to a different industry and almost $10 million to extend an EI work-sharing program which subsidizes the wages of eligible workers who go on reduced hours in order to prevent layoffs.
Another $10 million over three years is available for the Indigenous Forestry Initiative to encourage participation in the forest sector.
On April 28, the U.S. Department of Commerce imposed countervailing import duties as high as 24 per cent on Canadian softwood, arguing Canada unfairly subsidizes its industry by keeping the cost of logging artificially low. The rates are likely to go up after June 9, when the U.S. will decide whether to also impose anti-dumping duties on top of the countervailing ones.
The federal support package was well received by the Canadian industry.
“I think that the message sent by the Canadian forestry industry was heard by the federal government,” said Karl Blackburn, a spokesman for Quebec-based Resolute Forest Products. “It’s a good step in the right direction. The Canadian government is sending a strong message to the Americans who unfortunately use their laws and regulations in an abusive way against the Canadian forestry industry.”
Naomi Christensen, a lumber policy analyst with the Canada West Foundation, said the focus on diversification is key.
“I think that’s going to be the biggest benefit in the long run for the sector,” she said.
Carr said the package defends the industry against the “unfair and unwarranted” duties.
The government has been careful to characterize the money as a support package, not a bailout, in order to avoid running further afoul of protectionist forces in the United States. Senior government officials speaking on background said the package was put together with input from trade lawyers who ensured it meets Canada’s international obligations.
“We believe that this group of measures across the sector … is an appropriate response, that is one we think will stand the test of scrutiny,” Carr said.
However the U.S. Lumber Coalition, which brought the complaint that triggered the duties, criticized the package as another subsidy.
“The new funding adds to existing government subsidies boosting the Canadian softwood lumber industry, creating an uneven playing field with the U.S. lumber industry and putting American jobs at risk,” the group said in a news release.
This is the fifth time the U.S. has accused Canada of unfairly subsidizing its softwood industry and Carr and Freeland both say Canada has always prevailed against the accusations before the World Trade Organization or under the North American Free Trade Agreement.
A negotiated settlement on softwood expired in 2015, triggering the latest round of tariffs. It took more than four years to negotiate that deal.
The package was announced just hours after Freeland returned from Washington after two days of meetings with U.S. Commerce Secretary Wilbur Ross to try and negotiate a new settlement.
Freeland said a negotiated settlement is the best outcome and believes it can happen, but suggested the two sides are still pretty far apart.
“At this stage, the important thing about the negotiations is that we’re talking,” she said. “We are not yet at a stage where there is anything relevant to say to Canadians beyond the fact that we’re at the table.”
Canada can’t file an appeal of the tariffs until early next year, because the final determinations from the U.S. government on the softwood issue won’t be made until late fall.