Lumber duty could hurt western producers

Softwood lumber producers in Central Canada will be hardest hit by a new U.S. duty on Canadian exports and some believe western producers could be next as the government seeks new ways to generate cash in the sector.

Softwood lumber producers in Central Canada will be hardest hit by a new U.S. duty on Canadian exports and some believe western producers could be next as the government seeks new ways to generate cash in the sector.

With the United States set to slap a 10 per cent duty on Canadian imports of softwood lumber next week from four provinces — Ontario, Quebec, Manitoba and Saskatchewan — industry players believe the British Columbia and Alberta could be penalized next.

NDP critic Peter Julian said the anti-circumvention clause in the Canada-U.S. softwood lumber agreement provides ammunition for the United States.

“Although it hasn’t been formally filed yet, it’s a matter of time,” said Julian, whose party opposed the deal signed in late 2006.

In particular, he said stumpage rates in B.C. could be a target and the penalty could be in the “hundreds of millions of dollars.”

Rick Jeffery, president and CEO of Coast Forest Products Association, said the American lumber industry has been pointing to the B.C. stumpage system for years as a source of subsidy, something that is not allowed in the softwood deal.

He agreed the recent tax ruling “creates an incentive” for the U.S. government to launch more ligitation, even though stumpage fees are supposed to be covered in the deal.

In Moncton, Prime Minister Stephen Harper said the federal government has offered several ways of resolving the dispute with the Americans, and he’s disappointed the U.S. went ahead with the duty before Ottawa could get an international tribunal decision clarified.

“We should be clear that the tribunal did rule, that Canada is in violation of the (softwood) agreement, we are not disputing that,” Harper told a news conference.

“What’s at issue is what is the appropriate remedy, the appropriate penalty.”

Chris McIver, vice-president of lumber sales at Vancouver-based West Fraser Timber Co. Ltd (TSX:WFT), said while he hasn’t heard or seen anything that says there is another challenge pending, the Americans “continue to look for opportunities.”

“I wouldn’t be surprised if they would look at anything that would generate a penalty,” said McIver.

John Allan, of the Canadian Lumber Trade Alliance, said the United States has complained in the past about timber pricing policies in B.C. and Alberta, but taken no official action.

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