Published On: Tuesday, 25 April 2017

US Unveils Sanctions on BC Softwood Lumber

US Unveils Sanctions on BC Softwood Lumber
In 2016, forestry accounted for $14B in exports — 35% of the value of all goods exported, directly employs more than 60,000 people in over 140 communities around the province. In 2015–16, direct forestry revenues to the provincial government were $833M.

BC - The US Department of Commerce has recently announced that preliminary countervailing duties of nearly 20% will be applied to the majority of Canadian softwood lumber shipments entering the United States.

Preliminary countervailing duties in the form of cash deposits become effective around May 1, 2017, (once notice published in US federal register) for four months to the end of August. Thereafter, these duties will not be collected until the final orders are published in January 2018.

The US Department of Commerce argues that the countervailing duty is required to offset what in its view is unfair subsidies that Canadian and provincial governments allegedly provide to lumber companies.

The US Department of Commerce investigated five companies and assessed preliminary countervailing duties as follows:

  • Canfor: 20.26%
  • Irving: 3.02%
  • Resolute: 12.82%
  • Tolko: 19.50%
  • West Fraser: 24.12%

The preliminary countervailing duty assessed on all other companies is 19.88% (the average of the duty rates assessed on the five companies). In addition on April 24, the US Department of Commerce found “critical circumstances” applied on a preliminary basis to Irving and all other companies, but not to Canfor, Resolute, Tolko and West Fraser.

This means that Irving and all other companies may be assessed countervailing duties on their shipments made since about Jan. 31 (90 days prior to the notice being published in the US federal register, expected around May 1).

Cash deposits are held in trust by US Customs until all avenues for appeal are exhausted. Options for appeal will be assessed at the time all final orders are issued, which is currently expected to be in January 2018.

On June 23, the US Department of Commerce is expected to release its preliminary determination on anti-dumping duties. The Department of Commerce argues that an anti-dumping duty may be required to offset what in its view are unfair selling practices by Canadian lumber companies that are allegedly selling lumber into the US at a price below their costs or sales value in Canada. Critical circumstances also would apply to Irving and all other companies on a preliminary basis.

Taking a Stand: United Action on BC Softwood Lumber, summarizes actions the BC government has taken to date on the softwood lumber file. It and other frequently asked questions are available at the following link.