U.S. softwood duties on Canada see German imports grow dramatically

OTTAWA – U.S. imports of softwood from Germany
have grown tenfold in the first half of the year as
punishing duties pushed imports of Canadian
softwood down.
RBC Capital Markets analyst Paul Quinn estimates
Canadian lumber producers have plunked down
$500 million so far in countervailing and
antidumping duties since the spring.
The U.S. alleges Canada unfairly subsidizes its
softwood industry and has slapped on import taxes
averaging 26.75 per cent as punishment.
READ MORE: Canada, U.S. closing in on softwood
lumber deal but foreign wood a sticking point
Canada disputes the U.S. assessment but cannot
officially challenge the U.S. tariffs until after final
decisions are made about the level of duties to be
imposed some time this fall.
WATCH: New Brunswick coming to grips with
sobering reality of softwood lumber tariffs
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Canada and the U.S. are trying to negotiate a new
softwood trade deal to replace one that expired in
2015, but thus far have been unable to come up
with a plan acceptable to the U.S. Lumber
Coalition.
In the meantime, Canadian companies are paying
duties and prices are rising, making imports from
places like Germany suddenly more attractive.
“When Canadian lumber is more reasonably priced
it’s not that viable of an option,” said Jerry
Howard, CEO of the National Home Builders
Association in the U.S.. “The Germans this time
were poised to take advantage of it and I think that
they have.”
In the first six months of this year, German
softwood imports into the U.S. soared more than
900 per cent over the same period last year.
Germany’s share of imports rose from 0.35 per
cent in the first six months of 2016, to 3.6 per cent
this year.
READ MORE: B.C. Premier John Horgan travels to
Washington, D.C., to talk softwood lumber
Overall, U.S. imports of softwood were up three per
cent over the first six months of the year.
WATCH: Trudeau government unveils plan to help
softwood lumber producers
However Canadian shipments were down one per
cent.
As a result, Canada’s share of U.S. softwood
imports fell to 92 per cent from 96 per cent.
Richard Walker, a spokesman for the Forest
Products Association of Canada, said Canada’s
softwood exports were growing before the duties
were imposed at the end of April. In May and June
they fell.
“It’s the American
consumer who has been
paying the price to date as
lumber prices have gone
up in anticipation of the
duties,” said Walker.
Germany wasn’t the only beneficiary. Austrian
softwood imports were up 178 per cent, Romania
was up 141 per cent, Russia 42 per cent and
Sweden 41 per cent.
Howard estimates the softwood dispute has pushed
prices for home builders up 20 per cent, which
means new homes are costing U.S. consumers
more and more Americans will be priced out of the
market.
“If our own forestry practices in the United States
were more modernized and more state of the art
we could probably produce almost enough lumber
to satisfy our needs, but right now we have to
supplement our own domestic harvests
somewhere,” he said.
Quinn used the average duties imposed and
multiplied it by the amount of wood exported to
estimate as of now, Canadian producers have paid
close to $500 million in duties as of August.
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NAFTA negotiations and the softwood lumber
dispute
The second quarter reports for six of the country’s
biggest softwood producers show the impact of the
duties up to the end of June. Canfor deposited the
most at $34.8 million, followed by West Fraser
which paid $34 million. Resolute has deposited $4
million, Interfor $7.3 million, Western Forest
Products $9.2 million and Conifex $4.6 million.
Most companies are being asked to pay the duties
retroactively for 90 days. Interfor’s quarterly report
suggests that could amount to another $11.4
million for it alone.
The duties deposited are held in trust by the United
States until all Canada’s appeals are completed. If
Canada and the U.S. reach a settlement
agreement, that agreement will likely dictate where
those duties end up.
The last time there was a softwood trade dispute,
the U.S. collected $5.2 billion in duties over five
years and the settlement in 2006 included a clause
that the U.S. would repay $4.5 billion of it.

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