Softwood border duties could hurt 25 N.B. sawmills, government says

Softwood border duties could hurt 25 N.B. sawmills, government says

Twenty-five New Brunswick sawmills owned by 14 companies will be affected if the United States imposes a duty on Canadian softwood lumber, according to the provincial government.

But the government announced Friday it intends to fight for exclusion from border duties on softwood lumber and last month set up a task force with representatives from 11 departments to look at what can be done to mitigate the effects of any duty.

"We are focused and working hard alongside the federal government to secure exclusions from any trade remedies that may be initiated by the American government, whether imposed through managed trade or through litigation," Treasury Board President Roger Melanson, who is also minister responsible for trade policy, said during a news conference in Fredericton on Friday.

The U.S. Department of Commerce is expected to announce as early as Tuesday a decision on levying duties against Canadian softwood lumber imports.

The duties are predicted to be between 20 and 40 per cent.

Melanson contends the New Brunswick exclusion on softwood duties works for companies on both sides of the border.

"Our businesses here are partners with businesses in the U.S.," he said. "It creates jobs here and jobs in the U.S.

Melanson is confident the Trump administration will agree once the facts about lumber are laid out.

"I can tell you, at the state level, I've been going to the state of Massachusetts and Maine … they get it," he said. "They understand what's going on and they are also advocating, we hope, the benefits of what we're talking about here today, to Washington."

The forestry industry contributes more than $1.45 billion to the provincial economy each year and employs more than 22,000 New Brunswickers, the government said.

"The softwood lumber industry is a valued and important part of the New Brunswick economy," said Energy and Resource Development Minister Rick Doucet.

Could hurt communities

And while it's too early to estimate with any degree of accuracy the impact the introduction of countervailing duties would have on the New Brunswick economy, there could be serious local impacts if specific mills are idled or permanently closed, officials said.

"We will be working hand in hand with families and communities who make up this industry, to mitigate any negative impacts from the preliminary determination," said Doucet.

"We know there are real risks, but we are mindful of not doing anything that will exasperate the situation.

"We don't intend to flirt with actions that might be interpreted as subsidies."

New Brunswick sawmills had their best year in a decade in 2016, producing 3.4 million cubic metres of lumber. That's an increase of 74 per cent from 2009, when the collapse of housing markets in the U.S. devastated demand for New Brunswick wood products.

New Brunswick mills account for about two-thirds of the lumber production in Atlantic Canada, and receiving favourable treatment from the United States is viewed as critical to sustaining the industry and jobs that depend on it.

Nearly $470 million of New Brunswick softwood was exported last year — more than 90 per cent of it destined for the U.S.

If the lumber mills get hit, Rick Doucett, head of the New Brunswick Federation of Woodlot Owners, said chances are his members will too.

"In order for some of the mills to stay in business with that kind of countervail, they may have to pass it on to the producer and the woodlot owners," he said.

"Or in the worst case scenarios, they go out of business altogether, and then we lose the market forever."

Paper tariffs cut

Earlier this week, New Brunswick's forest industry managed to dodge a similar but separate threat when the U.S. Department of Commerce slashed punitive tariffs on glossy "supercalender" paper produced by J.D. Irving Ltd. from 18 per cent to 5.97 percent.

The two New Brunswick cabinet ministers' held their news conference a day after to President Donald Trump suggested that Canada was taking advantage of the U.S. in some areas of trade, including lumber and energy.

Last week, a North American Free Trade Agreement review panel ruled mostly against the U.S. in a separate case over duties against Canadian mills producing glossy paper for things like magazines and catalogues.

"NAFTA, whether it's Mexico or Canada, is a disaster for our country," said Trump. "It's a trading disaster."

Trump continues to promise his supporters that he will renegotiate a better deal.