N.B mill owner tells U.S. thousands of Maine jobs at risk over softwood lumber duties

One of New Brunswick's largest forestry companies is using its U.S. connections to argue the province should be excluded from punishing U.S. duties on softwood lumber exports.

Twin Rivers Paper Co. has told the Trump administration that thousands of jobs in Maine are jeopardized because New Brunswick isn't exempt from the duties.

That's because the company's Edmundston mill is linked, literally, to a large paper mill in Madawaska, Maine, that relies on New Brunswick wood chips and biomass.

But the June 12 request to U.S. Commerce Secretary Wilbur Ross failed to win the exemption for New Brunswick.

In a preliminary decision Monday, Ross excluded the three other Atlantic provinces from countervailing U.S. duties announced earlier this year, leaving New Brunswick subject to them.

A final decision will be made on those duties later this summer, and Twin Rivers can also seek its own individual review.

Ross also announced a separate anti-dumping duty Monday of 6.87 per cent for most Canadian companies.

This duty will also not apply to Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, but it will hit New Brunswick mills.

In the past, New Brunswick was covered by an exemption from tariffs for all four Atlantic provinces.

Twin Rivers intervenes

Monday's U.S. actions weren't a surprise because the Trump administration had signalled earlier this year it was considering them.

"It hasn't inflamed a crisis situation really," said Mike Legere of the industry group Forest NB. "I think it's because we were expecting it to come.

"We're looking at what will be the next steps here moving forward. Obviously, we're sticking to the position that we have to return to the negotiating table with the Department of Commerce and get a settlement."

The June 12 letter from Twin Rivers represents the first time the company has taken its own stand on the issue separate from the New Brunswick Lumber Producers, an ad hoc group formed to make the province's softwood case in Washington.

Twin Rivers has also hired a Washington law firm, which told the U.S. administration June 15 that the company is an "interested party" that will be making arguments on its own behalf in the case.

"They're looking out for their best interests, the same as all the provinces are looking out for their best interests," said Mike Legere, the executive director of the industry association Forest NB.

He said he didn't think the move by Twin Rivers would hurt the united front that the New Brunswick industry has been trying to project.

"If we get to the point where negotiations get stalled and this gets prolonged, that makes it difficult for some mills," he said. In that case, Twin Rivers may exercise its right under U.S. law to seek an expedited review of its own.

"That is part and parcel of the whole process," he said. "They're entitled to those. So I'm not surprised that individual companies are starting look at, 'what kind of case can we make for ourselves to at least have our tariff issues addressed?'"

Trade Minister Roger Melanson said while the provincial government is working for all players, Twin Rivers has to look out for its own interests.

"If I were a business owner, I'd do the same thing," he said.

Twin Rivers did not respond to a request for a comment on its move.

New Brunswick loses exemption

In May, a coalition of U.S. lumber companies asked the administration to exempt Nova Scotia, Prince Edward Island, and Newfoundland and Labrador from duties, citing a three-decade history of exclusion.

But in his June 12 letter to Ross, Twin Rivers CEO Ken Winterhalter said the U.S. industry group should have pointed out that New Brunswick used to be included in that exemption.

The U.S. coalition did not provide any evidence about New Brunswick "to support this drastic departure from 30 years of precedence," he wrote.

He said the exemption "must be consistent with the established practice in the prior cases" and include New Brunswick.

Winterhalter also laid out why the lack of an exemption might backfire on the U.S. and hurt jobs in that country.

He told Ross the company's mill in Madawaska, Maine is "tightly integrated" with the company's pulp mill in Edmundston and its sawmill in Plaster Rock.

The Plaster Rock mill produces wood chips and biomass for the Edmundston mill. The biomass is burned in a co-generation plant there to generate steam, powering the mill's conversion of the woodchips to pulp.

The pulp is ship ped across the Canada-U.S. border by pipeline to the Maine mill, where it's turned into paper. Some of the steam generated in Edmundston is also pumped across the border to power the U.S mill.

Maine jobs at play

The U.S. duties "would drastically increase the cost of the wood chips and biomass" used by the Madawaska paper mill in Maine, Winterhalter wrote.

"These increased costs have the potential to destroy the financial viability of the Madawaska operation and eliminate thousands of jobs in northern Maine."

Winterhalter's letter said the Twin Rivers mills account for 5,872 direct, indirect and spin-off jobs in Maine and New Brunswick.

Twin Rivers wouldn't be the first company to benefit from its U.S. presence in the softwood case.

J.D. Irving Ltd. was able to win a lower countervailing tariff rate of just three per cent — after it voluntarily submitted to an individual investigation by the U.S., the only New Brunswick company to do so.

Irving's request for an individual investigation was supported by Maine's two U.S. senators, Susan Collins and Angus King. One of King's staffers called it an "important issue for Maine," a reference to Irving's extensive operations in the state.

Melanson revealed Tuesday that New Brunswick is leveraging its links to Maine in another way. He said Gov. Paul LePage will make the province's case at a meeting Wednesday with President Donald Trump at the White House.

U.S. sees subsidies in N.B.

The U.S. industry has argued New Brunswick should no longer have an exclusion from tariffs because the volumes of wood from Crown forests going to sawmills has crossed a threshold that means companies here are benefiting from unfair subsidies.

Legere said rather than look at volume, the U.S. should look at "underlying market conditions" that affect the price paid for wood from Crown land. He said that price is set by the free market, so it shouldn't be considered a subsidy.

Legere said New Brunswick's best hope remains that the federal government will negotiate a settlement that restores the province's traditional exemption.

But he acknowledges that's just one of many issues from across the country that federal negotiators will have to deal with.

"We've made it clear this is not something you can negotiate away," he said.