Sawmill owners and wood producers are worried their companies won't survive if the U.S. imposes duties on softwood lumber imports from this region, says Rick Doucett, president of the New Brunswick Federation of Woodlot Owners.
The U.S. Department of Commerce is expected to announce a decision Tuesday on levying duties against Canadian softwood lumber imports, which could end New Brunswick's longstanding exemptions.
Twenty-five New Brunswick sawmills owned by 14 companies will be affected if the United States imposes duties, according to the provincial government.
"Our biggest concern is if [the duties] are too big, the companies can't absorb those and some will go out of business," said Doucett. "Then we lose further competition and further markets."
He said estimates of the potential duty ranges from 20 to 40 per cent, which he said would lead to closures, the worst-case scenario.
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The U.S. has maintained for years that the Canadian lumber industry is unfairly subsidized because much of the wood comes from Crown land.
Doucett said the biggest difference now is that New Brunswick has consolidated its marketplace and a lot of sawmills have disappeared since 2006, when the two countries signed their last agreement on softwood lumber.
New Brunswick policies have allowed J.D. Irving Ltd. and other big forestry companies to harvest even more wood from Crown lands in recent years and ignore private woodlot owners, he said.
Crown versus private
Yet private sources of wood would be key to exemptions from new any U.S. duties, he said.
In 2006, when Canada and the U.S. came to their last softwood lumber agreement, the private wood sector was running around 25 to 27 per cent of the total market share in New Brunswick, but by 2008 it was down eight per cent.
"The issue is if we're not managing the private market that well in the province, we start to lose ability to make that argument that these companies having access to public land are not at an unfair advantage — that's where we dropped the ball a little bit over the last decade," Doucett said.
He said his group has pleaded its case to successive governments for making sure private woodlot owners play a greater role in the industry.
"We've ... said, 'Look guys, we need to get this marketing situation sorted out here in the province because it could turn around and bite us and this is one of the ways it could.'"
Last week the province announced that it intends to fight for exclusion from border duties on softwood lumber and said a task force was looking at what can be done to mitigate the effects of any duty.
"As the forestry sector we are feeling a bit maligned and somewhat dismissed as far as an important part of the sector," Doucett said.
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.
"We shouldn't have a crisis like this to reflect on how the public forest is managed in the province," Doucett said. "If this the one thing that drives that I think it would be worth doing."