Changes to softwood tariffs between the United States and Canada could help alleviate the Canada’s lumber shortage.
Canada’s currently experiencing a shortage of pressure-treated lumber, and prices have been costly. The shortage is due to COVID-19 shutting down lumber mills, and residents starting home renovations during the pandemic.
Another factor impacting exports is the large tariffs placed on Canadian lumber exporters. These tariffs played a large role in Kenora Forest Product’s layoffs last September, as they currently add an additional 24 per cent of taxes onto the lumber’s cost.
In 2017, as the last Canadian-American lumber agreement expired, the U.S. Commerce Department levied countervailing duties on Canadian softwood lumber imports, saying Canada’s lumber industry is unfairly subsidized by the government, as most of Canada’s lumber comes from publicly-owned forests.
Earlier this week, the World Trade Organization found the American claims unfounded, with over 40 claims not substantiated. WTO ruled that the duties are inconsistent, and the U.S. now has 60 days to appeal the decision.
“This is an important step in ensuring the ongoing success of our forestry industries, which play an important part in our economy. As we move towards economic recovery, it has never been more important to vigorously defend and encourage this sector,” said Minister of Natural Resources and Forestry, John Yakabuski, in a prepared statement.
“We believe fair and open trade is the best outcome for consumers on both sides of the border, and Ontario families who rely on our forest industry are being hurt by these unfair actions. By ruling strongly in our favour, the WTO has reaffirmed our position that U.S. duties on our lumber are unjustified.”
To date, Canadian lumber exporters have paid over $3.9 billion in duties to the U.S.
Kenora Forest Products announced they were laying off their staff of more than 100 last September. The sawmill had been doing well -- adding shifts to reach full production in November 2016 -- but the impact of American tariffs on softwood lumber could no longer be ignored by the end of 2019.
Court documents showed there were liabilities worth just under $30 million. This includes more than $10 million in disputed tariffs tied up at the American border.
The mill’s restart on Family Day in February of 2015 ended seven years of indefinite idle that started during the Forestry Crisis in 2008. Prendiville Industries invested about $22 million to refurbish the Kenora sawmill before the restart, with another $4 million added after the kiln fire in December 2017.
While court documents show there's been interest from potential buyers for the sawmill, no bids came forward by the end of May. Estimates filed with the court say assets have a book value of close to $50 million, but the actual value these assets might get in the current market haven't been estimated in public documents before the court.
For more information:
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