Industry aims to launch legal challenge against tariff
Tembec CEO James Lopez.
With files from Kevin Anderson
A new tariff imposed by the United States is set to impact the lumber industry both in Kapuskasing and across the country.
Jim Carr, Ontario Minister of Natural Resources and Forestry, told reporters in Ottawa Tuesday, “There inevitably will be job loss.”
Carr spoke to reporters less than a day after Trump announced a tariff on imported softwood lumber from Canada, which will be about 19.88% for most companies.
“Our government disagrees strongly with this decision,” said Carr. “It is unfounded, and we will vigorously fight for the interests of the Canadians softwood lumber industry, its workers and their communities.”
Jamie Lim, chief executive officer of Ontario Forest Industries Association, is also in support of that type of program.
“Litigation could take a year, longer, and at the end, our lumber companies will get their money back,” said Lim. “But in the meantime, we need to maintain our credit in order to keep our mills open and people working.
“That’s why we need the loan guarantee program to bridge now until we finish the legal cases and our unlawful duties that were collected are returned to us. We need support during that period.”
Lim said she couldn’t predict the potential likelihood of job losses in Northern Ontario resulting from the tariffs. However, she did point out that forestry workers were laid off during the lumber dispute in the early 2000s.
Carr didn’t announce any new financial measures on Tuesday, but said that there are currently efforts underway to diversify markets with Canadian delegations in China, Europe and the United Kingdom to promote this country’s softwood lumber.
Previous disputes have ended in Canada’s favour, said Carr.
“Independent trade panels have repeatedly found these claims to be baseless. We have prevailed in the past and we will do so again,” the minister said.
Diane Lebouthillier, Minister of National Revenue, said the focus should be on diversification.
“We’re always redoing the same requests and the same mistakes,” she said in French at Tuesday’s press conference in Ottawa. “We’ve basically put all of our eggs in one basket and we are always finding ourselves in the same situation.”
Lim doesn’t buy the “new markets” argument.
“Give me a break. This whole alternative: Expanding new markets messaging that the federal government released on Friday is a long-term, at best mid-term solution for Western Canada’s forest sectors and its workers,” she said. “It will do nothing next week when our mills have to start paying duties. It will do nothing to help the hard-working men and women across Northern Ontario.”
The blow to the lumber industry comes less than a week after Trump pointed the finger at Canada’s dairy farmers.
The president has repeatedly spoken about renegotiating the North American Free Trade Agreement. Lumber was regulated through the Softwood Lumber Agreement, which expired in 2015.
Tembec CEO James Lopez had this to say about the current state of affairs:
“This 20 per cent tariff is in the range if not a little lower than what the company expected. We were prepared for the worst. I can’t say we’re happy because anytime you’re unjustly nailed with duties of 20 per cent, there’s nothing to be happy about at all.
We know that over time we will litigate and these duties will be reduced and will eventually be eliminated.
The retro payment we had to make, we expected. Likewise, we expect the U.S. Department of Commerce is going to rule on anti-dumping duties in June. We also expect that there will be a retroactive payment of 90 days once that ruling comes out. There will be no justification for it, but there is no end to creativity of the U.S. Department of Commerce in deploying duties.”
The retroactive payment for Tembec was reported to be around the $9 million CDN mark, however company representatives said they expect to recover the funds in early 2018. Beginning this month, the company will be making monthly remittances of approximately $2.5 million CDN per month.