Commission sides with U.S. mills

U.S. lumber mills have gained some ground in a long-running trade dispute.

Since November 2016, the U.S. International Trade Commission and the Department of Commerce have been investigating allegations that Canada’s government unfairly subsidizes its lumber industry, and that many of those mills dump underpriced lumber on the U.S. market.

Commerce concluded that this was the case earlier this year, and Dec. 7, the U.S. International Trade Commission concluded that American mills had been “materially injured” by the practice. After setting preliminary tariffs earlier this year, the U.S. government will now collect combined antidumping and countervailing duties of about 15 to 25 percent on southbound lumber.

In a press release, Sen. Jon Tester, D-Mont., wrote that “This decision helps level the playing field, keep the market competitive and ensure Montana’s lumber producers have a fair shot going forward.”

And Rep. Greg Gianforte, R-Mont., who toured Montana lumber mills earlier this fall, told the Daily Inter Lake that “I’m all for fair trade, as long as we’re on a level playing field, and that does not exist in the softwood lumber space between the U.S. and Canada, so I’m glad the U.S. government is looking hard at this.”

But reactions are more muted in the Flathead Valley, where tariffs and investigations like these have vexed lumber producers and consumers for years. Neither they nor their Canadian counterparts see last week’s ruling as the end of the fight.

Much of the dispute focuses on “stumpage fees” for cutting timber. Whereas about 70 percent of U.S. forest land is privately owned, 90 percent of non-Atlantic Canada’s forest is public “Crown land,” with stumpage rates set by provincial governments.

In a series of investigations stretching back to 1981, U.S. timber producers have claimed that this difference puts them at an unfair disadvantage. Chuck Roady, manager at F.H. Stoltze Land and Lumber in Columbia Falls, ranks imports as Stoltze’s third-biggest challenge, behind timber supply and federal forest policy.

Asked to account for the harm, he said that “to put an exact dollar per 1,000 [board feet] would be impossible, because they do whatever they can to undersell us.”

The Commission’s full report will become available later this month. But already, Roady feels vindicated.

“I was very pleased,” he said. “It’s been years of injury.”

But Roady didn’t see the finding, or current tariffs, as a salve for the problem. He predicted that, at current prices, Canadian producers could still sell the lumber profitably.

“Right now, the market is at a level that it’s not gonna hurt ‘em.”

Brock Mulligan, spokesperson for the Alberta Forest Products Association, had a different take.

“I think it’s a little bit too early to tell” what the impacts could be, “but we know that any time that trade is hindered or artificially stifled, that has a negative impact in the industry.”

Higher prices on Canadian imports, he said, could boost overseas producers, hurt sectors like construction, and leave U.S. consumers paying higher prices ­— a stance shared by America’s National Association of Home Builders.

But for timber customers, tariffs are just one of many factors to consider, explained SmartLam President Casey Malmquist. “It really depends on the profits and what your end product is,” he said.

When Columbia Falls-based SmartLam sources wood to produce cross-laminated timber, Malmquist said that “cost is obviously a huge concern, but we also require a significant element of quality.” He said that some Canadian mills fill orders for SmartLam, but that Stoltze was their “first choice.”

The trade dispute, he continued, “certainly has complicated the matter.”

This four-decade cycle of accusations, investigations and tariffs has spurred frustration up the timber supply chain and across the border.

“Our whole goal is not to be against Canada,” Roady said. “Our goal...is simply to maximize our production.”

“We want to be able to produce first the most wood [we can], and whatever we don’t produce, Canada or other countries can fill the void.”

He and other timber producers enjoyed relative calm from 2006 until 2015. Under the now-expired Softwood Lumber Agreement, the U.S. agreed not to initiate new trade actions.

“That deal did provide a lot of stability and predictability for folks on both sides of the border,” Mulligan said. “I think something like that could be productive.”

Roady voiced optimism that a new pact could eventually be reached. “I don’t like the angst between the two countries at all. That serves no purpose.”

Echoing that sentiment, Gianforte said he would “continue to push for forest reform legislation so that we have a consistent dependable source of logs for our mills, and part and parcel of that is a fair trade agreement with Canada.”

But for the moment, the softwood dispute continues to fester like a splinter. Canada has already challenged the U.S. duties before the World Trade Organization and a North American Free Trade Agreement panel.

“It’s just a shame that there have to be negative circumstances for folks on both sides of the border while that process plays out,” Mulligan said.

Reporter Patrick Reilly can be reached at preilly@dailyinterlake.com, or at 758-4407.