Senators take aim at Canadian lumber exports

Montana’s two U.S. senators testified Wednesday before a federal commission tasked with investigating Canadian lumber export practices.

Sens. Steve Daines (R) and Jon Tester (D) were joined by colleagues from other western states and representatives of American timber producers at a hearing held by the U.S. International Trade Commission (USITC), currently investigating whether Canadian softwood lumber imports have adversely affected U.S. producers.

“The softwood lumber case before you is of utmost importance to Montana’s wood products industry, thousands of Montana jobs, and the state’s economy as a whole,” Daines testified.

Mineral County, he continued, had gone from timber-powered prosperity to having “just a single lumber mill and folks there today are watching the very resources be mismanaged and are facing unfair competition from subsidized Canadian lumber.”

Their testimony marked a step forward for the investigation, and the latest turn in a long-running dispute between the U.S. and Canada about trading this natural resource.

For decades, American timber producers have alleged that Canada’s federal and provincial governments unfairly support the country’s timber industry, mainly by setting tree cutting fees lower than America’s.

Tensions over this practice eased in 2006, when the two nations signed the Softwood Lumber Agreement in 2006, with the U.S. agreeing not to introduce new tariffs or trade actions. But that pact expired in 2015, and a replacement has yet to be reached.

In November 2016, a group of timber producers filed petitions with the USITC and the Department of Commerce’s International Trade Administration (ITA), alleging that they had been “materially injured” by subsidized Canadian lumber imports.

Both agencies opened investigations. In April and June, respectively, the Commerce Department’s ITA reached preliminary conclusions that Canada had subsidized its lumber industries, and that it was dumping lumber on the U.S. market. Both conclusions prompted the Trump administration to issue duties on imported Canadian lumber.

Meanwhile, the USITC investigated whether U.S. industry had been harmed by the imports, reaching an initial determination that this was the case in January. Tuesday’s hearing allowed both sides to make their case before the commission as it works toward a final decision.

In supporting the investigation, Sens. Daines and Tester were joined by Sens. Ron Wyden (D-Ore.) and Roger Wicker (R-Miss.). Chuck Roady, director of Columbia Falls-based F.H. Stoltze Land & Lumber Company, and other timber executives also testified.

Roady could not be reached for comment. In a press release, U.S. Lumber Coalition spokesperson Zoltan van Heyningen said that, “As long as Canadian producers continue to ignore U.S. trade laws to suppress prices and capture growth in the American market, the U.S. government must level the playing field for U.S. workers by enforcing our laws.”

But Canada’s government, too, is willing to defend its mills and loggers. When the first round of duties was issued in April, Paul Whittaker, co-chair of the Alberta Softwood Lumber Trade Council, wrote in a press release that, “we are disappointed that the United States has chosen this course of action. Their accusations are baseless and unfounded,” adding that Canada’s and Alberta’s governments would “vigorously challenge these tariffs and fight for Alberta jobs.”

Representatives of Canada’s government and timber producers were in Washington Tuesday to re-iterate that stance, along with the National Association of Home Builders, which says the duties could drive up construction costs.

The USITC will weigh these opposing viewpoints in coming months. One of the Commission’s investigators, Fred Ruggles, tells the Daily Inter Lake that “The committee will wait until Commerce makes its final determination on subsidies and countervailing,” and on dumping, due on Nov. 13 at the latest. “Once they do that, the commission will make its final determination about who is adversely affected,” within 45 days.

If both agencies’ investigations reach affirmative conclusions, Ruggles explains, the duties “become a permanent injunction until they’re negotiated away,” or addressed in periodic reviews held by the USITC and the Commerce department.

According to the University of Montana’s Bureau of Business and Economic Research, the total number of workers employed in Montana’s forest industry dropped from 9,821 in 2005 to 7,556 in 2015. While competition from Canadian lumber is one of the challenges facing the industry, increased wildfire and litigation over forestry projects have also stymied development, according to the bureau.

But in his testimony, Sen. Tester focused on imports. “To limit the onslaught of subsidized Canadian lumber into our markets, we must immediately deploy our trade enforcement tools,” he said. “Our mills and our economy simply cannot afford to wait any longer.”

Reporter Patrick Reilly can be reached at preilly@dailyinterlake.com, or at (406)758-4407.