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Trudeau government promises to defend lumber industry in face of new U.S. duties

CANADA (From news reports) -- The Trudeau government says it will vigorously defend the softwood lumber industry, including through litigation, after the U.S. Department of Commerce slapped it with an additional 6.87 per cent in preliminary average anti-dumping tariffs.

The new anti-dumping duty will overlap for about two months with average preliminary countervailing duties of 19.88 per cent announced in April that are set to expire on Aug. 27. The industry now faces average duties of about 27 per cent.

U.S. Commerce Secretary Wilbur Ross announced separately that an internal investigation has determined that it was appropriate to exclude the Atlantic provinces of Nova Scotia, P.E.I. and Newfoundland and Labrador from softwood lumber duties as requested by the U.S. industry and Canadian officials.

The duties will continue to be collected until a final decision is issued later this summer.

"While I remain optimistic that we will be able to reach a negotiated solution on softwood lumber, until we do we will continue to vigorously apply the AD [anti-dumping duty] and CVD [countervailing duty] laws to stand up for American companies and their workers," he said in a news release.

Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland said in a statement that the Canadian government is deeply disappointed by the U.S. decision "to impose unfair and punitive anti-dumping duties."

"We will vigorously defend Canada's softwood lumber industry, including through litigation, and we expect to prevail as we have in the past."

This is the fifth time the U.S. has accused Canada of unfairly subsidizing its softwood industry. The government says Canada has always prevailed against the accusations before the World Trade Organization or under the North American Free Trade Agreement.

The statement said the duties will hurt American homeowners looking to repair, renovate or build.

At the same time, the Canadian government promised to continue to negotiate. "We remain confident that a negotiated settlement is both possible and in the best interests of our two countries."

The government said the U.S. decision to exclude three Atlantic provinces was "significant progress," and they would welcome a commitment to add New Brunswick to that list.

Jerome Pelletier, chairman of the New Brunswick Lumber Producers, said the anti-dumping duty will put "significant pressure" on producers in the province.

"New Brunswick should be granted the historic 35-year Maritime exemption from any duties on softwood lumber shipments to the U.S.," Pelletier said in a statement Monday. "We're market-driven and have the highest Crown stumpage rates in Canada."

He said that forest products in New Brunswick contribute more to the provincial economy than forest products in British Columbia.

"No other industry impacts as many communities in New Brunswick as forestry and forest products," he said.

Resolute Forest Products was assessed Monday with the lowest duties of 4.59 per cent while Canfor gets the highest at 7.72 per cent.

Two other mandatory respondents, West Fraser Timber and Tolko, were tagged with 6.76 and 7.53 per cent duties, respectively.

The rates are below the average 10 per cent forecast by industry analysts.

West Fraser will have the highest combined duties at 30.88 per cent, followed by Canfor at 27.98 per cent and Tolko at 27.03 per cent. All other producers will face combined average duties of 26.75, with the exception of Resolute at 17.41 per cent and J.D. Irving at 9.89 per cent.

Montreal-based Resolute continues to believe producers in Ontario and Quebec should have free access to the U.S. market.

"Anything above nothing is outrageous, unacceptable and simply politics at play," said spokesperson Seth Kursman.

The B.C. Lumber Trade Council said it will continue to vigorously defend the industry.

"These duties result from the trade action which is part of the continued attempt by the protectionist U.S. lumber lobby to constrain imports of high-quality Canadian lumber into the U.S. market and to drive up prices for their benefit," president Susan Yurkovich said in a news release.

"The ongoing allegations levelled by the U.S. industry are without merit. This was proven in the last round of litigation and we fully expect it will be the case again."

Canada's share of the U.S. softwood lumber market was 27 per cent in May, down from 31 per cent a year earlier, according to monthly Canadian government reports. That represented a $165-million loss in exports for the month, including $105 million in B.C. and $18 million in Quebec.

Final duty rates have been lower than preliminary tariffs in the past. But Paul Quinn of RBC Capital Markets said that could change because the U.S. Lumber Coalition is pushing for a tough response to the Canadian government's $867-million financial support for the industry, mainly through loans and loan guarantees.

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