Trend Watch: Good Research is Canada’s Best Defence in SLA Negotiations

January 1, 2017

Brian Isard

This past month has been a busy one and we have been fielding a lot of inquiries on the Softwood Lumber trade dispute extended Scope of Investigations.

Last month we wrote about the U.S. International Trade Commission (ITC) meetings in Washington DC on December 16, 2016 that CWPCA attended on behalf of our members. The ITC heard arguments made by the US Lumber Coalition that Canadian lumber imports should be investigated for dumping on the US market and it heard arguments defending against Canadian Lumber imports being investigated. It was good that we were in attendance because it helped us understand where to focus our efforts and how to make our voice heard in this dispute.

That evening the US Department of Commerce/ITC announced the initiation of antidumping duty (AD) and countervailing duty (CVD) investigations of imports on wide range of softwood lumber products from Canada. For more information, click here.

What this meant for the Government of Canada and the lumber industry was a very busy month of December, gathering data to refute the claims that dumping of Canadian lumber had not occurred and to understand the broadened Scope of Investigations and its impact on our industry. 

For the CWPCA three challenges existed: 

  1. The Scope of Investigations cited HTSUS codes 4407.10.0115 & 4415.20.8000 in the extended coverage. Upon researching these codes and their historic use it became evident that Canadian companies were shipping not only kits and components under these codes but also fully assembled pallets and cut stock from non-softwood species. We very quickly needed to ascertain whether the coalition’s intent was to include these finished goods, then draw attention to this serious issue. 
  2. Few, if any, people in the Canadian government, let alone the US Trade lawyers arguing on their behalf, understand the products that our industry manufactures and sells so we had to educate them quickly.
  3. We had to gather data to prove that dumping of this material was not occurring.

The CWPCA Trade Advisory Committee worked through December and into early January doing research on the flow of pallet kits over the past decade. The intent was to prove that there was no dumping activity by the Canadian pallet component manufacturers and to prove that pallet cut stock could not be used as dimensional framing stock in US residential housing construction.

We presented a submission to the Government of Canada on January 6th, 2017 making our arguments for exclusion of these items (assembled pallets, notched stringers, and pallet kits) which the government in turn supplied to their US legal defence team.

A press release was circulated on January 6th stating that on the basis of their investigations the ITC determined that there is a “reasonable indication that a U.S. industry is materially injured by reason of imports of softwood lumber products from Canada that are allegedly subsidized and sold in the United States at less than fair value”.

However, the US trade lawyers have indicated that while components or parts of semi-finished products will remain on the list of products subject to antidumping (AV) there was an opportunity to work further on an exclusion for pallet kits, notched stringers, and assembled pallets.  If a shipment includes a specific number of board-to-stringer ratio unassembled pallets, the material involved should not be deemed “parts or components”, and therefore should continue to be exempted from any potential ADD/CVD assessments.

The CWPCA Trade Advisory Committee made a subsequent submission to the Government of Canada on January 5th adding further clarification to our industry’s concerns. 

The issue many of our members want  to know is how this will affect lumber prices and lumber availability.  So far these negations have caused a lot of volatility in the markets  but these high prices on low grade lumber haven’t yet been affected.

A couple of things to remember:

  • Demand is strong for low grade material, not just in Canada but in the US as well, and a key factor is the yield that Canadian low grade material provides for pallet manufacturers. 
  • China is buying and that is influencing west coast prices. We will have to watch the markets carefully. 

While there is still much to come with regards to the Softwood Lumber Agreement negotiations, we are satisfied that we have put forth all of the efforts necessary to have our voice heard. It is reassuring to know that the CWPCA’s lobbying and advocacy efforts can be impactful on high levels of government. We wish to thank the members of newly formed committee for their efforts and inputs: Dave Uppal (Pioneer Pallet & Lumber Ltd), Suhki Brar (Advance Pallet & Crate), Donnie McMurray (Silvaris Corporation), Wayne Vanderwees (Magnum Packaging Industries), Fred Vrugteveen (Niagara Pallet & Recyclers), and Pete Rempel (Pete’s Pallet Manufacturing). 

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