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Minister of Small Business, Export Promotion and International Trade appearance before the Standing Committee on International Trade (CIIT) on softwood lumber duties – Briefing material

2021-06-04

Table of contents

A) CIIT Committee Overview

1. CIIT Scenario Note
2. CIIT Committee Bios

B) Briefing Notes

3. Softwood Lumber Litigation
4. Ongoing U.S. Trade Remedy Proceedings on Softwood Lumber
5. Negotiations for a Future Softwood Lumber Agreement and Advocacy Efforts
6. Forestry Sector Support in Light of COVID-19
7. Support to Trade Diversification in the Forest Sector
8. Lumber Prices (NEW)

C) Background notes

9. History of the Softwood Lumber Dispute and Chronology of the Developments
10. Stakeholders Implicated by the Ongoing Softwood Lumber Dispute

CIIT Committee Overview

CIIT Scenario Note

Appearance before the Standing Committee on International Trade (CIIT) on softwood lumber duties - June 4, 2021

Meeting scenario

• Your virtual one-hour appearance before the Standing Committee on International Trade (CIIT) begins at 1:00 p.m. Your appearance will last one hour, and the committee has asked supporting officials to stay behind for a second hour.
• The following officials are accompanying you virtually during the appearance and may be called upon to respond to questions:
• Michael Owen, Acting General Counsel and Executive Director, Softwood Lumber Litigation Division
• Arun Alexander, Director General, North America Trade Policy Bureau
• Rosaline Kwan, Director General, Trade Sectors
• Colin Barker, Director, Softwood Lumber Division

Committee context

• After your opening remarks of 5 minutes, the committee will move to rounds of questions. Time may allow for two complete rounds as follows:
  • First Round          
    • Conservative (6 minutes)
    • Liberal (6 minutes)
    • Bloc Québécois (6 minutes)
    • NDP (6 minutes)
  • Second Round
    
    • Conservative (5 minutes)
    • Liberal (5 minutes)
    • Bloc Québécois (two and a half (2.5) minutes)
    • NDP (two and a half (2.5) minutes)
    • Conservative (5 minutes)
    • Liberal (5 minutes)
• Subsequent rounds of questioning follow the order and timing of the second round.
• For further information on committee membership, please see Tab A2.

Motion inviting you to appear

On Friday, May 28, 2021, the committee adopted the following motion:

That, the Committee hold a meeting to invite the Minister of Small Business, Export Promotion and International Trade and relevant government officials to discuss the United States Department of Commerce's preliminary determinations increasing duties on Canadian softwood lumber exports from 8.99% to 18.32%; that the meeting be at least two hours in length; that the Minister appear for no fewer than 1 hour and that appropriate government officials appear for no fewer than two hours; that this meeting occur no later than June 4, 2021, whereas the meetings of June 7, June 11 and June 14 be devoted to Bill C-216, An Act to amend the Department of Foreign Affairs, Trade and Development Act (supply management).

Committee membership & interests

• Committee membership includes some members you will recognize from the Special Committee on the Economic Relationship between Canada and the United States (CAAM): MP Savard-Tremblay, MP Blaikie, MP Hoback, MP Sarai, and MP Bendayan.
• During the 43-2 Parliament, the committee has studied Canada's International Trade after COVID-19, the Main Estimates 2020-2021, Trade between Canada and the United Kingdom, the impact on Canada of the E.U.'s mechanism for exports of COVID-19 vaccines, Bill C-18, Reform of the World Trade Organization, Investor-State Dispute Settlement Mechanisms, the WTO TRIPs waiver proposal, Trade and vaccines, Main Estimates 2021-22 and Cleantech.
• The committee is scheduled to begin study of Bill C-216 on June 7th, 2021.
• Committee members' questions during committee meetings have focused on the following related issues:
  • Conservative Members – Supply chain security, support for the oil and gas sector, solar panel tariffs, the Softwood Lumber Agreement, support to the forestry sector, impact of Buy America, EU export transparency mechanism, non-tariff barriers and regulatory barriers, WTO reform, importance of ISDS provisions, COVAX, support for small and medium-sized exporters, sourcing vaccines from the U.S.
  • Liberal Members – Investments in the cleantech sector, solar panel tariffs, commercial scale-up for exporters, Trade Commissioner Service support, Investor State Dispute Settlement, the Softwood Lumber Agreement, investment protection, trade with Indonesia, trade with India, support for small and medium-sized businesses.
  • Bloc Quebecois Member – Strategic Innovation Funds to Quebec, exemptions to Buy America, green aluminum, Investor State Dispute Settlement, TRIPS waiver, WTO reform, support for softwood lumber, aerospace sector, protection of supply management, and support for small and medium-sized businesses.
  • NDP Member – North American strategy for electric vehicles, sector based industrial plans, potential impact of Buy America, TRIPS waiver, removal of Investor State Dispute Settlement mechanisms, transparency in trade negotiations, WTO reform, North American climate change strategies, and non-tariff trade barriers.

Committee work

• You have appeared before CIIT five times during the 43-2nd Parliament,
• April 26, 2021 on Main Estimates 2021-22 and ISDS
• February 22, 2021 on Bill C-18
• February 1, 2021 on EU Vaccines
• November 20, 2020 on the Canada-UK TTA
• November 3, 2020 on Main Estimates 2020-21

Recent meetings at CIIT

• April 30, 2021, Ambassador de Boer, Steve Verheul, Loris Mirella and officials from ISED appeared on Canada's International Trade and Investment Policy: Selected Considerations Concerning COVID-19 Vaccines.
• May 3, 2021, Canadian Nuclear Association, Carbon Upcycling Technologies, Electric Mobility Canada, and Heliene appeared on Canada's Exports of Environmental and Clean Technology Goods and Services.
• May 7, 2021, Canadian Association of Petroleum Producers, First Cobalt Corp., International Brotherhood of Electrical Workers, and Pyrowave, appeared on Canada's Exports of Environmental and Clean Technology Goods and Services.
• May 10, 2021, AddÉnergie Technologies Inc., Ballard Power Systems Inc., Opus One Solutions, and LNG Canada appeared on Canada's Exports of Environmental and Clean Technology Goods and Services.
• May 14, 2021, Forseight Cleantech Accelerator Centre and Forest Products Association of Canada appeared from 1:00 – 1:45pm, while officials from ¶¶ÒùÊÓƵ, ISED, NRCan, ECCC, BDC, and EDC appeared on Canada's Exports of Environmental and Clean Technology Goods and Services.
• May 28, 2021, from 1:30 – 2:15 pm, Amnistie international Canada francophone, Doctors Without Borders, Réseau québécois sur l'intégration continentale, and Alexander Douglas (appearing as an individual), appeared on Canada's International Trade and Investment Policy: Selected Considerations Concerning COVID-19 Vaccines.
• May 28, 2021, from 2:15 – 3:00pm, Ambassador de Boer, Steve Verheul, Loris Mirella and officials from ISED appeared for a second time on Canada's International Trade and Investment Policy: Selected Considerations Concerning COVID-19 Vaccines.

CIIT Committee Bios

Standing Committee on International Trade (CIIT)
43^rd Parliament – Second Session
September 23, 2020 to Present

Chair

Hon. Judy Sgro
(Liberal – Ontario)

Vice-Chair

Tracy Gray
(Conservative – British Columbia)

Vice-Chair

Simon-Pierre Savard-Tremblay
(Bloc Québécois – Québec)

Members

Daniel Blaikie
(NDP – Manitoba)

Sukh Dhaliwal
(Liberal – British Columbia)

Rachel Bendayan
(Liberal – Québec)
Parliamentary Secretary to the Minister for Small Business, Export Promotion and International Trade

Randy Hoback
(Conservative – Saskatchewan)

Ziad Aboultaif
(Conservative –Alberta)

Chandra Arya
(Liberal – Ontario)

Ben Lobb
(Conservative – Ontario)

Randeep Sarai
(Liberal – British Columbia)

Terry Sheehan
(Liberal – Ontario)
Parliamentary Secretary to the Minister of Economic Development and Official Languages (FedNor)

Order for Questioning:

The time allotted for the questioning of witnesses in the first round be as follows: Conservative Party – six (6) minutes, Liberal Party – six (6) minutes, Bloc Quebecois – six (6) minutes, New Democratic Party – six (6) minutes; that the order and time allotted for the questioning of witnesses in the second round be as follows: Conservative Party – five (5) minutes, Liberal Party – five (5) minutes, Bloc Quebecois – two and a half (2.5) minutes, New Democratic Party – two and a half (2.5) minutes, Conservative Party five (5) minutes, Liberal Party five (5) minutes. If time permits, further rounds shall repeat the pattern of the first two at the discretion of the Chair.

Witnesses typically have 10 minutes each for their opening remarks, but the Chair will often request witnesses to keep opening remarks to 5 minutes if appearing alongside other witnesses providing opening remarks.

Mandate:

The House of Commons Standing Committee on International Trade studies and reports on matters referred to it by the House of Commons. The Committee can also initiate studies of subjects falling within its mandate. As a permanent committee established by the Standing Orders of the House of Commons, the Committee may be asked to comment on legislation, departmental activities and spending, and other matters under its jurisdiction. The Compendium of the House of Commons Procedure contains additional information on the mandate and powers of standing committees.

The general subject area of the Committee includes the following:

• international trade policy, including trade and investment liberalization, as well as Canada's economic relationship with other countries;
• Canadian international competitiveness, as well as the effects of global competition on Canadian firms and the Canadian economy; and
• the global trade and investment environment, including the World Trade Organization, international markets and regional trade blocs.

The federal departments and agencies under the Committee's direct scrutiny are:

• ¶¶ÒùÊÓƵ (international trade component)
• Export Development Canada
• Canadian Commercial Corporation
• Invest in Canada

Hon. Judy Sgro
Chair
(LPC—Humber River-Black Creek, ON)

Key interests

• CUSMA (during 2019 – 2020 parliament)
• Human rights

Parliamentary roles 

Sgro has served as a Member of Parliament since 1999. She served as Parliamentary Secretary to the Minister of Public Works and Government Services in 2003, and as Minister of Citizenship and Immigration from 2003 to 2005. She has served as Critic of many portfolios, including Industry, Status of Women, Veterans Affairs and National Revenue. In the previous parliament, Sgro served as Chair of the Standing Committee on Transport, Infrastructure and Communities.

Notable committee memberships  

• Chair, Standing Committee on International Trade (CIIT), January 2020-present
• Chair, Liaison Committee, February 3, 2016 - present
• Former Chair, Standing Committee on Transport, Infrastructure and Communities (TRAN), February 2016 – September 2019
• Former Vice-Chair, Standing Committee on Industry, Science and Technology (INDU), October 2013 – August 2015

Background 

Prior to entering federal politics, Sgro served in municipal politics as part of the North York City Council and the Toronto City Council, starting in 1987. At the municipal level, Sgro focused on poverty and crime reduction.

Tracy Gray   &²Ô²ú²õ±è;
Vice-Chair
(°ä±Ê°ä&³¾»å²¹²õ³ó;°­±ð±ô´Ç·É²Ô²¹-³¢²¹°ì±ð&²Ô²ú²õ±è;°ä´Ç³Ü²Ô³Ù°ù²â ,‵þ°ä) â¶Ä¯&²Ô²ú²õ±è;

Critic for Export Promotion and International Trade &²Ô²ú²õ±è;

Key interests

• Softwood lumber agreement
• EU exemption mechanisms
• Non-tariff barriers
• Foreign direct investment
• Forced labour in supply-chains
• COVAX  &²Ô²ú²õ±è;

Parliamentary Roles   

Gray was named the Conservative Critic for Export Promotion and International Trade by Leader Erin O'Toole on September 8,  2020. She had previously served as the Critic for Interprovincial Trade. 

Notable committee membership  &²Ô²ú²õ±è;

• ³Õ¾±³¦±ð-°ä³ó²¹¾±°ù,  Standing Committee on International Trade (CIIT), October 6, 2020 – present  &²Ô²ú²õ±è;
• Former member, COVID-19 Pandemic Committee, April 2020 –June 18, 2020
• Former Member, Standing Committee on Industry, Science and Technology (INDU), February 5,   2020 – August 18, 2020

Background

Gray defeated the Liberal incumbent in the 2019 General Election, where she had been a Kelowna city councillor 2014-2018. Prior to entering politics, Gray had extensive experience in the BC Liquor industry. In 2003 she introduced a chain VQA wine stores to the BC interior and she has experience managing several wineries and breweries in the Okanagan Valley.

Recent Questions on Softwood Lumber

March 8, 2021 (CIIT)

• Our last softwood lumber agreement was from 2006 to about 2015. Now, with no agreement and with softwood not being negotiated into CUSMA, based on some of the testimony we've had here today it sounds like you're likely at the mercy of a functioning WTO to resolve disputes. How have your organization and those you represent been affected since we last had a softwood lumber agreement with the United States?
• I've certainly seen it first-hand in my community of Kelowna—Lake Country because we had a mill here, Tolko, which closed recently and hundreds of jobs were lost. We know that the Ottawa Group has been working to find solutions relating to the WTO. Have you seen any noticeable changes or reforms that have benefited the forestry industry since this group has formed?
• In regard to binding dispute resolution settlements and their lengthy process asked: How has the forestry sector been affected by this? Have you seen decisions yourself that you felt could have been easily rectified, but which were extended over a long period of time?
• Have you seen non-tariff barriers affect your industry? How do you see the WTO modernizing in order to be able to positively address these issues?

May 14, 2021 (CIIT)

• You've raised concerns about legislation currently going through the process in New York and California that could harm our forestry exports, if passed into law. First, what percentage of our U.S. exports goes to California and New York?
•  It's quite interesting that two very similar laws are going through two state legislatures at the same time. Do you foresee the risk of other states maybe introducing legislation around this as well? Are you hearing that at all?
• What effects could this legislation potentially have if it comes into force, specifically around job losses, potentially, in the Canadian industry?
• I understand that the Forest Products Association of Canada is calling on the federal government to go to bat for our forestry sector and those hundreds of thousands of jobs that you refer to. What could the federal government and our trade minister be doing right now to get this issue resolved?

Simon-Pierre Savard-Tremblay 
Vice-Chair
(BQ—Saint-Hyacinthe-Bagot, QC) 

Critic for International Trade

Key interests  

• Quebec Aluminum
• Quebec aerospace industry 
• Electric vehicles
• Investor state dispute settlement
• TRIPS provision waiver at WTO
• Protection of supply management
• Quebec Softwood lumber industry
• Exemptions from Buy America

Parliamentary roles 

Savard-Tremblay currently serves as the Bloc Quebecois critic for International Trade and Industry.

Notable committee membership 

• Vice-Chair, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
• Vice-Chair, Standing Committee on International Trade (CIIT), January 2020-present

Background 

Prior to entering politics, Savard-Tremblay worked as an academic, author and columnist. He has a bachelors degree in political science from the University of Montreal, a Masters in Sociology from the University of Quebec at Montreal, and a doctorate in the social economy of development from the École des hautes études en sciences sociales in Paris. He was heavily involved in the youth forum of the BQ and has been a frequent commentator in Quebec on economic and sovereignty-related issues. In his academic work, he is critical of neoliberalism and globalization.

Recent Questions on Softwood Lumber

March 4, 2021 (CAAM)

• A new administration, of course, brings new opportunities. One long-standing issue between Canada and the U.S., as yet unresolved, is the softwood lumber issue. I'm wondering what kinds of opportunities for resolution you think may exist, and what steps the government plans to take in order to try to get fair treatment for Canadian softwood lumber at the border.

March 12, 2021 (CIIT)

• In regard to Softwood lumber, asked what the impact was for the three witnesses.
• Do you feel that we absolutely need a real and permanent agreement between the two countries to settle the matter?
• In regard to Softwood lumber and the dispute settlement, asked: what is the effect of this judgment and how will it determine Canada's strategy?

May 14, 2021 (CIIT)

• The Bloc Québécois recently presented a study. It was not conducted by our party but by a third party. It was a fairly important study on maximizing Quebec's forestry potential. We proposed four priority recommendations for the industry. I won't list them now, but I want to tell you that one suggestion was to seize the opportunity of the new U.S. administration in the White House in order to obtain full exemption from all tariffs on Quebec softwood lumber exports to the U.S. In addition, the recommendation was to ensure that the development of the forest industry would be defined as a priority for the Government of Canada, given the strong economic potential and the essential role of forests in the fight against climate change. What are your expectations of the government now that the Biden administration is in office?
• Have you been consulted recently on this issue? What steps have been taken with respect to the softwood lumber dispute since Mr. Biden was elected president?
• So you haven't heard of any real changes in terms of a complete exemption from tariffs yet. You have not been informed that there might be an agreement or news on that very soon.
• Of course, there is the expanding market opportunities program, whose objective is to develop international markets for Canadian forest products and to promote the increased use of wood in the construction of mid-rise and non-residential buildings in North America. However, the 2019 evaluation of this program indicated that it was serving western producers, particularly in British Columbia, much better than eastern producers in Ontario and Quebec. In 2020, about three-quarters of the program's funding went to organizations in British Columbia. That's what we have noticed. How could this program be improved so that it also benefits eastern producers in a more equitable way?
  • Still, do any changes or improvements need to be made to this program? Could some criteria be adjusted so that the program also benefits eastern producers? Clearly, the program has not benefited eastern producers in an equitable manner. So it probably has shortcomings somewhere.
  • I would like to give you the opportunity to correct a widespread misconception. The forest industry is often associated with clear-cutting. Instead of having an eco-responsible industry, the impression could be the opposite. That behaviour could be extremely serious. A Quebec documentary, which dates back some 20 years and is entitled L'erreur boréale, was made for the National Film Board. The documentary was directed by Richard Desjardins, a well-known artist in Quebec. It was a good picture of the time, but could you tell us how the situation has evolved? Does clear-cutting still happen? I think this is a great opportunity to reverse a persistent misconception.

April 8, 2021 (CAAM)

• Minister, on March 4, 2021, the United States Department of Commerce published the notice of initiation of its third administrative review of the softwood lumber countervailing and anti-dumping duty orders. It is true that tariffs were already revised downward in the previous reviews. According to you, what kind of a tariff revision can we expect this time?
• My next question was actually about the Canadian government announcing its plan to negotiate a new agreement for softwood lumber. I wanted to ask you whether that was still planned. You just sort of confirmed it, but I would like to know what the status of the discussions on this issue is.
• Why not have used the CUSMA negotiations, for instance, to resolve the softwood lumber issue once and for all?
•   Regarding this, the World Trade Organization made an important decision in August 2020. How has that decision changed Canada's approach to obtain from the Americans a full exemption of all tariffs on the export of Quebec softwood lumber to the United States? Is that decision now being used as a sort of precedent?

Daniel Blaikie
(NDP—Elmwood-Transcona, MB) 

Critic for International Trade 

Key interests  

• Removal of Investor-state dispute settlement mechanisms
• Transparency in trade negotiations
• TRIPS provision waiver at the WTO
• Labour Protections
• Impacts of Buy America
• North American climate change strategy

Parliamentary roles 

Blaikie was first elected in 2015. Blaikie is currently the NDP Critic for Democratic Reform, Employment, Workforce Development and Disability Inclusion, Export Promotion and International Trade and Western Economic Diversification, as well as the deputy critic for Finance. He has previously served as the Critic for Public Services and Procurement, Deputy Critic for Ethics, and as NDP Caucus Chair.

Notable committee memberships 

• Member, Standing Committee on International Trade (CIIT) – January 2020-present
• Vice-Chair, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
• Vice-Chair, Standing Committee on Government Operations and Estimates (OGGO) – May 2018-Sept 2019
• Vice-Chair, Standing Committee on Access to Information, Privacy and Ethics (ETHI) – February 2016 – May 2017

Background 

Prior to entering politics, Blaikie worked as an electrician and acted as an advisor to the Minister of Health in the Government of Alberta. He has served on the Manitoba Apprenticeship and Certification Board and the Winnipeg Labour Council.

Recent Questions on Softwood Lumber

May 14, 2021 (CIIT)

• A recurring theme at this committee over the life of this Parliament has been a contention by many witnesses across many different industries that Canada really stands out in terms of not doing a lot of industrial planning, or sector-based industrial planning. I think what we've heard from a number of sectors is that they'd like to be able to sit down with government and hash out a medium- and long-term plan for their industry and really coordinate government policy with the aspirations of the industry. Of course, when we're talking about a really important emerging industry, even less emerging now than it was five to 10 years ago, in terms of clean tech, obviously this is important. Could each of you speak a bit to the way your industry is able to engage with government and the extent to which you feel there should be some more formal planning with government around your industry, whether it's trade policy or certain kinds of domestic policy, such as procurement, which I know has come up already today on several occasions? How can it work within your industry to make sure that there is actually a plan and that the actions of government and the policies of government are reinforcing the development of the industry in a way that's beneficial both to businesses and to workers within the industry? Are you satisfied that the government is where it needs to be on that? Do you think Canada stands out as not doing as much as our allies and competitors around industrial planning? What do you think those missing pieces are?

Randy Hoback 
(CPC—Prince Albert , SK) 

Critic for International Trade

Key interests  

• Trade Commissioner Service
• Trade of agricultural products (focus on canola)
• Durum wheat and a potential challenge at the WTO
• Support for investor-state dispute settlement mechanisms
• Support for Canadian exporters

Parliamentary Roles 

Hoback currently chairs the Conservative Saskatchewan Caucus. He has served previously as the critic for International Trade and the critic for Canada-US Relations. He also served as President of the Canadian Section of ParlAmericas starting in 2010, and as President of ParlAmericas at the hemispheric level from 2011 to 2014.  

Notable committee membership 

• Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
• Member, Standing Committee on International Trade (CIIT), January 2018 – present
• Vice Chair, Standing Committee on International Trade (CIIT), February 2016 - September 2017
• Chair, Standing Committee on International Trade (CIIT), September 2014 - August 2015
• Member, Standing Committee on Agriculture and Agri-Food (AGRI), October 2013 - January 2015

Background 

Hoback was first elected in 2008, and has been re-elected in his Prince Albert riding in each of the 2011, 2015 and 2019 elections. Prior to entering politics, Hoback worked in the farm equipment manufacturing industry before taking over his family farm. He has a business administration certificate from the University of Saskatchewan and a Chartered Director's designation from McMaster University.

Recent Questions on Softwood Lumber

March 8, 2021 (CIIT)

• In regard to the forestry industry, asked: Is there any advice that you'd give the Canadian government as they go through the modifications in the appellate body that we should be looking at?

April 22, 2021 (CAAM)

• Mr. Agnew, one of the things we're seeing in Canada already is a shortage of certain components. A good example would be lumber. With buy America, the $2 trillion that's going to be spent, and stimulus coming here in Canada, how do you see the management of our resources such as timber and lumber, steel and cement in this type of scenario? How do you see that functioning? The U.S. requires it, and Canada requires it. Do you have any predictions there?
• Concerning construction costs or canola facilities the MP asked: As we see a shortage in lumber, a shortage in cement, a shortage in steel, what does that mean for these plants and their expanding at this point in time? Does that concern you?

Ben Lobb 
(CPC—Huron-Bruce, Ontario) 

Key interests

• Exemptions for trades people crossing the Canada-US border
• modular reactor market
• Electric batteries
• Agriculture exports (focus on grains and beef)
• Durum wheat
• Manufacturing

Parliamentary roles 

Lobb was a member of multiple Parliamentary Associations and Interparliamentary Groups between 2009 and 2016. Some of these groups included the Canada-China Legislative Association (CACN), the Canadian NATO Parliamentary Association (CANA), the Canada-United States Interparliamentary Group (CEUS), and the Canadian Branch of the Commonwealth Parliamentary Association (CCOM).

Notable committee memberships  

• Former Member, Scrutiny of Regulations (REGS), February 2020-August 2020
• Former Member, Health (HESA), January 2018-September 2019; Chair 2014-15
• Former Member, Transport, Infrastructure and Communities (TRAN), September 2017-January 2018
• Former Member, Industry, Science and Technology (INDU), April 2016-September 2017
• Former Member, Public Safety and National Security (SECU), 2010-2011
• Former Member, Veterans Affairs (ACVA), 2013-2014; 2012-2013; 2011-2012; 2010-2011; 2009

Background 

Lobb was first elected to the House of Commons in 2008. He was re-elected in 2011, 2015, and 2019. Lobb attended Lee University in Cleveland, Tennessee where he earned a BSc in Business Administration.

Recent Questions on Softwood Lumber

May 14, 2021 (CIIT)

• I think you were talking about the mass timber initiative. We all see the news. We see the price of a two-by-four triple or quadruple in a year or a year and a half. When somebody is looking at timber versus concrete, what is the value proposition? This is an export opportunity.
• From an export perspective on the engineered lumber—the Trus Joists, the manufactured floor joists, the OSB, plywood, MDF and all that stuff—how is that export market for Canadian lumber companies right now?
• Do you have anything to do with the cardboard box industry? Do you liaise with anything in that?

Ziad Aboultaif  
(CPC—Edmonton Manning, Alberta) 

Key interests

• Oil and Gas sector
• Trade in Agricultural Products
• Western Alienation
• Trade Policy with China

Parliamentary Roles 

MP Aboultaif was the Conservative Critic for digital government from November 2019 to September 2020.  He had previously served as the Critic for International Development and the Critic for National Revenue.

Notable committee membership 

• Member, Standing Committee on International Trade (CIIT), October 2020-present
• Former Member, Standing Committee on Foreign Affairs and International Development (FAAE) September 2017 – September 2019  

Background 

Aboultaif was first elected in 2015 and campaigned on a pledge to support small businesses and to support pipeline development.  Prior to entering politics, Ziad was a self-employed business owner working in logistics and distribution.

Recent Questions on Softwood Lumber

March 8, 2021 (CIIT)

• How much progress have we made in the last five years towards changing the position of the U.S. when it comes to our industry [Softwood lumber]?

Rachel Bendayan 
(LPC—Outremont, QC)

Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade 

Key interests

• Disbursement of the Strategic Innovation Fund to SMEs
• Support for investor-state dispute settlement mechanisms
• Support for small and medium-sized exporting businesses

Parliamentary roles 

Bendayan was first elected in a by-election in February 2019. She is currently the Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade.

Notable committee memberships 

• Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
• Member, Standing Committee on International Trade (CIIT), January 2020-present
• Former Member, Standing Committee on Finance (FINA), May 2019 - September 2019
• Former Member, Standing Committee on Status of Women (FEWO), April 2019 - September 2019

Background 

Before entering politics, Bendayan was a lawyer with Norton Rose Canada in Montreal. She ran for the Liberal Party in Montreal in 2015, losing to Thomas Mulcair. After the election, she was hired as the chief of staff to the former Minister of Small Business and Tourism Bardish Chagger.

Sukh Dhaliwal 
(LPC—Surrey – Newton,  BC) 

Key interests  

• Trade Commissioner Services
• Canada-India Trade Agreement
• Support for Small to medium-sized businesses
• Benefits of trade deal for British Columbia
• Forestry sector

Parliamentary roles 

Dhaliwal has served in Parliament twice, first representing the riding of Newton-North Delta from 2006-2011, then for the riding of Surrey-Newton from 2015 to present. During his previous tenure as a Member of Parliament, he served as critic for the Asia Pacific Gateway, Sport and Western Economic Diversification Canada.

Notable committee membership 

• Member, Standing Committee on International Trade (CIIT), January 2016 - present
• Member, Standing Committee on Transport, Infrastructure and Communities (TRAN), January 2009-March 2011

Background 

Dhaliwal was born in India, coming to Canada in 1984. Prior to entering politics, Dhaliwal founded a successful land-survey company in Surrey. He has been very involved in the business community and in municipal affairs in Surrey, serving on many local boards and fundraising campaigns.

Recent Questions on Softwood Lumber

March 8, 2021 (CIIT)

• You mentioned there were two decisions that were made in favour of Canada—Lumber III and Lumber IV. How do those decisions address the economic impact that happened over the past many years?
• In regard to the WTO appellate body asked: How long do you think this appeal process will take? Exactly what do you mean by the appellate body, if we have to pin down that time frame?
• Even if we have a body—if the U.S. appoints those—how long do you think that appeal process would be, if we had all the members in the appellate body?
• What else can be done, from a government perspective, so we have much bigger shares in other countries and we are not dependent on the U.S.?

May 14, 2021

• Ms. Sharma mentioned net zero by 2050. Could you expand on the role that the forest products industry can play in green recovery? Also, how can the industry play a role on an international goal shared by many of our partners towards net zero by 2050?

Chandra Arya
(LPC—Nepean, ON) 

Key interests

• Knowledge-based sector
• Rare minerals and the production of Electric vehicle batteries
• Trade with India
• Foreign direct investment
• Investment protections in trade agreements

Parliamentary roles 

Arya was first elected in 2015. He is a member of virtually all of the interparliamentary associations.

Notable committee memberships 

• Member, Standing Committee on International Trade (CIIT), January 2020 - present
• Member, Standing Committee on Public Accounts (PACP), January 2016 – September 2019
• Member, Standing Committee on Industry, Science and Technology (INDU), January 2016 – September 2019

Background 

Arya spent his career prior to entering politics as an executive in the high-technology sector. He has a Bachelor degree in Engineering and a Masters in Business Administration. Arya was active in the Ottawa business community, serving on the board of Invest Ottawa and as Chair of the Indo-Canada Ottawa Business Chamber. He was also active in social causes, serving on the board of the Unity Non-Profit Housing Corporation Ottawa and as Vice President of the Ottawa Community Immigrants Services Organization.

Randeep Sarai
(LPC—Surrey Centre, BC) 

Key interests  

• Forestry sector in British Columbia
• Non-tariff barriers to trade
• Solar panel tariff
• Labour mobility

Parliamentary roles

Sarai was first elected in 2015. In the previous parliament, he served as the chair of the Liberal Pacific and Northern Caucus. He has also been a member of many interparliamentary associations.

Notable committee memberships 

• Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
• Member, Standing Committee on International Trade (CIIT) – January 2020 – present
• Member, Standing Committee on Public Accounts (PACP) – September 2018-September 2019
• Member, Standing Committee on Citizenship and Immigration (CIMM) – January 2016-September 2019

Background 

 Sarai is a lawyer by training, with experience in real estate development and urban planning. He has a Bachelors degree from the University of British Columbia, majoring in political science, and a Bachelor of Laws degree from Queen's University. He has served on the boards of a number of community organizations dedicated to combatting youth violence in Surrey.

Recent Questions on Softwood Lumber

March 8, 2021 (CIIT)

• You alluded to a very good point today, which is that there are $5 billion in duties that are collected and could be invested back into the industry. The sad thing is that this $5 billion is on the backs of Americans who are building or buying homes. They're paying it. It's used for political interests. It's also not helping those in British Columbia who are producing this great lumber and who could be using this to, as you said, improve the industry, get the latest technology and also improve trades and technology in the industry. Can you take a minute to tell us how it's impacting your industry?
• In regard to the increasing prices of softwood lumber, and the amount of jobs in the industry, asked how it has impacted the industry.
• What other reforms specifically would help? The softwood lumber industry has become almost an expert with five rounds of this, five incarnations. What other reforms would help this dispute mechanism?

April 1, 2021 (CAAM)

• Quickly on softwood lumber, do you think trade commissioner services might be able to assist our current forestry sector to diversify in markets outside the U.S. even though it is enjoying a healthy price and therefore decent margins despite the tariffs? Can more be done so that the lumber industry is not susceptible to only one buyer, the U.S.?

Terry Sheehan 
(LPC—Sault Ste. Marie, ON)
Parliamentary Secretary to the Minister of Economic Development

Key interests  

• Steel (particularly focused on Southern Ontario and Algoma Steel)
• Supply-chains for satellites and Electric vehicles
• Employment and economic growth

Parliamentary roles 

Sheehan was first elected in 2015. He was elected co-chair of the All Party Steel Caucus in the previous Parliament. He has been the Parliamentary Secretary to the Minister of Economic Development since November 2019.

Notable committee memberships 

• Member, Standing Committee on International Trade (CIIT), January 2020-present
• Member, Standing Committee on International Trade (CIIT), September 2018-September 2019
• Member, Standing Committee on Industry, Science and Technology (INDU), September 2016 – September 2019
• Member, Special Committee on Pay Equity (ESPE), February 2016 – June 2016

Background 

Prior to entering politics, Sheehan had a career in the private and public sectors in business, community and economic development. His last position prior to being elected as a Member of Parliament was as an employment and training consultant for the Ontario Minister of Training, Colleges and Universities. His riding is home to Algoma Steel and Tenaris

Private Members' Motion

In the 42^nd Parliament Sheehan submitted a concerning the importance of the Canadian steel industry and the creation of a National Steel Procurement Strategy.

Recent Questions on Softwood Lumber

May 14, 2021 (CIIT)

• One of the things we've been talking about, obviously, with the softwood lumber situation, is that it's creating more value added in Canada, and then sending it over there it creates more jobs and more opportunity. I wanted to congratulate you on that. Could you please define, in your opinion, what are the other opportunities in the forest industry as it relates to clean tech? We've heard testimony from the solar power people. We've heard from the small nuclear power people. Are any of those other technologies being incorporated into the Forest Products Association as a whole?

Briefing notes

Softwood Lumber Litigation

• Disappointed that the United States continues to impose unwarranted and unfair duties on Canadian softwood lumber.
• In the past, dispute settlement panels have always found U.S. claims regarding alleged subsidization to be without basis. Believe this to once again be the case.
• Vigorously defending the interests of Canadian industry, including through litigation under Chapter 19 of NAFTA, Chapter 10 of CUSMA and before the WTO.
  

Background

Shortly after the expiry in late 2016 of the one-year standstill period provided by the 2006 Softwood Lumber Agreement, the U.S. Department of Commerce (Commerce) launched, at the request of U.S. industry, anti-dumping (AD) and countervailing (CVD) duty investigations regarding certain Canadian softwood lumber products. In parallel, the U.S. International Trade Commission (ITC) investigated U.S. industry's claim that it was injured by imports of Canadian softwood lumber. 

As a result of these investigations, most Canadian companies were subject to a combined 20.23% duty rate on their softwood lumber exports to the United States from January 2018 until late 2020, when the combined duty rate was reduced to 8.99% for the vast majority of companies. Moreover, in its initial investigations, Commerce determined that softwood lumber imports from Nova Scotia, Prince Edward Island and Newfoundland and Labrador, are not subject to U.S. duties as long as they are certified by the Atlantic Lumber Board (ALB) as having been first produced in these provinces from logs originating in these provinces.

Canada is actively challenging U.S. duties on softwood lumber. Canada launched three challenges under NAFTA Chapter 19 in late 2017 and early 2018 (on Commerce's initial CVD and AD determinations and the ITC's injury determination). Canada's injury challenge ended in May 2020 when the NAFTA Panel adjudicating the case unexpectedly affirmed the ITC's decision on remand that imports of Canadian softwood lumber injure U.S. industry. Canada and the United States continue to be engaged in protracted discussions regarding panel composition for the CVD and AD cases.

Canada is also challenging Commerce's determinations before the WTO. The Panel's Report on Canada's AD challenge was released on April 9, 2019. The Panel agreed with Canada that the United States improperly calculated dumping margins. However, the report also contains findings unfavourable to Canada. On June 4, 2019, Canada appealed the Panel's findings on those issues. The Panel's report on Canada's CVD challenge was released on August 24, 2020. The WTO Panel's findings were overwhelmingly in Canada's favour; the panel unanimously determined that U.S. CVD duties on Canadian softwood lumber are inconsistent with the United States' WTO obligations. However, the United States appealed the Panel's report on September 28, 2020. Timelines for both appeal proceedings are unclear due to the WTO Appellate Body's current lack of quorum.

Finally, Canada is pursuing challenges of the final results of Commerce's first administrative reviews under Chapter 10 of CUSMA. Canada filed a request for panel review regarding the CVD results on December 10, 2020 (CUSMA Chapter 10 replaced NAFTA Chapter 19 as of July 2020). Canada is also participating in the CUSMA Chapter 10 case launched by Resolute FP regarding the AD first administrative review results.

Ongoing U.S. Trade Remedy Proceedings on Softwood Lumber

• Canada is extremely disappointed with the preliminary results of the second administrative reviews, which suggest that the United States intends to double duty rates for most companies later this year.
• Any U.S. duties imposed on Canadian softwood lumber are unwarranted and unfair. Moreover, adding to the duties makes no sense in the current conditions – it will lead to further undue harm to Canadian communities and industry, as well as U.S. consumers.
• Will continue to vigorously defend Canadian industry, including through litigation under Chapter 19 of NAFTA, Chapter 10 of CUSMA and before the WTO.

Supporting facts and figures

The rates in the table below are currently in effect for companies subject to the first administrative reviews.

First Administrative Review (Final Results) 2018 Rates

Companies not subject to the first administrative reviews will continue to be subject to the 20.23% "all-others" combined duty rate set by the initial investigation. The large majority of softwood lumber companies are subject to the first administrative reviews.

Background

The U.S. Department of Commerce (Commerce) conducts annual reviews of its anti-dumping (AD) and countervailing duty (CVD) orders. This process, known as an Administrative Review, is similar to the process used for the initial investigations, but applies only to companies that are subject to the review. A company is subject to the review if there has been a specific request for a review of that company filed with Commerce. The Administrative Review process establishes duty assessment rates for shipments entered during the period of review, as well as the new duty deposit rates going forward until the next annual Administrative Review is completed.

On November 23, 2020, Commerce issued the final results for its first AD and CVD Administrative Reviews (see results above). The final duty rates are, for most companies, significantly lower than those from the initial investigation (8.99% compared to 20.23% "all-others" rate). The only exception is Resolute, whose final rate increased to 20.25% from 17.90%. These new duty rates will be in effect until Commerce issues its final results in the second administrative reviews, which are expected in late November 2021. 

Commerce's second Administrative Reviews are currently underway. On May 2021, Commerce released the preliminary results, which do not take effect. The preliminary results suggest that Commerce is considering increasing the duty rates for all companies, with the combined rate for most companies going up to 18.32% from the current 8.99%. The final results, expected in November 2021, may differ from  the preliminary results. Canada will explore all avenues, including legal filings and advocacy opportunities to convince the U.S. to reconsider its findings prior to the final results.

The third Administrative Reviews have also been launched. Preliminary results are expected around January 2022 and final results may be issued around August 2022. These timelines could change depending on extensions.

Negotiations for a Future Softwood Lumber Agreement and Advocacy Efforts

• Continue to believe that an agreement bringing stability and predictability to the sector is in both countries' best interests.
• Remain ready and willing to negotiate a mutually acceptable agreement.
• Softwood lumber is being raised at all levels with the new U.S. administration.

Supplementary messages

• I have personally raised softwood lumber in my meetings with Secretary Raimondo and with Ambassador Tai and stressed the importance of finding a resolution to this dispute.
• Meanwhile, Canada continues to actively pursue its legal challenges of the unfair and unwarranted U.S. duties on Canadian softwood lumber.

Supporting facts and figures

• In 2020, about 85% of Canada's total softwood lumber exports (by volume) went to the United States.
• British Columbia is the top exporting province for softwood lumber products to the United States.

Background

Following the expiration of the 2006 Softwood Lumber Agreement (2006 SLA) in October 2015, Canada and the United States began discussions toward a successor agreement in January 2016. Aside from a pause caused by the change in U.S. administrations in early 2017, negotiations continued until the United States released final duty determinations for Canadian softwood lumber in November 2017.

Despite a high level of engagement with the U.S. government throughout 2016 and 2017, and considerable efforts in negotiations and stakeholder consultations, Canada and the United States could not reach an agreement. Since that time, negotiations have been stalled and neither the U.S. government nor industry have expressed a willingness to resume discussions on mutually acceptable terms.

Canada's position remains that a new softwood lumber agreement is in the best interests of both countries, and Canada is prepared to re-engage in negotiations when the United States is ready to discuss realistic proposals that would be acceptable to Canadian industry. In the meantime, Canada is continuing to vigorously pursue legal challenges against U.S. duties at the WTO and through NAFTA/CUSMA dispute settlement panels.

Softwood lumber continues to be a priority for the Government of Canada, and it is being raised at all levels with the Biden administration. In addition, Canada will continue to work with long-time allies in the United States, such as homebuilder associations, to stress that U.S. duties are not only causing undue harm to Canadian producers and communities, but also to U.S. homebuilders and consumers. 

Forestry Sector Support in Light of COVID-19

• The Government of Canada is committed to providing ongoing support to the forestry sector to diversify markets and develop innovative wood products.
• The Government announced a series of support programs generally available to Canadian industry, including investment and tailored financing in response to the COVID-19 pandemic.
• A key consideration for Canada regarding support programs is compliance with Canada's international trade obligations.

Supplementary messages

• The Forestry industry continues to be a critical part of Canada`s economy and the Government continues to provide support during the COVID-19 pandemic.
• Canada took swift action to minimize the impact of the softwood lumber dispute on workers and communities by announcing the Softwood Lumber Action Plan shortly after the imposition of U.S. duties in 2017.
• In response to COVID-19, the federal government announced a series of generally available support programs, such as the Business Credit Availability Program, the Canada Emergency Wage Subsidy, to help businesses and employees through these unprecedented times.

Supporting facts and figures

• Natural Resources Canada's Expanding Market Opportunities (EMO) program aims to increase and diversify market opportunities for Canada's forest products industry with up to a $64 million investment over three years.
• Investments and tailored financing program funding: Business Credit Availability Program provides backstopping loans worth up to $40,000 for SMEs and $40 Billion of new funds available through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
• The Canada Emergency Wage Subsidy provides a 75 percent wage subsidy assistance to all eligible firms.
• The government will invest $15.8 million to create green jobs and training opportunities for Canadian youth in the fields of science, technology, engineering and math (STEM) in the forestry and clean technology sectors.

Background - Forest Industry Support

In response to the imposition of preliminary U.S. countervailing duties on softwood lumber in April 2017, Canada reacted swiftly to mitigate the impact on workers and communities. On June 1, 2017, the government announced the Softwood Lumber Action Plan (Action Plan) to provide $867 million over three years in measures to support forest industry workers and communities affected by the softwood lumber dispute. Budget 2019 allocated a further $251.3 million over three years to some of the programs funded by the Action Plan that aimed at supporting companies to diversify their markets, expand market opportunities or make capital investments (Natural Resources Canada is the lead on this issue). Canada's approach to support remains that any assistance to industry must comply with its international trade obligations.

Canada-wide, sawmill activity curtailed due to COVID-19 has since recovered and mills are now operating at full capacity. However, the industry continues to face significant challenges that existed prior to the pandemic. For instance, in BC, the province faces fiber supply issues due to environmental factors, including pine beetle damaged timber and forest fires, in addition to ongoing pressures from unfair and unwarranted U.S. duties.

Support to Trade Diversification in the Forest Sector

• The Government of Canada is committed to diversifying markets for our traditional and innovative wood products. Given the impacts of the pandemic and increasing protectionism on our SMEs, trade diversification is more than ever a priority.
• ¶¶ÒùÊÓƵ supports the modernization of the Canadian forest sector towards a clean, low carbon economic recovery.
• Trade Commissioners in key export markets spare no efforts to facilitate and enhance market access for Canadian forest products.

Supplementary messages

• The Canadian forest sector plays a vital part in the supply chains that produce many of the critical goods to keep safe during COVID-19: masks and gowns for the health care sector; packaging for food and pharmaceuticals and; hygiene products.
• Trade diversification is critical to the future of Canada's forest and wood products industries; sustaining and growing Canadian jobs, and supporting the communities that depend on the industry.
• ¶¶ÒùÊÓƵ directly supports forest product innovators, especially SMEs in securing technology partners, foreign investors and new market opportunities for their next-generation forest products, including bioproducts.
• ¶¶ÒùÊÓƵ works closely with provinces and territories in promoting and advocating for Canada's sustainable forest management leadership in key export markets worldwide.
• The Government's Trade Diversification Strategy features an investment of $290 million over five years to help Canadian businesses export and grow, strengthen the Trade Commissioner Service and enhance the support it provides to Canadian exporters, including those in the forest sector.
• Our bilateral and multilateral economic and trade agreements, concluded or under negotiation, aim at increasing the international competitiveness of our natural resource industries, including the forest and wood products sector.

Supporting facts and figures

• ¶¶ÒùÊÓƵ's support to enhance trade in the forest sector is part of Canada's goal to increase overseas exports by 50% by the year 2025.
• Through the Trade Diversification Strategy, our Government is committed to investing $1.1 billion over six years to:
• Invest in infrastructure to support trade;
• Provide Canadian businesses with resources to execute export plans; and
• Enhance trade services and programs such as CanExport for our exporters.
• Joint efforts made over the past ten years with innovative SMEs are now showing promising results, with burgeoning market uptake for our innovative wood-based bio-products in multiple unconventional applications found in various industries such as automotive, chemical, food, cosmetic, medical, etc.
• In 2020-21, 261 clients and partners in forestry received a total of 705 activities (service, referral or funding) from the Trade Commissioner Service, including 25 new clients. Additionally, there were 25 successes for 19 organizations targeting 10 different countries.
• The Trade Commissioner Services (TCS) has a global network of 44 officers dedicated to FDI attraction supported by heads of mission, senior trade commissioners, as well as trade and investment specialists across Canada''.
• The TCS has witnessed increased interest from foreign companies in investing in Canadian bioproduct manufacturing. The TCS continues to support FDI prospects in this environmentally friendly sector to create well paying jobs for Canadians.
• Through the TCS, ¶¶ÒùÊÓƵ is committed to enhancing the environmental reputation of Canada as a leader in sustainable forest management.
• With a total of 14 free trade agreements with 51 countries, 36 foreign investment promotion and protection agreements (FIPAs) and more to come, Canada is the most connected G7 country. With preferred access to international markets for Canadian forest companies, there has never been a better time to diversify.

Background

For innovative forest product companies, especially SMEs, actively diversifying production towards bio-based products (i.e. biofuels, biochemical) and other new wood materials, top priorities include attracting investment, developing commercial applications through partnerships and uncovering new market opportunities. These three areas of action are well aligned with the integrative trade approach of ¶¶ÒùÊÓƵ.

¶¶ÒùÊÓƵ is a longstanding supporter of all Canadian forest-sector trade associations pursuing market development efforts for the benefit of the entire industry, including initiatives undertaken under the Expanding Market Opportunities Program managed by Natural Resources Canada.

Lumber Prices (NEW)

• The exceedingly high lumber prices are largely a result of unprecedented demand. Thanks to their resiliency, Canadian lumber producers have been quick to return to full operation to meet the demand here at home and serve their customers in the United States.
• The duties imposed by the United States on Canadian softwood lumber are unwarranted and increasing the duties makes no sense in the current conditions – it will lead to further undue harm to Canadian communities and industry, as well as U.S. consumers.
• One way we can help bring greater stability and predictability to the sector would be to negotiate a new Softwood Lumber Agreement.  I will continue to work with my U.S. counterpart towards this goal.

Background

Over the last 14 months, lumber prices have been on a meteoric rise and are at unprecedented levels. The most recent lumber price is US$1514 – a record-high and an increase of over US$1100 since April 2020.

The primary driver for the surge in prices has been demand-side pressures, a sudden increase in demand that is outpacing available supply. Canadian lumber production fell slightly in early 2020, as producers implemented stringent curtailments early in the year in response to the COVID-19 pandemic. Canadian production has since rebounded strongly, with the vast majority of firms now operating at full capacity. The high prices have helped much of the lumber industry weather the effects of the pandemic and the unfair duties on exports going to the United States.

In the United States, lumber prices have also garnered a lot of attention. Members of Congress as well as a various groups, such as homebuilders and affordable housing organizations, have been vocal with the Biden administration about the need to find a solution to the high prices, including renewed engagement with Canada on a softwood lumber agreement. Increasing prices and shortages in supply have resulted in rising costs for homebuilding as well as delays in construction.  Prices are also having an effect in Canada. Natural Resources Canada leads on analysis related to Canada's forest sector and market conditions.

The preliminary results of the second administrative reviews, which were released by the U.S. Department of Commerce (Commerce) on May 21, suggest that Commerce is considering doubling later this year the combined duty rate applicable to most Canadian companies exporting softwood lumber to the United States. Certain U.S. stakeholders, including the National Association of Home Builders, have expressed concerns about the further impacts an increase in the duty rates would have on housing affordability.

GAC officials are working with our Embassy in Washington and the Canadian network in the U.S., as well as our legal counsel to explore all avenues to encourage the U.S. to reconsider its potential increase in duty rates prior to the final results (expected in late November 2021).

Background notes

History of the Softwood Lumber Dispute and Chronology of the Developments

Summary:

The United States launched trade remedy investigations regarding softwood lumber from Canada in late 2016. Canada and the United States continued discussions towards a new softwood lumber agreement, but those negotiations have stalled since the U.S. Department of Commerce (Commerce) issued final countervailing (CVD) and anti-dumping (AD) duty determinations on Canadian softwood lumber in November 2017.

Below is a list of key developments related to U.S. trade remedy proceedings and Canada's challenges of the unfair duties imposed by the United States.

Background

History of the softwood lumber dispute

Trade in softwood lumber products has been the subject of a long-standing dispute between Canada and the United States. The U.S. softwood lumber industry alleges that differences in forest management practices in the two countries result in subsidization of Canada's softwood lumber industry. In Canada, the majority of forests are publicly owned while in the United States, most forest land is privately owned. The U.S. industry alleges that any difference between the prices provinces charge for stumpage (the price on standing timber and the right to harvest it) and the prevailing U.S. market price for timber constitutes a subsidy to Canadian lumber producers. This difference in ownership has been used by the U.S. industry as a pretext to seek the application of unwarranted and unfair duties to shield themselves from competition from high quality and affordable Canadian imports. Over the last 35 years, the United States has frequently imposed unilateral restrictions on Canadian lumber imports through the application of its countervailing and anti-dumping duty laws. Each time, Canada has ultimately been vindicated by successfully challenging these restrictions as inconsistent with both U.S. law and international trade obligations.

Since the early 1980s, Canada has been subject to four cycles of U.S. trade remedy investigations. After years of litigation, the last three cycles concluded with a period of relative calm under a managed trade agreement between the two countries, in which Canada agreed to certain restrictions on its access to the U.S. market.

There are a number of political and economic factors that influenced each of the various agreements over the years. The latest agreement that managed the softwood lumber trade between Canada and the United States was the 2006 Softwood Lumber Agreement, which expired in October 2015. The coming into force of the agreement in October 2006 happened during a decline in lumber prices that began after a high point was reached in 2004 (US $473). This decline continued through the 2008 economic downturn, reaching prices slightly below US$200 in 2009.

The agreement provided 9 years of relative peace, as well as a predictable and stable framework in which industry could operate. Regions covered by the agreement had the option to choose between: (1) higher export charges with no volume cap; and (2) lower export charges combined with a quota. The level of export charges and quotas that applied for any given month were determined by prices. When prices exceeded US$355, no export measures applied. Due to alleged concerns over some mechanisms and provisions of the agreement, the U.S. industry did not want to renew it on the same terms. Canada has always shown creativity and flexibility in the context of negotiations and in response to alleged concerns by U.S. industry. Unfortunately, the U.S. has not been willing to work towards terms that are mutually beneficial.

Stakeholders Implicated by the Ongoing Softwood Lumber Dispute

Summary:

The softwood lumber dispute is a long-standing trade irritant between Canada and the United States. In the current round of the dispute, the U.S. Department of Commerce (Commerce) conducted countervailing and anti-dumping investigations that led to the imposition of U.S. duties on certain Canadian softwood lumber products starting in 2017.

Following the conclusion of the investigations, Commerce conducts annual reviews of its duty orders, known as administrative reviews. Below is a list, by type of proceeding, of companies that were/are respondents in the countervailing and/or anti-dumping proceedings (as of May 21, 2021).

Initial investigations:

• Canfor Corporation
• Resolute Forest Products Canada Inc.
• Tolko Marketing Sales Ltd.
• West Fraser Mills Ltd.
• J.D. Irving Ltd.

First Administrative Reviews:

• Canfor Corporation
• Resolute Forest Products Canada Inc.
• West Fraser Mills Ltd.
• J.D. Irving Ltd.

Second Administrative Reviews:

• Canfor Corporation
• Resolute Forest Products Canada Inc.
• West Fraser Mills Ltd.
• J.D. Irving Ltd.

Third Administrative Reviews:

• Canfor Corporation
• Resolute Forest Products Canada Inc.
• West Fraser Mills Ltd.

While the above-mentioned companies were individually investigated in the countervailing and/or anti-dumping proceedings to date, hundreds of companies from across the country are affected by the imposition of unfair and unwarranted U.S. duties.

The Government of Canada is in regular contact with a plurality of stakeholders implicated by the dispute, in addition to the companies specifically investigated by the U.S. The federal government works collaboratively with provincial and territorial governments, individual companies, regional and product sub-category associations, organized labour, and Indigenous partners and reaches out to these groups periodically to provide updates and seek views on the way forward as the file unfolds.