By BRENT JANG
Tuesday, February 20, 2018
VANCOUVER -- Maine Governor Paul LePage has asked the U.S. Department of Commerce to exempt New Brunswick from punitive duties against Canadian lumber shipments into the United States, blaming British Columbia for the softwood dispute.
Mr. LePage made the request to Commerce Secretary Wilbur Ross, according to a memo written by a department official about the Feb. 7 meeting.
J.D. Irving Ltd. of New Brunswick is ponying up U.S. duties of 9.38 per cent while other lumber firms in the province are paying 20.23 per cent.
Mr. LePage told the meeting that Maine typically sends logs to Canadian sawmills, and much of the production of lumber is shipped to the United States. But he warned that the softwood fight has thrown hundreds of Maine loggers out of work.
"Governor LePage requested this meeting to underscore the impact the softwood lumber orders are having on his state," wrote Gary Taverman, deputy assistant secretary for antidumping and countervailing duty operations at the Commerce Department. "He also noted the strong cross-border connections between Maine and New Brunswick."
The United States says most provinces provide subsidies by charging unfairly low stumpage fees to producers, which pay for the right to chop down trees on Crown land. New Brunswick, however, has slightly more private timberland than Crownowned forest land.
Under the American system, most producers pay for U.S. timber rights on private land.
Irving has a wide array of sawmill and woodland operations in both New Brunswick and Maine.
Irving's Dixfield sawmill in Maine, for instance, is a major producer of eastern-white-pine boards. The Maine-New Brunswick integration in forestry runs deep - Twin Rivers Paper Co. Inc. owns the Edmundston pulp mill in New Brunswick and Madawaska paper plant in Maine.
Mr. LePage believes that the "primary problem in the softwood lumber dispute is with British Columbia," according to the memo that recounts the meeting at Mr. Ross's conference room in Washington.
B.C. held a 55.2-per-cent share of Canadian lumber sales volume in the United States in 2016, followed by Quebec (19 per cent), Ontario (7.9 per cent), Alberta (7.8 per cent) and New Brunswick (7 per cent).
B.C. is being criticized not only for low stumpage fees, but also for what the United States views as subsidies provided through log-export restrictions that are supported by the B.C. and Canadian governments. The Commerce Department, however, said in its final determination in November that those log-export restraints in B.C. play a smaller role than what the department had originally claimed in its preliminary ruling in April.
All four Atlantic provinces escaped U.S. tariffs and quotas for decades in the long-running softwood dispute dating back to 1982, but New Brunswick lost its exemption in this fifth round of the trade fight.
People in attendance at the Feb. 7 meeting included Mr. LePage, Mr. Ross, Mr. Taverman, New Brunswick Premier Brian Gallant and David Wilkins, a former U.S. ambassador to Canada who has been serving as trade envoy on the softwood file for New Brunswick.
New Brunswick is worried about the impact of U.S. tariffs on the province's economy. One of the representatives at the meeting was Jacques Pinet, chief executive officer of the New Brunswick Jobs Board Secretariat.
It is unclear what action, if any, the Trump administration will take to address the Maine Governor's concerns about New Brunswick being added last year to the list of provinces subject to duties.
Many Canadian producers have been weathering the duties by passing on most of the extra costs to U.S. home builders, with lumber prices surging to nearrecord highs.
"Questions arose during the meeting about Commerce's legal authority to remedy the situation in Maine, such as an exemption for New Brunswick. Secretary Ross noted the concerns of the Governor and indicated that he would be open to options that fall within Commerce's statutory authority," Mr. Taverman said in the memo.
Besides requesting duty exemptions for New Brunswick producers, Mr. LePage believes that some mills in Quebec near the U.S. border should also be excluded from the tariffs.
The Maine Governor also "noted a situation where some Canadian producers are skirting U.S. duties by selling lumber to Cuba, who are, in turn, selling to Puerto Rico," the memo added.
The U.S. lumber industry targeted four mandatory respondents from Canada: Resolute Forest Products Inc. of Montreal and three B.C.-based producers - West Fraser Timber Co. Ltd., Canfor Corp. and Tolko Industries Ltd.
The Commerce Department imposed the highest final duties against the three B.C.-based producers: 23.56 per cent against West Fraser, 22.07 per cent on Tolko and 20.52 per cent on Canfor.
Resolute pays 17.90 per cent and voluntary respondent Irving of Saint John pays 9.38 per cent.
Other Canadian producers pay the weighted average of 20.23 per cent.
In November, 2017, the Canadian government began filing documents to appeal the Commerce Department's lumber tariffs, launching the action through the Chapter 19 dispute-resolution mechanism of the North American free-trade agreement. Ottawa is also challenging U.S. lumber tariffs by taking its fight to the World Trade Organization.
Maine Governor Paul LePage holds a meeting at the State House in Augusta, Me., in 2017. He has asked the U.S. Department of Commerce to exclude New Brunswick from Canadian softwood-lumber tariffs as they have been damaging to cross-border operations.
ROBERT F. BUKATY/AP