Canada – US Softwood Trade Update

Quebec-based Resolute Forest Products CEO Richard Garneau said to the Globe and Mail Thursday he is confident he can demonstrate to American authorities this month that the region deserves free and unencumbered access to the US market.

The forestry sectors of Ontario and Quebec are modelled after the market-based systems in the US, and that should convince the US Commerce Department that the region doesn’t engage in the unfair trade of softwood lumber, Garneau said.

The Montreal company was recently selected by the US Commerce Department – along with BC companies West Fraser Timber, Canfor, and Tolko Industries – to provide details on how they operate as part of its investigation into alleged unfair trade.

The producers are required to respond to a questionnaire by the end of the month. A US auditor will then visit the four companies for follow-up.

The US Commerce Department is expected to take the information into account when it decides on the imposition of preliminary duties on Canadian lumber imports this spring.

Duties on the four producers will be based on their responses. Other Canadian producers will be subject to rates that are the average of those polled, said Garneau to Globe and Mail.


Still in Quebec, leaders of that province this week announced that province wants a seat at the negotiating table if the North American Free Trade Agreement is reopened, said the Montreal Gazette Tuesday.

Quebec Economy Minister Dominique Anglade made it clear on Monday the Philippe Couillard government will demand a place on the negotiating team. Anglade said Quebec will defend its historic position of protecting supply management in the agricultural sector, an issue that is constantly coming up in the free trade negotiations with all international partners.


This latest lumber battle covers a wide swath of softwood lumber material, writes Chaille Brindley in Pallet Enterprise Wednesday. The petition lists a number of lumber products and categories that previously had exemptions from duties under the North American Trade Agreement (NAFTA). These exemptions had allowed the free flow of those products and materials from Canada without duties or quotas in the past.

Unassembled pallets (pallet kits) and notched stringers are included in the expanded scope of the U.S. petition, and the DOC has decided to go ahead with the full scope of the petition in its investigation phase. The DOC might decide to limit the scope of any trade action if it finds that duties are warranted.

Some pallet companies are trying to switch customers to hardwood, says Brindley. Others are looking to softwood from the United States. What is clear is that any decision to impose duties would have significant market impacts.

Although the Canadian government will likely challenge in international courts any duty assessed, they would still have to put up the money ahead of time as bond, which would amount to a significant price increase for Canadian material.

This could be good news for the U.S. hardwood sector, which has lost some market share for pallets to softwood. And it also is positive for pallet rental companies, which have existing pools and longstanding contracts for its lumber sourcing. Also, domestic pallet producers with their own sawing capacity may benefit if they have lower cost sources of logs and don’t need Canadian material, according to Pallet Enterprise.