U.S. lumber duties unfair and unwarranted, says Canada

The federal government is reaching out to reassure forestry workers, lumber producers and others that it is ready to help cushion what may be a heavy blow from a softwood trade war.

The U.S. is imposing significant duties of up to 24 per cent on lumber imports — the latest flare-up in Canada-U.S. trade relations.

Natural Resources Minister Jim Carr acknowledged Tuesday that job losses are likely in the offing, saying Employment and Social Development Canada (ESDC) is standing by to provide essential services.

"If we look at the history of these trade actions, there inevitably will be job losses," Carr told a news conference in Ottawa.

"We will focus our efforts on doing whatever we can to ease the impact of those job losses; that is the reality of this countervail. It is going to result in some tough times for some operators across the country.

"We are prepared and well-positioned to do whatever governments can reasonably do to help the workers, the industries and the communities that will be affected."

Canada and the United States tremendously interconnected

Available ESDC supports include employment insurance benefits, career counselling, retraining and provincial skills development programs, said Carr, noting Canada is no stranger to softwood disputes with the United States and has always prevailed in the past.

Prime Minister Justin Trudeau, meanwhile, says the Canada-U.S. relationship is bigger than any one trade irritant — and that both countries would suffer from a "thickening" border.

"We are tremendously interconnected in our economy with that of the United States, but it's not just a one-way relationship," Trudeau said during a visit to Kitchener, Ont.

"There are millions of good U.S. jobs that depend on smooth flow of goods, services and people back and forth across our border."

He cited the North American auto sector as one compelling example, noting how a typical car part can cross the border up to six times before it ends up in a finished automobile.

Trudeau also said the friendly nature of the relationship means both sides will be able to work through any disputes that arise, such as those currently brewing on softwood lumber and dairy products.

Negotiated settlement is possible, says Carr

Carr, on the other hand, wasn't sounding an especially friendly tone.

"We will continue to press our American counterparts to rescind this unfair and unwarranted trade action," he said. "We remain confident that a negotiated settlement is not only possible but in the interests of both countries."

During a technical briefing on the softwood duties Tuesday, officials said Canada is not likely to launch a legal challenge under the North American Free Trade Agreement or with the World Trade Organization until next year.

The government needs to wait until the final determinations, which likely won't happen until late 2017.

U.S. President Donald Trump has been stirring the pot of late, tweeting today that Canada is making life "very difficult" for American dairy farmers and that the government "will not stand" for it.

Softwood trade dispute is cyclical

Lumber and dairy are long-standing irritants — and were also a problem file under previous presidents. In softwood lumber, the countries have a once-a-decade cycle of tariffs, trade litigation, and ultimately settlements.

Thanks to free trade, there is also a shortage of red tape and regulation that "blocks and gums up the system," Trudeau added.

"You cannot thicken this border without hurting people on both sides of it," he said.

"Any two countries are going to have issues that will be irritants to the relationship. Having a good constructive working relationship allows us to work through those irritants.

"There's always going to be political pressures to raise this issue or that issue ... but the core of this relationship is bigger than any two individuals sitting in the top of their respective governments."

Trudeau warned against paying too much heed to "those narrow interests that always want to close off or impose barriers."

Final verdict by Sept. 7 is possible

The softwood spat is unfolding amid th potential renegotiation of the North American Free Trade Agreement. Despite remarks from the president and his cabinet secretary, neither lumber nor dairy are actually part of NAFTA. However, different actors would be pleased to add provisions on one or the other.

What comes next on softwood is a study of separate anti-dumping duties, followed by a final verdict by the U.S. Commerce Department as early as Sept. 7, and then one of three possible outcomes: a negotiated agreement, a surprise retreat from the U.S. government, or a potential years-long court battle.

Canada's government condemned the announcement. In a statement, the federal government called the move unfair, baseless, unfounded and it promised help for its industry.

Carr said the action hurts people in both countries — not only Canada's lumber sector that employs hundreds of thousands, but also American homebuyers, who must now pay more for wood.