CANADA ECONOMICS

CANADA - CHINA

The Globe and Mail. Jun. 27, 2017. Trudeau ‘comfortable’ with Norsat takeover despite U.S. concerns
ROBERT FIFE AND STEVEN CHASE

Ottawa —  Prime Minister Justin Trudeau insists he’s “comfortable” with Ottawa’s decision to approve a Chinese investor’s takeover of a Canadian high-tech company, even though the U.S. Department of Defence is reviewing all its business dealings with Norsat International.

Mr. Trudeau told a news conference he saw no need to further scrutinize the purchase of Norsat by China’s Hytera Communications by subjecting the takeover to a comprehensive national security review. The Liberal government has faced widespread criticism for skipping this in-depth review.

“We would not move forward with approving investments under the Investment Canada Act if we were not assured and comfortable that there is no risk to national security. Period,” Mr. Trudeau said in Ottawa on Tuesday.

Mr. Trudeau was asked if he could assure the Pentagon there was no security risk for the Americans in the transfer of Norsat’s satellite communications technology to Hytera. The U.S. military is a significant customer of Norsat.

“It doesn’t matter what country it’s from or what deal it is. If there is a risk to national security we won’t move forward,” he said. “In this case our very effective national security agencies made a professional determination that there were no significant national security concerns about this particular transaction, and it didn’t need to go through further reviews.”

But U.S. critics have raised significant concerns about the deal, including a member of a U.S. watchdog agency that reports to Congress.

Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, called for a Pentagon review, saying “the sale of Norsat to a Chinese entity raises significant national security concerns for the United States as the company is a supplier to our military.”

Congressman Walter Jones, who sits on the House of Representatives Armed Forces Committee, also called on the Pentagon to review all its contracts with Norsat.

The takeover went through a routine national security screening that all foreign takeovers of Canadian firms undergo. The government did not ask its security officials to conduct a comprehensive national security review, which would have examined the economic and defence consequences of China obtaining this Canadian technology.

Norsat sells communications equipment to branches of the U.S. military and the North Atlantic Treaty Organization.

“The review they did was adequate to give them confidence that there was no risk to national security. Therefore their recommendation to the minister was to allow it to proceed, so we did,” Mr. Trudeau added.

The Globe and Mail. 27 Jun 2017. Pentagon to review deals with B.C. firm. Defence Department to re-evaluate Norsat contracts after Ottawa approves Chinese takeover without formal national security test
ROBERT FIFE
STEVEN CHASE 

OTTAWA - The U.S. Defence Department will review all its business dealings with Norsat International Inc. after the Vancouver-based satellite technology company closed a deal that will allow it to be swallowed up by a Chinese telecom giant. The Pentagon’s re-evaluation could have serious repercussions for Norsat and its new Chinese owner, Hytera Communications Corp. of Shenzhen, China. Norsat sells communications equipment to branches of the U.S. military and the North Atlantic Treaty Organization.
“Current contracts already awarded will be reviewed on a case-by-case basis and appropriate measures will be taken, in accordance with the terms of those contracts and consistent with U.S. laws and department regulations and policies,” Defence Department spokesman Lieutenant-Colonel Roger Cabiness said on Monday in a statement to The Globe and Mail.
Lt.-Col. Cabiness said the “department reviews the implications of the transfer of ownership of any firms that the department has contracts for equipment and or services.”
The Liberal government has taken heavy criticism in Parliament, from members of the U.S. House of Representatives Armed Services Committee and a congressional watchdog for approving the Norsat takeover without conducting a comprehensive national security review. »
Prime Minister Justin Trudeau has defended the decision to forgo a full review, saying Canada consulted Washington before concluding Hytera’s takeover does not pose any national security risks. He has refused to say who was consulted in the Trump administration or whether the Americans had objected to the sale.
The U.S. embassy in Ottawa has declined to comment on whether Washington was consulted and whether it had any national security concerns.
Lt.-Col. Cabiness did not directly criticize Ottawa’s decision to approve the Norsat deal, but he noted the way Washington handles potential national security concerns with any takeover of U.S. high-tech firms by Chinese investors.
“Within the [U.S. government’s] foreign-investment review process, the department emphasizes that transfers of sensitive technologies and capabilities should be carefully vetted to mitigate potential risks to U.S. and allied security interests,” he said in an earlier statement to The Globe.
Conservative public safety critic Tony Clement said the Pentagon review casts doubt on the government’s repeated assertions in Parliament that it takes national security seriously when it involves China.
“This is going to have huge repercussions for Norsat. It also raises the question of whether NATO should be reviewing its contracts with the company,” Mr. Clement said.
“It also begs the larger question of why the Canadian government did not foresee this when they gave the green light to the takeover in the first place.”
Shareholders of Norsat on June 22 voted in favour of the Hytera takeover after the company turned down a competing bid from a U.S. hedge fund. Norsat said in a statement last week that it expects the sale will close by the third quarter of 2017.
Concerns about the deal include the transfer of sensitive technology to China’s militaryindustrial complex as well as the fact that the company was sued by Motorola Solutions over allegations it stole patents and trade secrets.
Last week, Congressman Walter Jones, who sits on the House of Representatives Armed Forces Committee, called on the Pentagon to review all its contracts with Norsat.
“The United States cannot stop Canada from allowing the Chinese takeover of Norsat,” Mr. Jones told The Globe. “We can, and should, however, re-evaluate any business dealing that potentially affects our defence initiatives.”
Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, which reports to Congress, also called for a Pentagon review, saying “the sale of Norsat to a Chinese entity raises significant national security concerns for the United States as the company is a supplier to our military.”
Mac Thornberry, chairman of U.S. House of Representatives’ Armed Services Committee, urged Ottawa last week to be “more vigilant” in approving Chinese investor takeovers of Canadian high-tech firms that specialize in military hardware.
Norsat’s customers include the U.S. Department of Defence, the U.S. Marine Corps, the U.S. Army, the giant aircraft manufacturer Boeing, NATO, the Irish Department of Defence, the Taiwanese army, and major media companies such as CBS News and Reuters. Norsat says its technology is also used by NAV Canada, operator of the country’s civil air-navigation service.
Two former directors of the Canadian Security Intelligence Service – Richard Fadden and Ward Elcock – have said the Norsat transaction should have been subjected to a full-scale security review.
Mr. Trudeau has offered a changing storyline when pressed to defend his government’s handling of the Norsat deal since The Globe first reported on the lack of a formal security review in early June. At one point, he said the deal had undergone a national security review when it, in fact, had gone through a much less thorough security screening. He later told Parliament the Americans were consulted, but refused to answer when asked with whom the government spoke. The Prime Minister later emphasized how the decision not to hold a review was made on the advice of public officials, and he implied that his opposition critics did not trust the civil service as the Liberals do.
Since the Liberals came to power, they have been much more open than the former Conservative government to investment from China in a number of key sectors.
In February, Ottawa approved the sale of one of British Columbia’s biggest retirementhome chains to a Beijing-based insurance titan with a murky ownership structure, giving China-based Anbang Insurance Group a foothold in Canada’s health-care sector.
In March, the government approved the takeover of a Montreal high-tech firm, ITF Technologies – which the Conservatives had blocked on the grounds it would undermine a technological edge that Western militaries have over China.
At the time, CSIS had recommended against the takeover, saying the ITF technology transfer would give China access to “advanced military laser technology” and would diminish “Canadian and allied military advantages.”
Hytera, which is 52-per-cent owned by Chinese billionaire Chen Qingzhou, drew international headlines in March when telecom-equipment giant Motorola filed a high-profile lawsuit accusing the Chinese company of large-scale theft of its proprietary technology.

The Globe and Mail. 27 Jun 2017. In Australia, experts caution against close ties with China. Canberra’s troubles could hold warning for Canada as Trudeau seeks warmer relations with Beijing
NATHAN VANDERKLIPPE

Aheated new debate about Beijing’s influence has raised calls in Australia for greater vigilance toward Chinese money, as countries around the world grapple with a rising appetite in China for overseas infrastructure and sensitive technology.
Australia has stood at the forefront of Western countries in building economic links with China. In the decade leading to 2015, only the United States received more Chinese investment; Australia’s tally nearly doubled that of Canada over that period. China is Australia’s largest trading partner and the destination for a third of its exports.
But as Canada under Prime Minister Justin Trudeau has sought warmer ties with China, approving a series of controversial investments and beginning exploratory talks on a free-trade agreement, Australia and others have begun to ask hard questions about the cost of doing business with Beijing.
“We’ve reached the point now where there is almost a consensus forming among the political class; that Australia has to stand up to China,” said Rory Medcalf, a former diplomat and intelligence analyst who now heads the National Security College at Australian National University. Fighting back will require strong measures, some in Australia now say.
What’s needed is “an investment approach, which is actually quite similar to how China manages foreign investment into its own country, which is to say there are entire sectors which will be off-limits for the purposes of investment,” said Peter Jennings, a former high-level defence adviser and strategist who is now executive director of the Australian Strategic Policy Institute, a think tank.
And government should take a far more cautious approach even to investments in allowed sectors, tossing out thresholds for more extensive review, he said. Currently, deals over a certain value are scrutinized. “You wouldn’t have a dollar threshold, because in some cases even quite small investments can have a strategic impact,” he said.
Worry in Australia has simmered as Chinese money has bought up critical infrastructure, including a port and large stakes in the country’s electrical industry, and poured into homes and farms.
But the public and political agenda has been galvanized by a series of local media revelations that have trained new attention on ways China has used money and influence to press its agenda at the highest political levels in Australia.
Lax contribution laws have allowed Chinese money to flood into local politics – two Chinese billionaires alone, with their associates, contributed about $6.7million to the country’s leading political parties over the course of 10 years, according to a joint investigation by Fairfax Media and investigative television show Four Corners.
The uncertain motives of those billionaires – property developers Huang Xiangmo and Chau Chak Wing – led the Australian Security Intelligence Organization in 2015 to warn political parties against accepting donations from the two men, saying their intention may be to exert influence on behalf of the Chinese Communist Party.
The parties did little to change course, providing the billionaires leverage. In one striking instance, Mr. Huang threatened to cancel a $400,000 (Australian, $402,000 Canadian) donation to the federal Labor Party. A day later, Labor Senator Sam Dastyari publicly supported China’s controversial policies in the South China Sea.
Further revelations showed that well-connected Australians have sought to obtain passports for wealthy Chinese donors, while security forces discovered classified documents in the home of a woman believed to be a Chinese spy.
Canadian federal law places far tighter restrictions on foreign political donations, banning most of them outright.
But there are signs of similar problems in Canada. Prime Minister Justin Trudeau has been criticized for attending a series of private fundraising dinners attended by wealthy members of the ethnic Chinese community in
Canada, some of whom have close ties to the Communist Party apparatus in China.
In 2010, Richard Fadden, then director of the Canadian Security Intelligence Service, also warned that at least two Canadian provincial cabinet ministers had fallen under foreign sway. He pointed to China as one of the countries interested in political influence.
Amid the dislocations of the Donald Trump administration in the United States, China has sought to present itself as a responsible rising power whose interests align with the Western world, a fighter of climate change and champion of globalization.
“My only advice would be, don’t be fooled,” said the Australian Strategic Policy Institute’s Mr. Jennings. China “very clearly is not like us in terms of values.”
In Germany, similar concerns have sparked a broad public reevaluation of China, whose protectionist tendencies are sparking anger as its companies buy German firms. The two countries are moving away from complementary roles and taking on “a much more competitive relationship,” Michael Clauss, Germany’s ambassador to China, said recently.
“We feel it’s not fair. There is no level playing field.”
At the same time, other countries have looked with worry at Beijing’s repeated willingness to use economic punishment to press its political agenda. China most recently devastated domestic sales of South Korean cars and other products out of anger over a U.S. anti-missile defence system installed near Seoul.
Backlash against such hardnosed tactics has grown in Australia. In May, recently retired defence secretary Dennis Richardson called for Australia to send a naval ship through South China Sea waters China claims as its own. Then, earlier this month, Prime Minister Malcolm Turnbull delivered a stinging rebuke, warning that “a coercive China would find its neighbours resenting demands they cede their autonomy and strategic space.”
Ottawa may want to take note, Prof. Medcalf said. The Australian Prime Minister bears a political resemblance to Mr. Trudeau, and “it is an important signal and lesson to Canada if someone like Malcolm Turnbull is shifting on China,” he said.
“Australia is trying quite hard to push back. Australia is focusing on vigilance and transparency and review of laws around espionage and political donations and so on. The signal there is that there’s clearly something wrong.”
Australia has for years provided a template for profiting from China. Its free-trade deal with China, which came into force in 2015, is regularly cited as a starting point for Canada’s own trade talks.
The country also has signed an extradition treaty with China; Canada has similarly agreed to discuss such a deal. Earlier this year, however, the Australian Parliament rejected ratification of the extradition treaty.
Still, even critics in Australia acknowledge the value in doing business with Beijing.
“To highlight the risks is not to say don’t go there. It’s to say, set up management structures to deal with it and move forward,” said John Fitzgerald, a China scholar at Swinburne University of Technology in Melbourne, who previously led the Ford Foundation’s China operations in Beijing.
That means, he said, questioning the risk of dealing with China – not just at the federal level, but among boards and management at universities, in the tourism sector, at business councils and in lower levels of government. Those groups, he said, should ask questions such as “Who are we? What do we stand for? And where do we draw the line?”

The Globe and Mail Metro. 27 Jun 2017. It’s time for Canada to tackle the China puzzle
EDWARD GREENSPON, president and CEO of the Public Policy Forum
KEVIN LYNCH, vice-chair, Bank of Montreal, and former clerk of the Privy Council.

Canada has a China puzzle it needs to solve. We want our kids to have good jobs and live in prosperous communities. That takes economic growth. For a trading nation like Canada, growth necessitates access to markets for our goods and services.
Unfortunately, the United States – which is by a factor of nearly 10 our largest trading relationship – no longer treats Canada as a privileged friend. With its reduced reliance on petroleum, polarized and petulant politics, and protectionist sentiments popping up from softwood lumber to steel, aircraft, procurement and beyond, Canada needs to hedge it bets. President Donald Trump adds a layer of erraticism.
Contrast this with China, the second-largest economy in the world and growing at three times the pace of the United States. Canada has long-standing relationships with China. In the 1960s, John Diefenbaker ignored an economic embargo to sell it wheat. In the 1970s, Pierre Trudeau was applauded for ignoring a political embargo to accord diplomatic recognition in the midst of the Cultural Revolution.
Since then, China has shifted from dependence toward dominance.
When the world economy crashed in 2008-09, China and the rest of Asia provided much of the global demand that helped keep the Great Recession from becoming another depression.
Yet China is different – very different – from the countries with which we typically negotiate trade deals. It is not a democracy. It does not treat human rights as we do. It engages in extraterritoriality, whether in the South China Sea or cyberspace. Its stateowned enterprises don’t always draw a sharp distinction between commercial activities and political objectives.
Thus the puzzle: how to relate to an economic, political and increasingly technological powerhouse of 1.3 billion people with different political and legal values.
Do we want to turn away, which would leave Canada, not China, isolated? Do we want to allow matters to drift, with no clear and consistent policy objectives, no national strategy? That’s certainly not the path chosen by like-minded countries in Europe, or by Australia and New Zealand. It amounts to suppressing our sovereignty, rather than expressing it.
Or do we take control, by accepting that China isn’t going away and figuring out the best ways to engage it? The inevitability of China’s presence in our lives and the need to manage this reality is why Canadian trade-union leaders are organizing delegations there.
Last week, the Public Policy Forum held the first roundtable of its Consultative Forum on China, of which we are the co-chairs. The group includes business leaders, academics, public servants, a former prime minister, a former ambassador to China and a former trade adviser in Stephen Harper’s PMO. We discussed what we can discern from four major public-opinion polls in the past two years about what Canadians think of this relationship. We also began to think through what approach Canada might take if it were to negotiate – whether a comprehensive deal as with NAFTA and CETA, or something more phased or with non-commercial elements.
We discussed security and human-rights concerns and commercial opportunities in areas such as agriculture and clean tech. We talked about how medium-sized enterprises can be helped to penetrate the Chinese market and the amazing success of Atlantic Canada’s fish-processing industry in exporting to China. We talked about unambiguous common interests and shared interests, such as the environment. We talked about the mismatch between hundreds of thousands of Chinese students studying in Canada versus fewer than 5,000 Canadian students receiving similar exposure to China.
Nothing was resolved. This was the first of many conversations. The focus was on beginning to figure out where Canada’s advantages lie and what will be acceptable to Canadians, given the mixed messages of the public-opinion research so far and the significant number of undecideds. It was noted that in 1986-87, similar polls showed Canadians were opposed to free trade with the United States, a position that changed as the agreement was designed, debated and implemented.
We don’t know the federal government’s intentions on China. We’re not even sure they do yet. The Consultative Forum is meant as a gathering place of knowledgeable people who can take the China puzzle and provide some good ideas for solving it in a manner both economically beneficial and politically satisfactory to Canadians.
Canada has a China puzzle it needs to solve. We want our kids to have good jobs and live in prosperous communities. That takes economic growth. For a trading nation like Canada, growth necessitates access to markets for our goods and services.
Unfortunately, the United States – which is by a factor of nearly 10 our largest trading relationship – no longer treats Canada as a privileged friend. With its reduced reliance on petroleum, polarized and petulant politics, and protectionist sentiments popping up from softwood lumber to steel, aircraft, procurement and beyond, Canada needs to hedge it bets. President Donald Trump adds a layer of erraticism.
Contrast this with China, the second-largest economy in the world and growing at three times the pace of the United States. Canada has long-standing relationships with China. In the 1960s, John Diefenbaker ignored an economic embargo to sell it wheat. In the 1970s, Pierre Trudeau was applauded for ignoring a political embargo to accord diplomatic recognition in the midst of the Cultural Revolution.
Since then, China has shifted from dependence toward dominance.
When the world economy crashed in 2008-09, China and the rest of Asia provided much of the global demand that helped keep the Great Recession from becoming another depression.
Yet China is different – very different – from the countries with which we typically negotiate trade deals. It is not a democracy. It does not treat human rights as we do. It engages in extraterritoriality, whether in the South China Sea or cyberspace. Its stateowned enterprises don’t always draw a sharp distinction between commercial activities and political objectives.
Thus the puzzle: how to relate to an economic, political and increasingly technological powerhouse of 1.3 billion people with different political and legal values.
Do we want to turn away, which would leave Canada, not China, isolated? Do we want to allow matters to drift, with no clear and consistent policy objectives, no national strategy? That’s certainly not the path chosen by like-minded countries in Europe, or by Australia and New Zealand. It amounts to suppressing our sovereignty, rather than expressing it.
Or do we take control, by accepting that China isn’t going away and figuring out the best ways to engage it? The inevitability of China’s presence in our lives and the need to manage this reality is why Canadian trade-union leaders are organizing delegations there.
Last week, the Public Policy Forum held the first roundtable of its Consultative Forum on China, of which we are the co-chairs. The group includes business leaders, academics, public servants, a former prime minister, a former ambassador to China and a former trade adviser in Stephen Harper’s PMO. We discussed what we can discern from four major public-opinion polls in the past two years about what Canadians think of this relationship. We also began to think through what approach Canada might take if it were to negotiate – whether a comprehensive deal as with NAFTA and CETA, or something more phased or with non-commercial elements.
We discussed security and human-rights concerns and commercial opportunities in areas such as agriculture and clean tech. We talked about how medium-sized enterprises can be helped to penetrate the Chinese market and the amazing success of Atlantic Canada’s fish-processing industry in exporting to China. We talked about unambiguous common interests and shared interests, such as the environment. We talked about the mismatch between hundreds of thousands of Chinese students studying in Canada versus fewer than 5,000 Canadian students receiving similar exposure to China.
Nothing was resolved. This was the first of many conversations. The focus was on beginning to figure out where Canada’s advantages lie and what will be acceptable to Canadians, given the mixed messages of the public-opinion research so far and the significant number of undecideds. It was noted that in 1986-87, similar polls showed Canadians were opposed to free trade with the United States, a position that changed as the agreement was designed, debated and implemented.
We don’t know the federal government’s intentions on China. We’re not even sure they do yet. The Consultative Forum is meant as a gathering place of knowledgeable people who can take the China puzzle and provide some good ideas for solving it in a manner both economically beneficial and politically satisfactory to Canadians.

SOFTWOOD LUMBER

Natural Resources Canada. June 26, 2017. Joint Statement of Minister Carr and Minister Freeland in Response to United States Department of Commerce Anti-Dumping Duty Preliminary Determination

Ottawa  - The Honourable Jim Carr, Minister of Natural Resources, and the Honourable Chrystia Freeland, Minister of Foreign Affairs, today issued the following statement in response to the announcement by the U.S. Department of Commerce of the imposition of preliminary anti-dumping duties on imports of certain Canadian softwood lumber products‎ into the United States and the announcement of consultations on excluding three provinces from duties:

“The Government of Canada stands firmly behind the Canadian forest industry. This innovative, environmentally responsible and globally competitive industry sustains hundreds of thousands of good middle-class jobs across our country, including in rural and Indigenous communities.

“We will vigorously defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past.

“We are deeply disappointed by the U.S. Department of Commerce’s decision to impose unfair and punitive anti-dumping duties against Canada's softwood lumber producers who sell products into the United States. As with the preliminary countervailing duties announced this past April, these penalties are based on a flawed rationale that is damaging to workers, communities and consumers in Canada and the United States.

“These latest U.S. duties will significantly add to the costs that American consumers will have to bear when seeking to repair, renovate and build their homes. The National Association of Home Builders (NAHB) has estimated that new duties on Canadian lumber imports will cost jobs, hurt workers’ wages and put home ownership out of the reach of thousands of American families.

“We welcome the step by the U.S. Department of Commerce regarding consultations on an exclusion for Nova Scotia, Prince Edward Island and Newfoundland & Labrador from anti-dumping and countervailing duties on softwood. This represents significant progress in this longstanding dispute; however, we will continue to press our U.S. counterparts for the removal of duties for all provinces and would welcome a commitment by the U.S. Department of Commerce to consider an exclusion for New Brunswick.

“Canadian workers, companies and communities can continue to count on the Government of Canada for the long-term health and prosperity of the Canadian forest sector.

“As our government announced earlier this month, we are investing $867 million to support workers and communities affected by these ill-conceived duties, diversify our forest products and international markets, and facilitate access to a range of financial services for our producers on commercial terms. We are confident these measures comply fully with our international trade obligations. In addition, the government is actively exploring dynamic and growing export markets for Canadian forestry products in Asia.

“We will continue our determined efforts to maintain a dialogue with our American counterparts to encourage them to rescind this unwarranted trade action and come to a durable negotiated agreement on softwood lumber that is good for Canada as well as its forestry workers, producers and affected communities. We remain confident that a negotiated settlement is both possible and in the best interests of our two countries.”

• Softwood Lumber: https://www.nrcan.gc.ca/19601
• Backgrounder: https://www.nrcan.gc.ca/19603
• Fact Sheet: https://www.nrcan.gc.ca/19605

The Globe and Mail. 27 Jun 2017. U.S. turns up heat in softwood dispute with additional tariffs
BRENT JANG

VANCOUVER - The U.S. Department of Commerce is imposing additional tariffs on Canadian softwood lumber producers, threatening forestry jobs and escalating trade tensions between the two countries.
The new anti-dumping duty of nearly 7 per cent against Canadian lumber producers for allegedly undervaluing softwood boosts total U.S. tariffs to almost 27 per cent and comes after an April countervailing duty that averaged 19.88 per cent.
“We will vigorously defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past,” said a joint statement issued by Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr. “We will continue our determined efforts to maintain a dialogue with our American counterparts to encourage them to rescind this unwarranted trade action.”
The Canadian government hopes to keep the softwood dispute separate from looming talks to renegotiate the North American free-trade agreement.
The combined lumber tariffs are already having a significant impact on the forestry industry, with potential job losses in the thousands and financial-aid packages coming from federal and provincial governments. »
Unifor, Canada’s largest private-sector union, believes the U.S. duties will place up to 25,000 workers at risk of being laid off, or 12 per cent of an estimated 202,000 union and nonunion jobs in Canada’s forestry sector. Federal and provincial governments have pledged more than $1-billion in aid and loans to the forestry industry.
The financial pain will gradually increase over this summer and fall. That’s because under preliminary rulings, countervailing duties will last for four months while anti-dumping tariffs will be in force for six months. Longer-lasting tariffs could be next, once final determinations are made by the U.S. Department of Commerce by the end of 2017. Many firms also face paying retroactive duties dating back to late January.
The countervailing tariff is targeted at what the United States deems to be unfair subsidies in Canada, while the anti-dumping duty is designed to penalize Canadian producers for allegedly selling softwood at below market value. Resolute Forest Products Inc., one of the companies targeted by the tariffs, expressed disappointment on Monday. “We believe that we should have nothing less than free, unencumbered access,” spokesman Seth Kursman said in an interview. “We’re not satisfied. This is political gamesmanship.”
Some observers say that higher lumber prices should temporarily help Canadian producers while reducing the impact on workers. The Conference Board of Canada recently warned that the trade dispute could trigger 2,200 forestry job cuts across Canada. British Columbia is Canada’s largest lumber exporter south of the border, followed by Quebec, Ontario, Alberta and New Brunswick.
“This action by the U.S. lumber lobby ultimately punishes American consumers who are faced with higher lumber prices when they buy, build or renovate their home,” BC Lumber Trade Council president Susan Yurkovich said in a statement.
The influential U.S. group called COALITION, which stands for Committee Overseeing Action for Lumber International Trade Investigations Or Negotiations, did not ask the U.S. Department of Commerce to take action against Nova Scotia, Prince Edward Island and Newfoundland. The department said in a preliminary ruling that it will continue to exclude those three Atlantic provinces from any lumber duties.
Combined, those three Atlantic provinces accounted for less than 1.6 per cent of total Canadian softwood shipments into the United States last year.
All four Atlantic provinces had escaped U.S. tariffs and quotas over the decades in the longrunning softwood dispute, but COALITION’s strategy to corral New Brunswick this time is part of the U.S. lumber industry’s increasingly aggressive stand in the trade war against Canada.
“For years, Canada has unfairly distorted the softwood lumber market with billions of dollars in support of their producers,” U.S. Lumber Coalition spokesman Zoltan van Heyningen said in a release on Monday.
On June 1, Ottawa announced an $867-million aid package for Canada’s forestry sector in an effort to help ease the financial pain from duties levied by the United States.
In April, Quebec pledged as much as $300-million in loans and loan guarantees to help the province’s lumber producers deal with the duties.
The four mandatory respondents from Canada targeted for allegedly dumping lumber into the United States are Montrealbased Resolute and three B.C.based producers: West Fraser Timber Co. Ltd., Canfor Corp. and Tolko Industries Ltd.
The anti-dumping tariffs have been imposed as follows: Canfor 7.72 per cent; Tolko 7.53 per cent; West Fraser 6.76 per cent and Resolute 4.59 per cent. Other Canadian producers will pay 6.87 per cent, raising the overall punitive tariffs to a weighted average of 26.75 per cent.
The countervailing duties that took effect on April 28 were: New Brunswick-based J.D. Irving Ltd. at 3.02 per cent, Resolute at 12.82 per cent, Tolko at 19.50 per cent, Canfor at 20.26 per cent and West Fraser at 24.12 per cent. The remaining Canadian softwood exporters are paying 19.88 per cent.
Resolute, Tolko, Canfor and West Fraser are the only firms to escape the 90-day retroactive penalty related to countervailing duties for “critical circumstances” – a scenario in which Canadian lumber exports rise at least 15 per cent in the months after an investigation is launched but before duties take effect.
Before the announcement of the preliminary anti-dumping rate, Quebec Premier Philippe Couillard said Monday both the Quebec and federal governments have repeatedly told their American counterparts that there have been no subsidies given to Canadian producers and that no dumping into the U.S. market has occurred.

With a report from Nicolas Van Praet in Montreal

REUTERS. Jun 26, 2017. U.S. slaps dumping duties on Canadian wood, Ottawa vows to fight
By Eric Beech and David Lawder

WASHINGTON (Reuters) - Escalating a trade dispute with Canada in the run-up to talks on renegotiating NAFTA, the U.S. Commerce Department on Monday imposed preliminary anti-dumping duties on Canadian softwood lumber of up to 7.72 percent.

When combined with preliminary anti-subsidy duties issued in April, the new measures will bring total duties on Canadian lumber to between 17.41 percent and 30.88 percent.

The announcement, which was largely expected, prompted an angry reaction from the Canadian government against what it called unfair and punitive duties.

"We will vigorously defend Canada's softwood lumber industry, including through litigation," the government said in a statement.

The bilateral dispute is the fifth over lumber in less than 40 years.

U.S. producers asked the Commerce Department last November to investigate what they viewed as unfair subsidies to Canadian competitors, many of whom procure their timber from government lands at cheaper rates.

U.S. lumber producers generally cut timber grown on private land. Canada, which denies it subsidizes producers, said earlier this month it would give C$867 million ($654 million) in aid to the domestic industry.

Earlier on Monday, the Commerce Department said it made a preliminary decision to exclude Newfoundland and Labrador, Nova Scotia and Prince Edward Island from its investigation into whether Canada is dumping or unfairly subsidizing softwood lumber.

Until the decision is confirmed, U.S. Commerce Secretary Wilbur Ross said the duties would still be collected on lumber from the three provinces. The exclusion does not include New Brunswick, an Atlantic province bordering Maine that is also a major producer of softwood lumber.

The U.S. anti-subsidy and anti-dumping probes affect about $5.66 billion worth of imports of the construction material, and they show the United States taking a tough stance on trade with Canada as the two countries and Mexico prepare to renegotiate the 23-year-old North American Free Trade Agreement.

Much of the wood in the excluded Canadian provinces is also harvested from private land, and the three provinces had argued they operate under more of a free-market model.

Commerce said it is scheduled to announce a final decision on the anti-dumping duties on Sept. 7. Its preliminary duties were 7.72 percent for Canfor Corp and related firms, 4.59 percent for Resolute FP Canada, 7.53 percent for Tolko Industries, 6.76 percent for West Fraser Mills and 6.87 percent for all others.

NAFTA talks are expected to begin around Aug. 16.

(Additional reporting by Eric Walsh in Washington and David Ljunggren in Ottawa and Nicole Mordant in Vancouver; Editing by Clive McKeef and Bill Trott)

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LGCJ.: