Preliminary duty hits Prince George

Make no mistake, says Canfor president David Emerson, a U.S. commerce department imposed preliminary duty of 19.3 per cent on all lumber exports will be felt most in Prince George and surrounding communities.
Starting next week all forest companies that ship lumber into the United States will need to apply and account for a bond to ship lumber into the U.S. market. Though the bonds will not actually include cash payments, they are retroactive 90 days from the day the duty is registered.
When the duty is final early next winter all companies will have to start shipping cash for all U.S. exports dating back to mid May.
The duty represents an increased cost of about $60 per thousand board feet of lumber shipped south. While some of that cost will be absorbed by rising lumber prices, the ultimate effect will depend on the health of the U.S. economy.
“There will be huge negative impacts,” says John Allan, president of the B.C. Lumber Trade Coalition. “It’s a disaster. There will be some tough decisions for industry.”
The decision Friday could see $2 billion annually cross the U.S. border and as many as 25,000 to 35,000 jobs in the B.C. forest industry alone. B.C.’s forest minister Mike de Jong called the decision “draconian”, short-sighted and flawed and says there will be no compensation or assistance from the government to help aid companies or employees if layoffs are necessary.
Many of those cuts, says Mr. Emerson, could happen right here.
He says his company will be looking at all its mill operations in the Prince George area over the next three or four weeks to see if the decision will cause major shut downs.
“We’ll be looking at them all to see if they can work harder or more efficiently or if we need to shut them down,” he said Friday. “Prince George and northern communities are really the hardest hit in all of this. We already deal with higher costs because of waterbedding and stumpage this is just one more thing we have to deal with.”
The company ships $3 billion board feet of lumber to the U.S. annually and is B.C. largest lumber exporter.
To make matters worse, says Mr. Emerson, the money lost could eventually make its way into the hands of U.S. competitors.

Under recent U.S. legislation, companies hurt by unfair trade practice can apply to receive the money they feel owed to them.
“I think its a possibility, indeed a probability that some of this money is going to go into the hands of U.S. producers, I think they’re lining up for that,” he adds. “If you can think of a more diabolical trade agreement I’d like to see one.”
The company is also one of six companies being investigated for dumping lumber below production cost into the U.S. market. That decision, also made by the U.S. department of Commerce, is due September 24.
Mr. Emerson is calling on the Canadian government to take an aggressive trade stance with the Americans, perhaps putting electricity or natural gas counter-duties to address the situation.
“I do not know if those things are on the table but I think Canada needs to look very hard at our trade agreements,” he says, adding all economic agreements are a sliding slope at this point.
Canada is expected to appeal the decision under NAFTA and World Trade Organization appeal processes, but says those processes are also flawed because they’re based on American law.
“Any thought of expanding NAFTA into North American Free Trade Agreements with the Americas is laughable,” says Mr. Emerson.
Prince George based Lakeland Mills, which ships 75 per cent of its production to the U.S., expects the decision to be a major blow to his bottom line but does not expect to curtail production. The mill is one of several smaller operations expected to be hit hardest by the U.S. decision.
“This will take a large amount of cash out of our operations,” says mill owner Keith Anderson.