Softwood Lumber — Backgrounder

Canadian softwood lumber consists of spruce, pine and fir used primarily for framing in construction. It is a key component of Canada’s forest industry and supports predominantly rural and Indigenous communities while generating $22 billion in GDP. A majority of Canadian softwood lumber exports go to the United States. In 2015, American producers could only meet 70 percent of the United States’ softwood lumber needs with Canada covering virtually all of the shortfall.

On April 24, 2017, the U.S. Department of Commerce announced preliminary countervailing duties of 19.88 percent on imports of Canadian softwood lumber. A countervailing duty is intended to address the effects of what is presumed to be subsidized imports from other countries.

The U.S. lumber industry claims it has been injured by subsidized imports from Canada. Its main allegation is that the price charged to harvest timber from Crown or public lands is too low. It is therefore seeking protection through the imposition of countervailing duties on certain Canadian softwood lumber products entering the U.S.

The Government of Canada disagrees strongly with the decision. It will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation at the World Trade Organization and the North American Free Trade Agreement.

We expect to win in those fora — as we always have in the past. U.S. claims have always been found to be without basis.

The Canadian forest industry employs more than 200,000 Canadians in more than 170 rural and Indigenous communities across the country. These duties put those jobs and communities at risk.

American workers and communities will also feel the impact. The U.S. National Association of Home Builders has calculated that a US$1,000 increase in the cost of a new house would put home ownership beyond the reach of more than 150,000 Americans and their families. Further, residential construction in the U.S. employs 3.8 million Americans, and duties could jeopardize as many as 8,000 American jobs and millions of dollars in lost wages.

To reduce its dependence on the U.S. market, Canada has been actively diversifying markets for the forest industry, resulting in Canadian exports to more than 140 different countries.

Since 2002, these diversification efforts have boosted Canadian exports to:

  • China by more than 25 times to $1.6 billion; and
  • South Korea, Southeast Asia and the U.K. have increased by more than 200 percent to over $700 million.

The Government of Canada will continue its diversification efforts in the coming weeks and months.

In addition, the Government of Canada continues to invest in research and development projects supporting expanded use of wood in everything from innovative construction materials to biofuels.

This includes investments in technology as part of the Investments in Forest Industry Transformation (IFIT) program and research and development funds under the Forest Innovation Program (FIP), which collectively help secure a more prosperous future for Canada’s forest industry and the communities that depend on it.

Companies can take advantage of existing financing initiatives under the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).

EDC and BDC have market-based financial and risk management solutions that are fully available to businesses of all sizes and can assist companies looking to make capital investments, expand market opportunities, and diversify with confidence into new markets.‎

Last February, a Federal–Provincial Task Force on Softwood Lumber was struck to share information and analysis to understand potential impacts of the duties and assess the needs of affected workers and their communities.

The Government of Canada is also reaching out to Canadian communities that depend primarily on the forest sector for their local economy and that are most at risk. It will also engage Indigenous communities, national employers, national unions and provincial associations.

The Government of Canada will work closely with the affected provinces to ensure that displaced workers are provided with support and adjustment services. ‎Service Canada provides Employment Insurance benefits for eligible workers and the Government of Canada also provides funding to provinces through the Labour Market Development Agreements for skills training and employment services. These provincial programs include employment counseling, skills assessment and job search assistance, as well as skills training to help the displaced workers prepare for, find and maintain employment.

Affected workers can find more information online at: (https://www.canada.ca/en/services/benefits/ei.html) or at a toll free number (toll-Free: 1-800-206-7218 TTY: 1-800-529-3742).