Commerce sets AD/CVD rates after failure to reach US-Canada lumber deal

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This week, the United States cut tariffs on Canadian softwood lumber, including product originating in Newfoundland and Labrador.

More than 95 percent of all imported lumber came from Canada a year ago.

Premier Stephen McNeil told a news conference in Halifax on Thursday his government is very pleased with the decision.

Still, Canadian stocks responded positively since the duties came in lower than many were expecting, said Kevin Mason, managing director of Vancouver-based ERA Forest Products Research. The group alleges Canadian wood is heavily subsidized and imports are harming US mills and workers.

"I'm sure everyone is relieved (today), we certainly are, but you never know when you're in these negotiations", McNeil said.

The softwood lumber duties are a double-whammy for the USA housing sector, which is expected to have mortgage interest deductibility on new home purchases capped at US$500,000 during the federal tax overhaul. An earlier version said Resolute was the only producer to have its duties raised.

The duties have driven up the price of lumber, adding to the cost of building a home in the United States.

Softwood lumber producers in other provinces not lucky enough to be exempted from the duties had the amount they are required to pay reduced slightly.

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The Commerce Department reduced import duties for most Canadian producers to 20.83 percent from 26.75 percent.

"The U.S. continues to attack its closest friend, neighbour and ally while domestically the U.S. lumber coalition continues to put the interest of its members ahead of what is good for the American economy and American consumers", Bruce Ralston, minister of Jobs, Trade and Technology, said in a press release.

"This decision is based on a full and unbiased review of the facts in an open and transparent process that defends American workers and businesses from unfair trade practices", Ross said.

The Canadian government has vowed to defend the domestic lumber industry against protectionist measures.

The ministers said: "We urge the US Administration to rescind these duties, which harm workers and communities in Canada. These duties are a tax on American middle class families, too, whose homes, renovations and repairs will only be more expensive".

While significant efforts were made by the United States and Canada, and the respective softwood lumber industries, to reach a long-term settlement to this on-going trade dispute, the parties were unable to agree upon terms that were mutually acceptable. Those talks are continuing parallel to talks with the US over the renegotiation of the North American Free Trade Agreement. But its demands - which range from requiring that more auto production be made in the U.S.to having more government contracts in the NAFTA bloc go to US companies - will likely be unacceptable to the U.S.' two other NAFTA partners, Canada and Mexico.

It also maintains that the country is providing unfair subsidies at rates from 3.34-18.19%. Their impacts have been mitigated by high lumber prices in the U.S. The duties will push lumber prices even higher, so the biggest impact may be on American builders and new homeowners.

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