U.S. proposing lower duties for New Brunswick lumber producers

New Brunswick softwood producers may be getting some relief later this year with lower duties from the United States government.

Just two months after confirming increases in the duties, the U.S. Commerce Department's preliminary assessment is now proposing lower amounts that would take effect later this year.

Most mills in New Brunswick will see their combined anti-dumping and countervailing duty rates drop from 17.9 per cent to 11.64 per cent.

J.D. Irving Ltd.'s rate will drop from 15 per cent to 7.09 per cent.

J.D. Irving's wood is charged a different rate than other producers because it successfully persuaded the U.S. Commerce Department to investigate it separately from the rest of the industry.

The U.S. first included New Brunswick mills in its softwood lumber duties in 2017 after concluding that prices on provincial wood were not based on an open market.

The growing role of government-owned Crown land in the wood supply distorted the price paid for private wood, the U.S. found.

That finding remains the official U.S. position and was set out again in the assessment published this week.

"We find that oligopsonistic conditions exist in New Brunswick that contribute to the distortion of the market for private origin standing timber in the province," it says.

An "oligopsony" is a market where a small number of large buyers can influence the price paid for a commodity.

American lumber producers have long complained that Canadian wood is unfairly subsidized by governments, making it less expensive to U.S. buyers.

Duties charged to American customers are designed to raise the cost of Canadian wood and render the U.S. product more competitive.

Under U.S. law, the duties are reviewed annually, with a preliminary assessment early in the year and a final decision in the fall. The proposed lower duties published this week won't be finalized until September.

The rates finalized last November were based on 2019 market data, while the preliminary assessment issued this week for the coming year was based on 2020 numbers.

Last fall, the Canadian government announced it was filing a formal challenge of the duties under the Canada-U.S.-Mexico free trade agreement.