US & Canada

Canada gives $640m in aid to the softwood lumber sector

A pile of cut logs sit on Spanish Banks in Vancouver, British Columbia, Canada, on April 26, 2006 Image copyright Reuters
Image caption British Columbia is Canada's biggest logging province

Canada has announced C$867m (US$640m/£500m) in relief for the country's lumber industry.

The aid comes after the US slapped hefty tariffs on the import of Canadian softwood lumber in April.

The US Commerce Department claims that Canada is improperly subsidising its exports of the forestry product.

Federal Natural Resources Minister Jim Carr said the aid measures will come mostly in the form of loans made at commercial rates.

The funding, which will be dispersed over a three-year period, includes $605m in expanded financial products and services, including loans and loan guarantees. Forestry companies can apply for those funds to make capital investments and diversify into new markets.

Other funds will support employment in affected communities.

Canada's softwood lumber producers face between 3.2% to 24.12% in US countervailing duties, which are meant to level the playing field between domestic producers and government-subsidised foreign producers of an item.

In early May, Canada said it was considering multiple trade actions against the US in response to the softwood tariffs, which it calls "unfair" and "baseless".

The federal government said it was considering a ban of US coal exports and duties against several Oregon industries. The west coast US state has been one of the loudest supporters of the lumber tax.

This is the most recent flare-up in a long-running dispute over softwood lumber between the two countries.

Federal Foreign Affairs Minister Chrystia Freeland said on Thursday that Canada's preference is for a negotiated softwood lumber agreement that is settled quickly.

"But wanting something is not the same as getting something," she said, adding that talks are ongoing.

The US Commerce Department valued softwood lumber imports from Canada at US$5.6bn (C$7.6bn/£4.3bn) in 2016.

About 200,000 Canadians work in the forestry sector.

The Conference Board of Canada recently projected "substantial employment losses" at Canada's sawmills, with a net loss of some 1,100 workers forecast for 2017, due to the tariffs.

Softwood lumber, made up of spruce, pine and fir, is used primarily for framing in construction.

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