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New Brunswick Premier touts U.S. ties, stresses industry integration in softwood lumber spat

A load of lumber is trucked through the forest surrounding Edmondston, New Brunswick, Canada in this September 2001 photo. International Paper Co., Temple-Inland Inc. and other U.S. lumber companies rejected plans to end a dispute over $7 billion of Canadian lumber imports, a Canadian official said, causing talks to break down.

NORM BETTS/BLOOMBERG NEWS

New Brunswick Premier Brian Gallant is hoping the tale of Twin Rivers Paper Co. Inc. will help resolve the softwood lumber dispute between Canada and the United States.

The economic damage from the softwood battle isn't isolated to lumber, as evidenced by the ripple effect across other parts of the forestry sector, such as pulp and paper, he said.

Twin Rivers' Edmundston pulp mill in New Brunswick and Madawaska paper plant in Maine are prime examples of cross-border co-operation and integrated economies. "This operation is seeing things and people go from one side of the border to the other every single day," Mr. Gallant said in an interview.

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The integration runs deep: Twin Rivers also owns the Plaster Rock Lumber Mill in New Brunswick. That sawmill provides biomass for the co-generation plant at the Edmundston mill, which converts wood chips into pulp. Pulp and steam are moved through a pipeline from New Brunswick to the Madawaska paper mill.

In a recent filing to the Commerce Department, Maine-based Twin Rivers president Ken Winterhalter said punitive U.S. lumber duties raise prices for wood byproducts, threatening a large portion of the nearly 5,900 direct and spinoffs jobs from the company's operations on both sides of the border.

Related: Lumber prices see 'big jump' after wildfires in British Columbia

Read more: Tensions over time: A primer on the Canada-U.S. softwood lumber dispute

"The imposition of anti-dumping and countervailing duties on softwood lumber from New Brunswick would drastically increase the cost of the wood chips and biomass used by the Madawaska paper mill," Mr. Winterhalter said in a letter last month to U.S. Commerce Secretary Wilbur Ross. "These increased costs have the potential to destroy the financial viability of the Madawaska operation and eliminate thousands of jobs in northern Maine."

Mr. Gallant will be sharing his message of Canada-U.S. economic integration with his provincial and territorial counterparts at this week's conference of premiers in Edmonton. Alberta Premier Rachel Notley will chair the Council of the Federation's conference, which will follow a scheduled meeting between the premiers and Indigenous leaders, though some First Nations have said they plan to boycott that Monday gathering.

During a half-hour meeting with Mr. Ross last week in Washington, Mr. Gallant emphasized the importance of flourishing Canada-U.S. trade.

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B.C. NDP premier-designate John Horgan plans his own trip to Washington later this month to present British Columbia's lumber case for improved access to the United States.

Mr. Horgan won't be attending the event in Edmonton, where the Council of the Federation will meet on Tuesday and Wednesday. He will be sworn in on Tuesday as British Columbia's new premier as the NDP forms a minority government, backed by the Greens, to oust the provincial Liberals led by Christy Clark.

British Columbia is Canada's largest lumber exporter into the United States, with a 55.2-per-cent share of sales volume last year, followed by Quebec (19 per cent), Ontario (7.9 per cent), Alberta (7.8 per cent) and New Brunswick (7 per cent).

The U.S. lumber industry argues that there are market distortions in Canada, such as alleged subsidies for biomass or renewable-energy programs that consume lumber byproducts.

Last month, the Commerce Department said in a preliminary ruling that it will continue to exclude Nova Scotia, Prince Edward Island and Newfoundland from any lumber duties.

All four Atlantic provinces escaped U.S. tariffs and quotas for decades in the long-running softwood dispute dating back to the early 1980s, but New Brunswick lost its exemption in this fifth round of the trade fight.

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"We've been enjoying this exclusion since 1982," said Mr. Gallant, who wants New Brunswick to be placed back on the list of provinces exempt from U.S. lumber duties. "We have had a good relationship when it comes to softwood – sure, there could maybe be some tweaks, but good relationships since 1982."

Hamir Patel, an analyst with CIBC World Markets Inc., cautions that Canada will have to moderate its expectations, and that could mean New Brunswick remains caught in the net of tariffs.

The U.S. Department of Commerce ruled that Canada has been providing subsidies, deciding in April to slap preliminary countervailing duties on the vast majority of Canadian softwood. The United States also imposed anti-dumping duties in June after deciding that Canada is selling softwood at below market value.

Combined, the weighted average tariffs levied by the Trump administration total 26.75 per cent – 19.88 per cent for countervailing duties and 6.87 per cent for anti-dumping levies. New Brunswick-based J.D. Irving Ltd., the largest lumber producer in Atlantic Canada, is paying a combined tariff of 9.89 per cent.

Mr. Gallant said Canadian lumber shipments into the U.S. housing market foster prosperity in both countries. "We're helping American families by keeping prices of construction lower," he said.

The New Brunswick Premier says he is encouraged that Mr. Ross and Chrystia Freeland, Canada's Foreign Minister, have been cordial.

"He and Minister Freeland are very engaged in talks, which we certainly see as a positive," Mr. Gallant said.

But given the complexities of the softwood file, finding common ground will be challenging, he said. "We very much recognize it's an uphill battle."

Video: Softwood lumber tariffs ‘consistent’ with U.S. approach: Trudeau (The Canadian Press)
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About the Author

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

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