Canadian plywood makers seek duties as cheap Chinese rivals carve out half the market

It’s been years since Carlos Zarate and others in Canada’s ornamental plywood business began telling the federal authorities a few rising downside of their business.

The president of the Canadian Hardwood Plywood and Veneer Association warns of an business in decline, however not as a consequence of falling demand for issues like kitchen cupboards, ornamental wooden panels, furnishings, and different non-structural wooden merchandise.

Zarate, who’s additionally president of Industrie Ergie Inc. in Victoriaville, Que., mentioned the affiliation’s members have seen their market share in Canada drop as a result of they’re unable to compete with plywood merchandise imported from China at costs home producers may by no means hope to match, not to mention beat.

The business needs duties imposed on Chinese exporters, who they are saying take pleasure in unfair benefits corresponding to heavy authorities subsidies and entry to illegally harvested wooden, flooding world markets with low cost items that drastically undercut rivals.

But they have been dumbfounded by their lack of ability to persuade Canadian authorities to crack down on the Chinese merchandise, which have been topic to hefty duties within the U.S. since 2017.

Canadian business gamers complained to the Canada Border Services Agency concerning the state of affairs in April 2020, urging an investigation into dumping and subsidies for his or her rivals in China.

“In terms of pricing, Canadian producers are consistently undercut by dumped and subsidized Chinese imports. Lost sales and price reductions have caused significant injury to Canadian producers, and over time, some customers have simply stopped asking Canadian producers to compete with Chinese import pricing,” they advised the CBSA in a submission.

“Producers must increasingly look to other export markets to sell their products. The primary export market is the United States, which is now protected against dumped and subsidized Chinese imports.”

But the company’s investigation did not go the best way Zarate had hoped, and the affiliation appealed in Federal Court concerning the choice of the president of the CBSA to drop the investigation.

The Federal Court of Appeal upheld the choice in April in one other blow to the business in Canada, Zarate mentioned.

Zarate mentioned the business has been in contraction, a course of that accelerated within the final 15 years when Chinese exporters ramped up their presence in Canada. They now account for greater than half the nation’s market share.

He mentioned Canadian corporations discover themselves competing in a “disrupted market,” the place Chinese-made merchandise price half or perhaps a third of the value of these made in Canada.

“Even before the case, we’ve seen many Canadian plywood mills and veneer mills disappear throughout the years because they could not compete against the Chinese imports,” he mentioned.

Ottawa-based commerce lawyer Gordon LaFortune acted for a number of Chinese corporations that got here underneath scrutiny by the Canada Border Services Agency.

He mentioned his shoppers had been in a position to present that their prices weren’t distorted because the Canadian business gamers claimed, that means there was no “particular market situation” that justified the imposition of duties on their merchandise.

“The CBSA is not a shrinking violet. If there was a shred of evidence that showed dumping, if there was a shred of evidence they could have relied on to find a particular market situation, (they) would have done it, but they didn’t,” LaFortune mentioned.

The affiliation and its members mentioned within the criticism to the border company in 2020 that there had been “injurious dumping and subsidizing” of merchandise by Chinese producers.

The Canadian corporations tried to persuade the company that the market in China was distorted by illegally harvested wooden and heavy authorities management and subsidization, hoping duties can be slapped on imported merchandise because of this.

The company recognized a whole lot of China-based corporations out there, however few responded to its requests for data throughout the probe.

Ultimately, the company didn’t discover the existence of a “particular market situation” within the ornamental plywood area involving numerous Chinese corporations, although it did discover some had been certainly dumping product and receiving subsidies.

At the identical time, the Canadian International Trade Tribunal started an inquiry stemming from the home producers’ criticism to the CBSA.

In February 2021, the tribunal decided that dumping and subsidizing ornamental plywood merchandise had “not caused injury and are not threatening to cause injury to the domestic industry.”

The findings of each the CBSA and the tribunal, and extra lately the Federal Court of Appeal, have “dumbfounded” these working in Canada’s ornamental plywood business, mentioned Jeff Bromley, chair of the United Steelworkers’ Wood Council.

The union has just a few hundred members working within the ornamental plywood business in Ontario, Bromley mentioned, and the United States imposed anti-dumping and countervailing duties on Chinese-made merchandise a number of years in the past.

“The fact that the Americans were successful in establishing countervailing duties on the same product and we were not, we’re a little flabbergasted to be quite honest,” Bromley mentioned.

In 2017, the U.S. International Trade Commission discovered the Chinese imports had been harming American producers and it imposed anti-dumping and anti-subsidy duties of greater than 180 per cent based mostly on business complaints much like these of Canadian corporations in the present day.

Canadian labour requirements and wages are a lot larger in comparison with China, Bromley mentioned, and cheaply produced ornamental plywood merchandise imported into Canada are “harming Canadian jobs.”

“We can’t compete with what they’re doing, how they’re producing the products,” he mentioned.

For the union and its members, Bromley mentioned the difficulty comes right down to defending well-paying Canadian jobs that produce merchandise in keeping with excessive requirements of sustainability.

LaFortune, in the meantime, mentioned he understands why home producers declare to be “hard done by,” however imposing duties on merchandise imported from China would not solely have an effect on the overseas corporations that make them.

“What about the rest of the Canadian industry? What about the construction workers who are installing hardwood and plywood? What about the companies that are buying it? Distribute it? The manufacturers who use it in furniture? Are we gonna impose additional costs on them?,” LaFortune mentioned. “Because that’s what will happen.”

This report by The Canadian Press was first printed May 14, 2023.