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Forest industry welcomes trade action against China

The trade dispute with China over the country’s imposition of import duties on dissolving pulp moved ahead another step in early February, as the federal government requested a panel at the World Trade Organization (WTO) to resolve the…

The trade dispute with China over the country’s imposition of import duties on dissolving pulp moved ahead another step in early February, as the federal government requested a panel at the World Trade Organization (WTO) to resolve the issue.

Last fall, Canada made a request of the WTO for consultations with China. Since that action was not effective within its 60-day time frame, this request to have WTO adjudicate is the next step.

The Forest Products Association of Canada (FPAC) and two producers affected by the import duties, Tembec and Fortress, are supportive of the federal government’s trade action against China regarding duties on Canadian dissolving pulp.

China had imposed anti-dumping duties of up to 23.7% on Canadian dissolving pulp in 2013 saying the imports were negatively impacting China’s domestic pulp market. The Chinese duties have resulted in significant loss of market for Canadian dissolving pulp producers and put a chill on future investment.

“It is unfortunate that Canada has been forced to take this step but certainly the Chinese trade action was not in accordance with WTO rules on anti-dumping,” says David Lindsay, the president and CEO of FPAC. “The discriminatory duties on Canadian dissolving pulp have hurt Canadian exports and resulted in a number of investments being cancelled for new production facilities. This impacted jobs and economic opportunity.”

Forest products are Canada’s largest export to China at $4.8 billion, and China remains a critical future market. However exports of dissolving pulp to China dropped 20% last year to $255 million.

“Certainly the forest products industry wants to maintain positive relations with China and build on our existing trading relationship,” says Lindsay. “However it is essential that we all act in accordance with international trade rules and regulations.”

A statement from Tembec says the company supports rules-based trade of forest products. “National governments should not invoke international trade remedies in an attempt to solve competitiveness issues of their domestic industry,” commented Tembec president and CEO James Lopez.

Tembec manufactures lumber, pulp, paper and specialty cellulose, including viscose dissolving pulp.

Chadwick Wasilenkoff, CEO of Fortress Paper, said: “Fortress Paper fully supports the Government of Canada’s decision to advance this trade dispute with China to the WTO and defend the interests of Canadians in the dissolving pulp industry.”

Fortress Paper produces dissolving pulp at a mill in Thurso, Que.