Drywall contractors seek end to anti-dumping tariffs as softwood lumber, NAFTA negotiations approach

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gypsum board (drywall)

The Western Canada Alliance of Wall and Ceiling Contractors (WCAWCC) has released an open letter sent to Finance Minister Bill Morneau and Global Affairs Minister Chrystia Freeland imploring them to resolve the issue of what is says are crippling anti-dumping tariffs on U.S. imports of gypsum board (drywall) in Western Canada.

The alliance says in a letter signed by counsel Dan Ujczo that “it feels abandoned by the Trudeau government and frustrated with being forced to absorb a massive 43 per cent anti-dumping tariff on U.S. drywall.”

Following an outcry after massive anti-dumping duties were imposed last year, an official Canadian trade panel determined in January that U.S. firms had dumped drywall in Canada, but that maintaining duties of up to 276.5 per cent would harm businesses, consumers and the country’s trade interests.

In February, the federal finance department said it was reducing minimum import prices, which are used to calculate duties, by 32.17 percent. The new duty level took effect Feb. 24 and will be reviewed again in a year.

However, the contractors believe that the measures are insufficient, especially for some who are locked into fixed-price contracts based on the pre-duty prices for drywall.

In its letter, WCAWCC says it requests the government resolve the gypsum issue not only because it benefits Western Canadian consumers and the livelihoods of its members but because it is essential to negotiating a favourable agreement for the Canadian softwood lumber industry and advancing Canada’s position in the NAFTA negotiations. The letter comes as the U.S. government released their list of negotiating objectives for NAFTA modernization.

The alliance says the letter further outlines:

  • How the government’s misguided “bargaining chip” trade negotiation strategy to ignore the implementation of a duty holiday on its own people, leaves the issue unresolved, and creates a roadblock in softwood lumber negotiations with the U.S.;
  • This issue now has the attention of the U.S. government. WCAWCC testified before the U.S. Trade Representative (USTR) at its June 2017 NAFTA consultation hearings in Washington.

“The panel was alarmed and surprised by the hypocrisy of the Canadian government when the Alliance explained it had been harmed by duties imposed on U.S. imported gypsum board,” the WCAWCC news release says. “Our government was offering the same argument made against Canadian imports into the U.S. of softwood lumber and the harm on U.S. homebuilders.”

“From the perspective of the Trump Administration, Canada has now imposed extreme duties on U.S. gypsum manufacturers, created a monopoly for a French-owned company, and now other foreign countries are entering the Canadian market to fill the void left by the U.S.,” the contractors say.

The contractors’ group asserts its members’ financial situation is worse today than it was in fall 2016.

“Anti-dumping duties have devastated the economics of the industry’s standard, fixed-price contracts. Over the last six months, the Alliance estimates Western Canada’s 100 largest commercial drywallers (combined) have been forced to absorb over $20 million in unanticipated duty costs. Further imperilling their financial situation is a six per cent increase in U.S. drywall pricing announced on July 6.”

WCAWCC says it has appealed to the government to “implement the duty holiday recommended by the Canadian International Trade Tribunal (CITT) on U.S.-imported gypsum into Western Canada, allowing contractors to clear out their fixed-price contracts during the height of the summer’s building season and allow “the government to take this issue off the softwood lumber and NAFTA negotiation tables.”

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