Drywall Duty Report Recognizes Negative Impact on Builders, Renovators, Consumers and the Canadian Economy
A report by the Canadian International Trade Tribunal has found that the imposition of drywall duties in the amount set by the Canada Border Services Agency “is contrary to Canada’s economic, trade or commercial interests, and specifically that such an imposition has or will substantially reduce competition in those markets, or cause significant harm to consumers of those goods or to businesses who use them.”
The Tribunal has provided a number of recommendations to the Federal Government to mitigate the negative impacts on the residential industry.
“In order to ensure that the recommendations of the Tribunal do in fact avoid the harm they are now seeking to mitigate, the details of implementation, which are expected to be released in the Statement of Reasons report due by January 19, 2017, and actual subsequent implementation by the government, will be key,” said CHBA CEO Kevin Lee.
The recommendations include that duties be eliminated for 6 months (addressing problems with fixed-price contracts already in place) and, after that, be limited to 43% of export price (rather than as much as 201% as previously set). The Tribunal also recommends that monies already collected be used to offset some of the increased costs already paid by end users. Options for Fort McMurray are also provided.
“How the 43% duty is enacted will make all the difference—prices more in line with historical norms, price stability, and adequate supply of product will all be essential to ensuring Canada’s economic, trade and commercial interests are indeed met and harm to downstream users is sufficiently mitigated. Thousands of middle class jobs, along with a crucial engine of economic growth, are at stake.”
The duties on U.S. drywall have had a significant impact on the residential construction industry, which accounted for $45 billion in economic activity, 400,000 jobs and $24 billion in wages for Western Canada in 2015.
The Tribunal’s report to government is part of an unprecedented accelerated inquiry into whether it is in Canada’s best interest to impose duties on U.S. companies importing drywall into Western Canada. Industry will have to wait for the Tribunal’s Statement of Reasons, and the government’s final decision on details of action to be taken, before having a full understanding of what’s going to happen next with drywall.
“Now is the time to focus on what the Canadian economy needs to see as the outcome to all this – including restoration of drywall supply certainty, as well as reasonable and predictable prices,” said Mr. Lee. “Given that the government wants to avoid negative economic impacts, the details will be key.”
“CHBA and its members want to recognize the Minister of Finance and the government for taking expeditious action with respect the cost impact of the duties on the actual users of drywall and in so doing helping those directly affected participate at an earlier stage of the review. We recognize that it was a significant decision for the government to step in and request that the Tribunal look at the impacts of the duties on businesses, consumers, and the economy on an accelerated timeline. The Tribunal’s report acknowledging the economic implications shows that it was the right call. Now the next steps of getting the implementation right will be essential.”