06/01/2017 01:31 EDT | Updated 06/06/2017 11:27 EDT

Feds Pledge $867 Million To Help Lumber Industry Deal With U.S. Tariffs

A negotiated settlement on softwood expired in 2015, triggering the latest round of tariffs.

Adrian Wyld/The Canadian Press

OTTAWA — Natural Resources Minister Jim Carr is announcing $867 million in financial supports to help lumber producers and employees weather the impact of punishing new U.S. tariffs on Canadian softwood exports.

The package announced today includes loans and loan guarantees to help cushion the blow for forestry companies and to help them exploring new markets and innovations.

The help includes $260 million to help diversify the market base for Canadian lumber products, allow the indigenous forestry sector to explore new initiatives and extend work-sharing agreement limits to minimize layoffs.

Natural Resources Minister James Carr and Foreign Affairs Minister Chrystia Freeland attend a news conference on Parliament Hill in Ottawa on June 1, 2017. (Photo: Adrian Wyld/The Canadian Press)

The money also includes measures to support workers who want to upgrade their skills and transition to a different industry.

Cabinet discussed the options for a package last month, but the federal government wanted more input from the provinces via the special working group Carr established in February.

Carr is announcing the details in Ottawa alongside Foreign Affairs Minister Chrystia Freeland and International Trade Minister Francois-Philippe Champagne.

"These actions defend the interests of Canadians against the U.S. Department of Commerce's imposition of countervailing duties on Canadian softwood lumber and build upon recent efforts made to ensure the continued growth and vibrancy of this sector," Carr said.

"The government of Canada continues to forcefully press our American counterparts to rescind this unfair and unwarranted trade action while remaining confident that a negotiated settlement is not only possible, but in the best interests of both countries."

The government has been careful to characterize the money as a support package, not a bailout, in order to avoid running further afoul of protectionist forces in the United States.

On April 28, the U.S. Department of Commerce slapped countervailing import duties as high as 24 per cent on Canadian softwood, arguing Canada unfairly subsidizes its industry by keeping the price of logging artificially low.

Carr has repeatedly called those allegations baseless, saying the U.S. has lost repeatedly when challenged by Canada before the World Trade Organization or under the North American Free Trade Agreement.

A negotiated settlement on softwood expired in 2015, triggering the latest round of tariffs. Canada and the U.S. continue to try to reach another negotiated settlement.

On Wednesday, the Conference Board of Canada released a report saying Canadian softwood producers would pay $1.7 billion in duties a year and cut 2,200 jobs and $700 million in U.S. exports over the next two years before the dispute is settled.

On June 9, the U.S. Department of Commerce is set to decide an anti-dumping claim against Canadian softwood producers, and is expected to add as much as another 10 per cent tariff on top of the countervailing duties.

Low Canadian dollar helps cushion blow

Canada can't file an appeal of the tariffs until early next year because the final determinations from the U.S. government on the softwood issue won't be made until late fall.

It took Canada four years to reach a negotiated settlement the last time, and 15,000 workers lost their jobs in the first year alone. Canadian producers paid about $5 billion in duties then, 80 per cent of which had to be returned to them as part of the negotiated settlement.

This time around, a low Canadian dollar and high market demand for softwood is helping to cushion the blow.

The aid package will include a push to get Canadian companies to do more of the value-added work on softwood in Canada. That means instead of exporting raw logs, Canadian companies use the logs to make doors and window frames, furniture and countertops.