The Government of Canada is fast-tracking an inquiry into anti-dumping duties on drywall that raised concerns among those in the construction community.
Officials cited that middle class families in Western Canada could be affected, particularly those involved in the reconstruction of Fort McMurray, Alta. A government release explained concerns were raised that anti-dumping duties on imported drywall were leading to price increases and supply shortages of the product.
Imposed to address unfair trade, these duties may be having unintended impacts, including delays in the rebuilding efforts in Fort McMurray.
Given the circumstances, Ottawa is asking the Canadian International Trade Tribunal (CITT) to conduct an inquiry to hear from a wide range of stakeholders and the public, and to report its findings in early January, so that the government can determine the best path forward.
According to officials, by asking the CITT to conduct an inquiry now rather than after their initial ruling, the process is being accelerated by up to 12 months, while allowing the Canada Border Services Agency (CBSA) and the CITT to continue their independent investigations.
"Our Government has listened to the concerns of Western Canadians. With this action, we are putting in place an expedited process to look into the unintended impacts that these duties may be having," reads a statement from Bill Morneau, the federal minister of finance. "I look forward to the CITT's independent review of this matter so the government can determine the best path forward in ensuring a strong Canadian economy and middle class."
The decision to implement the tariffs stems from a complaint filed with the CBSA by CertainTeed Gypsum Canada Inc.
The company alleges that imports of gypsum board originating in or exported from the U.S., imported to British Columbia, Alberta, Saskatchewan and Manitoba, as well as the Yukon and Northwest Territories, are being dumped.
CertainTeed operates six gypsum board manufacturing facilities located throughout Canada.
According to the CBSA, it is the only producer of gypsum board located in Western Canada with three manufacturing facilities located in Vancouver, Calgary and Winnipeg.
On Sept. 6 the CBSA made a preliminary determination that the U.S. was dumping and imposed tariffs from 105 per cent to as high as 276 per cent depending on the product type and manufacturer.
The tariffs were far higher than many expected and came without warning, stated industry stakeholders.
Neil Moody, Canadian Home Builders' Association (CHBA) of BC CEO, noted there was no warning or consultation with the players in the market before the decision. He told the Journal of Commerce that the decision is arbitrary and could favour one Canadian company that can't meet all of the region's demand, meaning prices of homes and properties for buyers could increase anywhere from $3,000 to $10,000.
"Supply shortages and higher costs for drywall are the last thing we need in the already vulnerable Alberta market," said Carol Oxtoby, a developer in Calgary, in a release issued by the CHBA. "We should be concerned that smaller companies may be forced into bankruptcy, as existing contracts may force them to fully absorb cost increases. As the Alberta economy seeks to recover, a duty that harms businesses and damages affordability for home buyers is a major step in the wrong direction. Worst of all, the impacts of higher prices and shortages will be felt severely in Fort McMurray, affecting the rebuild there, so important after the fires."
Bob Finnigan, national president of the CHBA and a builder in Toronto, explained the tariffs don't just have an impact on the industry in the west.
"This is quickly becoming a national issue," he said. "We are already seeing ripple effects on price and warnings of supply restrictions in Ontario as uncertainty about the supply of drywall grows and Ontario plants potentially start to have to supply the Western markets. As we try to keep house prices contained in the GTA (Greater Toronto Area), increases in drywall prices and potential shortages will only make matters worse."