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For Immediate Release
January 6, 2017

Drywall Duty Update: CHBA Action and Results
Leading up to and since the September 6th, 2016, imposition of provisional duties on U.S. drywall exported into Western Canada, the Association and members have been extremely active in combatting the exorbitant duties, contending that they are not in the public interest and will adversely impact consumers, the home building industry and the economy at large. drywall.jpg


As a result of this action, on October 18th, 2016, the Minister of Finance, in an unprecedented action, directed the Canadian International Trade Tribunal to accelerate investigation into the downstream impacts of the duty. This had never been done before, and showed the efforts of the Association and members were attaining serious positive impact.

Although the duties were imposed on U.S. imports into Western provinces and territories, drywall prices had quickly become a national issue. The residential construction industry had already seen ripple effects on price and warnings of supply restrictions in Ontario and in Eastern Canada. There was also talk of extending the duty to all of Canada.

Over 500 members responded to a CHBA survey to get detailed data on the impacts of the duty, providing excellent support for CHBA’s testimony and action with legal counsel at the two weeks of Tribunal hearings in Edmonton in late November and early December.

On January 4th, the Tribunal issued its findings and recommendations, which showed once again that efforts by the Association and members yielded significant and important results. They are as follows:

• The Tribunal found that the imposition of the duties in full 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. This is a key finding and points to the need for remedies for the residential construction industry and consumers.

Duties should be eliminated for 6 months. Suspending the duties for an extended period was a key request of CHBA, as it will help to address many of the fixed-price contracts that were at risk due to the sudden imposition of the duties. It will also allow preparation for potential increase in prices, should those come to fruition.

Duties collected to date should be used to refund wholly or in part the higher costs paid by end users. This is in line with CHBA recommendations that those who had to pay more due to the provisional duties enacted in September should be reimbursed.

Duties, when enacted, should be reduced to 43% (down from a high of 201%). Although a complete elimination of the duty would be ideal, given that the Tribunal has found that there actually has been substantial dumping occurring, having no duty was not a practical option for the Tribunal at this time given the need to enforce fair trade. However, the dramatic reduction of duties is a very substantial “win” for the residential construction industry and consumers. It is also important to note that the duties are on trans-border inter-company transfers, which are lower than even wholesale prices, so a 43% duty on the final export price does not equal a 43% cost increase to builders and renovators. For example, provisional duties of over 120% were resulting in price increases to builders and renovators of about 30%. There are also nuances of how this final duty gets implemented that may further reduce upward price pressure. More clarity on these nuances will come when the Tribunal releases its next more fulsome report by January 19th.

Grant remission to negate the duty for drywall for rebuilding Fort McMurray. Eliminating any impact on the reconstruction effort in Fort McMurray was a critical recommendation by CHBA and it is excellent that this is being recommended.

CHBA is pleased that efforts of the Association and members have had such an impact and yielded such extensive results, particularly in accelerated fashion, especially given the nature of the international tribunal process for which these types of changes for downstream interests are very uncommon, let alone in expeditious manner.

Moving forward, CHBA will strongly advocate that the government implement measures to at least these levels, and that the details of that implementation do the most they can to return drywall prices closer to historic norms, provide price stability going forward, and ensure adequate and competitive supply to Western Canada, and all of Canada for that matter. CHBA’s media release can be found here.

CHBA will continue to be active on this file, but at this time wishes to extend thanks again to the many local and provincial HBAs and members who actively supported the process to get to this important point. The government is also to be commended for taking the action to accelerate this process for this issue of such concern to our industry.

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For more information contact:
CHBA Central Interior Office
T: 250 828 1844
W: www.chbaci.ca