August 2023 – Advocacy Win for CHBA on Drywall Remission Order in Western Canada

Following the hearing at the Canadian International Trade Tribunal (CITT) last summer, the Department of Finance undertook a review of the 2017 Remission Order for Gypsum Board Products Anti-Dumping Duty (see June 2022 update below). CHBA presented department officials with a detailed submission outlining the overall negative impact increasing the duties would have upon both CHBA members and affordability challenges currently facing Canadians. Any change to the Remission Order resulting in increased duties would give drywall manufacturer CertainTeed Gypsum Canada unnecessary protection to the detriment of CHBA members, and homebuyers and homeowners, in Western Canada.

CHBA further advocated with political staff in Finance Minister Chrystia Freeland’s office – the minister who would ultimately make the final decision – that a change to the Remission Order resulting in higher duties would come at a time where the home construction industry is already challenged with higher interest rates, higher costs of materials and labour, and an overall slowing of housing starts. CHBA also successfully delivered the message to political staff that an increase in the duty would counter the efforts to address housing affordability and supply. CHBA was very pleased to receive notification from the Department of Finance on July 12 that the Minister of Finance has decided not to proceed with changes to the Remission Order. This is a major victory for our Western Canadian members. The benefit also extends to Eastern Canadian members, as higher priced drywall in Western Canada would result in more demand on Eastern Canadian drywall, potentially reducing supply and increasing costs.

More details on the history of CHBA’s action on drywall can be found below.

June 2022 – CHBA Looking to Repeat Success in Fighting Western Canada Drywall Tariffs

CHBA and its legal council are now engaged in the Canadian International Trade Tribunal process for the potential renewal of drywall tariffs that were put in place nearly five years ago and which are now up for re-evaluation.

Five years ago, CHBA was extremely successful in its representations to the Canadian International Trade Tribunal that exorbitant tariffs on U.S. drywall are not in Canada’s best interests. CHBA advocacy resulted in unprecedented action by the Minister of Finance (which was covered as exceptional in trade journals), when he directed the Tribunal to consider the downstream economic impacts on builders and homeowners/homebuyers while also looking at the impact on manufacturers. The result was significantly lowered tariffs in a very accelerated fashion, and an estimated $300 million in saved costs for Western Canadian builders, renovators, contractors and homebuyers. And it should be noted that CHBA efforts were bolstered by survey data gathered from over 500 CHBA members in support of CHBA’s legal action.

A year after that, CHBA and its members successfully fought and won against proposed new tariffs on 54” drywall imports into Western Canada that came about due to complaints alleging that dumping of 54-inch U.S. drywall was hurting the manufacturing business in Western Canada. The complaint was tossed out and no additional new tariffs implemented.

With the Canadian Border Services Agency now having determined there is a likelihood of more dumping if the tariff is eliminated, the Tribunal process is now underway. CHBA is very familiar with the process and the issue, and is engaging accordingly. More details on the history of CHBA’s action on drywall in Western Canada can be found below.

August 21, 2018 – New Drywall Tariffs “Dumped”

In a major victory for CHBA and our builder, renovator, developer and drywall contractors, the Canadian International Trade Tribunal (CITT) has tossed-out a complaint by CertainTeed Gypsum Canada alleging that dumping of 54-inch drywall made in the U.S. was hurting their business in Western Canada.

CHBA had been engaged in the issue since June when CertainTeed’s new complaint was filed with the Tribunal and CHBA was contacted by CBSA based on our past, successful efforts in fighting against anti-dumping tariffs on drywall.  The Association immediately advised of its opposition to any new tariffs, registered officially as an interested party with the Tribunal, engaged legal counsel, and began preparing for a legal intervention, should new tariffs be announced following the Tribunal’s Preliminary Injury Inquiry – the first step in the anti-dumping hearing process.

The complaint by CertainTeed triggered this inquiry by the Tribunal to decide whether CertainTeed’s claims had any substance.  As CHBA had notified members, a positive finding would have triggered import tariffs on 54-inch drywall from the U.S. by mid-September.
On August 20th, CITT announced that “the evidence does not disclose a reasonable indication that the dumping of the subject goods has caused injury or retardation or is threatening to cause injury to the domestic industry”.
CHBA is pleased that the CITT has taken such a well-considered position.  The Association’s extensive interventions on drywall tariffs have made it clear to CBSA and the Tribunal that imposing such tariffs has serious and very detrimental financial impacts on builders, drywall contractors and, ultimately, on consumers.

With this announcement, CITT has terminated the inquiry and the possible imposition of any subsequent tariffs based on this CertainTeed complaint.

July 12, 2018

As reported previously, on April 30, 2018, CertainTeed Gypsum Canada Inc. filed a complaint with the Canada Border Services Agency’s (CBSA) alleging that 54-inch gypsum board imported from the United States of America (US), was being ‘dumped’ in British Columbia, Alberta, Saskatchewan, and Manitoba, as well as the Yukon and Northwest Territories (Western Canada).

In response, on June 21, 2018, pursuant to subsection 31(1) of the Special Import Measures Act (SIMA) the CBSA initiated an investigation into dumping of 54-inch gypsum board in Western Canada.

The CBSA determined that the complaint was properly documented and has estimated the dumping margins to be 6.1%. The CBSA has initiated an investigation that will result in a Preliminary Determination of dumping on September 19th. If the CBSA finds dumping margins of more than 2.0%, provisional duties will apply to all U.S. imports landed on or after that date.

The Canadian International Trade Tribunal (CITT) has indicated that it will issue its determination in this case on August 20, 2018 and publish its reasons for this determination on September 4, 2018. CHBA and its legal counsel are registered with CITT as interested parties.

The CITT is currently conducting a Preliminary Injury Inquiry to determine if the evidence discloses a reasonable indication of injury caused by dumping. If the CITT makes a Preliminary Finding of Injury, and the CBSA makes a Preliminary Finding of Dumping, the CITT will initiate it's Injury Inquiry to determine whether dumped US gypsum Board actually harms CertainTeed. If hearings take place on the matter, CHBA will participate in these to represent the interests of members.

If the CITT concludes that the evidence does not disclose a reasonable indication of injury, retardation or threat of injury, the investigation will be terminated.

According to CHBA’s legal counsel, any provisional duties set by CBSA would take effect on September 19th and would apply to all shipments landed in Canada on or after that date.

CHBA has recently learned that CertainTeed Gypsum Canada Inc. has already implemented a price increase of 25 percent of all 54-inch product shipped in Western Canada that will come into effect August 1, 2018.

CHBA recommends that any member companies in Western Canada that could be impacted by potential tariffs on 54-inch drywall discuss future supply availability and pricing with their supplier and/or contractors.

CHBA will continue to engage in this matter and update members as developments take place.

June 2018 – CertainTeed again seeks tariffs on drywall—this time on 54” boards
CHBA has learned that Certainteed Gypsum Canada Inc. has once again filed a complaint to the Canada Border Services Agency (CBSA) alleging dumping of certain 54 inch gypsum board from the U.S, imported into Western Canada. Although there is currently no production of like goods in Western Canada, the claim is that dumping of U.S. goods has caused retardation to the establishment of the domestic industry in Western Canada.

CHBA is already in communication with CBSA. CBSA has identified CHBA as an interested party in the matter (per a letter received by CHBA from CBSA on June 21, 2018—the day on which CBSA initiated its formal investigation). CHBA has accordingly authorized its legal counsel to access the confidential files related to the proceedings. A similar tribunal process to the last time can be expected. CHBA was extremely successful in the last round in having the duties dramatically reduced. While the trade environment has changed since, the facts of the situation differ little. Stay tuned for ongoing reporting on action on this matter going forward.

June 2017 – Drywall Tariffs Lowered, Compensation Program for Builders and Contractors Launched Due to CHBA and Industry Intervention

With the support of provincial and local Associations, and over 500 members, CHBA was successful in its representations to the Canadian International Trade Tribunal that exorbitant tariffs on U.S. drywall are not in Canada’s best interests. They agreed – and so did the federal government.

CHBA’s specific issues were:

• Exorbitant duties quickly destabilized and could permanently damage businesses down the line from drywall producers/importers
• The duties were particularly damaging with no phase‐in period to allow all affected parties to adjust (fixed-price contracts and sales agreements)
• Impact on cost to rebuild in Fort McMurray
• Problem with the scope of CITT and CBSA – they only considered the domestic market for drywall producers (which are also the majority importers), not the impact on the end user
• Government had an obligation to consider the bigger picture ‐ health of the largest economic engine, housing markets and overall economy

Results of CHBA interventions were swift, as within weeks of the first announcement of the duties and subsequent CHBA engagement, 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.

A few weeks later, it was clear that the Tribunal found CHBA’s involvement and testimony significant. CHBA’s legal counsel noted the following: ““[W]e should recognize the CHBA's important contribution to this Inquiry ... The CHBA was the only party to argue that consumers were not willing to absorb all these costs. The CITT recognized that consumers would be forced to accept higher costs and that this would cause harm … and would slow the residential housing market. Consequently, the CHBA can take credit for demonstrating that its members will be harmed by anti-dumping duties over the long run and that this evidence led the CITT to recommend limiting anti-dumping duties.”

On February 27, 2017 the Minister of Finance announced a reduction in the duties on drywall from the U.S. coming into Western Canada. The Government stated that the reduction will have the same effect as the Tribunal’s recommendation to reduce the duties to 43% of the export price.

On May 1, 2017 the federal government launched its Drywall Support Program through Western Economic Diversification Canada. The relief program was for Western and Northern Canadian drywall contractors and builders who paid increased drywall costs due to the anti-dumping duty between September 6, 2016 and February 24, 2017, and residents of the Regional Municipality of Wood Buffalo whose homes were severely damaged or destroyed in the May 2016 wildfires.

$330 Million Saved

CHBA estimates that intervention on this issue from the Association and industry saved over $330 million (in new construction alone) in additional costs for Western Canadian builders, renovators, contractors and most importantly, their client homebuyers.

History

On September 6, 2016, the Canada Border Services Agency invoked the Special Import Measures Act, making a preliminary determination of alleged dumping with respect to gypsum board (drywall) originating from the United States and imposing provisional duties on drywall imported into Western Canada.

Leading up to and following September 6, the Association and members were extremely active in combatting the exorbitant duties, contending that they were not in the public interest and would adversely impact consumers, the home building industry and the economy at large.

As a result of this action, on October 18, 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 4, 2017, the Tribunal issued its findings and recommendations, which showed once again that efforts by the Association and members yielded significant and important results:

• 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, as CHBA had contended.
• Duties collected to date should be used to refund wholly or in part the higher costs paid by end users. This was 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%). 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.
• 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.

CHBA was pleased that efforts of the Association and members 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.

On February 27, the Minister of Finance announced a reduced in the anti-dumping duties on drywall from the U.S. coming into Western Canada, along with a compensation package for industry and consumers affected by “exceptional price increases”.

The Government established new minimum import prices for drywall imported from the U.S. for use in Western Canada that are 32.17% lower than the original tariffs. The government believes that this approach will result in the same level of duty reduction as recommended by the CITT, while addressing potential circumvention concerns.

In addition, the Government committed to using the approximately $12 million in anti-dumping duties collected to provide relief to builders and contractors who were unable to pass through elevated drywall costs, due to fixed-price building contracts.

On May 1, 2017 the government announced the launch of a relief program for Western and Northern Canadian drywall contractors and builders, and residents of the Regional Municipality of Wood Buffalo whose homes were severely damaged or destroyed in the May 2016 wildfires. Applications for reimbursement could be submitted from May 1 to May 31, 2017.