Softwood lumber agreement expected to expire in October

Lumber industry in BC is not optimistic that Canada’s softwood lumber agreement with the United States will be renewed in October.

The lumber industry in British Columbia is not optimistic that Canada’s softwood lumber agreement with the United States will be renewed in October.

Hampton Affiliates – company that owns Babine Forest Products and Decker Lake Forest Products – is neutral on this issue given that the company owns sawmills on both sides of the border. However, Steve Zika, Chief Executive Officer of Hampton Affiliates, said he thinks the agreement will not be renewed in October.

“Most people believe that the softwood lumber agreement renewal will not be resolved this year,” he said. “It may take well into next year to hopefully reach a settlement.”

Zika said that regardless of what happens in October, it should not have an impact on the sawmills in the Lakes District. He said the lumber market dynamics and currency tend to be a bigger factor than the export tax.

“I don’t believe any stalemate related to the softwood lumber agreement will have a short-term effect on any of our operations in British Columbia,” said Zika.

“With the large Canadian forest products companies now owning many sawmills in the U.S., it could change the dynamics of the negotiations, although much of the negotiations are at the government, not company level,” he added.

The B.C. industry, as well as the B.C. and Canadian governments, support renewal of the current agreement and have been negotiating from that position, said Cam McAlpine, Spokesperson for the B.C. Council of Forest Industries.

“We haven’t reached an agreement yet, and we’re not optimistic we will by October,” he said.

According to McAlpine, there won’t be any noticeable impacts to companies or workers when the agreement ends in October.

“There is a one-year stand down period during which no side can take any trade actions against the other,” he said. “If we don’t get an agreement in the next four months, we’re confident we can do so before the stand down period ends.”

Canada and the United States signed the softwood lumber agreement in 2006 for an initial seven-year term. In 2012, the two countries agreed to extend the agreement for an additional two years. The agreement will expire on Oct. 12, 2015.

Under the deal, Canada is required to put an escalating tax on exports as softwood lumber prices drop below a predetermined threshold. It’s a form of managed trade, designed to limit potential harm to American producers.

The Canada-U.S. lumber dispute is a long-standing issue. Softwood lumber dispute first arose in 1982 with a complaint by the U.S. lumber industry that low Canadian stumpage rates constituted an unfair advantage.