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.
The 2006 softwood lumber agreement required Canada 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 agreement ended five years of litigation and returned $4 billion in duties collected by the U.S. to Canadian producers. The agreement has also provided improved market certainty for lumber manufacturers in B.C. and Canada, while enabling the province to manage its forest resources and maintain access to the U.S. market.
The problem is that the agreement expired on Oct. 12, 2015, and according to premier Christy Clark, so far the U.S. has not been willing to discuss renewing or extending the agreement.
In a statement in the legislature, Clark said that B.C. has been working with the federal government seeking an extension or renewal of the agreement over the past two years. She also emphasized the importance of stability in Canada-U.S. softwood lumber trade to the province.
“British Columbia’s forest industry is too important to take for granted,” she said. “For lumber producers, and the communities throughout the province that depend on them, we need to avoid an unnecessary trade dispute with our most significant market.”
The province estimates that about 40 per cent of B.C.’s rural communities are dependent on forestry. In fact, B.C. is Canada’s largest producer of softwood lumber accounting for 55 per cent of Canada’s lumber exports to the U.S. forestry.
If trade litigation between U.S. and Canada resumes again, B.C. companies could face the prospect of paying unwarranted duties to the U.S. instead of re-investing in B.C. to support jobs and communities, according to the province.
Despite the significance of the Canada-U.S lumber dispute, the B.C. industry remains confident that a deal will be reached within the next year.
Cam McAlpine, Spokesperson for the Council of Forest Industries, said that due to a standstill period under the agreement, there won’t be any noticeable impacts to companies or workers in the short term. Under the softwood lumber agreement, the U.S. cannot launch any trade litigation for one year after the expiry of the agreement.
McAlpine emphasized that the B.C. industry supports renewal of the agreement and have been negotiating from that position.
“I’m hopeful that over the next year Canada can reach an agreement with the U.S. on a trade relationship that’s acceptable to both countries,” he said.
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 agrees that the expiry of the agreement should not impact Hampton Affiliates’ operations in the Lakes District.
“I don’t believe any stalemate related to the softwood lumber agreement will have a short-term effect on any of our operations in B.C.,” he said.
The one-year standstill period also gives the government time to negotiate a renewal of the agreement.
Steve Thomson, Minister of Forests, said the province continues to work closely with the B.C. forest industry, other provinces and the federal government to ensure B.C.’s priorities are clearly communicated.
Premier Clark said the Canada-U.S. lumber dispute would be the “first issue” she would be discussing with the newly elected federal government.