Financial Reports & Markets
Softwood lumber agreement expires, trade enters a grace period
By Cindy Macdonald
With the expiration of the 2006 Softwood Lumber Agreement between Canada and the U.S. on Oct. 12, lumber trade between the two nations is now governed by a “standstill provision” that precludes the U.S. from bringing trade action against Canadian softwood lumber producers for 12 months.
As the 2006 agreement drew to its close without a negotiated settlement, representative from both sides of the border pointed fingers at their counterparts.
The U.S. Lumber Coalition said the Canadian government has so far been unwilling to enter into negotiations on a new trade agreement. “If Canada continues to stay away from the negotiating table,” stated Charlie Thomas, chairman of the Coalition, “the U.S. industry will eventually have no choice but to use our rights under U.S. trade laws to offset the unfair advantages provided to Canadian industry.”
Thomas added: “We hope Canada will make use of this next year to work constructively with the U.S. Government to secure a stable and effective agreement that all stakeholders can support.”
Meanwhile, in Vancouver, B.C. Premier Christy Clark said B.C. has been working with the federal government over the past two years seeking an extension or renewal of the softwood lumber agreement, but so far the U.S. has not been willing to discuss renewing or extending the agreement.
“B.C.’s forest industry is too important to take for granted. 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,” said Premier Clark. “When the new federal government is formed later this month, this is the first issue I’ll be raising with the new Prime Minister.”
Susan Yurkovich, president of the BC Lumber Trade Council, commented: “It is important for governments on both sides of the border to take steps to avoid another lengthy and unnecessary trade dispute in softwood. In the past, these disputes have created uncertainty, hurt consumers and producers, and impeded the growth of the North American market.”
“While we believe that another managed trade agreement is possible, we are also actively preparing to defend BC’s softwood lumber industry against any potential legal challenges brought by the United States, as we have done successfully in the past,” said Yurkovich.
Canadian producers generally feel the Softwood Lumber Agreement has benefited both countries by providing reliable, affordable, high-quality lumber supply from Canada to the United States, and maintaining certainty of market access for Canadian producers.
In the words of the U.S. Lumber Coalition, “the Softwood Lumber Agreement was intended to reduce the competitive imbalances caused by subsidies growing out of Canadian provincial government control of most of the fiber supply used to produce softwood lumber in Canada and to minimize the harmful effects of unfairly subsidized imports in the U.S. lumber market.” “Unfortunately,” said Coalition chairman Charlie Thomas, “world timber and lumber markets have evolved and the 2006 agreement is now outdated. The Coalition intends to continue working with the U.S. Government to reach a new agreement that will resolve this issue effectively in the future.”