B.C. Premier Christy Clark says she is optimistic about a top-level agreement to try to head off another Canada-U.S. softwood lumber trade conflict.
British Columbia sent $3.3-billion of softwood lumber to the United States last year, but the expiration of the 2006 softwood lumber agreement means that U.S. forestry interests have an opportunity to launch another trade war starting in six months – if a new deal is not reached first.
On Thursday, Prime Minister Justin Trudeau and U.S. President Barack Obama announced a commitment to seek a new deal in the next 100 days.
That is “fantastic news,” Ms. Clark told reporters in Victoria.
Although the B.C. forest industry has shrunk since 2006 and exports to the United States have declined, it is still a key sector that directly employs 60,000 people.
“British Columbians have worked really hard to make sure the softwood lumber agreement was on the Prime Minister’s agenda, and he listened,” Ms. Clark said.
“Now, there is a lot of work to be done between now and then, but I know you can’t get to the end of something unless you start. So this is a good start – let’s get going, we need to protect those jobs in British Columbia.”
The softwood lumber agreement created certainty for Canadian lumber producers after decades of costly trade disputes, and the Council of Forest Industries, representing B.C.’s softwood lumber sector, would like to see the deal extended.
Under the now-expired deal, Canada was required to put an escalating tax on exports when softwood lumber prices dropped below a predetermined threshold. The industry argued that free trade would be better, but that the managed trade model at least provided stability.
The exchange rate on the loonie makes Canadian lumber attractive to U.S. consumers now, and that may increase the pressure on the U.S. side to push for greater impediments to trade.
However, the B.C. industry also hopes that other factors that have changed since 2006 will make Canadian exports less of a threat to U.S. competitors. In 2006, B.C. lumber companies were racing to process timber threatened by the mountain pine beetle and exported $4.3-billion of wood to the United States that year. Now, the industry has reduced its production capacity to cope with a shrinking timber supply.
Last fall, Ms. Clark made a statement in the legislature vowing to push the renewal of the lumber pact to the top of the agenda in Ottawa, and, on Thursday, Mr. Trudeau succeeded in making progress during his first bilateral meeting with the U.S. President.
Still, provincial NDP forestry critic Bruce Ralston said B.C. should be getting ready for failure at the bargaining table – political uncertainty with the pending U.S. election means that a deal within 100 days is far from certain.
“This is a significant B.C. industry and one hopes for a settlement, but the Americans play hardball. We need to prepare contingency plans if we see more trade action in six months,” he said.
Although B.C. industry officials are keeping a low profile in negotiations, Ms. Clark’s government says it is taking an influential role in shaping Canada’s bargaining position. Mr. Ralston was skeptical about how much effort the province has invested behind the scenes.
“Premier Clark led a huge delegation to Ottawa on Feb. 5, but she did not take the Forests Minister with her.” He said the Premier should have reduced her communications delegation to make room for Forests Minister Steve Thomson on the trip. “These are real jobs at stake, not fantasy LNG jobs,” Mr. Ralston said.