Prince George, B.C.- While the talks are underway for a new softwood lumber agreement, former Minister of Forests for B.C., Pat Bell, says there are some different things in play this time round.“First of all there is a standstill period now for a year, where no litigation can be brought forth. Canada is free to ship lumber on an unrestricted basis into the U.S. so that puts us in a position of strength for the next year or so” says Bell.
Another significant difference is what Bell calls a ” time of transition ” as the amount of timber available for the sawmills in B.C. has been reduced. “There’s a lot more southern yellow pine that is mature now and available to the market than there was ten years ago when this was last negotiated, so log prices in the U.S. are considerably lower and log prices in Canada are going higher, so there are a number of fundamental shifts.”
Then there’s the fact Canfor, West Fraser and Interfor have all purchased mill properties in the United States “In some cases they own more sawmills in the U.S. than the do in Canada” says Bell.
Bell says he is concerned that the softwood lumber agreement has not been mentioned as an issue in the federal election and has not been mentioned as part of the Trans Pacific Partnership “There is nothing mentioned to provide relief to the softwood lumber industry in terms of reduced options for the American softwood industry to litigate.” Federal Minister of International Trade, Ed Fast told 250News the softwood lumber agreement with the US stands alone but trade barriers for softwood lumber to the Asia Pacific have been eased under the TPP.
Following the crash of the U.S. housing market, B.C. worked hard to boost its softwood shipments to Asia. It was hoped that when the softwood lumber agreement with the States expired, Canada would be in a much stronger position with decreased reliance on its exports to the U.S. “Last time, when we went into the softwood lumber agreement 1 or 2% of our total lumber exports were going to China” says Bell “today it’s still about 25% despite the fact the Chinese market has gone through a bit of a downturn. I expect it will be much tougher for the Americans to try and prove that Canada is a subsidized industry, but that doesn’t really matter because they can simply launch an action and that immediately brings tariffs to bear, so we’re guilty until proven innocent under American Trade laws and that’s a real problem.”
Bell, who also served as a Vice President for Conifex, says there are a few key things that can work in Canada’s favour in this round of negotiations “First, we have the one year standstill period, so the Americans are facing unrestricted flow of lumber for the next 12 months. So once the federal election is resolved, whoever becomes the next Prime Minister, if it goes to the top of their agenda, I think they have 3 to five months to negotiate a new deal in a position of strength. You might be lucky to get Obama’s attention during that time. So I think there is a possibility we could get a deal as soon as the federal election is over if it becomes a top priority issue for the Prime Minister.”
But the Americans are also heading into an election period, (Presidential election is November 8th 2016) and getting Obama’s attention sooner than later is a must “I think if it’s delayed past four or five months, I think we’re into litigation a year from now for sure.” Bell adds It’s a big issue, “and if it’s not included in the TPP I think that’s very problematic for B.C, Quebec and Ontario.”