Lumber mills in the riding of Kootenay-Columbia want a quick, but fair, long term resolution to the softwood lumber dispute between Canada and the USA. None of our mills have participated in the Federal government’s short-term Softwood Lumber Action Plan. These are two clear messages I received over the last two weeks from speaking with many of our mill owners and managers across the riding.
The recently expired Softwood Lumber Agreement was in effect from 2006 to October 12, 2015. It provided a range of duties based on the price of lumber which depends on a complex number of factors, including the location of the harvested forest, the type of tree, accessibility by road or trail or water, and many other elements.
This is at the heart of our dispute with the Americans. In the USA, most of the softwood lumber forests are privately owned and the price is determined at auction on the open market. Canadian forests are mostly owned by the provincial or federal government and the prices are determined by legislation. As a result, Canadian prices can be lower than American prices, which the Americans complain is an unfair subsidy.
The one year extension to negotiate a new agreement expired on October 12, 2016 and on April 25, 2017 the Americans slapped duties as high as 24% on British Columbia softwood lumber. On June 26, they increased it another 7%. You can be rightly disappointed that neither the Conservatives nor the Liberals made signing a new deal with our American neighbours a priority – they certainly were well aware of the expiry dates for the Agreement and the one year extension!
On June 1, the Liberals introduced temporary measures worth $867 million to help the lumber industry in Canada which included:
- loans and loan guarantees
- support for workers and Indigenous communities
- expanding markets and diversifying products and
- job loss mitigation programming and support.
None of our mills are participating in these measures. The reasons offered ranged from: not needing them at this point, too many strings attached to government programs, the Americans will try to use these measures against us in the negotiations and, our independent nature – one mill owner said he would mortgage his home to keep his mill going rather than get involved with government!
So what does our local industry want? In terms of a negotiated agreement all the mills agreed that getting a deal sooner rather than later was important (don’t wait for the North America Free Trade Agreement to be renegotiated) as uncertainty is always bad for businesses, but at the end of the day they all agree that no deal is better than a bad deal. The dispute resolution mechanism in the 2006 Agreement has served Canada well in the past and must be included in the new deal.
Reaching a new agreement similar to the one that expired in 2015 would be acceptable. However, a number of the smaller mills would prefer a quota based approach rather than a duty based deal, so long as they can continue to ship their current volumes into the USA. Even better from their perspective would be a quota based deal with a guarantee that any increased demand for lumber in the US that cannot be filled by American lumber mills (which has been the case during construction booms in the past) be given to Canada as a priority over other countries.
A healthy lumber industry based on a good long-term softwood lumber agreement is critical to the economic well-being of the people of Kootenay-Columbia and to many of our communities. Let’s hope the Liberal government is up to the task of getting a positive deal for Canada, and for British Columbia, in the negotiations that are now underway!