Provinces explore diversified markets as US-Canada lumber trade war heats up

VANCOUVER (Scrap Monster): With the US Lumber Coalition filing trade petition, requesting the US Department of Commerce (DOC) to initiate investigation on lumber imported from Canada, a new lumber war between the two countries seem imminent. Meantime, B.C and Quebec provinces have begun exploring new options to protect the forestry sector and the thousands of jobs supported by the industry. The petition filed by the US Lobby group blames Canadian imports for the lumber mill closures and job losses in US forestry sector.

According to sources, the B.C forest industry and government representatives are currently in Asia on a lumber trade mission aimed at promoting Canadian lumber in these markets. The mission is currently in China, after visiting Japan. Steve Thomson, Minister of Forests, Lands and Natural Resource Operations, who heads the team, noted that the mission has made successful start and is looking forward to build new relationships over the next few days. B.C Lumber products are currently witnessing increased interest from Chinese buyers, he noted. Thomson further stated that Chinese markets offer immense opportunities for Canadian lumber. It must be noted that China is the country’s second lumber market after the US, worth nearly $1.2 billion.

Mike de Jong, B.C.’s Minister of Finance had been to India on a similar mission. According to him, the efforts in India are about to deliver results now. By focusing more on Asian markets, Canada aims to diversify its markets, by reducing its over-dependence on US market. Incidentally, Canadian imports which accounted for 29.5% of total US lumber consumption during Q3 last year had surged higher to 33.1% during the fourth quarter. Also, market share of Canadian lumber has increased to 34.1% during year-to-date period in 2016.

Dominique Anglade, Quebec’s economy minister urged federal government to act proactively in support of the industry. The minister proposed creation of a loan guarantee program which would ensure that Quebec lumber producers are not adversely impacted by the trade tensions with the US. Anglade is scheduled to meet federal International Trade Minister Chrystia Freeland next week to discuss the softwood lumber dispute, sources said.

Meantime, Susan Yurkovich, president, Council of Forest Industries expressed confidence that the two countries would be able to reach some kind of a lumber trade deal at the earliest. According to Susan, US economic growth would spur construction of more new buildings, which in turn will boost the lumber trade between the two countries.

The US government could impose preliminary duties on Canadian softwood lumber imports from as early as spring of March or April next year. However, Canada is expected to challenge the duties on forums including the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO).

The lumber trade dispute between the two countries is dated back to 1982. The two countries had signed a bilateral agreement in September 2006. The original seven-year agreement had an optional provision to extend for a period of two years upon consensus by both parties. Accordingly, the deal which came to an end in 2013 was extended until 2015. As per the terms of the deal, parties were prohibited from engaging in trade actions for one-year grace period, which has already come to an end on 12th October, 2016.