Opinion: CUSMA review is B.C.'s best chance to resolve the softwood lumber dispute

SEATTLE (Scrap Monster): Few trade disputes have had a greater impact on B.C. than softwood lumber.

For nearly four decades, Canada’s forest sector has been caught in a recurring cycle of U.S. trade actions, litigation and uncertainty. Duties are imposed, legal challenges follow, some decisions are overturned, and yet the dispute persists. The names of the cases change, but the outcome is largely the same: uncertainty for businesses, workers and communities that depend on forestry.

The upcoming review of the Canada-U.S.-Mexico Agreement (CUSMA) presents a rare opportunity to change that.

Trade agreement reviews are not simply technical exercises. They are moments when governments step back, reassess priorities and address issues that conventional trade processes have failed to resolve.

Softwood lumber should be at the top of Canada’s agenda.

No province has more at stake than B.C.

It produces roughly one-third of Canada’s lumber and accounts for approximately 40 per cent of Canada’s softwood lumber exports to the United States. Forestry remains a cornerstone of the provincial economy, supporting tens of thousands of direct and indirect jobs and helping sustain hundreds of rural, northern and Indigenous communities.

Yet the sector is facing unprecedented pressures.

Timber supply has been reduced by wildfires, insect infestations and changing forest management requirements. Operating costs have increased. Mills have closed. Communities have experienced job losses and economic uncertainty. At the same time, producers continue to face significant U.S. trade barriers that further undermine competitiveness and investment.

Today, Canadian lumber exports are subject not only to anti-dumping and countervailing duties but also to Section 232 tariffs. Combined trade barriers have reached levels that would have been difficult to imagine only a few years ago.

The consequences extend far beyond the forest sector.

Trade uncertainty discourages investment in new technologies, modernization projects and value-added manufacturing. It ties up capital that could otherwise be used to improve productivity and strengthen the long-term competitiveness of the industry. Billions of dollars in Canadian duty deposits remain tied up in the U.S. rather than being invested in Canadian operations and communities.

The economic costs are real, but so too are the broader strategic implications.

The U.S. does not produce enough lumber to meet its domestic housing needs. Canadian lumber has long helped fill that gap. When trade barriers increase the cost of lumber, those costs ultimately flow through to American homebuilders and consumers.

At a time when housing affordability has become a major concern on both sides of the border, maintaining barriers on a key construction material makes little economic sense.

Ironically, these policies may also be producing unintended results. As Canadian market share in the U.S. has declined, offshore suppliers have increased their presence. European producers have expanded exports to the U.S. market, capturing opportunities that might otherwise have been filled by Canadian producers. If the objective is stronger North American supply chains and greater economic resilience, replacing Canadian lumber with imports from overseas is a curious outcome.

The reality is that Canada and the U.S. share common interests. Both countries need more housing. Both are seeking stronger supply chains. Both want greater economic resilience and investment certainty. A stable North American lumber market would support all of those objectives.

Unfortunately, litigation has proven incapable of delivering a durable solution.

Canada has achieved important legal victories over the years and should continue defending its rights under international trade agreements. But experience shows that litigation alone does not end the dispute. Administrative reviews continue. Methodologies change. Duty rates fluctuate. Even successful legal outcomes rarely provide lasting certainty.

After nearly 40 years, it is difficult to argue that another round of litigation will finally solve the problem.
What is required is political leadership.

The CUSMA review provides a unique opportunity to pursue a negotiated solution that reflects the realities of the North American market. Such an agreement would not be perfect. Every softwood lumber agreement has involved compromise. But a framework that provides stability and predictability would be far preferable to the perpetual cycle of duties, appeals and uncertainty that exists today.

For British Columbia, the stakes could not be higher.

The province’s forest sector is adapting to major structural challenges while continuing to support jobs, investment and economic activity across the province. What it needs most is certainty.

The upcoming CUSMA review offers a rare opportunity to achieve it.

Canada should make resolving the softwood lumber dispute a priority and pursue a durable negotiated agreement that supports workers, communities and economic growth on both sides of the border.
After four decades of conflict, it is time to move beyond litigation and focus on a lasting solution.

Courtesy: www.vancouversun.com