Lumber producers in Alberta hope the federal governments in Canada and the United States are able to quickly hammer out a new softwood lumber deal before a trade war breaks out.
The softwood lumber deal agreed to in 2006 by the two countries expired in October 2015. Under the terms of that deal, the U.S. can’t launch a trade complaint for a full year, but many expect it will once the year is up.
Fresh cut logs are stacked after being harvested by loggers near Youbou, B.C.
“The U.S. side is going to shoot for the moon, you know, retroactive duties, huge percentage duties,” said Neil Miller, president of Alberta Spruce Industries, a small mill just west of Edmonton.
About 30 per cent of Miller’s exports go to the United States, and he fears a renewed trade war between the two countries could cut those sales in half.
“There’s nothing good that’s going to come out of a situation where a duty is imposed on a produced we produce here,” added Miller. “We should be concerned.”
Under the expired agreement, Alberta companies could ship lumber into the United States free of U.S. tariffs, unless market prices dropped below a certain point, which triggered export taxes payable to the province.
“Forestry is a major employer in this province,” Paul Whittaker, president and CEO of the Alberta Forest Products Association, said.
“The softwood lumber agreement and successful trade with the United States matter to Alberta and Albertans.”
In Alberta, 45,000 people are employed in the forestry industry, and it accounts for about $1-billion worth of exports to the United States every year.
Trade disputes or tariffs would have a damaging impact on the province, Whittaker said.
“Any kind of tariff, or duty or limitation on our trade flows has a negative impact on our industry, on revenues to the province and jobs to the citizens of this province,” he explained.
Whittaker says half of Alberta’s product stays within Canada, but the other half leaves the country. A quarter of that goes to the United States.
He says parts of the U.S. industry, including the home improvement sector as well as consumers, would describe the deal that just expired as acceptable or agreeable.
“There is a segment of the U.S. industry that will always feel that they are damaged by the actions of Canada,” Whittaker said. “But, at the end of the day, did this work best for both economies? We would argue yes.”
Alberta’s minister of economic development and trade was in DC this week to speak with his counterparts there about trade issues, among them was softwood lumber.
“We are not providing unfair subsidization, we are not treating our forestry industry unfairly compared to the United States,” Deron Bilous said. “We want the best trade deal possible… one that focuses on stability and a fair price.”
Bilous then travelled to Ottawa and spoke with the federal trade minister about this file.
“It’s definitely in the best interest of Alberta, and for our government, to negotiate a new softwood lumber agreement, and sooner rather than later.”
The issue was brought up in Ottawa Thursday. The federal minister of international trade was asked about the deal.
“The forestry industry is incredibly important across this country and we are very aware of the significance of the softwood lumber agreement and we are working very hard on it,” Chrystia Freeland said.
“I’m proud to inform you that actually at our very first bilateral meeting with President Obama, I was fortunate to be there and our Prime Minister proactively raised this agreement. My officials and I personally are negotiating very actively. My officials were in Washington last week. We’re working very hard on this deal. It’s essential for Canadians.”