B.C. Forest Minister Steve Thomson flew to Ottawa on Sunday to start working toward a new trade agreement on softwood lumber with the U.S. as officials south of the border prepare for trade litigation that could result in punitive duties on one of B.C. major industries.
Thomson said he will be working with Chrystia Freeland, federal minister of foreign affairs and Francois-Phillipe Champagne, minister of international trade.
“In our view, a managed trade agreement is as important to Americans as it is to us,” said Thomson. “If they want to build their economy, and that is a key objective of the new U.S. administration, they will need our softwood lumber.”
Canadian lumber is important to the U.S. housing construction sector, and tariffs could increase construction costs in the U.S. and thus reduce the affordability of new houses.
The trip comes ahead of the anticipated release Monday of the latest U.S. International Trade Commission report on their investigation into the import of Canadian softwood lumber.
The commission released a preliminary finding in January that the U.S. industry is “materially injured” by imports of softwood lumber products from Canada that are “allegedly subsidized and sold in the United States at less than fair value.”
The commission also announced that it would make a softwood “duty determination” in late February, and an anti-dumping duty determination could be expected in May.
Since the Oct. 12, 2015 expiry of the 2006 softwood lumber deal with the U.S., Canada has been shipping softwood lumber to the U.S. tariff-free under a one-year grace period.
On Nov. 25, 2016, the U.S. Lumber Coalition filed a petition arguing that Canada’s softwood lumber industry is subsidized and the tariff-free import of softwood is “dumping”, and that wood is being imported to the U.S. and sold at less than market value, which harms the U.S. lumber industry.
Thomson said B.C. rejects that accusation.
“The U.S. has launched … litigation stating our forestry policy is subsidized, and we don’t agree with that.”
Thomson said, “We will defend our policy vigorously and we want to work to create a managed trade agreement with the United States rather than litigate.”
The launch of litigation was expected, and both B.C. and the federal government have been preparing for litigation since the expiry of the last agreement.
Since 1982, softwood lumber exports from Canada to the U.S. have been subject to five rounds of U.S. trade litigation. “This is round 5 of this process and the Canadian industry has always been successful in defending its softwood lumber policy,” said Thomson.
A new agreement is of particular importance for B.C. which provides half Canadian softwood lumber exported to the U.S., said Thomson. Forestry employs about 65,000 British Columbians, and the value of B.C. lumber exports to the U.S. was $3.3 billion in 2015.