British Columbia’s 2016 budget will inject $5 million over three years into the Forestry Innovation Investment Crown corporation to promote Canadian wood in India.

Although the investment is not large, it sends a clear message – that the B.C. government gets the importance of market diversification.

Market diversification is part of the solution to maintaining a strong softwood lumber industry in challenging economic conditions. We lost the security of managed trade with our largest customer when the Canada-U.S. Softwood Lumber Agreement (SLA) expired in the fall of 2015. The low Canadian dollar is further fueling protectionist sentiment in the U.S. lumber lobby. The U.S. Trade Representative continues to be preoccupied with the Trans-Pacific Partnership Agreement.

All of these factors suggest there is little chance of reaching a new SLA with the U.S. anytime soon.

The B.C. budget speech spells out a goal of pursing the market in India “in the same way we have taken advantage of, and created, opportunities in China.” As shown below, the province’s exports of softwood lumber to China grew dramatically during the last decade. In 2010, B.C. became the leading supplier of softwood lumber products to China and remained so until surpassed by Russia in early 2015.

Government can play a crucial role in building new markets for products like lumber – for example, working with another country’s government to establish building codes that allow for wood frame construction. But government cannot do it all. B.C. and other Canadian lumber companies know this, and are working hard to gain new customers in many markets, including India.

It is great to see the province supporting industry efforts to diversify its customer base, but government should be careful not to prejudge which markets are winners or losers. Demand for softwood lumber is increasing in India, but it is not the only market with this characteristic.

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– Naomi Christensen is a policy analyst at the Canada West Foundation

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