CALGARY, AB – Canada needs to step up efforts to build new markets for softwood lumber because our biggest customer, the U.S., shows little interest in renewing a trade agreement that expires on Oct. 12, a report from the Canada West Foundation says.
Without a Softwood Lumber Agreement (SLA) in place, western Canada’s lumber industry is vulnerable to punishing tariffs from the U.S., a country which buys two-thirds of our softwood exports. Protectionist practices for lumber in the U.S. date back more than a century.
Branching Out: Preparing for Life Without a Softwood Lumber Agreement, argues that Canada can ease the impact of any such action by redoubling its efforts to build markets in Asia. It broke into China, for example, and while that market is cooling, opportunities are arising in Korea, Vietnam, Thailand, Indonesia and the Philippines. The report suggests Canada might even be able to take a bite out of the market in Mexico, which imports much of its lumber from the U.S.
“Canada is about to have its security blanket ripped away,” said Naomi Christensen, report author. “But if we act now, it doesn’t have to have the same impact as it did in the past.”
It is of particular concern to the West because fully three-quarters of our lumber exports come from western Canada, primarily British Columbia. The report notes that B.C. lost so many trees to the mountain pine beetle infestation, it cannot supply wood in the volume it once could. Canadian companies have adjusted by investing in U.S. sawmills.
In addition to building new markets, the report recommends building value in its trade with U.S. to help mitigate future disputes. Canada can do this by seeking new value-added product markets and promoting the Canadian brand. It also recommends continuing to work with the U.S. to grow the global softwood lumber market.
“The trading environment with our largest customer is riskier without an SLA,” said Christensen. “We’ll pay a price if we wait for another dispute to flare up before acting to mitigate these risks.”