WASHINGTON - With Canadian Prime Minister Justin Trudeau in Washington, D.C. for a State Dinner, much of the talk has centered on the special relationship and shared interests between the two countries with President Barack Obama pledging in a press conference on March 10 to make it easier for goods and people to travel back and forth across the border between Canada and the United States. However, one question top of mind for many in the lumber and forestry industry is whether a new Softwood Lumber Agreement (SLA) will be negotiated.
The 2006 SLA expired last October and a one-year grace period, nearly half over, is now in place. During this period the U.S. can not bring trade cases against Canadian lumber exports.
Trudeau's visit to the White House this week brings the long-simmering issue back into focus, but whether a new agreement will be negotiated before the grace period ends this October remains unclear.
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The British Columbia Lumber Trade Council urged Canada's federal government to engage with its U.S. counterparts to determine a way forward following the expiration of the Softwood Lumber Agreement.
According to CBC News, the softwood lumber issue was a top concern Trudeau raised with Obama during their first meeting at the 2015 Asia-Pacific Economic Cooperation (APEC) Summit. However, muddying the waters to a quick resolution is the 2016 U.S. presidential elections taking place a month after the current grace period ends, making negotiations in this political climate tricky.
The U.S. Lumber Coalition, a major proponent of the original agreement, says it sees the SLA as a way to "reduce a competitive imbalance." But in a October 2015 statement, the group also said that it felt the 2006 SLA agreement was outdated because world timber and lumber markets have evolved. A new agreement is viewed as an opportunity to "provide stability and predictability to industries and consumers on both sides of the border," and it chided the Canadian government for being reluctant to renegotiate. The group asserted its rights to bring trade cases after the grace period ends if no further deal is reached.
Trudeau is already facing pressure not to agree to another deal that Canadian officials and forestry interests see as giving the U.S. an advantage. Many of these officials viewed the last agreement as harmful to the Québec and Ontario forest industries.
The Quebec Minister of Forests, Wildlife and Parks, Laurent Lessard expressed concerns about renewal of the SLA to the Canadian Minister of International Trade, Chrystia Freeland, earlier this month.
"Our forest regime is the strictest in the world. In addition, some elements of the regime, such as the open market and the timber marketing board, match US demands for a price for lumber from Québec's public forests that better reflects market conditions. These particularities must be fairly recognized, and I was pleased to note Minister Freeland's attentive response," Lessard said in a statement.
For now, the Canadian government seems to be taking a way-and-see approach, according to the CBC, which quoted Carl Grenier, a former lumber council executive and trade diplomat as saying, "Nobody really knows what will happen next October," when the U.S. is allowed to start trade action again, he said. New tariffs, if they were to come, could take as long as two years to implement."
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