U.S. lumber manufactures want restrictions on Canadian lumber so they can make more profits. American home owners and industries involved in building houses want fair lumber prices which include Canadian lumber.
An article in the Globe and Mail this fall is already out of date because of some recent events but does a good job of showing the futility of the ongoing battle over imports of Canadian lumber.
Author Barrie McKenna describes how every shipment of lumber rumbling across the border today does so under a cloud of uncertainty. Producers could later be forced to pay steep duties on those sales, rendering them uneconomic.
The U.S. lumber industry has long argued that Canadian provinces unfairly subsidize lumber exports, mainly by charging lumber companies too little to log on Crown land. The vast majority of U.S. lumber production is harvested from private land.
Canada’s lumber industry was eager to extend the current arrangement, making the calculation that stability was worth the price of managed trade. But the U.S. lumber industry balked, demanding an even more restrictive arrangement than exists now.
Fighting over softwood lumber is absurd. The two countries are neighbours and free-trade partners in a mostly integrated North American economy. Canada has a product the U.S. badly needs to drive its housing industry and in spite of numerous rounds of litigation, the U.S. has been unable to make allegations of unfair subsidies stick.
Nor does Canada pose a growing threat to U.S. industry. Its share of the market has dropped to roughly 27 per cent from 33 per cent in 2006. Experts expect the downward trend to continue because of dwindling Canadian timber supply — the result of sawmill shutdowns and a mountain pine beetle infestation in British Columbia.
Canadian exports are way down, mainly because of the crash in the U.S. housing market. Softwood lumber exports to the U.S. totalled $5.6-billion last year, down from $8.4-billion in 2005. The U.S. housing market is on the cusp of a big comeback. Housing starts reached an annual rate of 1.2 million in September, the highest level in eight years and the sixth straight month they’ve exceeded one million. The potential is much greater. At 1.2 million, starts remain well below the historic norm of recent decades, according to a Bank of Montreal report this fall. Starts have peaked at more than two million a year, four times since the 1970s.
McKenna summarizes by stating the calculation for the U.S. industry is a simple one. A trade challenge, even one that fails, would put a hefty temporary tax on Canadian exports for the two-plus years it would take to litigate a case. But the duties are a sideshow. It’s the effect they have that really matters. Duties inflate North American lumber prices and push up the value of U.S. private timber lands.
The result is a permanent wealth transfer from Canadian producers to their rivals in the United States. Americans also pay more for their homes than they otherwise would.
It’s also getting hard to tell the Canadian and U.S. industries apart. B.C.’s three main lumber producers — West Fraser, Canfor and Interfor — all own sawmills in the U.S. as a hedge against currency fluctuations and trade disputes.
Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo Chilcotin for the past 40 years. Now retired, Hilton still volunteers his skills with local community forests organizations.
