First Cut: One hundred days
March 28, 2016 - Our leaders have spoken. Prime Minister Justin Trudeau and U.S. President Barack Obama have stated that they want a new softwood lumber agreement (SLA) and they want possible solutions to this contentious issue within 100 days. That was easy. Well, maybe not. As Canada’s Trade Minister Chrystia Freeland recently stated, the softwood lumber issue is a “fiendishly complicated issue.”
B.C. Premier Christy Clark told reporters that she felt this was a “good start” towards getting both sides talking. That, I will definitely agree with. There have been reports coming from media on both sides of the border stating that the two countries have been unwilling to sit down with one another and iron out a new SLA. With the leaders of both countries now stating that a deal will be ironed out, you can bet there will be some pressure from Ottawa and Washington to get a deal done sooner rather than later.
Forgive me for asking, but it seems like having a new SLA was always the most reasonable option for both sides, so why so much unwillingness to create a new one? I mean, not having one in place was costing both sides.
Was the previous SLA perfect? Most members of industry will tell you “no.” However most industry members I’ve spoken with also said it worked well enough, in comparison to the costly court-ridden chaos many of them dealt with before the SLA was formed (and since the U.S. will likely never find the free trade of softwood lumber palatable).
And isn’t the bottom line for the U.S. sector based on ensuring the protection of American industry?
During the duration of the SLA, Canada’s market share went from 34 per cent in 2006 to just over 28 per cent by around the time of its expiration. During that same period, the U.S. lumber industry’s domestic market share grew from 61 per cent to 71 per cent. So why wouldn’t our neighbours to the south be supportive of keeping the agreement as it was?
The voices of Canada’s forest industry associations even came out publically before the expiration of the SLA on a united front stating that they supported the renewal of the previous agreement, or at a bare minimum, using the previous agreement as the basis for a new agreement. This included British Columbia’s Council of Forest Industries, the Forest Products Association of Canada, Quebec Forest Industry Council, Alberta Forest Products Association and many others. It seems pretty clear that Canada’s industry is in favour of maintaining some stability within the marketplace, especially since the U.S. housing market is slowly recovering.
The fact that the U.S. housing market is recovering will hopefully act as a positive influence for getting both sides to come up with some practical solutions within the 100-day period requested by our countries’ leaders. After all, Canada’s forestry sector needs a home for its softwood lumber, and the U.S. need softwood lumber for their homes. This is a win-win, right?
That’s not even including the other benefits both countries have experienced from having the SLA in place. The SLA contributed to the creation of the Binational Softwood Lumber Council and the Softwood Lumber Board – a platform for the industry on both sides of the border to work together that also provides a mechanism for settling disputes outside of court.
Hopefully, when Trudeau and Obama sat down and discussed the “fiendishly complicated issue” that is the forming of a new SLA, it included constant consultation with the key members of Canada’s forestry sector. Because without buy-in from industry on both sides, Obama and Trudeau’s hopes of having some practical solutions appear within the next 100 days will almost certainly be dashed.
In the end, I just hope that the deal gets done before next October, which is when the U.S. government’s commitment to not initiate trade remedy action is set to expire, which would force Canada to re-test the waters of quota-free softwood lumber trade. Of course, if a deal hasn’t been reached by next October that is good for Canada’s forestry sector, it might be better to walk away from the bargaining table altogether. After all, the one thing that could be worse than having no deal is getting a raw deal.