"Trade between Canada and the United States having stagnated since the early 2000s, eliminating supply management and softwood lumber tariffs would be a good way of breathing new life into the economic partnership," points out Alexandre Moreau, Public Policy Analyst at the MEI and author of the publication.
The system of quotas and tariffs imposed on dairy, eggs, and poultry blocks the entry of foreign products and costs Canadian household $258 a year on average, according to the OECD. Furthermore, if the United States went ahead with the imposition of a 25% tariff on Canadian softwood lumber, the average price of a new home on the American market would increase by $1,300. Just for single-family homes, these additional costs would total $1 billion.
"Trade barriers have always enriched a small minority of people at the expense of the vast majority," says Mr. Moreau. "The disappearance of existing tariff barriers would be very beneficial for Canadian and American consumers alike."
Consumers are not the only ones who suffer in the current situation. Canadian farmers also lose under supply management, since it deprives them of access to billions of consumers around the world. Moreover, the funds required to purchase quotas limits their ability to invest to increase the productivity of their farms.
"Putting supply management on the table would be a good negotiating tactic that could convince the American government to drop the idea of imposing tariffs on Canadian softwood lumber," adds Mr. Moreau. "We would thus avoid an nth softwood lumber dispute of the kind we've struggled through every five or ten years."
Canada is the second largest trading partner of the United States, with trade totalling nearly $882 billion a year, or almost $2.5 billion a day.
"To preserve and even expand economic relations between the two countries, it is imperative that politicians on both sides of the border resist the influence of lobby groups and come to the defence of the millions of consumers who pay the price for protectionism," concludes Michel Kelly-Gagnon, President and CEO of the MEI.
The Economic Note entitled "Trading Supply Management for Softwood Lumber?" was prepared by Alexandre Moreau, Public Policy Analyst at the MEI. This publication is available on our website.
The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
In the budget tabled by Finance Minister Bill Morneau Wednesday, he earmarked:
- $1.8 billion to support clean technology. It is critical that the forest products sector is central to the government’s clean tech strategy. These investments will help our sector develop environmentally friendly products in areas of bio-fuels and bio-materials while helping to reduce carbon in the atmosphere.
- $40 million over 4 years – starting next year – to support projects to increase the use of wood in buildings and infrastructure. This is an important program to support the use of sustainably sourced Canadian wood and since wood stores carbon, this a great way to further address climate change.
- $5 billion from the Canadian Infrastructure Bank to support improved trade and transportation corridors. This is important as we are a sector heavily dependant on reliable transportation infrastructure and a strong export sector.
- $1.8 billion for programs to support youth employment, post-secondary education placements and Indigenous skills training; also includes measures to support skills upgrading. Ensuring we have the right workers with the right skills at the right time is key to future of our industry’s success.
FPAC provides a voice for Canada’s wood, pulp, and paper producers nationally and internationally in government, trade, and environmental affairs. The $65-billion-a-year forest products industry represents 2 per cent of Canada’s GDP and is one of Canada’s largest employers operating in over 200 communities, providing 230,000 direct jobs, and 1 million indirect jobs across the country. The forest products sector is a world leader in sustainable forest management; we are a critical partner in the fight against climate change and have invested 1.5 billion dollars in clean technology in the last five years.
“We have met with them to make sure they understand that B.C. is going to fight on behalf of our lumber producers," Emerson said in a statement. "We would much rather find opportunities to work together with our American neighbours to find a lasting solution to this long-lived dispute."
Following what he called a "prickly" meeting with Oregon Senator Ron Wyden, who is also a main advocate of the U.S. Lumber Coalition, Emerson says the U.S. is not yet ready to settle the dispute.
He says the country is likely still adjusting to President Trump's transition into power.
Emerson says he made it clear to all parties that Canada is not interested in a lengthy and expensive dispute but rather in a long-term decision, on which it is ready to cooperate.
“A stable, predictable lumber supply is good for workers and the economy on both sides of the border," he said in a statement.
“Litigation will only disrupt the market and create artificial constraints on timber supply that will benefit a select few timber barons and sawmill owners at the expense of American workers and consumers."
Emerson was appointed trade envoy by B.C. Premier Christy Clark in February 2017. | READ MORE
The task force will ensure communication between the federal government and all provinces and territories to ensure needs are being met via information-sharing and analysis.
Canada’s Minister of Natural Resources Jim Carr made the announcement Wednesday. "Canada's forest and natural resource sectors are vital to employment in communities across the country,” he said in a statement. “This new task force will work together to strengthen the long-term success of the forest sector through innovation and diversifying markets for Canadian forest products.”
Minister Carr will take charge of the domestic task force while Canada’s Minister of Foreign Affairs, Chrystia Freeland continues talks with the U.S.
The 2006 Canada-U.S. Softwood Lumber Agreement expired on Oct. 12, 2015. Since then, the proverbial flame under Canada and the U.S. regarding softwood lumber was re-ignited in November 2016 after the U.S. Lumber Coalition filed a petition against the Canadian government, citing unfair subsidies are being provided by the Canadian government for Canadian producers. It also called for taxes to be imposed on Canadian producers as a result.
"Softwood lumber is a priority for our government. We are committed to promoting and vigorously defending the interests of workers and producers from across Canada,” Minister Freeland said in a statement. “My colleagues and I will continue to work very closely with the softwood industry, its workers, the provinces and territories."
According to a statement from Natural Resources Canada the end-goal for the softwood negotiations is to create stability and predictability on both sides of the border for all lumber producers.
“The government will continue to work closely with provinces, territories and the softwood lumber industry to vigorously defend the interests of the middle-class Canadians who depend on the industry. This work will continue outside of the task force,” the statement read.
“The new Federal–Provincial Task Force on Softwood Lumber will assess current federal and provincial programming and ensure coordination of government initiatives to promote innovation, market diversification and transformation of the forest sector.”
According to Natural Resources Canada, the country’s forest industry directly employs more than 200,000 people nationwide. And nearly 70 per cent of Canada’s $8.6 billion worth of softwood lumber exports in 2015 were sent to the U.S.
Earlier this year FPAC announced its 30 by 30 Climate Change Challenge where it pledged to cut 30 megatonnes of greenhouse gases a year by 2030, about 13 per cent of the federal government’s overall climate change target.
To reach that goal, FPAC would like to see provinces allocate all revenue generated by a price on carbon to a technology fund made available to industry to support further greening of operations. FPAC would also like to call on the federal and provincial governments to join the global movement to building more with wood as a way to reduce GHG emissions by replacing materials made from fossil fuels.
“We agree that putting a price on pollution can be a win for both the environment and the economy,” says the CEO of FPAC, Derek Nighbor. “The forest products industry has pledged to do more than any other sector in the country to tackle climate change. With smart government policy, we can do this while still supporting forest communities and the nearly one million families who rely on forestry for their livelihoods.”
Nighbor notes that FPAC has also signed on to two important initiatives: an open letter from more than 60 CEOs and civil society leaders urging the first minister to take bold action on clean growth and climate change as well as the Clean Growth Century Initiative that says Canada can tackle climate change through innovation. As part of its pre-budget submission, FPAC has been asking for a renewed partnership with government to support innovation by de-risking the commercialization of new innovative green products and processes that could help reduce greenhouse gas emissions.
The Canadian forest products industry has also been increasing its production of renewable electricity from biomass residue – the sector now produces enough green electricity to power the city of Calgary. With government support for clean technology, FPAC believes the sector can increase its amount of renewable electricity generated in Canada.
“The forest sector appreciates the leadership role that governments in Canada are now taking to tackle climate change,” Nighbor says. “We are uniquely positioned as a willing and able partner to drive real climate change results for Canada.”
FPAC provides a voice for Canada’s wood, pulp, and paper producers nationally and internationally in government, trade, and environmental affairs. The $65-billion-a-year forest products industry represents 2 per cent of Canada’s GDP and is one of Canada’s largest employers operating in hundreds of communities and providing 230,000 direct jobs across the country.
The hearing, in Sudbury, is meant to be a pre-budget consultation regarding the federal finance committee’s pre-budget recommendations for Canada’s forestry sector.
The federal committee released its pre-budget recommendations on Dec. 7, with a section on funding for Canada’s forest industry.
Tuesday’s meeting will include a presentation from the Ontario Forest Industries Association (OFIA)with ideas on how to best use Ontario’s wood, create new jobs that can improve the economy, and apply more environmentally efficient practices.
“Growing Ontario’s forestry community and recognizing its vital role in climate change mitigation is crucial in maintaining the opportunities in forestry that create jobs and foster economic growth in northern and rural Ontario,” said the OFIA’s president and CEO, Jamie Lim in a statement.
“Ontario’s forestry community generates $11 billion of economic activity. Last year, manufactured forest product sales increased by more than $1 billion over the year before, and our exports of forest products have increased each year since 2012,” Lim stated.
The Forest Products Association of Canada (FPAC) and Alberta-Pacific Forest Industries Inc. (Al-Pac) informed the committee about the funding needed in the forestry sector. The committee issued its recommendations to the federal government to support those needs.
The recommendation states that the Government of Canada should strengthen its commitment to the country’s forestry sector by supporting manufacturing, innovation and promotion of forestry products; ensuring the stability of wood supply; supporting investments that can improve competitiveness and address the climate change agenda; and explore possible support measures for Canadian softwood lumber producers if the U.S. government decides to impose taxes on lumber exports from Canada to the U.S.
According to FPAC, “nine jobs are created for every million dollars in value add in the forest industry.”
“We are pleased that the committee has recognized the need for an ongoing partnership between the federal government and the forest sector,” FPAC CEO Derek Nighbor said in a statement.
“Almost a million families across Canada depend on our industry for their economic wellbeing. I look forward to working with the federal government to help implement these committee recommendations,” he said.
The recommendations for the forest industry are included in a list of 81 overall recommendations by FINA, aimed at improving Canada’s economy via funding for various businesses and communities.
RELATED: FPAC calls for formal federal partnership
Russ Cameron, president of the Independent Wood Processors Association of B.C., told The Province he is very pleased with the tax exemption commitment, which he says could provide an incentive for timber licensees to make more wood available to them.
Read the full story here.
According to new research from the University of Arizona, boreal forests will not benefit from climate change.
The traditional thinking goes like this: Forests in colder climates such as Alaska and Canada will do better as temperatures warm because they’ll experience longer growing seasons. As they grow, these boreal (northern) forests will absorb increasing amounts of the greenhouse gas carbon dioxide, which in turn will slow down global warming. The effect is called boreal greening.
But a team of researchers at UA came to the opposite conclusion, determining that most of the boreal forests in North America will likely do worse as the climate warms.
“That’s one of the most surprising results,” said Valerie Trouet, an associate professor with the Tree-Ring Research Laboratory. “We don’t see that the trees in the boreal forest are going to do better. On the contrary, there will be the opposite effect.”
See the full article in the Tucson Sentinel.
April 9, 2015 - Funding announcements, the future of fibre, transportation challenges and an informative discussion on Aboriginal land title highlighted the Council of Forest Industries’ (COFI) 2015 annual conference, which took place on April 8 and 9 in Prince George, B.C.
April 7, 2015 - The Canadian Food Inspection Agency has extended the regulated area for the Brown Spruce Longhorn Beetle (BSLB) regulated area to include the entire province of Nova Scotia.
The proposed changes will reduce regulatory burden, increase awareness of the regulated areas, and maximize compliance with movement restrictions. Furthermore, the regulations will be in line with domestic and international pest management standards in order to better protect the Maritimes' forest areas from this destructive invasive insect.
"The CFIA remains committed to protecting Canada's plant resource base from pests,” says Gerry Ritz, Minister of Agriculture and Agri-Food. “Taking measures to slow the spread of BSLB will help keep markets open to Canadian products and protect our natural resources."
The movement of regulated wood products (e.g. softwood firewood and spruce logs) by individuals is the greatest risk to the rapid and long distance spread of BSLB. The use of recognizable provincial boundaries is intended to address movement of regulated wood products by individuals. This interim province-based regulation approach will allow for more open trade regionally in the "Maritime woodbasket" while longer term measures are being considered.
"This action by the CFIA is necessary to further ensure the integrity of international trade of forest related products,” says Zach Churchill, Minister of Natural Resources, Government of Nova Scotia.
The Canadian Food Inspection Agency (CFIA) will continue to work with stakeholders and consult widely before any longer-term regulatory changes are implemented.
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International Mass Timber ConferenceTue Mar 28, 2017
March 28 & 30 Wood Dust Collection Seminars (B.C.)Tue Mar 28, 2017
Montreal Wood ConventionTue Mar 28, 2017
COFI Convention 2017Wed Apr 05, 2017 @ 8:00AM - 05:00PM