News of softwood lumber agreement lost amid COVID crisis

I didn’t see much written about the latest developments on the lumber dispute with the U.S., with the exception of an article by Tony Kryzanowski (Logging Sawmilling Journal April 2020).

Based on the recent announcement by the U.S. Department of Commerce, “combined duties will drop from about 20 per cent now to about 8.21 per cent, although that amount will vary for larger softwood lumber producers. For example, Resolute Forest Products will realize only a marginal rate reduction from about 18 per cent to just over 16 per cent. Other companies like Canfor will witness a significant reduction from just over 22 per cent to 4.76 per cent, West Fraser Timber will see a reduction from nearly 24 per cent to about nine per cent, and J.D. Irving’s rate will drop from 9.38 per cent to 4.32 per cent.”

Discussions are ongoing regarding a new Softwood Lumber Agreement, as are talks about details of the return of deposit funds collected from Canadian producers.

As the author points out, any new deal should not include tariffs on B.C. companies since there will be a significant reduction of wood shipped to the U.S. because of fires and beetles. The B.C. government is predicting a 30-per-cent reduction of wood supply between 2010 and 2030.

Mr. Kryzanowski also points out that, “This tariff rate reduction by the Department of Commerce either signals that civility is returning to the conversation surrounding tariffs or that it is an election year in the U.S., with Republicans worried how the impact of these tariffs on American home prices might hurt them at the ballot box.”

This victory for Canada is certainly felt in the B.C. Interior, since one-third of the lumber exported comes from the B.C. Interior. ( i.e. 336 million board feet out of the total of 981 million board feet of Canadian lumber exported to the U.S. From an April 2020 report.)

For the immediate future, the major impact of exports could be the rate at which the U.S. economy rebounds, which will determine the housing starts, hence what the lumber demand may be. With all of the enflamed discussion going on about what is good for the U.S. and for politicians looking for topics to deflect news away from areas sensitive to their political futures, who knows what could happen to the ongoing wood tariff talks and when monies will be returned to Canadian producers. If and when the money does come to Canada, it may not be here long, as a large part of wood manufacturing investment by Canadian companies has taken place outside of our country.

If and when the economies of both Canada and the United States returns to a more normal state, the reduced wood tariffs is a good starting point for a new (long-term) softwood lumber deal, especially if we can convince the Americans that it will take 30-plus years for replacement trees to reach a merchantable size intended for the export market.

Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo-Chilcotin for 40 years. Now retired, he volunteers with community forests organizations.

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