A lumber yard near Vancouver, B.C., on July 6, 2022. Canadian lumber producers are hoping a negotiated agreement could be reached over the trade fight between Canada and the United States.JENNIFER GAUTHIER/The Globe and Mail
Canadian lumber producers believe the time is ripe for the federal government to persuade the Biden administration to begin negotiations to resolve the softwood battle.
The chief executive officers of Canada’s top lumber companies made their views known to International Trade Minister Mary Ng during an online discussion on Thursday night.
“Minister Ng underscored Canada’s interest in exploring all avenues to resolve the dispute, including negotiations on a new softwood-lumber agreement, which the United States has blocked and refused to participate in,” Global Affairs Canada said in a statement on Friday.
The CEOs want the federal government to place the softwood file onto the agenda for the March 23-24 summit in Ottawa between Prime Minister Justin Trudeau and U.S. President Joe Biden.
In the latest round of the trade war dating back more than 40 years, Canadian producers have been paying U.S. lumber duties since 2017.
Leaders from West Fraser Timber Co. Ltd. WFG-T, Canfor Corp., Resolute Forest Products Ltd. RFP-T, Interfor Corp. IFP-T, Tolko Industries Ltd. and J.D. Irving Ltd. participated in the virtual round table with Ms. Ng.
Cash prices – what sawmills charge wholesalers – settled this week at US$357 for 1,000 board feet of two-by-fours made from Western spruce, pine and fir, according to Random Lengths, an Oregon-based newsletter that monitors wood markets. Lumber prices have fallen 78 per cent since reaching a record high of US$1,630 for 1,000 board feet in May, 2021.
“Persistent winter weather in key consuming regions, rising mortgage rates and continued bearish signals from the Federal Reserve weighed on trading in many species and markets,” Random Lengths said in its latest newsletter.
B.C. Interior sawmills have higher operating costs than facilities in the U.S. South, said Dustin Jalbert, senior economist at Fastmarkets, which publishes Random Lengths.
The impetus to start softwood talks is understandable from the Canadian perspective, given the cost pressures at sawmills in Canada, he said.
“If there is going to be a new agreement, there’s still a long road ahead,” Mr. Jalbert said in an interview on Friday.
He said it’s hard to predict when the Biden administration might eventually agree to sit down to discuss softwood with Canadian government officials. When lumber prices were at lofty levels in the spring of 2021, there still wasn’t enough political pressure within the U.S. to take steps toward resolving the trade fight.
“There were some really angry consumers out there looking at high prices for two-by-fours,” Mr. Jalbert said. “But even back then, it never translated into pushing the U.S. industry forward to try to make a deal.”
The U.S. lumber lobby has long argued that Canadian producers receive unfair provincial softwood subsidies and dump product south of the border. But Global Affairs Canada said international panels have consistently ruled in favour of Canada as a fair trading partner.
“We may have a window in 2023 for a negotiated agreement to be reached between the two countries before Washington pivots into presidential election mode in early 2024,” Scotia Capital Inc. analyst Benoit Laprade said in a research note.
Otherwise, the next window of opportunity could be more than two years away, he said.
Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, defended the tariffs imposed by the U.S. Department of Commerce. “Strong enforcement of the U.S. trade laws against unfairly traded Canadian lumber is critical for American lumber manufacturers and timberland owners,” he said in a statement.