Fresh cut lumber stacked at a mill along the Stave River in Maple Ridge, B.C., on April 25, 2019. The federal government says Canada will challenge recent increases to softwood lumber duties by the United States.JONATHAN HAYWARD/The Canadian Press
Ian Dunn is the president and chief executive officer of the Ontario Forest Industries Association.
I want to thank late-night diplomat Stephen Colbert for raising the issue of “something about soft wood” with Prime Minister Justin Trudeau. With a review of CUSMA on the horizon and the presidential election in November, it was good to hear the Prime Minister speak on this issue.
Increasingly, world powers are placing more barriers to trade in the name of protecting domestic industry and jobs. The current iteration of the softwood-lumber trade dispute – likely the largest global dispute since the end of the Second World War, with origins stretching back to the Jay Treaty of 1794 – is the most apparent example affecting Ontario’s lumber producers. Canadian lumber producers have paid more than $9-billion in duties since the last agreement ended in 2017. This pot of money sits in the U.S. and grows daily with every shipment of Canadian lumber. This is a considerable amount of capital that could be reinvested into modernizing mills and supporting local economies.
The U.S. alleges that Canada is subsidizing its industry and that companies are dumping lumber at prices lower than the price of production. Duties placed on Canadian lumber by the U.S. Department of Commerce in the name of protecting American jobs are a false flag. Commerce will use any means to limit our competitive advantage, regardless of whether it hurts U.S. consumers, ignores legal commitments under CUSMA or brushes off international rulings in favour of Canada.
This strategy can have the opposite impact of what protectionism is trying to achieve, resulting in the weakening of cross-border supply chains and exposure to security and trade risks from our common geopolitical rivals. The U.S. electorate should care about higher prices because of politically motivated trade barriers, and American businesses could see a continued fracturing of supply chains.
For example, U.S. businesses that supply large American retailers depend on pulp wood fibre and paper from Canada owing to our strong, slow-growing softwood trees. This is produced at only a handful of Canadian facilities, with three located in Ontario. Pulp and paper is typically made using chips produced by sawmills, a byproduct of making lumber. A potential collapse of the Canadian sawmilling industry owing to increasing softwood-lumber trade action would mean that this high-quality and in-demand fibre would cost more or cease to exist.
There are legitimate issues of Chinese and South American forest products, such as plywood and cheap, low-strength eucalyptus pulp, being dumped into North American markets. These jurisdictions assign a different priority to sustainable forest management practices, the environment, employee health and safety and Indigenous rights. Removing trade barriers within North America and improving the competitiveness of our collective industry would strengthen supply chains and send a clear signal to laggard jurisdictions.
The simple reality is that the U.S. cannot produce enough lumber to meet demand and, as in Canada, housing supply and affordability are top issues for families. To meet this challenge, a free and open flow of North American construction material across borders is in the best interests of consumers, businesses and governments.
By focusing on collaboration rather than confrontation, Canada and the U.S. can create a more resilient North American lumber market that upholds environmental standards and supports local economies. As we approach the next U.S. election, policy makers and industry leaders must recognize the unintended consequences of their decisions and should foster an environment where co-operation, not protectionism, prevails for the benefit of both countries.