If the Softwood Lumber Agreement Falls in the Forest

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By Naomi Christensen, The Vancouver Sun Sep 08, 2015

Canada’s softwood lumber trade agreement with the U.S. expires one week before the Oct. 19 federal election, yet almost no one seems to be talking this long-contentious issue. We ignore it at Western Canada’s peril.

Not having a softwood lumber agreement leaves Canada vulnerable to punishing tariffs at the whim of the protectionist U.S. industry.

In spite of this risk, there is little alarm as the end of the current SLA nears, because Canada will not immediately feel the effects of living without the pact. A clause in the agreement prevents the U.S. from legally slapping tariffs on Canadian lumber imports for a year, as it has done off and on for more than 120 years.

Competitive dynamics have also shifted. High lumber prices have exempted Canadian exporters from SLA duties, which means we have been operating as if we have free trade in softwood lumber for 24 of the last 32 months. This works well when U.S. housing starts are on the rise (as they are now) because the U.S. relies on imports of Canadian softwood lumber to help meet domestic demand.

U.S. producers should also feel less threatened because Canadian timber supply is decreasing. Mountain pine beetle damage has taken its toll, leaving Canada without the capacity to increase market share in the U.S. What may work well for Canada now, however, does not eliminate risk if the U.S. recovery slows or our dollar continues to fall against the U.S. dollar.

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