Any fight that might have been brewing between Canada and the U.S. over softwood lumber sales has been put off to October 2015, with the extension of the 2006 softwood lumber agreement.
Canadian International Trade Minister Ed Fast and his U.S. counterpart, Ron Kirk, jointly announced Monday that the agreement will be extended by two years.
Because it was due to expire in 2013, that effectively gives the industry on both sides of the border more than three years before it needs to restart negotiations, which have been fraught in the past with differences over things like B.C.’s stumpage fees.
With the U.S. housing sector still depressed, sales of Canadian wood to the U.S. are down and China’s market has opened up dramatically, which has taken some of the pressure off Canada.
“What has changed is that, in the fall of 2006, when we signed the agreement, our market share in the U.S. was 34% of a market that was 51 billion feet of lumber,” John Allan, president and CEO of the Council of Forest Industries, told Business in Vancouver.
“Now, Canada’s market share is down around 26%, and the market is only about 32 billion feet of lumber. So we’ve got a lower percentage of a smaller market.”
At the same time, B.C.’s exports to China have gone from about 300 million board feet few years ago to more than four billion in 2011, Allan said. That has taken the pressure off the U.S. market, while sustaining B.C.’s forest sector through what otherwise would have been hard times.
“It’s allowed a lot of B.C. mills to keep running,” said Allan, “because 98% of the wood going to China comes out of B.C.”
Nelson Bennett
@nbennett_biv