Forest industry waits as softwood lumber deadline passes.

Author:Kelly, Lindsay
Position::Forestry
 
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As the deadline to settle a new Softwood Lumber Agreement between Canada and the U.S., came and went, Northern Ontario stakeholders are weighing in on what could happen to the industry.

On Oct. 12, 2015, the nine-year agreement--which outlined tariffs and guidelines for the lumber trade between the two countries --expired. Failing to negotiate a new arrangement, a one-year "standstill" period set in, allowing free trade while a solution could be found. But there's been no sign that a new agreement has been forged.

American producers allege that the Canadian industry is subsidized by the provincial and federal governments, while in the U.S., prices are set by the market, a situation the U.S. contends is unfair. It believes Canadian lumber should be subject to a tariff to offset the subsidy.

Christine Leduc, director of public affairs for EACOM Timber Corporation, said the company is disappointed a new agreement couldn't be ratified by June, despite assurances by both Prime Minister Justin Trudeau and President Barack Obama in March that it was a priority.

For EACOM, whose Northern Ontario operations include mills in Timmins, Elk Lake, Gogama, Ear Falls and Nairn Centre, a deal must be "commercially reasonable," and maintain Ontario's share of the U.S. market, Leduc noted. Based on the 2006 agreement, that equates to 3.34 per cent.

"For Ontario, trade with the United States is significant for the forestry industry," Leduc said. "Up to 95 per cent of Ontario's forestry products exports go to the U.S.... If you're a producer in Ontario, you're not shipping west; you're not shipping east; you're selling domestically or to the U.S."

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In the past, the U.S. has introduced anti-dumping and countervailing duty investigations against Canadian softwood lumber, but Leduc noted that Canada successfully defended itself against those actions, and she expects it would do so again.

Yet fighting those actions in court could take years and cost tens of millions of dollars to resolve, she noted. In the meantime, the U.S. Lumber Coalition's action would be swift and the impact to Canadian...

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