Ontario, Quebec more vulnerable to softwood duties this time: observers
Montreal
Canada’s lumber industry is in a stronger position to weather a U.S. trade battle than it was during the last major clash a decade ago, but smaller Quebec and Ontario producers would be particularly vulnerable to duties that may arrive within weeks, industry observers say.
B.C. producers such as West Fraser Timber, Canfor and Interfor have hedged their bets, purchasing sawmills in the U.S. primarily in the years when there was a truce over softwood. They’ve also seen softwood exports to China grow, giving them some degree of protection against tariffs that the U.S. could impose as early as May.
“The big players in the West are now in a more comfortable position than they were 10 years ago,” says Andre Tremblay, head of the Quebec Forest Industry Council.
“We are in a much more delicate situation now than during the last conflict.”
Due to their distance from China, Quebec and Ontario sawmills largely missed out on the surge of shipments to Asia’s largest economy. Canadian softwood exports to the country grew from $55 million in 2005 to $1 billion last year, according to Statistics Canada. Almost all was supplied by British Columbia.
China accounted for about 10 per cent of total Canadian softwood exports last year, up from less than one per cent before the last softwood agreement was signed in 2006 though down from a peak of about 21 per cent in 2011.
British Columbia’s efforts to The lumber yard at Delta Cedar Products in Delta, B.C. Canada’s lumber industry is in a stronger position to weather a U.S. trade battle than it was during the last major clash a decade ago.
ramp up exports to Asia have helped better position the Canadian industry in the latest trade dispute, despite the pressures in other provinces, said provincial Forests Minister Steve Thomson.
“If we’re more diversified here, it provides opportunities for the rest of the country,” he said in an interview.
In Central Canada, sawmills tend to be smaller, don’t have as much cash flow to pay duties and are therefore more at risk of closing, experts say.
That’s why Ontario and Quebec producers are pushing Ottawa to provide loan guarantees to help them pay duties and stay in business, something B.C. isn’t immediately considering.
Before the last softwood dispute was resolved, Canadian lumber companies faced U.S. duties of up to 27.22 per cent. If the industry faces duties between 25 and 40 per cent, as some have speculated, the blow would be swift, said Bob Matters of the United Steelworkers union.
“We’d see some impacts on the smaller operations pretty close to immediately,” said Matters, the union’s wood council chairman.
Naomi Christensen, a lumber policy analyst with the Canada West Foundation think tank, noted lumber prices have almost doubled since 2009, when the U.S. was in the grips of its housing crisis, meaning Canada presents less of a longterm threat to American producers.
She said Canada’s share of the U.S. market, which has historically hovered between 30 and 34 per cent, is expected to fall to 25 per cent by 2027 because of the effects of the mountain pine beetle infestation in B.C. and reduced harvests in Quebec.
There is one constant in the dispute, Matters says – strong economic arguments haven’t been enough to overcome a U.S. lumber lobby that has consistently pressed for limits to Canadian imports, regardless of which political party is in power.
ottaWa
The Liberal government has taken the next step towards buying 18 Super Hornet fighter jets on an interim basis, a purchase it hopes to make official by year’s end.
The government sent a letter to the U.S. government on Tuesday outlining exactly what it needs in the warplanes, when it needs them, and what type of economic benefits Canada expects in return.
Aerospace giant Boeing will use those requirements to draw up with a formal proposal by the fall, with the government hoping for a contract by the end of 2017 or early 2018.
The Liberals have said any deal will be contingent on getting the Super Hornets at the right price, on the required schedule and with the right economic spinoffs.
“We will assess whether an interim Super Hornet fleet purchase will help ensure Canada remains a credible and dependable ally for many years to come,” Defence Minister Harjit Sajjan said in a statement Tuesday.
The agreement must also be approved by the U.S. Congress.
The government announced in November its plans to augment Canada’s aging CF-18 fleet with the new Hornets until a full competition to replace the CF-18s can start in 2019.
The Liberals say the Super Hornets are needed because the air force doesn’t have enough jets to be ready to defend North America and contribute to NATO at the same time.
But a number of retired military officers have called for an immediate competition, warning an interim fighter fleet will be more expensive and hurt the military in the long run.