NZ timber exporters study US v Canada fall-out

TIMBER EXPORTERS AROUND NEW ZEALAND are anxiously studying any possible fall-out from the US move to slap an average 20% tariff on Canadian lumber imports.

The Trump administration has imposed the tariff in retaliation for what it claims are improper subsidies for timber manufacturers in Canada.

The action is the culmination of a longrunning dispute between the two countries, with the US claiming that Canada’s forests are owned by the various provinces that charge subsidised prices for trees harvested on state land, which provides an advantage to timber exported across the border.

The US argues that most of its forests are privately owned and therefore pay full-market rate for the stumpage, which puts its mills at a disadvantage.

The spat has already led to Canada filing a complaint with the World Trade Organisation (WTO) and New Zealand timber companies are watching the outcome closely.

Jon Tanner, CEO of the Wood Processor and Manufacturers Association (WPMA) says: “We have been studying what effects this will have on our members who export, not just into the US, but other markets as well.”

Dr Tanner says Canadian timber manufacturers are already turning their attention to China where they could divert lumber that had been destined for the US.

“Whilst we compete in different spaces in the Chinese market it does mean that there could be some spill-over effect that could cause disruptions,” says Dr Tanner.

Last year Canadian mills shipped more than US$5.6 billion worth of timber into the US market and if even a relatively small percentage of that total was diverted to other markets it could still have a major effect on other smaller exporting nations, such as New Zealand.

Conversely, companies from other nations could find an opportunity to supplant Canadian lumber into the United States, since its domestic industry would not have the capacity to ramp up production to meet the demand. Among those in New Zealand is Tenon, which has built a solid base for its mouldings and other timber products in America.

Dr Tanner says the WPMA is still examining the fall-out from the spat between the US and Canada and it could be some time before the full ramifications are known.

There has been no word on when the WTO will rule on the dispute, but the last time the two sides came to blows over the issue the WTO sided with Canada in 2004 and the two sides came to a temporary agreement in 2006, which expired last October.

With President Donald Trump looking to make an example of the timber issue as part of his wider remit to renegotiate the North American Free Trade Agreement, pundits expect the outcome to be less certain this time around.

NZL