Mayor’s Column – April 19, 2017

April 19, 2017

 

Living, working, playing, and maybe even growing old in our hometown, a hometown whose roots go deep into the forestry industry and whose 600 plus or minus direct forestry workers give indirect support to countless others, it would not be surprising if many of us were more than a little aware of the pending US announcement of countervailing duties to be imposed on imports of Canadian softwood lumber within hours of your reading this column – to be followed within weeks by anti-dumping duties.

Canada’s trade relationship with the US on softwood lumber has never been sweet. There have been periods of relative calm when a trade agreement has been in place but the last trade agreement expired eighteen months ago and US lumber producers have exercised their constitutional right to challenge Canadian imports and the US Department of Commerce is legally obligated to pursue all remedies – as it is doing.

It is not as if the US can produce enough lumber to satisfy its domestic needs. US producers are probably between 20% and 35% short of capacity with no reasonable expectation of achieving capacity. Producer motivation to pursue sanctions against Canada seems to be entirely monetary, an on-going attempt to escalate lumber prices and increase producer profit at the expense of US consumers.

This is not the first time Canada has been down this road with our big, friendly neighbour and every time in the past Canada has won the court challenges brought against our producers. Will Canada win this time? Who can predict? Our governments and our industry leaders have been and are on top of all the intricate issues of alleged subsidies, stumpage rates, labour costs, shipping costs, land ownership, silviculture practices, electricity costs, and all the other cost and profit line items that it takes to compare Canada’s lumber pricing with US pricing.

Canadian negotiators and industry leaders are confident that Canada’s case is as sound and solid as the wood we ship to the US. But it is aggravating to be dragged through the process again when nothing substantive has changed since the last multiple times the courts have decided in Canada’s favour.

A court decision in Canada’s favour is good but a negotiated settlement that opens US markets to Canada is far better. Canada’s negotiation team is strong, tough, and knowledgeable. Canada has done its homework. Why aren’t we at the table? The US team is not in place. Meanwhile, the duties will be levied.

How serious will this be? Four of the CEOs of the major British Columbia producers were on the podium at the Council of Forest Industries (COFI) annual convention a few days ago in Vancouver. They assured delegates that the duties will hurt. How much will they hurt? I guess we’ll have to wait and see.

The softwood trade dispute with the US was the big item on the minds of most delegates to the convention but there are so many things of interest in the fascinating forest industry. I can make only the briefest reference to some of them.

Architectural research into constructing tall buildings from wood is growing. The architect who presented to the convention is confident that buildings as high as the Empire State are not only feasible but within our reach. Silviculture and production are increasingly benefiting from high technology. Use of drones to map and identify specific trees for specific customers is something my woodsman father could not have foreseen.

On the world scene, because of the devalued ruble Russia is moving into the Chinese market to a degree we would not have imagined just a few years ago and Europe also is expanding its marketing efforts into Asia and America.

Indeed, things are changing rapidly and we cannot afford to take a blasé attitude to an industry and its environment that means so much to our prosperity as a community and as a country.

Finally, economists are always brought to the COFI conventions to inform and even to entertain. Permit me to pass on a few of their lighter comments: The GDP of Hungary is the same as that of Portland, Oregon; Malaysia’s is equivalent to that of Atlanta, Georgia; Australia and Greater New York City share a common GDP as do Nigeria and Chicago. I wonder how Chetwynd compares.

 

Merlin Nichols, Mayor