Canada's Ambassador to the United States David McNaughton speaks to media as British Columbia's Trade Envoy to the United States David Emerson and Premier Christy Clark look on following a special cabinet meeting to discuss the softwood lumber dispute at Legislature on Feb. 16, 2017 in Victoria, B.C.
Canada's ambassador to the United States says the softwood-lumber dispute is the subject of substantial discussions between the Canadian government and the White House and says both sides are taking the issue and its potentially massive impact on thousands of workers seriously.
But British Columbia's newly appointed envoy on the file also added a cautionary note during a briefing with reporters after a meeting with the ambassador and Premier Christy Clark: The path ahead to a deal could be painful.
Ms. Clark and her new trade envoy, David Emerson, spent two days this week huddled with Ambassador David MacNaughton discussing the future of the province's softwood-lumber industry – a sector that last year sent $4.6-billion worth of exports to the United States.
With the resumption of the Canada-U.S. softwood-lumber trade war, Ms. Clark and her cabinet, along with industry executives, met over a working dinner on Wednesday night in Victoria with the two trade representatives to map out a strategy for a settlement that won't cripple the already-struggling forest industry.
On Thursday morning, Mr. Emerson and Mr. MacNaughton met privately with the Premier before briefing the provincial cabinet.
Speaking with reporters after the cabinet meeting, the ambassador said Canadian officials spent weeks pushing the issue of softwood lumber onto the agenda ahead of last Monday's meeting between Prime Minister Justin Trudeau and U.S. President Donald Trump at the White House.
"We brought up the softwood-lumber issue consistently. For them, it's minor, they see it as a small, regional issue," he said. "And I think the most important thing that we did was to impress on them how important it is to Canada, that this isn't a small regional issue, it's a national issue that affects hundreds of communities right across the country."
Since 1982, Canada's softwood-lumber exports have been subject to five separate rounds of U.S. trade litigation, and the last negotiated agreement was signed in 2006 by Mr. Emerson when he served as Canada's international trade minister.
That agreement has since expired and, in January, prompted by a complaint by the U.S. Lumber Coalition, the U.S. International Trade Commission found there was a reasonable claim that softwood-lumber products from Canada have injured its domestic lumber producers, setting the stage for the imposition of preliminary duties.
For the smaller lumber producers in particular, Mr. Emerson said, the prospect of paying export duties while negotiations and litigation drag on may be devastating. "They are going to feel the cash squeeze.
"I don't want to say I'm not optimistic, but I am a cautious person and I think we need to anticipate it will be a very tough battle and we need to ready our battle plans," he said.
Mr. Emerson was appointed earlier this week to head up the softwood-lumber talks on B.C.'s behalf. He will be attached to the Canadian embassy in Washington. He said some things about the conflict haven't changed since the last battle: "It's always been about a protectionist group that has accumulated tremendous power over the years … to basically shake down Canadian industry to increase their profitability."
However, in an interview, he said many factors have changed since the pact he signed in 2006, and a new deal will likely look different.
Canadian lumber companies have bought up roughly 18 per cent of the lumber manufacturing capacity in the United States to insulate themselves from the now-inevitable trade wars. And although British Columbia has had some success in diversifying its lumber markets, there is additional economic stress on the sector because of the decline in the amount of timber available for harvesting each year.
B.C. produces more than half of Canada's softwood-lumber exports to the United States, and Ms. Clark underscored that an agreement is critical to 60,000 workers in 140 forestry-dependent communities across the province.
But she said the new U.S. administration could provide an opportunity for a settlement.
"There is a lot of risk with what is going on in the United States," she told reporters after the cabinet meeting. "But it may open up new opportunities for us as well. We worked hard to negotiate an agreement with the Obama administration but frankly they just weren't interested. So unpredictable change can sometimes be good."
Susan Yurkovich, president of the BC Lumber Trade Council, was at the table on Wednesday night for the strategy session. She said in an interview she was encouraged by Mr. MacNaughton's positive message. But she cautioned that there is a lot of work to be done.
"To get a deal, you have got to have a willing dance partner," she said, adding that she is relieved the federal government and Canada's ambassador have recognized B.C.'s significant interest in this trade file. "There is a rightful recognition of the importance of this issue to the province of British Columbia."
Justine Hunter