Stung by new U.S. softwood lumber duties, Canada's International Trade Minister wants the forest industry to turn its attention west to China rather than continuing its heavy reliance on the United States.
"What we need to achieve as a country is we need to have a far more diversified market," François-Philippe Champagne said in an interview Tuesday in Beijing near the end of a five-day visit to China.
Though lumber sellers in British Columbia have had some success in building a market for their goods across the Pacific, the industry in Ontario, Quebec and Atlantic Canada sends an overwhelming percentage of its exports south.
Finding new buyers for Canadian lumber, Mr. Champagne said, "is something which we should be looking at across Canada" rather than merely on the West Coast. "I would like to believe that we can increase significantly" the volume of wood sent to the world's second-largest economy.
In China, Mr. Champagne led a lumber mission that met with government officials and buyers. Though it is a distant market, he believes it can offer companies quick relief from U.S. duties while allowing Canada to "make sure we find ourselves in a very different position" in the longer term, as Ottawa attempts to sort out the fallout from a new round in the softwood lumber wars.
Mr. Champagne lashed out at a "protectionist U.S. industry," saying the new duties will "increase the cost of home construction in the United States." In addition to weighing litigation options, Ottawa is considering trade remedies and "what we can do to support our industry and the regions that may be affected."
One way, he said, is by finding new markets.
Canada's forestry companies have spent almost a decade chasing sales to China, and companies in B.C. have achieved some success – largely by exploiting their proximity to the Pacific. Last year, just under 15 per cent of the province's softwood lumber exports went west.
China is hungry for forest products, averaging 19-per-cent annual growth in wood demand over the past decade, according to Eric Wong, managing director of Canada Wood China, the Shanghai arm of an organization working to increase Canadian forestry exports.
"China is to a high degree a potential alternative market for Canadian softwood exports," Mr. Wong said.
But China may not be a panacea for sellers outside B.C. Companies in other provinces are "restricted by transportation costs," said Fred Spoke, the former head of Canada Wood China and now a consultant on Canada-China trade.
And Canada's forest industry has often treated China as a market of last resort, keeping most of its mills tooled for two-by-fours rather than the metric sizes sought by Chinese buyers. That means Canadian firms remain wedded to the U.S., leaving them vulnerable to the dictates of the White House and giving Chinese buyers reason to look for other sources.
"We don't cut metric. And that's another reason they've gone to Europe – because they want metric," Mr. Spoke said.
Last year marked the fourth consecutive year of record softwood lumber imports to China, but that roaring demand has largely benefited other countries. In the first nine months of 2016, China's softwood lumber imports from Russia rose 50 per cent; from Chile, 11 per cent; from Finland, 65 per cent; and from Sweden, 38 per cent.
Only Canada showed a decrease – 12 per cent compared with the same period last year, statistics compiled by the China Timber & Wood Products Distribution Association show – while B.C. lumber exports to the U.S. rose 25 per cent.
Still, Canada remains China's second-largest source of softwood lumber and its fifth-largest source of softwood logs.
But the Chinese industry says Canada has been hamstrung by its own practices and laws. Most of the product Canada sends to China is of lower quality; the best boards go to Japan and the U.S. The export of logs from B.C., meanwhile, is limited by government regulations intended to protect domestic processing jobs. The Chinese industry, with a lower-paid work force that can cut wood more cheaply, has argued for their elimination, saying it would benefit Canada.
"Provincial log suppliers are forced to sell at low prices to local lumber mills first, which cuts their sales profits and limits their exports to China," the China Timber & Wood Products Distribution Association said in a statement.
China's interest in Canadian wood involves more than buying up trees, however, and Mr. Champagne's bid to sell more to China comes as Beijing seeks a deeper reach into Canada's forests.
"From the Chinese side, what they want to do is buy into our industry," Mr. Spoke said.
That issue is likely to arise in the context of free-trade talks with China, whose companies have so far struggled to gain entry to a sector that is heavily dependent on government-controlled Crown land resources.
"That's what they're going to demand in a free-trade agreement," Mr. Spoke said. They want "access and want to invest."
With reporting from Yu Mei
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Nathan VanderKlippe