The hard-fought softwood-lumber agreement that ended decades of trade wars between Canada and the United States expires on Monday. A new battle with U.S. lumber producers could have enormous consequences for Canada's forest industry, and in particular British Columbia's economy.
The prospect of renewed tensions over lumber exports was enough to prompt B.C. Premier Christy Clark to acknowledge a federal election campaign is taking place in this country.
While Ontario Liberal Premier Kathleen Wynne has found ample time in her schedule to campaign on behalf of her federal counterparts, the B.C. Liberal Premier has studiously avoided any topic that might offer clues about her preference for prime minister.
Last week, however, Ms. Clark sought to inject a new topic into the federal campaign. "I want to inform the House that as soon as this federal election is over, whatever the outcome, I will be speaking to the prime minister," Ms. Clark told the legislature. "I'm going to make sure that our prime minister makes the softwood-lumber agreement and its renegotiation a priority."
It sent not a ripple through the campaigns. Even the Conservative government, which secured the deal in 2006, is more consumed with debates on refugees and reefers. The Conservatives at least support renegotiation of the deal. The NDP and Liberal platforms make no mention of softwood.
The expiry of the deal is a sleeper of an issue because of a year-long standstill period in which no trade litigation can be launched.
The agreement can be renegotiated – if the United States agrees. It is expected that U.S. lumber companies will agitate for another countervailing investigation, particularly as housing starts drive up demand.
Some on the Canadian side hope the markets have changed enough since 2006 to reduce the appetite for a fight.
In 2006, B.C. lumber companies were racing to process timber threatened by the mountain pine beetle. Now, the industry has reduced its production capacity to cope with a shrinking timber supply. As well, the industry has put more effort into new offshore markets. In 2006, B.C. exported $4.3-billion (U.S.) worth of wood south of the border, and that had declined to $3-billion in 2014.
Overall, Canada's share of the U.S. lumber market has shrunk to 29 per cent today from 33 per cent in 2006.
British Columbia's lumber companies present a smaller target this time around.
Susan Yurkovich, president of the Council of Forest Industries, said that as much as the industry would like to see free trade, it accepts that this deal is likely as good as it gets.
Under the deal, Canada is required to put an escalating tax on exports as softwood-lumber prices drop below a predetermined threshold. That managed trade at least provides stability. "It can work, it can provide certainty to producers and customers," she said.
Like Ms. Clark, COFI is not pressing the parties to take a stand in this election campaign. Ms. Yurkovich wants to be able to work with whichever party is in power. But the standstill period should not lull anyone into complacency. "I think this is going to be one of the very first issues that faces them when they are settling down into their chairs following [Oct. 19]," she said.
Then again, if it is not on the radar now, Ms. Clark will have to work at getting Ottawa's attention.
It will be a couple of months yet before the data are out, but it is likely that British Columbia will soon be one of the few "have" provinces in the country, and there is little doubt the B.C. Premier will use that status as leverage in trying to gain traction on her issues in Ottawa.
She planted that notion last week: "I'm going to ensure that the federal government understands the importance of free and fair access to the U.S. market and what that means for British Columbia, but also," she told the legislature, "in a country where so much of the national economy depends on what happens here in British Columbia, the importance of this agreement for every single Canadian."