B.C. Premier Christy Clark is bullish about the future of Canada's softwood-lumber industry, despite reports that the incoming U.S. administration under president-elect Donald Trump intends to push for more favourable trade terms between the two countries.
Speaking to reporters in Ottawa, Ms. Clark predicted Mr. Trump will not want to risk his country's domestic housing construction boom by threatening its supply of Canadian softwood lumber.
"The thing about Donald Trump is that he talked to Americans about jobs and affordability. One of the things we also know is that if Canadian softwood doesn't come into the United States, the price of housing goes way through the roof," Ms. Clark said.
"So if he is a president that decides that he wants to keep housing affordability within the reach of average Americans, if he wants to keep job growth going – because residential construction is a big part of that in the U.S. economy – then I think we will have an easier path on softwood than we might have otherwise."
New data released Thursday showed U.S. housing starts surged to a nine-year high in October. Canadian softwood lumber provides roughly 30 per cent of the market.
Mr. Trump campaigned on a protectionist trade agenda, saying he would renegotiate or rip up the North American free-trade agreement. A leaked memo obtained by CNN shows Canada's softwood-lumber and livestock producers are being targeted by Mr. Trump's transition team, which is advising the president-elect to seek better terms in those two areas of trade when he reopens NAFTA. Prime Minister Justin Trudeau has said he is open to discussing new trade terms, but his officials maintain Canada is only entertaining "tweaks" to the agreement.
Canada had sought to renegotiate the 2006 softwood-lumber agreement with the United States in advance of the presidential elections. Last March, Mr. Trudeau and U.S. President Barack Obama announced a commitment to seek a new softwood-trade deal within 100 days.
Despite that high-level agreement, the lumber pact expired and the Canadian industry now fears their U.S. competitors will seek quotas that would put a hard cap on how much Canadian lumber can be imported.
The softwood-lumber agreement provided certainty for Canadian lumber producers after decades of costly trade disputes. The issue is especially significant for British Columbia, which accounts for half of Canada's softwood-lumber sales to the United States.
Susan Yurkovich, president of the BC Lumber Trade Council, said her industry is prepared for a fight.
"We are very experienced at defending our industry and we are very prepared," she said. "We have had allegations levelled at us over a number of softwood-lumber rounds and we have consistently proven our case and have successfully defended our industry."
The endless rounds of trade disputes have been costly, nonetheless. The U.S. Lumber Coalition has launched a series of claims of unfair trade practices against the Canadian industry, leading to import duties or tariffs. In the last dispute, the United States collected in excess of $5-billion in duties. When Canada won that round and signed the 2006 accord, roughly $4-billion was returned.
Under the now-expired deal, Canada was required to put an escalating tax on exports when softwood-lumber prices dropped below a predetermined threshold. That export tax ended October, 2015, when the 2006 accord expired.
Ms. Yurkovich said the fact that softwood lumber may be in Mr. Trump's cross-hairs is not surprising.
"They have indicated that lumber might be included in a trade discussion with Canada. Fair enough, it is a significant export product to the U.S.," she said. "Having lumber as part of a broader trade discussion doesn't worry me."