Future of Softwood Industry Unclear After Expiration of Softwood Lumber Agreement

Monday, November 2, 2015

The Softwood Lumber Agreement (SLA), between the United States and Canada, first agreed upon in 2006, expired this month, after having agreed to a two year extension in 2012. The SLA represents the agreement for Canadian exports of softwood sawnwood to the US with the current trade agreement from 2006 representing a solution to US industry claims that Canadian forest policies subsidize sawnwood production.

The agreement specifies higher duties on Canadian exports when softwood sawnwood prices are low. According to the Office of the United States Trade Representative: "Under the SLA, Canada agreed to impose certain measures to affect the price of softwood lumber exports to the United States. The SLA provides that Canada may not circumvent those export measures, including through providing grants or other benefits. By selling timber harvested from public lands in the Interior region of British Columbia for prices below those provided for under the timber pricing system grandfathered under the SLA, Canada provides a benefit to Canadian softwood lumber producers in circumvention of the export measures provided for in the Agreement.”

ProSales has reported that “governments on both sides have now reached a standstill as the U.S. government believes that the deal is now outdated while according to the U.S. Lumber Coalition the Canadians have not yet been willing to negotiate”. However, a standstill provision in the 2006 agreement gives the U.S. and Canada a year to come to a new agreement before the United States could bring any type of trade actions against the Canadian suppliers. Reported by the newspaper Vancouver Sun, the Canadian industry would like to see the current agreement renewed, while US sawmills are reported to oppose a renewal. If Canadian sawmills will have to pay new higher duties on exports to the US, it is likely to affect trade flows to other markets including China.

NLBMDA 11/2/2015

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