United States considers softwood lumber supported due to how forest managed by both the provinces and federal government. USA has private land as compare to Canada which has more forests fall under crown land. Crown land requires specific agreement as part of any work on crown land.
Softwood lumber dispute – canada and united states may 2017
1. SOFTWOOD LUMBER DISPUTE
– CANADA AND UNITED
STATES – MAY 2017
BY: PAUL YOUNG, CPA, CGA
DATE: MAY 9, 2017
2. PAUL YOUNG - BIO
• CPA, CGA
• Financial Solutions
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com
3. AGENDA
• What is Softwood
• Softwood Exports
• Softwood Destinations
• Softwood Issues
• Return to Protectionism policies
4. TRUMP ADMINISTRATION CALLS
TRUDEAU SOFTWOOD THREAT
‘INAPPROPRIATE’
• “The decision to impose tariffs on Canadian softwood lumber was based
on the facts presented, not on political considerations,” he said in a
statement. “If any Canadian or British Columbian official wishes to
present additional information (about lumber), we will consider it
carefully and impartially…
• “Threats of retaliatory action are inappropriate and will not influence
any final determinations. We continue to believe that a negotiated
settlement is in the best interests of all parties, and we are prepared to
work toward that end.”
Wilbur Ross – Commerce Secretary – United States – Canadian Manufacturing – May 9, 2017
5. WHAT IS SOFTWOOD LUMBER
Softwood is wood from gymnosperm trees such
as conifers.
Softwood is the source of about 80% of the world's
production of timber, with traditional centres of
production being the Baltic
region (including Scandinavia and Russia), North
America and China.
The term is opposed to hardwood, which is the
wood from angiosperm trees. Softwoods are not
necessarily softer than hardwoods. In both groups
there is an enormous variation in actual wood
hardness, with the range in density in hardwoods
completely including that of softwoods; some
hardwoods (e.g. balsa) are softer than most
softwoods, while the hardest hardwoods are much
harder than any softwood. The woods of longleaf
pine, douglas fir, and yew are much harder in the
mechanical sense than severalhardwoods.
6. CANADA LEADING SOFTWOOD LUMBER
PRODUCERS
• Source: https://www.eics-scei.gc.ca/report-
rapport/SWL%20monthly%20Exports%20Report_201609.htm
Analysis
• ½ of softwood
lumber comes from
BC
• Ontario, Quebec,
Maritimes and
Alberta have sizable
softwood exports
7. SOFTWOOD DESTINATION/CANADA
• In 2015, the value of Canada’s forest product exports increased by 6.3% over 2014, rising
to $32.7 billion from $30.8 billion.
• On the wood product side, the U.S. housing recovery continued to drive Canadian
softwood lumber exports. In 2015, softwood lumber exports totalled $8.6 billion, a 3%
increase over 2014. The value of wood panel exports increased by 18%, to $2.68 billion,
with significant increases in all panel types, especially plywood (29%) and fibreboard
(28%).
• As for pulp and paper, wood pulp exports increased 6.5% over 2014 levels, to $7.7
billion. In 2015, exports of printing and writing paper barely grew (by 1%), while
newsprint exports fell 10% from the previous year
• Source: https://www.nrcan.gc.ca/forests/report/economy/16558
8. UNITED STATES SOFTWOOD LUMBER ISSUES
• Forest Ownership
• Outside of the Maritimes, most forests in Canada are provincially-owned, while in the U.S. they’re privately-
owned. The U.S. has long alleged that allows Canadian producers to sell their lumber at a lower price,
undercutting American producers in the process. The Americans claim that amounts to a subsidy, a claim Canada
has fought (largely successfully) at the World Trade Organization.
• Ongoing issues
• This is the fifth battle between the U.S. and Canada over softwood lumber. The dispute goes back to the early
1980s. Since then, during periods when deals have expired, the U.S has collected billions of dollars from duties
imposed on Canadian lumber. Some of that has been returned eventually.
• There are two types of duties that can be imposed: countervailing and anti-dumping. The duties act as a tax on
Canadian lumber exported to the U.S. and can cripple the Canadian industry.
• Source - http://globalnews.ca/news/2999152/5-things-to-know-about-canadas-softwood-
lumber-trade-war-with-us/
9. UNITED STATES SOFTWOOD LUMBER ISSUES
• Sticking Point
• There are nine issues being negotiated in an effort to reach a long-term deal but the biggest sticking point
appears to be market share. The U.S. wants a hard cap on Canada’s share of the American market. The Canadian
and American ideas of what that cap should be, though, are said to be at least five percent apart and each
percentage point is significant.
• In a joint statement following President Obama’s visit to Ottawa last June, market share was established as an
issue for negotiation. Today, the U.S. Lumber Coalition claimed, “to date, Canada has continued to insist on
frameworks that are inconsistent with the joint statement.”
• Job Losses
• According to Statistics Canada, as of 2013 , about 360,000 Canadians were employed by the forestry industry. Job
losses are a reality if duties are imposed.
• In the early 2000s, for example, the U.S. imposed a combined duty of 27.22 percent and within months 15,000
workers in B.C. were laid off. Ongoing negotiations are so tenuous, Canadian producers refused to comment on
potential job losses or hits to the industry.
• Source - http://globalnews.ca/news/2999152/5-things-to-know-about-canadas-softwood-
lumber-trade-war-with-us/
10. SOFTWOOD LUMBER DEAL EXPIRATION
DATE
• Negotiations between United States and Canada on a new Softwood
Lumber deal have been ongoing for over a year
• The biggest problem has been there has been shift in Government in
Canada as well as federal election in the USA. Changes in government
can complicate negotiation, especially in election years.
• Source: - http://www.cbc.ca/news/politics/softwood-lumber-
standstill-expires-thursday-1.3801771
11. • Industry Week – April 26, 2017
Canadian Foreign Minister Chrystia Freeland said she’s confident her
country will prevail over the U.S. in a lumber dispute and urged
President Donald Trump’s administration to uphold free trade.
Freeland said she raised trade matters with first daughter Ivanka
Trump on the sidelines of a conference in Berlin on Tuesday, though
it wasn’t the focus of the meeting. The U.S. needs to recognize the
importance of the two nations’ $500 billion in annual commerce, she
said.
“I would say to my American friends: Be nice to your clients,”
Freeland said in a Bloomberg Television interview in Berlin on
Wednesday. “We work hard at our relationship with you guys, and I
think it’s in the interest of the United States to keep the relationship
strong as well.”
12. TRUMP DUTIES
• U.S. President Donald Trump intensified a trade dispute with
Canada, slapping tariffs of up to 24% on imported softwood
lumber in a move that drew swift criticism from the Canadian
government, which vowed to sue if needed.
• Trump announced the new tariff at a White House gathering of
conservative journalists, shortly before the Commerce
Department said it would impose countervailing duties ranging
from 3% to 24.1% on Canadian lumber producers including
West Fraser Timber Co.
Industry Week – April 24, 2017
13. ARE PROTECTIONISM POLICIES RETURNING
• With slow growth there is more pressure on government to
protect key industry from foreign pressures
• Industries in different countries will argue that industries in
other countries are subsidize. The problem is defining what
classifies as subsidy.
• Increase protectionism can lead to higher prices due to
duties/tariffs. The end consumer could pay the price for
expansion of protectionism policies.
14. KEY COMMENTS
• Canadian lumber and government officials told the U.S. trade representative that
any new softwood lumber agreement must reflect the differences in forestry
regimes across the country. http://www.plant.ca/general/canadian-lumber-
execs-press-softwood-deal-us-trade-rep-162346/
• Canadian softwood lumber executives will meet this week with America's trade
ambassador as they brace for the prospect of U.S. tariffs that they say could
result in mill closures and layoffs. U.S. Trade Representative Michael Froman will
speak with the Canadian lumber industry in Toronto on Wednesday, days before
U.S. producers could start petitioning Washington to impose new duties on
Canadian softwood. Source: http://www.tsn.ca/u-s-trade-ambassador-to-
meet-with-canadian-lumber-executives-before-softwood-deadline-1.578396