Timber: the embers of the dispute canada-american revived

Photo: Darryl Dyck, The canadian Press
In Quebec, exports to the United States have increased.

The timber has long been a source of contention between Canada and the United States and the last year has been revived, for a fifth time, the embers of this dispute commercial that took root in the 1980s.


At the end of fruitless negotiations, Washington has imposed anti-dumping and countervailing on canadian exports which, according to the Commission u.s. international trade (USITC), harming the u.s. industry.


In the wake of this decision made by the american agency on December 7, last, everything indicates that another long battle is emerging between the two parties before the commercial courts.


In addition to looking at the world trade Organization (WTO), Ottawa has used the system of conflict resolution in the free trade Agreement north american (NAFTA).


In the past, a similar battle in front of the international organization established in Geneva was stretched over four years, before the conclusion of a temporary agreement in 2006 put the lid on the commercial dispute for about 10 years.


“The goal for Canada is to go before the commercial courts, obtaining a favourable decision, which generally encourages Americans to return to the negotiating table,” said one source aware of the negotiations.


This person, who is not authorized to speak publicly, stressed that the dispute over the timber is far from the heart of the government’s priorities Trump, which makes it so that the trade dispute could enter a ” phase dormant in 2018.


Carl Grenier, a specialist of conflict on the timber and a lecturer at the University of Laval, agrees.


“This may be as long as last time, which is unfortunate,” he said. During the last conflict, it had taken four years. There is obviously someone who is dragging the feet. This comes, in part, of the United States. “


Despite the victories, the canadian front of the commercial courts, the United States, ” know that the producers here have need of their market “, which, according to Mr. Grenier, explains the american approach to stretch the conflict.


The bill to the American


But for now, the imposition of countervailing duties on canadian exports did not cause overflow of stock in lumber yards or large layoffs.


This situation is essentially explained by a strong demand in the United States as well as by a decline in canadian production resulting from forest fires have slowed down the operations of many sawmills in British Columbia.


Nevertheless, the president of the Council of the Québec forest industry (CIFQ), Denis Lebel, says that Quebec should be exempt from countervailing duties and anti-dumping duties totaling about 20 % under the forest regime put in place in 2013.


“The auction system has resulted in higher fibre costs,” he says. We would like that the rights are zero. Currently, there is a strong demand in the United States and we have a quality product. “


Even if the United States imposed a series of penalties in Canada, which they accuse of subsidize unfairly producers of timber by granting them access to public land at low prices, the canadian industry is able to keep the head out of the water.


Up to now, the price rise has been shifted to u.s. consumers.


“During the last conflict, it was necessary to absorb the increase,” says Jean-Pierre Rioux, director of operations at Marcel Lauzon, a sawmill, of East Hereford, in the MRC of Coaticook, which has more than 50 employees. If the market remains as it is, we can’t complain too much, despite the taxes. “


Mr. Rioux noted, however, that the situation can change quickly.


Exports down in bc and the rise in Quebec


The exports of canadian lumber to the United States were down approximately 6 % in 2017 compared to the previous year, according to federal statistics analyzed by the CIBC.


The bank’s analysts say that the biggest loser up to now is by far British Columbia, since its exports to the United States were down about 33 % in part because of forest fires. The New Brunswick’s exports have declined slightly.


In Ontario and Quebec, the exports have in fact increased.


A sign that the sawmills in quebec manage to get away for the time being, the envelope of 300 million provided by the government Couillard in order to finance, among others, loan guarantees has not yet been put to contribution.