For months now, we have been hearing about declines in B.C.’s forestry industry. Many workers in this industry are now without work.
The Tolko mill, a stalwart in downtown Kelowna, now states, “we simply cannot operate in current conditions.”
Various explanations have been offered for the forestry industry’s current situation. Some suggest that a lack of building activity in the United States has dampened demand for Canadian lumber products. However, U.S. housing starts are up 12 per cent.
Other explanations proffered include the pine beetle and provincial stumpage fees. But the pine beetle has been around a long time. Increased stumpage fees may have had an impact, but did this really cripple an entire industry? And, if so, why not reduce them?
The forests minister stated that international pressures including low lumber prices and U.S. import tariffs are factors. The B.C. government feels unable to reduce stumpage fees because U.S. producers characterize it as a “subsidy.”
B.C. lumber producers have been paying U.S. duties on shipments to the U.S. since April, 2017.
They are now struggling amid softwood prices that have plunged 40 per cent since mid-2018.
Has the Canada-United States-Mexico Agreement (CUSMA) significantly and adversely impacted the forestry industry?
You may recall that U.S. President Trump required the North American Free Trade Agreement (NAFTA) to be renegotiated. The result was the CUSMA.
On January 3, 2018, before CUSMA was signed, the U.S. imposed final countervailing and anti-dumping duties on imports of certain Canadian softwood lumber products.
That same day, the federal minister of foreign affairs responded by issuing a statement that “Canada’s forestry industry supports good middle-class jobs in communities across our country. The government of Canada will continue to vigorously defend our industry and its workers against protectionist trade practices.”
“U.S. duties on Canadian softwood lumber are unfair, unwarranted and troubling. They are harmful to Canada’s lumber producers, workers and communities, and they add to the cost of home building, renovations and other projects for American middle-class families.”
“Canada has already begun legal challenges of these duties under NAFTA and through the WTO, where Canadian litigation has proven successful in the past. We will continue to work with the provinces and territories, as well as with Canadian industry and workers, to find an enduring solution. Canada will also continue to engage with the U.S. administration and with American legislators to come to a new agreement on softwood lumber.”
What is the status of this wrangling, post- CUSMA? As of the time of writing, inquiries to the federal government for an update on these “vigorous” “legal challenges” have not received a reply.
CUSMA’s signing date was set, before the parties had even agreed what they were signing.
In the fall of 2018, Canada’s ambassador to the U.S. quipped that perhaps a low-ranking Canadian official with a bag over his head would be best person to pick to officially sign the agreement on Canada’s behalf.
In 2017, the federal government, announced $867 million in measures to support forest industry workers and communities affected by U.S. measures targeting softwood lumber. In 2016, the forest industry accounted for $22 billion of Canada’s GDP. In 2015, it directly employed more than 200,000 Canadians.
Although CUSMA has been signed, it is not yet effective. To become effective in the U.S. it must be approved by both the U.S. House and Senate. Further U.S.-friendly changes may be requested.
To become effective in Canada, implementation legislation is required. In May, 2019, the federal government tabled an implementation bill. It passed second reading and was referred to the Standing Committee on International Trade. However, earlier this month parliament dissolved for the federal election.
So the implementation bill died on the order paper. To become effective, it will need to be reintroduced after the election.
As Canadians, we owe it to ourselves to demand more transparency and accountability from our federal government.
At the very least, it ought to educate Canadians on the terms of this deal, before a new implementation bill is introduced.
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