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Softwood lumber: Well, that escalated quickly

Wells: On Monday, Fox News carried an interview with a Wisconsin dairy farmer who has hit hard times and blames Canada. The President was watching.


 
A machine places freshly cut trees into piles before transport to the West Fraser Timber Co. sawmill in Quesnel, British Columbia, Canada, on Thursday, July 11, 2013. West Fraser Timber Co., the largest lumber producer in North America, had a sustainable rise in price, demand volatility, and profits within the past year. (Ben Nelms/Bloomberg/Getty Images)

(Ben Nelms/Bloomberg/Getty Images)

Shots fired:

“It has been a bad week for U.S.-Canada trade relations [US trade secretary Wilbur Ross said in a statement this evening]. Last Monday, it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States. Today, in a different matter, the Department of Commerce determined a need to impose countervailing duties of roughly one billion dollars on Canadian softwood lumber exports to us. This is not our idea of a properly functioning Free Trade Agreement.”

Chrystia Freeland and Jim Carr were quick to reply:

“The Government of Canada disagrees strongly with the U.S. Department of Commerce’s decision to impose an unfair and punitive duty. The accusations are baseless and unfounded…The Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, including through litigation.

It started with such promise, too. When Justin Trudeau visited the White House on Feb. 13, the longstanding softwood lumber dispute with the Americans came up — and in an interesting way. I was told some time ago by a source familiar with the discussions that at some point, Donald Trump became interested in knowing how his budding relationship with Trudeau compared to Barack Obama’s. Trudeau was circumspect. I did have a good working relationship with President Obama, the prime minister said, approximately. But you know one thing he was never in a position to deliver on? Softwood lumber.

Hint, dropped. And reinforced, in a followup call ten days later. The hint seems to have been taken: some Canadians who’ve worked with both the Obama and Trump administrations on the softwood lumber dispute believes that until this week, the discussions were more substantive with the current administration than with its predecessor.

READ MORE: For a troubled Trump, Canada is easy pickings

So what happened? Two things, perhaps. First, Trump has been having a lousy time on trade, which was one of the two or three top issues that got him elected. He can’t get his nominee for chief trade representative, Robert Lighthizer, confirmed. He hasn’t been able to formally start the 90-day process toward a NAFTA renegotiation. He’s backed down on a trade fight with China, which is the fight some Trump aides entered politics to wage (if you have some time, check out this astonishing documentary by Peter Navarro, now a trade advisor to Trump).

What’s left? I’m told that at 1:46 p.m. on Monday, Fox News carried an interview with a Wisconsin dairy farmer who has hit hard times and blames Canada. The President was watching, and was greatly displeased. Coming as it did on the heels of Trump’s visit last week to the Snap-On Tools plant in Kenosha, the Fox News story egged the President on in his growing suspicion that Canada, far from being cuddly and Ivanka-friendly, is actually a marauding border-squatting trade succubus.

The relationship has come so far, so fast. Only three days after Trump’s inauguration, his informal economic advisor Stephen Schwarzman was in Calgary briefing the Trudeau cabinet on bilateral affairs. In remarks to reporters, Schwarzman was full of sunshine. “One of the important things is the unusually positive view that’s held of Canada,” he said. “Canada’s been a great partner of the United States for as long as anybody can remember.” Trump’s arrival might portend “a changed climate, maybe some modifications,” Schwarzman said. But “basically things should go well for Canada.”

READ MORE: Donald Trump flops and flubs and goes after Canada

And now? The 20 per cent tariff that seems about to hit Canadian lumber exports to the U.S. is neither unexpected, I’m told, nor out of line with earlier U.S. tactics during this interminable dispute. And Canadian officials continue to talk regularly with their U.S. counterparts at senior levels. It’s not inconceivable there could be an agreement within weeks, the Canadians believe.

But Canadian officials cannot discern any consistency in the Trump administration’s tone from day to day. If prospects of an agreement fade, the Trudeau government, finding itself in a fight, may decide to push back. I can detect no sign of a rush to get to that point.

The prime minister won’t have to spend much time wondering what business leaders think he should do. He had already scheduled a lunch meeting on Tuesday in Kitchener with the Business Council (formerly Canadian Council of Chief Executives, formerly Business Council on National Issues), the blue-chip CEO group led by former Liberal cabinet minister John Manley. They may be able to help him gauge next steps. Surely, even at this late hour, Trudeau still hopes the storm will blow over.


 

Softwood lumber: Well, that escalated quickly

  1. If we are “dumping ” lumber on the US market. why don’t we stop “dumping” lumber and raw logs to the US. Save Canadian jobs and stop the export of raw logs. See how things turn around with the halt of exporting Canadian logs and lumber.

  2. US softwood timber forests are owned and controlled by the 0.01%’ers in the US. The wealthiest of the weathiest. The plutocrats themselves. They are the most powerful lobby in the United States. It is an insoluble problem from Canada’s perspective, because we are battling the people who literally run the Deep State and the World.

    You might have an easier time fighting and winning against God.

  3. Maybe we should give them $1 Billion to placate them like Harper did.
    The time to renegotiate was when THEY wanted to land THEIR planes at OUR airports on 9/11.
    Sell the lumber to anyone else.

  4. The ONLY way to deal with a BULLY is to stand up collectively against him.

  5. I hope all the Reform Conservatives who supported Trump incessantly while trashing Canada are now happy. These are the same people that argue, “the west should separate from Canada”. Right, is that the same west that is now being kicked in the soft spots by the Trump they support?

    This is why we don’t need a Trump mini-me or mini-she in Canada. O’Leary, go back to Boston. Leitch, take your alt-right BS somewhere else. Reform Haters, take your hate south of the border.

    This is not about dumping. This is about feeding time for the Trump supporters. Facts need have nothing to do with it.

    • Western separatism has been dead for donkey years. Additionally, it was the Western Canada Concept and some offshoots that espoused separatism. The old Reform Party (it no longer exists) had the motto “The West wants in” (google it), and never espoused separatism. Finally, western separatism was mostly borne out of the NEP. Not unreasonably, Alberta and company objected to having a national oil price imposed by Ottawa. One can easily imagine that Canada would now be short one province if Quebec, not Alberta, had been the major oil producing province when the NEP had been imposed.

  6. If it was true that those forest companies operating in British Columbia have an unfair advantage over US forest companies, operating in the US, then why did the US forest company which I worked for (in BC) become insolvent in 2007. I have worked in the BC forest industry for over 30 years, and I’m a BC registered professional forester going on to 27 years. Of those 27 years, I worked for Pope & Talbot Ltd (a US forest company), for 15 years in Nakusp BC.

    Pope & Talbot was a company with deep US roots going back to 1849. Besides operations in the US, it mostly operated in BC. In 2007 it became insolvent and became a casualty of the last great recession. P&T weathered the Great Depression and other economic storms (for over 100 yrs), and it was a well-run US company, one of the best by all BC standards. However, P&T, obviously, never had any advantages of harvesting so called subsidized crown timber in BC. If it did, P&T would still be in operation today. Not only that, but there would be a lot more US forest companies in BC. The majority know it’s tough slugging here.

    Weyerhaeuser is another large US company which had operations in BC, and it also lost operations in BC (ie, Kamloops, BC) during the last great recession of 2007. The only reason Weyerhaeuser survives today is due to its large private tracts of timber in the US, not because it had operations in BC.

    If harvestable crown land timber was subsidized, in BC, why couldn’t some of the best US companies survive here? The answer is very simple, the BC forest industry operates on very small average margins, and it must weather through very unpredictable cyclical economies. Without a doubt, it is very tough to make a buck, and only the leanest and most efficient can make it. As a matter of fact, many Canadian forest companies are establishing themselves in the US because it’s easier there. There is more economic stability/opportunity and free access to large US markets.
    It’s the complacency which US companies have become accustomed to which is causing them to be less competitive than the Canadian forest industry because they don’t have to compete for their enormous US market share like we do in BC; realistically they can only supply 70 to 75% of the US market with their own limited timber/lumber supply. That’s why they only want our Canadian logs. If harvesting our crown timber is subsidized why do they want our logs only? They want to bully their best and only friend in the world.
    In reality, we have to be the best in the world to compete in the US market because of artificially created US market restrictions. Instead of admitting we are more efficient than they are and building their own efficient mills in the US, the US blames it on so called subsidized timber in Canada. It’s an easy money grab for the US government.

    Today, the BC forest company which I work for is spending $180 million to upgrade a US mill (recently purchased in the US) to our BC standards, so it can operate as efficiently as our Canadian mills. The BC forest industry is the best in the world (we have to be), and that is why we can compete so effectively with our US counterparts.

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