Canada needs to step up efforts to build new markets for softwood lumber as the country's biggest customer, the U.S., shows little interest in renewing a trade agreement that expires on Oct. 12, a report from the Canada West Foundation (CFW) says.
Without a Softwood Lumber Agreement (SLA) in place, western Canada’s lumber industry is vulnerable to punishing tariffs from the U.S., a country which buys two-thirds of Canada's softwood exports.
According to CFW, Canada can ease the impact of any such action by redoubling its efforts to build markets in Asia. It broke into China, for example, and while that market is cooling, opportunities are arising in Korea, Vietnam, Thailand, Indonesia and the Philippines. The report suggests Canada might even be able to take a bite out of the market in Mexico, which imports much of its lumber from the U.S.
It is of particular concern to the West because fully three-quarters of its lumber exports come from western Canada, primarily British Columbia. The report notes that B.C. lost so many trees to the mountain pine beetle infestation, it cannot supply wood in the volume it once could. Canadian companies have adjusted by investing in U.S. sawmills.
In addition to building new markets, the report recommends building value in its trade with U.S. to help mitigate future disputes. Canada can do this by seeking new value-added product markets and promoting the Canadian brand. It also recommends continuing to work with the U.S. to grow the global softwood lumber market.