No interest in the extension of the Softwood Lumber Agreement

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The Softwood Lumber Agreement between Canada and the US expired in October and negotiations have not started for a new trade agreement. The softwood lumber dispute is one of the longest and largest trade disputes between the two countries, with US producers accusing Canada of subsidising soft sawnwood production.

The US has shown little interest to sign a similar agreement because current market prices and limited Canadian wood supply have changed the trading environment. The US is Canada’s largest market for softwood sawnwood accounting for 66% of total exports in 2014, which accounts for about one third of total US consumption.

The agreement included export charges for Canadian producers. It provided a stable trade environment that ended with the agreement’s expiry, although a clause prevents either country from taking trade action against the other until October 2016.

A recently published report by the Canada West Foundation (Branching out: preparing for life without a softwood lumber agreement) recommends further market diversification for Canadian producers.

Canada may be able to use the Trans-Pacific Partnership (TPP) agreement to export more into growing markets, especially Vietnam, Thailand, Indonesia and Mexico. Canada already has the largest import share for sawn softwood in the Philippines.

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