What can be done about the softwood lumber disagreement that hangs like an axe over British Columbia’s forest industry?
Dealing with the United States on issues like this is like nailing jelly to the wall. There’s far too much inconsistency and backtracking. For example, U.S. President Donald Trump has put all of the North American Free Trade Agreement on the bargaining table and then taken it off again repeatedly.
Alternate truths muddy the negotiations, like claims about Canada dumping subsidized lumber. These claims have been discredited by many courts and in several hearings. And hard facts from the National Association of Homebuilders in the United States are ignored even when they warn that duties on Canadian lumber will cost the U.S. 8,000 jobs and US$450 million in lost wages, and will significantly increase the cost of housing for Americans, putting homes out of the reach of many.
It’s hard to advise negotiators under these conditions – although all Canadians would benefit if we traded our dairy and egg boards for free trade in wood products, including lumber.
U.S.-Canada trade is often described as a mouse versus an elephant. Canada is not the elephant.
Nevertheless, some things can be done over the longer term to improve Canada’s bargaining position with the United States and our overall economic well-being. Some of these are already in place.
British Columbia needs a diversified industrial base
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In the last half of the 20th century, you could accurately forecast B.C. economic activity with just one number – the housing starts in the U.S. American houses were built with our lumber and as went the lumber sector, so went the province.
Fortunately, B.C. no longer has most of its economic eggs in the one basket of lumber sales. Technology in all its forms now provides more B.C. jobs than the entire resource sector, including forestry and lumber. The province plays a large role in meeting the seemingly endless demand for entertainment and media content. And we play a role in the knowledge economy by selling education to international students here and overseas.
Much more can still be done to diversify the industry mix and make sure we can’t be held to ransom by a threat to any one sector.
Travel and tourism can be further developed. Tourism makes up less than two per cent of the Canadian economy and has great potential for growth, especially in B.C. Our dollar is low compared to the American currency. Many tourists find the States less appealing than it was.
We have great natural beauty, original aboriginal cultures and developed infrastructure. The lights stay on and you can drink the water.
In ever more insecure and uncertain times, we offer peace, freedom and safety. What better place for a vacation?
B.C. needs a diversified customer base
Any business person can tell you that relying too heavily on one customer leaves you vulnerable. And our lumber has been far too vulnerable to the vagaries of U.S. markets and trading conditions.
We have begun to take baby steps away from the U.S. market toward Japan and, more recently, China. But we haven’t done nearly enough.
A major, long-term negotiating strategy for dealing with the U.S. on lumber would be to create a well-planned and well-funded marketing campaign to sell B.C. lumber in non-U.S. markets. Both government and industry can contribute.
Our low dollar keeps us competitive. Our high environmental standards should help us in markets sensitive to such factors, like Europe. Our reputation as an easy and honest place to do business also helps.
B.C. needs infrastructure
Here, at least with respect to lumber, we’re doing well. Roads, rail and access to tide water, and, hence, global markets, are in place.
More infrastructure is needed to continue to diversify our industrial base. Pipelines are desperately needed to get oil and liquefied natural gas to ports. Otherwise, those products can only reach U.S. markets. This leaves Canadians trying to negotiate fair trade in the energy and possibly other sectors over an oil barrel.
There’s a great deal that can be done, then, to protect B.C. and its economy from the softwood lumber fallout over the longer term. It just takes leadership, courage and commitment.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.
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