A local sawmill says they are satisfied with the new international trade agreement that was reached earlier this month.
The United States-Mexico-Canada Agreement (USMCA) took 14 months to negotiate and will replace North American Free Trade Agreement (NAFTA). The new agreement will have significant impacts on the car industry, dairy farmers, tech companies, online shopping, steel and aluminum suppliers. However, there’s one section in USMCA that Downie Timber Ltd. is thankful was kept from NAFTA.
“We were very pleased that Chapter 19 was maintained,” says Angus Woodman, manager at Downie Timber Ltd.
Chapter 19 gives the U.S, Canada and Mexico the right to challenge each other over anti-dumping issues.
Dumping is when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market.
Anti-dumping cases are used to block imports on the basis that the exporting country is not trading fairly, for example by subsidizing a domestic industry so it can set low prices.
When NAFTA and the earlier Canadian-U.S. Free Trade Agreement were negotiated, Canada made the U.S. give up the right to bring anti-dumping cases against its neighbours completely, but the United States refused.
Chapter 19 was the compromise.
The system has not been used heavily in the last 10 years. The best known cases that involve Canada concern softwood lumber. Others involve U.S. fertilizer, steel pipes and washing machines made in Mexico.
Downie Timber Ltd. says a significant portion of their lumber is exported to the U.S. While they do not dump their product, Woodman says they’ve had issues with other countries/companies dumping.
Bruce Ralston, Minister of Jobs, Trade and Technology, said in an email that B.C. is pleased that Canada was able to preserve the dispute resolution mechanism contained in Chapter 19 in NAFTA.
“The resolution played an important role in Canada in the softwood lumber disputes of the early 2000s, when appeal panels ruled against the U.S., providing Canada the leverage needed to reach a negotiated settlement.”
Last November, the U.S. set tariffs above 20 per cent on imports for Canadian softwood lumber.
Ralston wrote that Canada has filed an appeal over the imposed duties.
“The duties imposed by the U.S. Department of Commerce on Canadian softwood lumber are unfair and are driven by the U.S. lumber lobby solely for the purpose of constraining imports of high-quality Canadian lumber to drive up prices for their own benefits.”
“Ultimately these duties punish consumers and workers on both sides of the border,” wrote Ralston.
Price of lumber reached an all-time high in May of $639 USD/1,000 board feet. The high price was due to ten B.C. sawmills forced to halt operations in 2017 for wildfires, which significantly reduced Canada’s lumber inventories. There were also transportation difficulties and a lack of trains and trucks to move the lumber to markets.
On Oct. 24, lumber was $302 USD/1000 board feet.
The U.S. is the largest importer of Canadian lumber. In 2016, lumber exports to the U.S. were more than $7 billion. China was second at roughly $1 billion.
Woodman says it’s likely that the price of lumber will drop further.
“We’ve had a good run for awhile.”
Record low for lumber of $211 USD/1,000 board feet was reached in 2011.