OTTAWA — A settlement remains elusive but Canada and the U.S. have edged closer to a job-saving settlement on the softwood lumber dispute, President Barack Obama and Prime Minister Justin Trudeau said in Ottawa. “The United States and Canada have made important progress in our negotiations, but significant differences remain,” they said in a joint statement. Thousands of jobs are at stake in the $20-billion Canadian industry that supports 370,000 jobs, primarily in B.C. but also in Quebec and Ontario, Canada’s second- and third-largest exporters, government and industry officials have recently warned. They said their officials will “maintain an intensive pace of engagement” with the goal of striking a deal before this autumn’s expiration of a 2006 peace accord. The last battle, known as Softwood IV, was settled in 2006 when Ottawa struck an agreement with Washington that limited Canada’s access to the U.S. market through a combination of quotas and export taxes. That deal expires on Oct. 12, opening the door to the U.S. industry launching a legal battle to impose punitive duties on Canadian exports. But a Canadian analyst questioned whether the U.S. is actually determined to settle the dispute.
“President Obama has no incentive to sign a new softwood deal during his last days in office — he’d gain little but the ire of U.S. producers,” said Naomi Christensen of the Canada West Foundation. “An agreement couldn’t be struck over the last 100 days when the issue was given priority, so it’s hard to imagine anything developing over the summer.” If Canada and the U.S. enter a legal battle, she said Canadian firms will look for ways to deal with the failure of negotiations and the pending election of a more protectionist president. “Western Canada in particular is well-positioned to take advantage of growing softwood demand outside the U.S. market in Asia and even Mexico,” she said in an email exchange. “Canadian companies may look for further acquisition opportunities in the U.S., made even more attractive by the low Canadian dollar.” Trudeau sounded optimistic at a March meeting in Washington with Obama, predicting a breakthrough in the coming “weeks and months.” But hopes for a deal sagged when Canadian Trade Minister Chrystial Freeland and U.S. Trade Representative Michael Froman failed to meet a June 18 deadline to come up with the “framework” of a deal. The U.S. angered the Canadian industry and some provincial governments by offering a one-size-fits-all deal that would result in Canada’s share of the U.S. lumber market sliding from 28 to 22 per cent over four years. That’s a far cry from the 34 per cent cap in the 2006 agreement.
“We are not doing a bad deal,” Clark snapped earlier this month in reference to the U.S. offer. “If Ottawa makes the wrong deal for British Columbia we could see thousands of job losses for British Columbia and I am not interested in that.” Canada, according to a recent report from Inside U.S. Trade, countered with a deal similar to the one struck in 2006 that allowed Canadian provinces to choose from several options involving a combination of quotas and export taxes. The new twist is that the new proposal would see export taxes range as high as 25 per cent, whereas the previous deal had a maximum tax of 15 per cent. And the overall Canadian share would slide from 32 to 30 per cent. Those quotas wouldn’t likely impact Canada, according to a recent analysis from Christensen. Canada’s share has recently fallen to 27 per cent as a result of B.C.’s mountain pine beetle infestation and tougher Quebec conservation policies, she noted. Christensen projected that this figure will decline naturally to 25 per cent over the next decade due to supply issues, even in the absence of a deal.