rsz_img_3622The status of the softwood lumber dispute between Canada and the U.S. is that the parties have until October 2016 to reach an agreement about rules for managed trade on lumber imports into the U.S.

If an agreement is not reached by October, the U.S. Lumber Coalition could, once again, be in a position to levy anti-dumping and countervailing duties on imported Canadian lumber. The levy is not known at this time, but current expectation, based on history, is that the duty will be as high as 25%.

During past disputes, whenever U.S. duties were imposed on Canadian lumber, the domestic log price (paid by B.C. sawmills) was reduced accordingly. This is bad news for B.C.’s forest owners because it has a direct and immediate effect on log markets and land values.

For a long time, the U.S. has cited Canada’s private land log export restrictions as evidence of a subsidy to Canadian lumber mills. It’s expected that the next SLA agreement, resulting from the current round of negotiations, could include quotas, import levies or a combination of both. This would also be bad news for B.C.’s forest owners.

Matters will be made worse if Canada agrees to quotas and taxes that reduce domestic log prices, while maintaining private land log export restrictions. This scenario is a “double whammy” for B.C.’s private tree growers. Not only would we be required to offer logs to domestic mills at below international prices, we would also have to accept even further reduced domestic log prices.

If we’re able to freely shift our sales to international markets at international prices, there’s no harm done; however, if current Canadian log export restrictions are maintained tree growers will continue to be held hostage to an artificially suppressed B.C. domestic log market.

In 2015, when Canada’s dairy farmers were concerned about the potentially negative impacts of allowing minor volumes of foreign dairy products access to Canadian markets under the Trans Pacific Partnership agreement, the federal government immediately offered them support with talk of generous compensation.

B.C.’s forest owners are curious to see if their investments in growing tree crops might be treated with the same level of respect as herds of cows.