No time to be soft on softwood as tariffs threaten Canadian jobs
April 28th, 2017 - 10:34am
Donald Trump was elected by talking tough on trade issues, but Canada did not appear to be his primary concern. Mexico and China were seen as the biggest irritants for the United States in terms of trade imbalance and Canadians were mostly holding their breath and hoping for the best. We knew that America wanted to rework the North American Free Trade Agreement, but didn’t expect the President to take aim at Canada ahead of those negotiations. All that changed this week when America levelled new tariffs on Canadian softwood.
Our softwood lumber sector has been on the defensive for decades. Successive governments have failed to break the impasse with America and this has cost Canada thousands of jobs while sounding the death knell for many communities. In this latest version of the dispute, the U.S. will apply punitive countervailing duties of up to 24% on Canadian softwood lumber. The shock of that will ripple throughout the entirety of industries that utilize softwood such as construction or pulp and paper which still has a strong presence in Algoma-Manitoulin-Kapuskasing.
Right now, the Canadian lumber industry employs over 200,000 people across the country. During the last softwood dispute, about 400 sawmills closed and Canada lost more than 20,000 jobs. This disproportionately hurt rural communities and that is why it is so important for the government to act swiftly and decisively to mute the worst effects of this trade dispute. We know from experience that job losses can gut a town’s population which makes it difficult to find employees when the pendulum swings back and the jobs return. This played out in White River over the last decade.
At the heart of the dispute is the way that prices are set for logging, known as stumpage fees. In the past these disagreements have been settled by the World Trade Organization (WTO) but, another round in court is not a solution that has any permanence. The last agreement on softwood was negotiated by Stephen Harper’s government in 2006. It was seen as a retreat from a stronger position – even by the Liberals who voted against it. New Democrats are reminding the government of that position and telling them the time is right to stand up for Canadian jobs and fair trade.
While it’s clear that another agreement will have to be negotiated to offer long-term protection for softwood jobs, it’s also clear that now is the time to protect the companies that will be affected in the interim. That’s why it’s worrisome that the Liberals have ignored calls from Ontario and Quebec for federal loan guarantees that would help ensure companies aren’t bankrupted by U.S. duties, which trade tribunals like the WTO have consistently found to be unjustified.
Meanwhile, communities that depend on softwood jobs are very worried. There is a desperate need for immediate action as part of a concrete short-term plan that will deal with this emerging crisis. If this dispute follows the same pattern as past versions, there will ultimately be a settlement that doesn’t move the needle as far towards the U.S. as their tariffs do now. For Canada, preserving jobs will require a commitment from the government. Right now, it remains to be seen if that will be coming.