Resolute Forest Products Inc. (Montreal, Que., Canada) President and CEO Richard Garneau this past week (Oct. 12, 2016) reaffirmed his company's support of free, unencumbered access for softwood exports from Central Canada (Quebec and Ontario) to the U.S. Garneau has been a leading figure in the ongoing softwood lumber dispute between the U.S. and Canada, and draws on more than 40 years of experience and leadership in the forest products industry across Canada.
Resolute is Canada's largest forest products company and the largest producer of softwood lumber east of the Rockies. Garneau has consistently challenged the claims by some that the 2006 Softwood Lumber Agreement between the U.S. and Canada produced predictability and stability. "Managed trade increases volatility, creating an unpredictable and unstable trade environment between two of the world's largest trading partners," stated Garneau.
While Western Canadian softwood lumber producers benefit from China's extraordinary economic development, logistical limitations mean that Asian markets remain out of reach for Central Canadian producers. Additionally, Western Canadian softwood lumber producers' purchase of 39 sawmills in the U.S., with a production capacity of some five billion board feet, afford them an important measure of insulation from future restrictive measures.
"To put this capacity into context, it is more than 150% of the total existing capacity of Ontario's sawmills. Canadian demand is simply not enough to absorb all of the production of Central Canadian sawmills," added Garneau. "We need to be able to sell freely to the U.S. Indeed, that was the whole point of the Canada – U.S. Free Trade Agreement and NAFTA. Just about every industry enjoys free trade, except for softwood lumber.
"The last softwood lumber trade arrangement between Canada and the U.S. was incredibly destructive, particularly for Central Canada. The previous Government of Canada not only agreed to limiting access, through quotas and taxes, it also paid more than $1 billion ‘in ransom’ to the U.S. softwood lumber producers, financed by Canadian workers. The purpose of a deal must not be simply an alternative to litigation. It must be to assure fair and equitable trade," Garneau further stressed.
Canadians have won every legal fight with the U.S. over softwood lumber. Canada has played by the rules and proved that its industry is not subsidized, and does not cause injury to any U.S. industry. Softwood lumber producers in Quebec and Ontario need and deserve nothing less than free trade.
Canadians have an important and influential ally in the U.S. consumer; however, they are reticent to fully engage their powerful movement in support of Canada considering Canada's stated intention to once again agree to a managed trade deal.
"If there is to be a deal, it must recall a principled purpose: that the Canadian softwood lumber industry does compete fairly in North America and pays a fair market price for timber, and that our forestry regimes are market-based. The Government of Canada must not negotiate a deal that does not fully recognize Central Canada's right to free trade," said Garneau. "However, if we are to go down the litigation route, the Canadian industry will need the full backing of the federal government to avoid being forced into a deal brought about by undue financial pressure by the U.S. government's actions at the border."