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Canada softwood industry seeks China sales as alternative to US

Trudeau government has placed a priority on finding new trade markets in Asia.


April 21, 2017
The Canadian Press
by Mike Blanchfield

OTTAWA — As Donald Trump added softwood lumber to his anti-Canada trade rhetoric Thursday, Trade Minister Francois-Philippe Champagne was on his way to China with an entourage of industry representatives looking for an alternative to the US market.

One senior government official who spoke on the condition of anonymity characterized one portion of the visit as a “trade-mission oriented trip on softwood.” New Brunswick, Quebec, British Columbia and Ontario producers were all represented.

“For all sorts of reasons, we’re striking while the opportunity is ripe, to showcase, to take companies with us to promote them,” said the official, who wasn’t authorized to publicly discuss details of the trip.

Estimates of how much of Canada’s softwood lumber is shipped to the US are as high as 70%, but the Trudeau government has placed a priority on finding new trade markets in Asia – especially China – for a variety of goods and services.

Indeed, Canada’s softwood industry makes no secret of its own search for opportunities in China.

Canada Wood, an industry trade group, said earlier this month it would “take the first steps to extend its reach to Wuhan, which is the economic engine of central China,” by establishing a joint Sino-Canadian Modern Wood Construction Technology Center in the little-known Chinese city of more than 10 million.

“Canada Wood China is vying for a piece of China’s $44-billion hotel industry by promoting low-density, wood-frame hotels to the Chinese hotel industry,” the organization’s website added.

While exploratory talks on a Canada-China free trade deal between government officials take place in Ottawa next week, the first round of a high-level economic and financial dialogue will unfold in Beijing.

Champagne will be joined by Finance Minister Bill Morneau; their Chinese counterpart will be Vice Premier Wang Yang, who is also China’s point man on relations with the United States.

Softwood lumber is a long-standing irritant between Canada and the US. The two sides are working on a new agreement to replace the nine-year truce that expired in 2015.

The US Commerce Department is expected to decide soon whether to impose duties on Canadian softwood, which American producers say is overly subsidized and unfairly floods their market.

Earlier this week, Trump blamed Canadian dairy policy for driving American farmers out of work, and he ratcheted up his anti-Canadian invective April 20 from the Oval Office by calling Canada’s actions a “disgrace.”

He also widened his attack, saying, that “included in there is lumber, timber and energy. We’re going to have to get to the negotiating table with Canada very, very quickly.”

Prime Minister Justin Trudeau said he will continue to protect Canada’s agriculture producers – including its supply management system for dairy – as he tries to engage with the US administration on a variety of trade irritants.

Trudeau said he wants to have a fact-based conversation with the Americans, noting the US – like other countries – subsidizes its dairy and agriculture industries to the tune of hundreds of millions, if not billions, of dollars.

The US currently enjoys a $400-million dairy surplus with Canada, “so it’s not Canada that is a challenge here,” he said Thursday in a question-and-answer session with Bloomberg television.

Trudeau made his remarks prior to Trump’s latest broadside, which came just minutes later.

“Canada, what they’ve done to our dairy farm workers, is a disgrace. It’s a disgrace,” Trump said.

“Rules, regulations, different things have changed – and our farmers in Wisconsin and New York State are being put out of business.”

Trump was amplifying the complaints of Wisconsin and New York governors, who say Canada’s decision to create a new lower-priced, classification of milk product has frozen US producers out of the Canadian market.

Trudeau acknowledged the concerns of those two states, but said: “Any conversation around that starts with recognizing the facts. Now, I understand how certain governors are speaking to certain constituencies on that. It’s politics.”

Trudeau signalled that he is optimistic he can persuade Trump, saying the US president is “unlike many politicians” and avoids the instinct to “stick with” a particular position.

“He has shown if he says one thing and then actually hears good counter arguments or good reasons why he should shift his position, he will take a different position if it’s a better one, if the arguments win him over.”

News from © Canadian Press Enterprises Inc. 2016

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