On April 24, 2017, US Department of Commerce (DOC) issued its preliminary determination in its countervailing dutyinvestigation into imports of certain softwood lumber products from Canada. USDOC claimed that Canadian softwood lumber imports into the US were subsidized.On May 29, US said it will impose preliminary anti-subsidy duties rough 20 % onmost imports of Canadian softwood lumber, which could affect some US$5.66billion worth of imports. It means that Canadian lumber exports, worth about $5billion a year (U.S.), will now be slapped with $1 billion in duties.<\/p>\n
The Conference Board of Canada says U.S.softwood lumber duties will cut $700 million from Canadian exports over twoyears and result in the reduction of 2,200 jobs. The board released a report OnJune 1st that says curtailed exports should lower the industry\u2019s pre-tax profitto $1.1 billion in 2018, down from $1.8 billion last year and $1.4 billion thisyear, despite growing revenues\u00a0[ii].<\/p>\n
With the inevitable consequence of joblosses and profit reduction, Ottawa looking at assistance to help Canada\u2019slumber industry after Washington slapping new duties on Canadian lumber.<\/p>\n
On May 30, 2017, the Prime Minister Justin Trudeau refused the decision to impose unfair duties as a baseless allegation in a phone call with Trump. The Prime Minister stressed that the Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry.<\/p>\n
Natural Resources Minister Jim Carr said Ottawa will push Donald Trump\u2019s administration to rescind unfair and unwarranted trade action on Canadian softwood imports.<\/p>\n
In a news conference, Carr cited that \u201cIndependent trade panels have repeatedly found these (U.S. lumber) claims tobe baseless\u201d.\u00a0Canada was mulling options such as a World Trade Organization or NAFTA challenge, and would help companies and workers who lose their jobs because of the tariff[iii]<\/p>\n
On June 1, 2017, Natural Resources Minister Jim Carr was announcing $867 million in financial supports to help lumber producers and employees weather the impact of punishing new U.S. tariffs on Canadian softwood exports[iv].The aid package are aiming at helping lumber companies\uff1a<\/p>\n
1) to diversify the market base for Canadian lumber products,<\/p>\n
2) to explore new markets and innovations, and<\/p>\n
3) to do more of the value-added work on softwood in Canada, which means instead of exporting raw logs, Canadian companies use the logs to make doors and window frames, furniture and countertops.<\/p>\n
Despite Canada\u2019s strong reactions, on June 9, the U.S. Department of Commerce is set to decide an anti-dumping claim against Canadian softwood producers, and is expected to add as much as another 10 per cent tariff on top of the counter vailing duties[v].<\/p>\n
Washington\u2019s decisions escalate the trade tensions between two nations. \u00a0While US-Canada lumber trade dispute enters into a never-ending battle, diver sifyingthe export market can alleviate the pains from US new duties. \u00a0Expending China market could be win-win alternative both economically and politically.<\/p>\n
China\u2019s Softwood Market<\/strong><\/p>\n The demand for wood products in China has been growing continuously. China is expected to remain the fastest-growing importer of softwood lumber in the world in the coming years.<\/p>\n In 2016 China imported record-high volumes of softwood lumber and softwood log imports reached their second highest level on record. Total importation of logs and lumber (in round wood equivalents) reached almost 76 million m3 in 2016, which was up 17 per cent from 2015, and almost 38 per cent higher than five years ago, according to the Wood Resource Quarterly (WRQ)\u00a0[vi].<\/p>\n Lumber exports to China are beginning to expand beyond low-grade timber to higher value products. China\u2019s demand for Canadian pulp has also been growing steadily since 2000, and now makes up 34% of total Canadian pulp exports[vii].<\/p>\n BC has been playing leading role in open up Chinese market. In 2010, BC has become China\u2019s largest supplier of softwood lumber. Based on the Trade figures in May 2011, the value of softwood lumber exported to China ($122 million) has surpassed the U.S ($119 million). Softwood lumber exports to China reach nearly $1.4 billion in 2013, accounting for 26.1 per cent of BC total volume of exports of softwood lumber.<\/p>\n Fig: ‘BC Exports of Softwood Lumber (440710) by Destination. Serial 1-World, Serial 2-US and Serial3China.<\/em><\/p>\n Produced by: BC Stats – Ministry of Technology, Innovation and Citizens’ Service Source:Reproduced from Statistics Canada, International Trade Statistics customextract, April 2017.<\/em><\/p>\n Here are a summary of market trends in China\u00a0[viii]<\/p>\n Rapid urbanization\u00a0\u2013 Sustainable urban development is an important priority for the Chinese government, and the government has committed to increasing the rate of urbanization to 60% by 2020, moving more than 100 million people to cities. This means that each Chinese province plans to build four to five new cities in the next few years. China\u2019s ongoing urbanization will further increase the needs for wood products in tier-ones and some surrounding tier-two cities.<\/p>\n Construction industrialization\u00a0\u2013 Construction creates an ongoing market for wood building systems and for structural and appearance grade products. In 2015, China introduced news trategic priorities and policies for the construction sector that promote construction industrialization and prefabrication. Municipal governments so providing subsidies for companies using prefabricated\u00a0construction methods. There is a significant opportunity for wood in prefabrication.<\/p>\n Rising middle class\u00a0\u2013 With an increasingly large and affluent middle class, Chinese consumers will continue to develop an appreciation for quality, a variety of housing styles, and a greater acceptance of international designs. This may create an opportunity to promote products manufactured with wood.<\/p>\n Continued demand for imported fibre\u00a0\u2013 China has the world\u2019s largest construction market as well as the largest wood products manufacturing base; however, the country has a growing fibre deficit which can only be satisfied by imports.<\/p>\n Green development\u00a0\u2013 Three decades of unabated growth has taken a serious toll on China\u2019s environment. The government is now recognizing the need to rectify the issue, raising green development, including green building and prefabrication,on the agenda.<\/p>\n Above five trends will drive lumber exports to China continuously growing in coming years.<\/p>\n Opportunity under China\u2019s OBOR Initiatives<\/strong><\/p>\n \u201cOne Belt, One Road” (OBOR) is an economic and diplomatic program proposed by Chinese President Xi Jinping in 2013.\u00a0 OBOR comprises of the Silk Road Economic Belt (red) and the 21st Century Maritime Silk Road (blue). It spans more than 68 countries and encompass 4.4 billion people and up to 40% of the global GDP. \u00a0About $1 trillion has already been invested in OBOR, with another several trillion to be invested over the next decade. Through building infrastructure and networks, China aims to boost free trade and development inregions traversed by OBOR, with potential benefit the entire world and lifts millions out of poverty\u00a0[ix].<\/p>\n While the recent Belt and Road Forum in Beijing became spotlight of global media coverage and gained overwhelm supports, somemedia view OBOR as primarily a political project for China to win friends and influence people. Few detractors view OBOR as a “philosophy” or “party line,” rather than anything concrete[x].The similar comments were also found in reports that China\u2019s overseas infrastructure might more target at the geopolitical value of the projects, rather than their economic value[xi].It is not unusual having different comments in negative sides of OBOR or using obsolete view on the novel thing from rising China\u2019s economics due to the difference in ideology and culture background.<\/p>\n Such noises provide warnings as precautions. \u00a0But, it will be wiser to filter or capture opportunities from economic prospects such beneficial from such political platform. It is obviously that vast infrastructure projects will require substantial raw materials. Canada\u2019s high quality softwood lumber could find large market associated with OBOR initiatives. As a catalyst, Canadian government can set up specific research projects to map and identify the potential needs for Canada softwood lumber and make early plan and market promotion while those ambitious projects are still loosely defined and in its fuzzy stage.<\/p>\n Canada is not on the routes along OBOR directly. But, large infrastructure projects will certainly drive the demand for large amount wood products. Since many countries targeted by OBOR — in central Asia, Africa and Southeast \u00a0Asia — are prone to economic and political instability and corruption, there are good chance that OBOR project funded by the Chinese government fails. Although CNN review might be full of bias, the benefits from participation under OBOR umbrella are reducing the economic risk through value chain instead of direct involvement.<\/p>\n Saying that China\u2019s OBOR is geopolitical, Canada can play vital role in balancing the political and economic relationship between US and China trade friction. With the rising of China as world’s second largest economy, China has become the number one trade partner with US. But, the annual import and export between Canada and China is still under low level in China\u2019s North American trade portfolio. China has tremendous room for Canada to share more market, such diversify the Canada softwood export without deadly bonded with US market. Canada is G8 member and will bring significant geopolitical value to OBOR projects through positive participate in China\u2019s OBOR initiatives.<\/p>\n Government\u2019s Eye to Eye<\/strong><\/p>\n Luckily both country senior officers are realizing the importance of win-win economic relationship and have made efforts to enhance bilateral partnership.<\/p>\n China\u2019s ambassador to Canada, Lu Shaye, in an event at Vancouver on May 11, said \u201cA lot will depend on how they choose to participate while the impacts and benefits Canada and B.C. derived from OBOR are still not so clear\u201d. \u201cOpportunity knocks but once; takes it now or never\u201d.\u201cWhile you are putting on your shoes, your competitors have already been running on their way\u201d\u00a0[xii].Somehow, Chinese government is urging Canada take actions quickly instead of observation and waiting.<\/p>\n Although Lu did not discuss specificindustries that would benefit, he highlighted that Canadian technology and product might look to Chinese manufacturing as a way or a value chain to reach developing markets in Central and Southeast Asia even Canada isn\u2019t along the OBOR corridor.<\/p>\n \u201cDo it if advantages out weigh the disadvantages,\u201d \u201cBoth sides should have the courage to do what benefits thelargest majority of people, as well as future generations\u201d<\/p>\n China is releasing strong interest in drawing Canada and B.C. into an expansive trade and investment initiative that\u2013\u2013carries significant geopolitical elements in addition to its economic values.<\/p>\n In Canada side, Natural Resources Minister Jim Carr said that our government recognizes the importance of finding new markets for our forest products. By diversifying into a variety of markets, we will beless vulnerable to actions from any single market[xiii].<\/p>\n On April 20, Trade Minister Francois-Philippe Champagne was in Beijing to boost sales of softwood in China lumber. He said there had never been a better time to diversify exports. He said from Beijing that there is enormous potential, in view of heavy Chinese demands.<\/p>\n The high rank officers in both sides have released similar signal, which could set as a starting point to reach a win-win agreement for Canada\u2019s soft wood export to China market. Diversifying the softwood export market to China will benefit to Canada\u2019s softwood companies, their employees and their communities to create new job opportunities and ensure sustainable prosperity for generations to come.<\/p>\n But experienced China watchers say Canada needs a coherent plan to meaningfully engage with China, and has to avoid sporadic overtures of interest in doing business there when it runs into trouble with the United States[xiv].<\/p>\n Summary<\/strong><\/p>\n US-Canada lumber dispute has been anever-end battle between the two nations. The baseless and unfair dutiesimposed by Trump government to Canada\u2019s lumber export create tough pains toCanada\u2019s lumber industry and economics. Diversify the softwood market willalleviate the heavy dependent of lumber trade with US. China has become anemerging market for Canada lumber products with continuous growth on demands inrecent years. Both Chinese and Canadian governments have released positivesignals on the expansion of bilateral trade. \u00a0China\u2019s new OBOR initiative could be a once alifetime opportunities for Canada\u2019s lumber industry and other sectors. Theexpecting demands to high quality wood products from trillion infrastructureprojects under OBOR umbrella will bring much-needed new markets for Canadianwood to easy the pains of Canada\u2019s softwood lumber dispute with US.<\/p>\n Cited References<\/strong><\/p>\n [i]Softwood Lumber, Global Affairs Canada, Government of Canada. http:\/\/www.international.gc.ca\/controls-controles\/softwood-bois_oeuvre\/index.aspx?lang=eng.<\/p>\n [ii]\u00a0United States softwood lumber duties to cost 2,200 jobs, report says, By Ross Marowits The Canadian Press Wed., May 31, 2017, https:\/\/www.thestar.com\/business\/2017\/05\/31\/united-states-softwood-lumber-duties-to-cost-2200-jobs-report-says.html<\/p>\n [iii]\u00a0Softwood lumber dispute fires up trade fight between Canada, U.S., By David Ljunggren | OTTAWA, Rueters Business News, April 25, 2017, http:\/\/www.reuters.com\/article\/us-usa-canada-trade-idUSKBN17R1VZ<\/p>\n [iv]\u00a0Ottawa announces $867M in financial assistance for softwood lumber industry, By Peter Zimonjic, Susan Lunn, John Paul Tasker, CBC News\u00a0 Posted: May 31, 2017,\u00a0http:\/\/www.cbc.ca\/news\/politics\/softwood-lumber-announcement-1.4140300<\/p>\n [v]\u00a0Federal government set to help softwood industry with $1-billionaid package,\u00a0 By Mia Rabson\u00a0 The Canadian Press. http:\/\/globalnews.ca\/news\/3493181\/softwood-aid-package\/<\/p>\n [vi]\u00a0Chinese softwood lumber imports hit record-high, January 31, 2017 By Hakan Ekstrom, Wood Resources International LLC -https:\/\/www.woodbusiness.ca\/industry-news\/markets\/chinese-softwood-lumber-imports-hit-record-high-3918.<\/p>\n [vii]\u00a0Forest products and applications, Natural Resources Canada, https:\/\/www.nrcan.gc.ca\/forests\/industry\/products-applications\/13317<\/p>\n [viii]\u00a0B.C. softwood lumber and panel exports to China, Forestry Innovation Investment (FII), BC Government,\u00a0http:\/\/www.bcfii.ca\/bc-forests-and-markets\/key-international-markets\/china<\/p>\n [ix]\u00a0Just what is this One Belt, One Road thing anyway, By James Griffiths, CNN, Thu May 11, 2017.http:\/\/www.cnn.com\/2017\/05\/11\/asia\/china-one-belt-one-road-explainer\/<\/p>\n [x]\u00a0OROB as primarily a political project for China to win friends and influence people, By James Griffiths, CNN, Thu May 11, 2017. http:\/\/www.cnn.com\/2017\/05\/11\/asia\/china-one-belt-one-road-explainer\/index.html<\/p>\n [xi]\u00a0The Problem With China\u2019s One Belt, One Road Strategy, By Spencer Sheehan, May 24, 2017, The Diplomat, http:\/\/thediplomat.com\/2017\/05\/the-problem-with-chinas-one-belt-one-road-strategy\/<\/p>\n [xii]\u00a0China looks to B.C. to help recreate Silk Road, By Chuck Chiang |May 23,\u00a02017, Asia Pacific Business. https:\/\/www.biv.com\/article\/2017\/5\/china-looks-bc-help-recreate-silk-road\/<\/p>\n [xiii]\u00a0 Feds announce $867M to help support lumber producers affected by U.S. tariffs, The Canadian Press, Thu.,June 1, 2017. http:\/\/globalnews.ca\/news\/3495549\/softwood-lumber-financial-support-plan\/<\/p>\n [xiv]\u00a0Trade minister courts China for softwood as US announces duties on Canadian lumber, By Mike Blanchfield, The Canadian Press Posted: Apr 25, 2017. http:\/\/www.cbc.ca\/news\/politics\/canada-china-softwood-market-1.4085269<\/p>","protected":false},"excerpt":{"rendered":" Canada is one of the world\u2019s largest lumber producers and exporters in the world. The wood products exports contribute $17.1 billion in net trade. Softwood lumber accounts for 20% of the value of Canada\u2019s wood product exports. The softwood lumber industry has been a key component in the Canadian economy, creating thousands of jobs across […]<\/p>\n","protected":false},"author":6,"featured_media":1302,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50,55],"tags":[210,209,154],"class_list":["post-1301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-topics","tag-opportunities","tag-softwood","tag-154"],"_links":{"self":[{"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/posts\/1301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/comments?post=1301"}],"version-history":[{"count":1,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/posts\/1301\/revisions"}],"predecessor-version":[{"id":1303,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/posts\/1301\/revisions\/1303"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/media\/1302"}],"wp:attachment":[{"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/media?parent=1301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/categories?post=1301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/grizzlybearinstitute.org\/en\/wp-json\/wp\/v2\/tags?post=1301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n
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