Friday’s new agreement limiting the amount of timber imported from Canada gives some hope for downtrodden sawmills facing some of the worst market conditions in years.
Under the threat of a 15 percent U.S. tariff, Canadian trade officials reached a tentative deal with U.S. Trade Ambassador Mickey Kantor to limit how much lumber comes into the states from north of the border.
Lumber companies like Vaagen Bros. in Colville have blamed Canadian lumber for their decisions to close mills and lay off workers. Vaagen cut a whole shift at its primary mill Thursday, laying off 20 workers.
As one of the last sources of decent-paying jobs that don’t require higher education, the sawmills have strong support in communities throughout the region. Especially in small mill towns that see trucks stacked with Canadian lumber roll down their main streets, Friday’s agreement is likely to be seen as a community-wide victory.
The trade deal follows news earlier in the week that some of these same communities will receive federal flood aid.
“It’s like a double shot of good news for these towns,.” said Idaho Republican Sen. Larry Craig.
Even the most staunch supporters of tariffs against Canada agree that other factors, such as environmental regulations and shrinking log supplies, contribute to making the sawmill business a tough one.
Regardless, the trade truce with Canada is a symbolic victory for an industry in desperate need of a morale boost.
Canada flooded the United States with somewhere between 10.2 billion and 10.6 billion board feet of lumber last year, said Dick Bennett, a sawmill owner and spokesman for Inland Northwest timber producers. A board foot is a piece of wood an inch tall by an foot wide and a foot long.
The deal limits Canada’s total lumber exports to 9 billion board feet. It restricts Canadians provinces differently. Quebec, for instance, agreed to raise stumpage fees, or the costs that Canadian timber companies pay to cut its government’s trees. That will raise Canadian lumber prices.
The agreement will rekindle a moribund lumber market and make it more economical for Inland Northwest mills to operate, Bennett said.
If mills can make more money here, fewer or no more mill workers will find themselves out of jobs.
“I’ve got some friends who own mills that said they wouldn’t even start their mills back up again unless the market improves,” Bennett said from Palm Springs, Calif., late Friday. “This agreement will definitely help the market.”
Both nations subsidize timber through prices they set in auctions. The nearly 2-year-old trade dispute centered on the perception that Canada gave a better deal to its timber companies to cut logs, allowing them to cut their prices and undercut U.S. mills.
Eighteen months ago a Canadianmajority trade commission lifted a U.S. duty on Canadian lumber, setting off the dispute.
Canada’s share of the U.S. lumber market jumped to 36 percent last year. That compares with the the high 20s just two or three years ago, Bennett said.
The agreement should push Canada’s cut of the market back toward 31.5 percent, he said. “It’s definitely going to help us out.”
No major Northwest timber company has survived this decade without shuttering mills and laying off hundreds, if not thousands, of mill workers.
Headstones to the lumber depression lie padlocked around the Inland Northwest: Ione, Post Falls, Priest River, Grangeville.
The new agreement, while not final, will not be a magic elixir for sawmills. Timber supply continues to be a problem.
Under the agreement, British Columbia, the largest lumber exporting province, will tax its exports. Other provinces will increase the prices that logging companies pay for trees cut on government-owned land. Both measures should raise the cost of the Canadian wood sold in the United States.
Kantor said that 60 percent of the U.S. imports of Canadian lumber come from British Columbia. The agreement would cut that amount by 14 percent, he said.
The real winner in Friday’s new trade accord may be Southeastern sawmills. While the Northwest, the nation’s wood basket for decades, struggles to find trees, fast-growing and plentiful pines in the Southeast become more attractive for timber companies.
The threat of U.S. trade sanctions remained very real Friday morning. Craig condoned the use of the 15 percent tariff as the only way to bring the Canadians to the table.
“We’re not longer willing to be rope-a-doped at the negotiating table,” Craig said. “We’ve negotiated for the last 12 months and nothing has happened until the last few weeks. We had to force the issue.”
Kantor lauded the deal as an equalizer between the nations on the timber playing field. Once the deal is finalized, the governments of Ontario and Alberta will have to sign them, but Kantor said he expected the provinces to go along.
, DataTimes MEMO: This sidebar appeared with the story: Lumber deal Under the agreement, Canada agrees to do the following: Ship only 9 billion board feet for the next five years, unless a booming U.S. housing market demands more lumber. Add up to $100 for each 1,000 board feet of lumber sent here above the 9 billion mark. Increase stumpage fees, or what Canadian mills pay the government for the right to cut down trees on provincial lands, by $100 million in Quebec and other provinces.