Efforts to negotiate a successor to the Softwood Lumber Agreement are running out of time. The current agreement expires March 31.
The SLA limits the amount of timber that can be imported from Canada to the U.S. duty-free to 14.7 billion board feet.
Beyond that, sliding fees are charged. About 18.5 billion board feet were shipped last year.
Short the SLA, lumber trade between our two countries would fall under the North American Free Trade Act. Our trading partner to the north would be free to up its exports to the U.S., which is to their advantage. Canada has far more resources than they have people to consume them.
The trouble is, the U.S. cant decide what is in its best interest.
Singing in an unusual harmony now are U.S. lumber interests and environmental groups, who challenge that Canadas lumber industry is unfairly subsidized by the government and unfettered by U.S.-caliber environmental regulations.
Canadian loggers and mills pay a flat fee for lumber. In the U.S., timber sales are awarded by competitive bidding.
Loggers up north also enjoy what environmentalists are calling ecological subsidies. A lack of restrictions like the Endangered Species Act allow Canadian logging to proceed without concern for salmon or grizzly bears.
The result has been plummeting prices. Wholesale lumber prices hit a seven-year low last year.
And U.S. timber just cannot compete. In British Columbia, a mill pays $9.25 for a truckload of logs. In the U.S., the same load would cost $500.
Canadas ability to extract wood from its forests and import the lumber to the U.S. at a fraction of the cost of domestic production appears to be a clearcut call for protectionist tariffs.
That would be in the best interest of the U.S. economy.
Or would it?
When the Federal Reserve Board meets today to take the economys pulse, some of the myriad of vital statistics they will sound are new home starts and home sales.
For builders and home buyers, the SLA hasnt been a good deal, the National Association of Home Builders argues.
The NAHB represents home builders, for whom lumber represents the single highest cost of building a new home.
The groups wants the SLA to expire and no new agreement to crop up in its place.
The SLA added between $800 and $1,300 to the price of a new home last year, the NAHB says, citing a Cato Institute study.
Even if you can justify that additional expense to protect domestic timber jobs which, if you believe the timber industry, were not protected by the SLA the NAHB has an answer for you.
The five million workers in building-related occupations plumbers, electricians, landscapers, painters, builders outnumbered loggers and sawmill workers 25 to 1.
A protectionist strategy for the few will harm the many, they argue.
For now, maybe. But not in the long run.
We think the long-term health of the U.S. and Canadian forest products industries requires a level playing field.
And that must be negotiated through the SLA.
Ideally, that would mean better environmental standards in Canada and some tariffs on imported wood.
It might also, however, require our flailing forest policy to restore a means to produce a sustainable domestic harvest.