Prioritizing a Softwood Lumber Agreement

Trevor Kennedy’s testimony to the House of Commons’ Standing Committee on International Trade regarding U.S Countervailing and Antidumping Duties on Canadian Exports of Certain Softwood Lumber Products

Madam Chair, committee members, thank you for the invitation to take part in your meeting on Canada-U.S. softwood lumber trade.

The Business Council of Canada is composed of 175 chief executives and entrepreneurs of Canada’s leading enterprises. Our member companies directly and indirectly support more than six million jobs across the country and hundreds of thousands of small businesses.

Since our establishment more than four decades ago, the Canada-U.S. partnership has always been a top priority for our members. We played a critical role in the supporting the development of the first trade agreement in 1987 and its expansion into NAFTA, as well as with our new framework, CUSMA.

Today, Canada and the United States enjoy a strong, mutually beneficial trade and investment relationship. 2022 was a record year for exports, and in the big picture, the future of bilateral trade looks bright, in large part due to the greater certainty provided by the CUSMA.

Unfortunately, this certainty has not extended to the softwood lumber industry nor to the various industries that rely on lumber inputs, such as homebuilders.

Softwood Lumber Agreement

We believe the only workable long-term solution to provide certainty and stability for the industry would be a new softwood lumber agreement.

We are disappointed that eight years after the expiration of the last softwood lumber agreement, there is no new agreement in its place, nor are there active negotiations toward a one.

A new agreement would clearly be in Canada’s interest, but also in the interest of American consumers as well.

We understand that there has been resistance by certain industry groups in the United States to negotiate a new deal, and as a result, this has not been a priority for the administration.

However, we know there are many supporters as well. Just last year, Members of Congress called on the United States to return to the negotiating table.

We were especially encouraged to see United States Senators Menendez and Thune, a Democrat, and a Republican, respectively, call on the administration to negotiate a new deal to benefit industry and consumers, particularly to reduce home building and housing costs.

Following up on this initiative, the Business Council of Canada sent a letter calling on the government to work with these congressional leaders, as well as other supporters in the United States, to build some renewed pressure toward a new deal. This is still possible, and we encourage Canadian officials to intensify efforts with likeminded partners in the United States to make progress toward negotiations this year.

Extending CUSMA

Securing a deal becomes more important as we approach the review and what we hope will be a smooth extension of CUSMA in 2026. While there is still considerable support for the agreement across a range of stakeholders, we should not take support for granted.

To create the conditions for extension, it should be a priority for Canada to reduce the number of irritants and disputes facing the trilateral trade relationship. Reaching a long-term solution for softwood lumber would certainly improve this discussion.

WTO

Another challenge in resolving this dispute has been the state of the WTO Appellate Body. This concern extends well beyond softwood lumber, but this dispute also demonstrates how important this institution is for Canada.

We were encouraged that at the 12^th Ministerial Conference the United States and other WTO members agreed to restore full functionality of the dispute settlement system by 2024.

We urge Canada and its partners in the Ottawa Group to work closely with the United States this year to overcome longstanding concerns and restore this important system.

Buy America

The recent expansion of Buy America rules to include a broad range of construction materials further threatens to harm Canada-U.S. lumber trade. We reiterate the importance of Canada securing a carve into any proposed restrictions placed on government procurement.

Conclusion

We urge Canada to prioritize securing a softwood lumber agreement. The Business Council of Canada and its members stand ready to support efforts to build a more stable and prosperous Canada-U.S. relationship and a competitive North America. Once again,

Thank you for this opportunity. I look forward to answering your questions.