THUNDER BAY -- Ontario and Quebec chambers of commerce say forestry companies are preparing for a trade war with the United States over softwood lumber and are asking the Canadian government for help.
The chambers are sending a letter to Prime Minister Justin Trudeau, requesting the federal government commit to loan guarantees as Canadian companies will need to set money aside for legal action.
Every time the United States has challenged Canadian softwood lumber stumpage policies as unfair subsidies, it has lost in World Trade Organization (WTO) courts. While the American government leads those legal efforts, however, Canadian companies are required to respond rather than the Canadian government.
Thunder Bay Chamber of Commerce president Charla Robinson said forestry companies need support so capital isn't restraining them if the fight breaks out again.
"When there's tariffs put in, when there's duties that are being imposed by the government, everything is in the courts but in the meantime, companies have to put the dollars they would be putting into those tariffs into a special bank account to show they have the money to pay those at the end if they lose," Robinson said.
"That means those dollars aren't available to the companies to use."
Softwood lumber exports were not included in the 1994 North American Free Trade Agreement (NAFTA). A 2006 agreement between Canada and the US expired in 2015 and the parties failed to reach an extension to the agreement by the October 2016 deadline.
Robinson expects the US will issue new tariffs on softwood lumber crossing the border this spring. While both Democratic and Republican party administrations have been hawkish on the issue, the Donald Trump administration's stated America First approach to foreign policy suggests the next stage of softwood lumber relations will be a difficult climb.
"I think we all knew no matter who was in power in the US, there would be challenges," Robinson said.
"Softwood lumber has been a file that has been a challenge for some time but the overarching attitude of this US administration probably adds a few gray hairs to folks as they think of how hard it is to negotiate under that kind of approach, which is, 'it's all about us and we don't care if anyone else feels like they're getting a fair deal.'"
Robinson argued Canada needs to continue aggressive negotiations toward the same end as most goods and services between the two tightly-integrated, national economies.
"From the chamber perspective, from the local industry perspective, Canada should be fighting for free trade," she said.
"I don't think we should be walking in with an attitude of, 'let's see how little pain we have to take.'"
Thunder Bay-Superior North MP Patty Hajdu says the Liberal government is committed to free trade but can't yet speak to whether loan guarantees would be its preferred path to support industry in the event of renewed trade conflict.
"Free trade is important. It's an important part of driving our economy and we've been working very hard with the United States in particular to demonstrate the value Canada provides to the United States," Hajdu said.
"For 48 states, we are their largest customer so we've been meeting with various representatives -- political, bureaucratic -- to drive home that message that Canada's a valuable customer but also a valuable customer and that our shared prosperity depends on that relationship."