Trade Deals: North America and International

Trade Deals: North America and International

Just as the 2006 Canada-US Softwood Lumber Agreement is expiring, leaving a one-year stand-still period before either country can embark on any kind of trade action against the other, the Trans-Pacific Partnership is signed between twelve Asian and North American countries, including Canada and the US. That agreement now has to be passed domestically by each of the member countries.

The most important player — for Canada’s forest products’ industry — by far, is Japan.

Trans Pacific Partnership: Japan and Canadian Forestry Products

The effects of the Trans Pacific Partnership on Japan’s forestry trade are:
“On lumber and plywood, it is agreed that Japan can set up a safe guard and duty abolishment period in 16 years for the member countries, from which import is large or growth of import is remarkable. Such countries are Malaysia, New Zealand, Canada, Chile, and Vietnam.
Also it is agreed to control trade of illegally harvested wood.
On main items from Canada and Malaysia, Japan can maintain safe guard even after the tariff is abolished.
Japan SPF Imports from Canada

For Canadian SPF lumber, import duty will be reduced from 4.8% to 2.4% until 16 years after ratification. However if the import volume reaches a certain level, the previous duty rate (before ratification) is applied.
The base volume, at the time the TPP is ratified, of 1,573 million cubic metres, to increase by 31,500 cubic metres every year up to and after the 16 year term of the TPP.

SOURCE: Japan Lumber Reports
SOURCE: Japan Lumber Reports

Duties on OSB, as a substitute for plywood and lumber, will be abolished step by step.
The Japanese government announced in March 2015 a ‘Uniform calculation of economic effect in case import duty is abolished’. In this, production value of forest products will decline by about 49 billion yen by reduction of duty and domestic products would be replaced by the imports and resolution was made that utmost consideration is necessary for import of plywood and lumber.”

Japan Lumber Reports; October 9, 2015

Japan Imports of North American Logs and Lumber: First Half 2015

Japan’s import of North American logs decreased by 26.3 per cent, to 1.28 million cubic metres, compared to the first six months of last year. This is an almost 30 per cent drop from the recent peak of 2013.
Log imports from USA dropped by 14.2 per cent, to 893,000 cubic metres, while that from Canada fell by 44.4 per cent, to 387,000 cubic metres.
Conversely, import of North American lumber for January to June this year fell by 5.4 per cent, to 1.15 million cubic metres, compared to the same time in 2014.
Lumber imports from USA dropped by 16.6 per cent, to 168,000 cubic metres, while that from Canada lost only 3.2 per cent, to 983,000 cubic metres.

Japan Log Imports

The amount of Japan’s log imports for the first half of 2015:
• Douglas fir (sources approx 70% from the US, 30% from Canada) 1.15 million cubic metres, down 27.7%;
• The share of Hemlock logs continued to fall;
• Sitka Spruce log imports fell further as prices continued soaring.

Screen Shot 2015-10-09 at 2.02.13 PM
SOURCE: Japan Lumber Reports

Japan Lumber Imports
The amount of lumber products received:
• Spruce-Pine-Fir lumber import (which accounts for 57% of North American lumber imports) 659,000 cubic metres, up 4.5%;
• Douglas fir lumber volumes imported were 241,000 cubic metres, down 9.5%;
• Hemlock lumber imports fell by 24.5%, to 140,601 cubic metres, due to production curtailments by supplying sawmills on the BC coast.

Comments are closed.