As I write this, the Canadian dollar is worth less than 88 U.S. cents and no one is expecting it to make any drastic moves soon. Not long ago the loonie was above parity with the greenback and we are now concerned about the implications of its fall.
The benefits of a weaker currency are centered on exports. Canadian goods and services, resources, tourist attractions and manufactured goods become less expensive to those outside Canada. On the other hand, everything we import, from tangerines to technological equipment, becomes more expensive for Canadian consumers and businesses.
One area where the lower dollar has great potential to do harm is in the forest sector, especially with respect to softwood lumber. Lumber is important to the economy across Canada and has always been a mainstay in British Columbia. As we wait to see how much and how soon developments will occur in LNG and other sectors, a gently reviving forest industry is supporting the B.C. economy.
But a big threat now looms over a major component of the forest industry in Canada and British Columbia. That threat is the fast approaching expiration of the Softwood Lumber Agreement (SLA) with the United States. Last September, the United States took 59 per cent of B.C.’s softwood lumber exports – down from earlier years, but still the lion’s share.
The United States should be delighted that Canada provides them with an assured supply of high-quality, low-cost, sustainably-produced lumber that becomes even better value as the Canadian dollar falls because it could reduce the cost of housing for Americans, a desirable goal.