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June 2003 - Column

Guest Column

The Atlantic provinces should not be part of a softwood solution with the US that includes duties or taxes simply because they are not part of the problem.

By Diana Blenkhorn

For the last 65 years, the Maritime Lumber Bureau has been effective in representing the interests of lumber producers in the four Atlantic Provinces with a coordinated, unified position on many important issues. It has most often been representative of not only the industry in the Atlantic Region, but has also successfully coordinated representative positions of both industry and provincial governments—a challenge not to be underestimated considering the differing objectives of these parties.

The most notable of the unified positions maintained by industry and government in the four Atlantic Provinces concerns the softwood lumber dispute between Canada and the United States.

We are only too aware that despite the Canada - US Free Trade Agreement of 1988 and the North American Free Trade Agreement of 1992, disputes in areas including wheat, dairy, poultry, cultural investments, salmon, steel, potatoes and wool have persisted. The most publicized and politically charged of all these battles is, of course, the decades-old softwood lumber dispute.

Lumber wars have rumbled between the two countries since the 1820s. But historically it is the difference in timber ownership that has set Atlantic Canada apart from other parts of Canada. In the Maritimes, 76 per cent of all softwood lumber production is generated from private land. In this region, the Crown is not the principal supplier of raw materials for the production of softwood lumber—it is only the residual supplier.

A review of the history of softwood lumber trade with the US since 1986, with particular emphasis on the treatment of Atlantic Canada in each phase of the dispute, shows an acknowledgment of the unique situation that exists in the Maritime provinces.

The most recent example of this acknowledgment came when the US Department of Commerce initiated the current countervail case against all the Canadian provinces. In a precedent setting move—just days before issuing a preliminary subsidy determination—the Department of Commerce amended the original notice of initiation so as to exclude the four Atlantic Provinces from the scope of the countervail case.

For decades, Canada has been faced with the challenges of finding a permanent solution addressing the numerous complexities of the softwood lumber dispute. It has been particularly daunting to find a solution acceptable to Canada as a whole, as the fundamental basis of the issue lies within the jurisdiction of provincial forestry practices.

While collectively the provinces of Atlantic Canada are very small in the Canadian context of softwood lumber production, the unified position and the unique nature of timber land ownership in the region have been understood by all levels of government.

It is anticipated in the next few months that Canada and the United States will reach yet another mutually acceptable resolution to the latest softwood lumber challenge. Our position is that Canada must ensure that there is no erosion in the recognition of the Atlantic region as being exempt or excluded as part of the desire to achieve a Pan-Canadian solution. The Maritime Lumber Bureau’s position has consistently been a firm “No” to duties, quotas or an export tax. To put it another way, we should not be part of any solution that includes duties or taxes or other border restraints, simply because we are not part of the problem.
Looking to the larger picture, our lumber industries on both sides of the border share many common goals, objectives and challenges. Both countries need to focus on the development of a shared vision for the future of our renewable resource, rather than being distracted by trade infighting.

We need to concentrate on the growth of our markets, and on satisfying the legitimate and increasing environmental consciousness of our customers. Rather than focusing on our common interests over the past 18 years, the US and Canadian industries have devoted financial resources in fighting each other. While this dispute has been going on, both industries have been faced with questions about integrity in the eyes of the public.

In the meantime, we have seen substitute products take an increasing share of available markets, and most importantly, we have watched imports from outside North America grow at significant rates.

In 2002, the US imported more lumber from offshore suppliers that it did from Atlantic Canada, despite the fact that Atlantic Canada maintained relatively free market access, with its continued exclusion from countervailing duties. From 1995 to 2002, offshore supplies to the United States increased by over 220 per cent.
While it may have not been seen by many in the industry as such, the takeover of MacMillan Bloedel by Weyerhaeuser a few years back was an important milestone in the history of Canadian forestry. It moved continental integration along by a quantum leap and raised legitimate questions as to the purposes served by continuous disputes.

What duties and taxes clearly do is distort the marketplace for smaller mills and value-added industries on both sides of the border. And, in the end, both the Canadian and US industries are on the losing end.  It’s time to leave this classic lose/lose situation behind us and move on with a united North American effort at developing and serving our lumber customers and growing the global wood market, thus eliminating the need for such  disputes.

Diana Blenkhorn is the President and CEO of the Maritime Lumber Bureau, based
in Amherst, Nova Scotia.

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