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The Gauntlet Has Been Thrown In The Softwood Lumber War

Jim Stirling

 "The inescapable fact is that the US impact is vast, Canada's isn't." 

The gauntlet has now been well and truly thrown. Now comes the test. We shall discover if the federal government has finally come of age and will assume the necessary leadership role to take up that gauntlet and fight the Canada/US softwood lumber war. Even then, it will require a united front of support from all of Canada's lumber producing provinces to have a chance of success. The next few skirmishes will be critical in determining the eventual outcome and the level of economic damage sustained by the Canadian economy. 

High cost producing regions like the central and northern interiors of British Columbia are especially liable to devastating effects on its forestry-dependent communities if the dispute lingers. The situation would be less alarming had the federal government paid more interest to the softwood lumber file three years ago. And it would have helped if Al Gore had garnered a few more Florida votes. But that's not the context. 

Instead, George W Bush has wasted no time establishing his stamp on the White House and upon US domestic and foreign policy. Within 120 days of assuming office, Bush has committed to large increases in defence spending and has put forth an aggressive energy policy. He's been hawkish with the Chinese about spy planes and snubbed the European community and other world leaders by repudiating the Kyoto Accord on reducing greenhouse gases. 

He doesn't care that his country is responsible for creating 25 per cent of them. The new president will be no lamb about lumber. US protectionist trade policies are well entrenched. America traditionally brooks little leeway for countries producing better and cheaper products than the US can consistently match. It constitutes an untenable position for the country that financially, politically and economically assumes a dominating world position. Self-interest on the Canadian side of the border is only helping the Americans. The expiration of the five-year softwood lumber export quota agreement is good news despite the present uncertainties. 

But at this writing in early April, it has resulted in Atlantic Canada, central Canada and BC adopting their own approaches to lumber trade relations with the US. Adivided Canada simply makes it easier for the Americans to achieve their ultimate goal of protecting market share. Lack of unity is not an admirable negotiating strategy. And negotiation is essential from the Canadian perspective, despite the pernicious cocktail of compromise it might entail. And it can work only if it is nation to nation. The federal government must find ways to liberalize trade agreements and institute unbiased dispute mechanisms. 

The giant's nose is tweaked at one's peril. But slinking off into the night in ignominious defeat is consummately worse. Taking the moral high ground and fighting the claims of subsidization, product dumping or whatever else the American complaint du jour is through the existing process is intellectually commendable but financially ruinous. Canada has been there and done that. We've won but we've lost. Rules and procedures have simply been arbitrarily changed to victimize the apparently vindicated. How many more times do we really need to bang our heads against that unyielding wall? 

The Americans have been judge, jury and executioner. The lumber market as well as the commodity's producers need a clear signal sooner rather than later that a level of stability can and will be re-defined. What tools Canada can best employ during the negotiation process is the crux of the issue. Mixing apples with oranges is an intriguing tactic that would attract short term attention. It could work, it might backfire. The inescapable fact is that the US impact is vast, Canada's isn't. Brinkmanship can therefore be dangerous. But the key with deploying any weapon is in the timing. Debating the respective merits in the media is not too bright. 

It's productive only to the Americans who require no additional help. One conclusion gleaned from all this is a confirmation of the cliché about not putting all one's eggs in the same basket. But the US is large, affluent and awfully handy. We share a long and generally rewarding history as trading partners. We have a common language and similar cultures. The US also consumes 45 per cent of the world's wood. It's a market Canada can't ignore. It's also one the US can't satisfy alone. It comes back down to the common denominator of market share. 

By the time this is read, British Columbians will, by all the polls, have a new government. The provincial Liberals will finally reveal the details of their political strategies. Hopefully, they will include the framework for a new provincial forest policy. New internal policies should have nothing to do with the US or smokescreens of subsidies or knee jerk reactions to deliberately misleading statements and good old BS. They have got to do with a new and workable vision for BC. Changes are sorely needed to better suit the province, its taxpayers and the forest industry in the long term. 

The stumpage system in BC makes little sense as a public policy strategy. Distortions in the system-the infamous waterbedding effects-make no economic sense. The system is broken so it does need fixing. And if a new BC government can build a public forest policy around principles of common sense and market realities to serve both the resource owner and the economic engine of industry it would indeed mark a new millennium.

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This page last modified on Tuesday, February 17, 2004