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The option of linking lumber and energy might have been useful if it had not been mishandled

By John Clarke

  The image has now receded into the shadows. But the look on Ralph Klein’s face that day in August, when it looked as if Canada might play the “energy card” in the softwood lumber dispute, was as close to a deer in the headlights as any human could come.

No matter that Prime Minister Jean Chretien said later he had only told US President George W Bush on the telephone that Bush was being inconsistent—a free trader in energy but a protectionist on lumber.

It wasn’t as if the energy card hadn’t been thought of before. Tom Stephens, the American head of MacMillan Bloedel before it was taken over by the American Weyerhaeuser Corp, had months before bluntly advised withholding energy co-operation with the US unless the Americans accepted free trade in lumber. And Stephens knows Americans.

Federal Fisheries Minister Herb Dhaliwal, who’s from British Columbia, had even suggested that moving Arctic oil and gas through Canada to the lower 48 states should depend on solving the lumber problem.

So the energy card was out there in free flight on the western breezes and Klein didn’t like it at all. He deliberately made his point by staying at the microphone talking with the media bloodhounds long after Chretien had left, thinking he had laid the whole matter to rest.

Chretien might not have taken the energy gambit seriously, but Klein certainly did. He was not going to have another disaster, like the National Energy Program (NEP) from the early 1980s, foisted on Alberta to fight anybody’s else’s fight. Energy and lumber would be linked, but only over his dead body.

There’s not going to be a trade-off between softwood and energy, of course. As Chretien said, that would be war and he believed in resolving a file rather than fighting a war that couldn’t be won.

But there is linkage nevertheless.  If energy is so important that putting any artificial NEP restraints on its export would create a national unity crisis, why don’t lumber export controls count just as much?

The forest industry has had its ability to grow, and generate the kind of wealth Alberta has been building, locked in a straitjacket for the last five years. At well over $30 billion a year it’s still the biggest net contributor to Canada’s balance of trade with the US. Yet there was never any talk of national crisis throughout the long slumber of the export quota agreement that ended this past March 31.

There’s a quiet perception among people in the lumber business that they aren’t as high on the radar in Ottawa as other industries. Not much public noise about it. But it’s more than idle speculation in some of the boardrooms to wonder how soon trouble in the automobile industry would be answered by some kind of trade-off.

That may be a disservice to those in the back corridors handling the softwood lumber file. But given the history of unresolved disputes, it’s not difficult for the forest industry to feel hard done by.

Energy and automobiles have the advantage of being confined in single, well-defined regions where political influence is easily harnessed into political action.

Indeed there’s already so much free trade in energy that foreign companies have been able to spend almost $23 billion buying assets in the oil patch in just the last two years.

There’s some auto manufacturing in Quebec but Ontario is where that industry’s focus has been for years and it will continue to produce the material wealth on which central governments depend.

Alberta and Ontario have the political influence right now, which is why there was so much instant damage control when Klein thought he might be sacrificed for a softwood lumber solution.

Forestry is much more diverse—different species, different management systems, different structures and different attitudes, all of them distinguished more by diversity than unity.

The Atlantic provinces’ private woodlots say they’re different from Quebec’s Crown-based pulp and paper industry and shouldn’t be punished in this lumber controversy. Quebec thinks it’s less guilty than BC on stumpage. BC’s coastal industry would rather export to Asia anyway, when there’s a market there, than ship to the US. Meanwhile the BC interior does quite nicely in the US market.

Forestry is hardly a homogeneous industry. It’s hard to tune so many voices into a national anthem that would make the politicians stand up and salute. We swing more separately than we swing together.

Even as International Trade Minister Pierre Pettigrew and the provincial forest ministers hold hands in the face of that preliminary 19.3 per cent countervailing duty and whatever else comes down the road, the united front is held together more by desperation than conviction.

When a national newsmagazine like Maclean’s, on its September 3 cover, can say “Cities are hot. Provinces are powerful. Does Ottawa matter?”, it hardly breeds confidence in anyone’s role in this affair.

Yet if the American protectionists can cherry-pick among our industries, none is safe. What price Canadian sovereignty if Washington insists on our Crown-based logs being marketed at auction exactly as privately-owned American logs are?

Chretien may say he’s working as hard for forestry as for any other industry.  And there’s some confidence in Ottawa that Canada will come out all right in the end. But if Ottawa doesn’t matter, forestry will be fighting the fight without much more than moral support from other industries that, for now, have escaped the sharp edge of American trade restrictions.

What the energy card affair really does is give pause to the forest industry to wonder where it fits in the national economy, more particularly in the political economy. As it stands now, it’s eminently exploitable because the fit isn’t at all clear.

There never was any chance that oil and gas would be linked to lumber. But the suggestion that they could use linkage might have been useful in at least negotiating with the Americans, had the issue not been so clumsily mishandled.

Now that energy is out of the way, there’s one less thing for the Americans to be worried about.

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