BC Forest Industry Faces Change
Threat of US duties looms as agreement nears March expiry
Copyright 2000 The Toronto Star
December 30, 2000
By Gordon Hamilton
VANCOUVER - The new year is shaping up to be one of change for British Columbia's forest industry with more on the table than the corporate bottom line.
With the expiry of the Canada-U.S. Softwood Lumber Agreement on March 31, British Columbia's biggest industry and the 200,000 people who depend on it have a choice: Accept changes in forest policy that will take some of the sting out of American demands for a countervailing duty, or face a penalty that could drain $1 billion out of the industry.
"This is the Number 1 economic issue facing not only the forest industry but the entire province in the year 2001," says Bob Plecas, president of the B.C. Lumber Trade Council.
Plecas said if the Americans succeed in forcing a countervailing duty on Canadian lumber, which could be as high as 15 per cent, it would have a billion-dollar impact.
"That's a billion dollars that isn't going to be spent on new equipment, it isn't going to be spent on wages, it isn't going to be spent on technology or research, in taxes here for schools or hospitals," he said.
Under the 1996 agreement, Canada was allowed to ship 14.7 billion board feet of duty-free lumber to the U.S. each year, with tariffs set for shipments beyond that level. In return, the United States agreed not to launch any trade action, including the imposition of protective duties. A new agreement before the deadline is considered remote.
Reid Carter, industry analyst for National Bank Financial, sees a 90-day window of free trade opening up for Canadian producers beginning in April.
It will take that long for the U.S. commerce department to impose a duty if the U.S. lumber industry files an application after the agreement expires.
But during that time, Carter expects Canadian producers will flood the U.S. with lumber, giving the Americans all the ammunition they need to succeed in their application.
The Coalition for Fair Lumber Imports, a lobby group representing the U.S. lumber industry, says it is ready to file a countervailing duty application April 2 if no agreement is in place.
B.C. Forests Minister Gordon Wilson said he is committed to changing forest policy, not just because the Americans insist on it, but because the B.C. industry needs to change in order to survive in the global marketplace. Issues likely to be on the negotiating table include a market-based system of stumpage fees and raw log exports.