Canada Primarily Responsible for Softwood Lumber Dispute
THE GALLON ENVIRONMENT LETTER
Vol. 5, No. 12,
Copyright (c) 2001,
Canadian Institute for Business and the
Environment, Montreal & Toronto
March 21, 2001
506 Victoria Ave.
Montreal, Quebec H3Y 2R5
Ph. (514) 369-0230
Fax (514) 369-3282
Email ggallon@pcstarnet.com
CANADA PRIMARILY RESPONSIBLE FOR SOFTWOOD LUMBER DISPUTE
The fact is that forest companies operating in Canada are receiving more subsidies and paying lower stumpage fees than their counterparts in the United States. Forest companies in Canada do less reforestation and protect less endangered species than those in the U.S. Forest companies in Canada have been purposefully low-grading valuable timber for which they pay much less stumpage fees than they would if they were more honest. As a result, the forest companies in Canada are operating a definite competitive advantage over the U.S. forest companies. Canada is allowing its valuable forests to be stripped as quickly as possible and sold at a discount to the United States - - without giving a thought to sustainable yield, adequate old growth protection, and long-term economic protection of the forest industry into the next generation. Home builders and commercial lumber companies in the United States love it, because they can get such cheap timber from Canada, when they can't it from their U.S. forest companies. Also, it is suspected that Quebec forest companies are cutting trees and selling the timber cheap through the Atlantic provinces to the U.S. without being subject to the more expensive U.S. Canada softwood trade agreement (see, "Lumber Unity in Tatters as B.C. Breaks Ranks", by Ian Jack, Financial Post, March 21, 2001). If Canada is going to participate in free trade then it must play on a level playing field. It can't dump cheap timber into the United States just to boost the immediate income of foreign and Canadian forest companies operating in Canada. Ironically, Canada has placed itself in a position where the U.S. will end up placing a countervailing duty on the Canadian timber that enters the U.S.
This money will be taken by the U.S. and used in the U.S. Instead, Canada should have bitten the bullet and charge the proper stumpage fees and force the companies to reforest and protect endangered species. Then Canada and its citizens and environment would benefit from the stumpage fees rather than the United States. We only have to remember that the U.S. forest companies in Washington and Oregon were stopped dead int their tracks in a national effort to protect the habitat of the "Spotted Owl". Some forest companies in the largest exporting province, B.C., know this and have broken ranks with the federal government and forest companies in the other provinces that have stuck with the position that Canada has done nothing wrong and is not operating at a competitive advantage. B.C. companies like Canfor (Canadian Forest Products) and Lignum Ltd. believe that they have to cut a deal with the U.S. that in effect increases their stumpage fees, or implement a "Canadian Voluntary Export Tax" (in lieu of stumpage fees). The real solution is for Canada to stop acting like a "hewer of wood and drawer of water" for the United States, and begin to treat its forests as if they are going to sustain industry in Canada for the next several generations, rather than allow the companies to cut and run. It should be understood as well that the majority of the forestry activity in Canada is being conducted by U.S. controlled companies, not Canadian companies. For example, MacMillan Bloedel, Canada's largest company with $3.2 billion in annual sales is controlled by Weyerhaeuser Co., based in the State of Washington. Cascades Canada with annual forest products sales of $1.6 billion a year, is controlled by Boise Cascades Co., based in Boise, Idaho. Fletcher Challenge Canada, with $975 million in annual wood sales in Canada, while not a U.S. company, is controlled by the giant multinational forest company out of New Zealand, with no real roots in Canada. Ironically, it will be free trade under NAFTA and WTO that will force Canada t o finally come in line and operate on the same playing field as the U.S., and action that will see a better protection of the environment and a better stewardship of the renewable forest resources. See the Rainforest Action Network website at http://www.ran.org/ran/ . Also visit the Council of Forest Industries (COFI) website at http://www.cofi.org/ .
CANADA'S TRADE MINISTER, PIERRE PETTIGREW TRIES TO DEFEND CANADA'S UNDEFENDABLE POSITION The Canadian Press (CP) reported that Canada's Trade Minister Pierre Pettigrew found himself defending the country's environmental laws from an American attack as the softwood lumber battle took a new twist. Mr. Pettigrew fended off allegations made by U.S. Senator Max Baucus that Canada's softwood lumber exports may be hurting the environment. That claim represents a new tactic by Baucus to support his longstanding position that Canadian provincial and federal governments provide unfair subsidies to the softwood lumber industry. Responding to the accusations, Pettigrew said that, "Canada is a world leader in forest management," during a House of Commons Committee meeting on trade. CP reported that the U.S. industry has long complained that Canadian provincial governments subsidize domestic lumber companies through low tree-cutting fees and other benefits that give Canadian producers an advantage over their U.S. competitors. "The subsidies increase imports from Canada and also encourage detrimental over-har vesting of Canada's old-growth forests," Baucus, the Democrat senator from Montana, told a news conference in Washington organized by U.S. environmentalists. "Simply stated, these subsidies cause the harvesting of timber regardless of need and at the expense of the environment." Not so, said Pettigrew. "If you look at the reality, with 94 per cent of forest land under public ownership (in Canada), we control harvest levels very well -- much better than the United States," he said. "We grow twice as many trees as we harvest in Canada -- this is a very significant number." This last statement by Pettigrew may be wrong. Canada does not know how many trees it is regrowing, nor is it clear that the trees they are regrowing are the same species of valuable timber that they are now cutting and exporting to the U.S.. It may well be that "junk trees" with little value are growing in the place of the great old growth timber pines that are being clear-cut. A Timber Management Class Environmental Assessment in Ontario carried out from 1988 to 1991, revealed that Ontario was mismanaging its forests; that it was not reforesting adequately; and, that different forest district offices counted standing trees and cut trees differently between the district offices - there was no overall exact science employed by the Ontario Ministry of Natural Resources (MNR) related to courting the commercial trees overall in the Province. Then, just as the province was putting in place proper measures in 1995 the Mike Harris Government came in and slashed the MNR budget by more than 30 per cent. It also cut MNR's regulatory powers through the "Red Tape Commission" which was designed to get government out of the way of business in Ontario, including its forests. The Harris Government shutdown or sold most of the provincial tree nurseries. Reforestation was placed into the hands of industry. It's not clear at all that adequate reforestation is being undertaken, particularly when the industry reneged on its financial responsibilities by reporting that "natural regeneration" was faster and better than tree planting. In the face of these facts it is not clear at all that Canada is planting two trees for everyone cut.
Susan Casey-Lefkowitz, of the Natural Resources Defense Council, called for a new Canada-U.S. agreement on softwood lumber that deals with both economic and environmental subsidies. "We'd like to see that negotiated as quickly as possible because we fear that any lag time between the current agreement and a future agreement is only to further cause destruction of our shared North American environment." Source, "Pettigrew Disputes U.S. Shot at Canadian Environmental Laws", by Sandra Cordon, The Canadian Press, Ottawa, March 19, 2001. See the full story at http://www.canoe.com/CNEWSPolitics0103/19_pett-cp.html
BEHIND THE SOFTWOOD LUMBER DISPUTE, WHAT'S IT ABOUT?
Canada and United States signed a five-year Softwood Lumber Agreement in 1996. It expires March 31, 2001. In 1996, the Softwood Lumber Agreement was negotiated at the behest of US lumber producers by the US Commerce Department and the Office of US Trade Representative. It capped the amount of lumber that could be imported duty-free from Canada into the U.S. at 14.7 billion board feet (bbf) per year, and taxed lumber over and above this amount on a sliding scale. While this quota applies to the whole of Canada, the bulk of lumber exported into the US - 9.8 bbf - comes from British Columbia. Alberta, Quebec and Ontario supply the rest under the Agreement. However, 14.7 bbf of timber exported under the Softwood Lumber Agreement is only the duty-free amount exported into the US. Many Canadian lumber producers have simply chosen to pay the tariff in order to have access to lucrative US markets, increasing the total amount of lumber products exported to the US to 25 bbf.
The Softwood Lumber Agreement covers lumber exports to the United States from four provinces, which accounted for 16.2 billion board feet (BBF) of the 17.0 BBF imported from Canada in 1995. There are high Canadian export fees on shipments in excess of 14.7 BBF. Under an amendment to the Agreement announced in August 1999, shipments from British Columbia (the largest producer) face fees of up to $148 per million board feet (MBF). Shipments in excess of the fee-fee quota from Quebec, Ontario, and Alberta are subject to fees of up to $108 per thousand board feet (MBF). The government involvement allows producers to restrict competition without facing antitrust charges. From 1991 to 1994, Canadian lumber faced a countervailing duty (CVD), based on findings of subsidy by the Department of Commerce and injury by the U.S. International Trade Commission. Each finding was appealed to a binational panel. The subsidy finding was struck down in a 3-2 decision. The injury finding was rejected 5-0. The binational panels' decisions were based on U.S. trade law. After the countervailing duty (CVD) was struck down, U.S. law was changed, by provisions attached to the bill implementing the Uruguay Round GATT, passed by Congress under fast-track rules in December 1994. Using the leverage provided by the changes in U.S. trade law, U.S. lumber firms were able to threaten a new CVD and demand limits on shipments from Canada.
The result was the 1996 Softwood Lumber Agreement, with its "voluntary" restraints. The scope of the Softwood Lumber Agreement is specified in terms of classifications under the Harmonized Tariff Schedule (HTS). The U.S. Customs Service has reclassified some products, putting them under the quota. The products involved—drilled studs, notched studs, and rough header lumber—were reclassified from HTS 4418 "Builders' Joinery and Carpentry" to HTS 4407 "Wood Sawn or Chipped Lengthwise" Prior to the Softwood Lumber Agreement, when there was a higher duty on products under HTS 4418 than on products under HTS 4407, the U.S. Customs Service insisted that these products could not be imported under HTS 4407. The Harmonized Tariff Schedule of the U.S. is based on an international agreement of over 170 countries. The Harmonized System Committee of the World Customs Organization issued a final decision in October 1999 that drilled studs were properly classified under HTS 4418, not under HTS 4407, but the U.S. has refusedto follow that decision. Restricted supplies of timber from U.S. public lands have limited lumber output in the West, increasing the share supplied by the South and by Canada. What happened was that sales of timber from federal lands fell from 10.4 BBF in 1990 to 3.2 BBF in 1998. Supplies of lumber from the Western U.S. declined by 19 percent from 1989 to 1999. Imports of lumber from Canada grew by 35 percent from 1989 to 1999. Imports of lumber from other countries grew by 737 percent from 1989 to 1999. Supplies of lumber from the South grew by 35 percent from 1989 to 1999. About 34 percent of lumber consumed in the U.S. in 1999 was from Canada. Source, National Association of Home Builders (NAHB), 1201 15th street, NW, Washington, DC 20005, ph. 202-822-0200, email info@NAHB.com . See the article at the http://www.nahb.com/lumber/lumber_background.htm . Also see http://www.ecosystem.org/transb/art9.html
HISTORICAL BACKGROUND ON THE LUMBER DISPUTE Following 14 years of formal dispute, the United States and Canada in April, 1996 reached agreement regarding alleged Canadian subsidy of that nation s softwood lumber industry. After first rejecting a 1982 petition from U.S. lumber companies charging the Canadian government with subsidizing its softwood lumber industry, the U.S. Department of Commerce (DOC) subsequently accepted a second identical petition filed by U.S. lumber companies four years later. Following negotiations, the Dept. of Commerce and the Canadian government reached an agreement whereby the Canadian government would impose a tax on softwood lumber exports and attempt to transform its forestry programs. However, in September, 1991 Canada decided to terminate the tax claiming it was no longer needed. The United States disagreed and pursued a legal case with the U.S. International Trade Commission (ITC). In July, 1992 the ITC ruled in favour of the United States. Canada is pursuing the case via the Free Trade Agreement and GATT. Four years h ave passed since the disagreement. As of April, 1996 a new agreement has been reached between Canada and the U.S. Canada has agreed to limit its softwood lumber shipments to the U.S. In exchange that the U.S. would not launch any new trade action against Canadian softwood producers for five years. On three separate occasions, the Canadian federal and provincial governments have been charged with subsidizing the softwood lumber industry. The U.S.-based Coalition for Fair Lumber Imports first filed a petition in 1982. It claimed that the Canadian government's timber programs offered lumber to the Canadian softwood industry at a price 27 percent lower than the U.S. rate. However, in May, 1983 the DOC rejected those allegations and the petition was denied. Commerce based its rejection on U.S. law which defined a subsidy as government assistance provided to a single industry or group of industries.
The Canadian government stumpage fee program did not offer assistance to just one industry or a group of industries, but to a number of different industries. Without filing an appeal, a U.S. lumber group filed a second petition in May, 1986 repeating the same allegations against Canada. Although there had been no material changes in the Canadian forestry program since 1984, the U.S. Dept. of Commerce accepted its petition. The department found that the federal and provincial governments provided a 15 percent subsidy to a single industry: the softwood industry. Once Commerce determined this rate, it threatened to impose a 15 percent countervailing duty to counteract the alleged subsidy. Canada chose to avoid the implementation of the tax by negotiating a Memorandum of Understanding (MOU). Although this agreement also forced Canada to impose a 15 percent tax on softwood lumber exports, it was more beneficial for Canada than a 15 percent countervailing duty charge, which would have lined U.S. coffers. After the
Dept. of Commerce found that the timber oversight programs of BC, Ontario, Quebec and Alberta, along with the log export restrictions of BC, were countervailing subsidies, the Department determined a country-wide ad valorem tax. This tax was calculated according to the amount Canada lowered lumber prices. DOC found that the stumpage programs provided a net subsidy of 2.91 percent and that the log export restriction granted a 3.60 percent net subsidy, generating a net subsidy of 6.51 percent. These duties were determined on May 18, 1992, but they could not be implemented until the International Trade Commission (ITC) confirmed that these subsidies materially damaged United States industries. On July 6, ITC made a final affirmative decision and the countervailing duty was imposed. Source, "TED Case Studies: Case No. 75: "US-Canada Softwood Lumber Dispute". Find the report at http://www.american.edu/TED/USCANADA.HTM . Also see the direct wording of the 1996 Softwood Lumber Agreement at the website http://www.d btrade.com/casework/softwood/summary.htm
ABOUT THE COALITION FOR FAIR LUMBER IMPORTS The U.S. lumber firms seeking protection from import competition operate together under the name Coalition for Fair Lumber Imports. Most of the funding for the Coalition for Fair Lumber Imports comes from five companies: Georgia Pacific, International Paper, Sierra Pacific, Temple- Inland, and Potlach Lumber Co. The five companies own large tracts of private forest land. The Coalition for Fair Lumber Imports has one of the largest budgets of any single-issue lobby group in Washington. The Coalition for Fair Lumber Imports on March 24, 1999, accused Canadian sawmills of seeking to evade the scope of the 1996 U.S.- Canada softwood lumber agreement and falsely claiming that the U.S. industry is trying to add more products to the pact. The Coalition for Fair Lumber Imports represents small and large lumber producers from every region in the United States. Members include the Independent Forest Products Association, the Intermountain Forest Industries Association, the Northeastern Lumber Manufacturers Associatio n, the Southeastern Lumber Manufacturers Association, the Southern Forest Products Association, the Western Wood Products Association and many state wood products and forestry associations. The Coalition's efforts have been supported by the Paper, Allied-Industrial, Chemical and Energy Workers International Union and the United Brotherhood of Carpenters and Joiners of America who represent over 650,000 workers.
Scott Shotwell, Executive Director of the Coalition for Fair Lumber Imports said that, "no one is seeking to add new products to the Softwood Lumber Agreement. The U.S. Customs is quite rightly--as required by law--seeking to close loopholes whereby some Canadian mills have evaded the softwood agreement by drilling small holes or notches in their lumber or scratching the face of their lumber and then claiming that it is no longer lumber or siding," Shotwell said in the March 24, 1999 press release. Source, "U.S. Lumber Firms Charge Canadian Mills With Misconstruing, Evading Lumber Pact", Vol. 16, No. 13, "International Trade Reporter", March 31, 1999. See the full article at http://subscript.bna.com/SAMPLES/itr.nsf/85256269004a99228525625400656cb3/4a8a028f2e079b7b85256746000778db?OpenDocument .
CANADA'S FREE TRADE LUMBER COUNCIL
A coalition of Canadian softwood lumber producers, known as the Free Trade Lumber Council, recently asked the Canadian federal government to intercede on their behalf on the matter, charging that the U.S. Customs was trying to expand the pact (16 ITR 495, 3/24/99). Frank Dottori, co-chair of the Free Trade Lumber Council and chief executive officer of Quebec-based Tembec Inc., has claimed that the reclassification would threaten up to $1.3 billion of Canadian softwood lumber exports to the United States and significantly increase prices for U.S. consumers.
CANADA LUMBER EXPORTS TO U.S. HIT NEW RECORD 18.2 BBF U.S. import data for 1999 just made available show that Canadian exports of lumber to the United States hit a record high in 1999. Over 18.2 billion board feet (BBF) of timber from Canada's forests were exported to the United States. In fact, since the adoption of the U.S.-Canada Softwood Lumber Agreement in 1996, Canadian imports have hit a record almost every year. Canadian imports from 1996 to 1999 averaged 17.8 BBF annually, compared to 17 BBF in 1995. Canada's share of the U.S. market has also continued at near record levels, reaching 34% in FY 1999. Canadian import penetration has averaged over 34% under the Agreement, down somewhat from the 36.6% peak of FY1995 but nonetheless higher than in any year prior to 1995. The Agreement has permitted a sustained increase in U.S. production (and U.S. jobs). In 1999, U.S. lumber production was 16.3% higher than it was in the period immediately preceding the Agreement. At the same time, Canadian production is also reaching record levels and has actually increase d by 17.2%, more than the U.S. increase (data through November 1999). In fact, 99.6% of the lumber consumed in the United States is not subject to any fee under the Agreement. See the full press release at http://www.incongress.com/issues/article.cfm?ArticleID=340 .
U.S. CONCERNED ABOUT THE WAY CANADA SETS SUCH A LOW STUMPAGE FEE A U.S. forest business webletter called "E-Wood.Com", edited by Fred Morris, reported that, "British Columbia is the source of more softwood exports to the U.S. than any other Canadian province and source of the Canadian subsidy for stumpage. What Americans perceive as the subsidy Canadians understand as grade-setting, the way stumpage is assessed by the provincial government from its public lands.. Ninety-five percent of Canadian forest land is owned by the Crown, and forest product firms pay grade-set rates for trees on the stump instead of market prices. Grade setting is practice of harvesting only low-grade timber to set the grade for huge cutblocks, as a way to trigger a downward appraisal of their stumpage payments. Then they switch to harvesting only high-grade timber but pay the low-grade stumpage rates." The same U.S. internet business reported that the B.C. forest company, "Doman Industries Ltd., claimed the B.C. Government was aware for several years of irregularities in what companies were paying
for timber stumpage yet allowed the practice to continue. "We have no choice. We must seek compensation," Doman director Rick Doman said., adding that, "our balance sheet is basically weaker because of this stumpage fee discrepancy between companies." A recent Vancouver Sun newspaper survey of stumpage rates showed that Doman – which harvests over three million cubic metres of timber a year, paid an average price of $26.83 a cubic metre in 2000, more than four times rival Interfor, which paid only $6.28 a cubic metre. A cubic metre is about the equivalent of a telephone pole Under an obscure piece of legislation called the Ministry of Forests Act, the forests minister is required to ensure stumpage is collected in a fair and equitable manner. Source: Vancouver Sun See the comments at http://e-wood.com/news/news_archive_Detail.asp?id=3851 . See the full article at http://www.e-wood.com/nsearch.asp?keyword=grade-setting&f=11/1/00INTERFOR, TIMBER WEST, AND WEYERHAEUSER GOT AWAY WITH PAYING VERY LOW STUMPAGE RATES IN B.C.
In November 22, 2000, the U.S. internet newsletter "e.Wood.Com" reported that, "by using a loophole in provincial regulations, three of British Columbia's largest forest companies paid next to nothing for 115,000 truckloads of timber harvested from the coastal rainforest. And the provincial government let them do it, fearing it would push small companies out of business if it tried to collect the lost revenues the only way it could -- by raising the price of logs for everybody else. The three companies, International Forest Products, TimberWest Forest Ltd. and Weyerhaeuser, were identified in a 1999 computer search by the forests ministry after anecdotal information was received that companies were avoiding stumpage payments through grade-setting. The search turned up 36 instances since the spring of 1998 where the three companies had received at least a 50-per-cent drop in their stumpage rates. A fourth company, Terminal Forest Products, was identified once for a total of 37 instances. Forest companies view
the issue of grade-setting as a symptom of the mess surrounding B.C.'s system of collecting revenues from public forest lands. "If you could equate grade-setting to windfall forest profits, maybe that's an issue, but in fact you have companies that are barely able to stay afloat," said Steve Crombie, director of public affairs at Interfor. See the full story at the e.Wood.Com website http://e-wood.com/news/news_archive_Detail.asp?id=3198 .
SIERRA LEGAL DEFENSE FUND REPORT ON AVOIDED STUMPAGE CHARGES IN BRITISH COLUMBIA
A new report entitled, "Stumpage Sellout: How Forest Company Abuse of the Stumpage System is Costing B.C. Taxpayers Millions", by Mitch Anderson and John Werring, was released January 2001 by the Sierra Legal Defence Fund (SLDF). It found that major forest companies logging on B.C.'s coast shortchanged the province by $224 million. That International Forest Products (INTERFOR) was the single largest beneficiary of those savings by almost $100 million on its own. It was carried out by a stumpage manipulation technique, known in industry circles as grade setting. On one Interfor cutting permit alone, grade setting techniques appeared to result in the initially appraised stumpage rate falling from $41.01 a cubic metre to $2.19 a cubic metre, resulting in a loss to the taxpayers of B.C. of over $5 million. Interfor also reduced the stumpage it paid to the legal minimum of 25 cents a cubic metre on more than half the wood it logged on the Coast in the last quarter of 1999. Such reductions are achieved by a compan y cutting a poor section of forest with low quality trees and presenting the findings to the provincial forestry inspectors as the type of tree that they are going to cut and sell throughout the next several years. The province, without the resources to challenge or test the company's allegation that it will be harvesting such cheap trees, sets a low grade and therefore a low stumpage rate for all the trees the company harvests. As soon as the company gets the approval for a low stumpage fee based on the junk trees it originally harvested, it sets off to high grade the forest of the very expensive and high quality trees and paying the province a pittance of correct stumpage fee that should have been assessed for the expensive trees.
Sierra Legal also found that had major forest companies paid the full stumpage rates for logs between 1993 and 1998, as much as $6 billion more in stumpage fees may have been collected by the taxpayers of British Columbia. This has been considered a subsidy by the United States softwood lumber and industry and has been attacked as unfair for the forest industries in the U.S. that are much more closely monitored and which pay much larger stumpage fees that are used to help manage the growth of new and healthy forests there. To end grade-setting and other potential abuses of the stumpage system, the report calls on the government to request the Auditor General investigate the entire stumpage and appraisal system; to increase the presence of the civil service enforcement officers in the field to ensure company accountability; order that more wood to be sold by auction so that market forces, not industry or government, dictate the price paid.
Stumpage is the method used by the provincial government to generate revenue for the cutting of trees on Crown land. Stumpage rates vary depending on the value of the timber, market conditions, and logging costs. Rates are determined by combining these variables in a complex formula detailed in the Coast Appraisal Manual produced by the Ministry of Forests. In 1998, combined stumpage payments of more than $1.7 billion were collected from logging companies operating on Crown land. British Columbia has some of the most valuable wood in the world. B.C. is also logging a huge volume of wood. Victoria has set annual logging rates, also known as the Allowable Annual Cut or AAC, at least 20% above the sustainable rate by the government's own numbers. Under the Forest Act, the minimum stumpage rate is set at $0.25 per cubic metre. Such rates are intended to apply only sporadically, and usually only to the lowest quality logs. Yet it is this fee that most often applied to companies which were hoodwinking the B.C. Gov ernment. To understand the significance of this – if the 25 cent rate is applied to a fully loaded logging truck, the province receives only $10.00. In the third quarter of 1998, the percentage of wood that Interfor was accessing for $0.25 per cubic metre ballooned. By the end of the following year, an incredible 53% of Interfor's coastal logging volume was assessed at the lowest 25-cent number, and generated only $10 per logging truckload. This is in one of the richest temperate old growth rainforests in the world. No other major forest company operating in the same B.C. region came close to the low Interfor stumpage rate. In fact, SLDF found that by 1998, the proportion of wood sold by the province for less than $10 per logging truckload ballooned to well over 90% for virtually every tenured logging company in the district.OVERVIEW OF CANADA'S FORESTS AND FOREST INDUSTRY, WRI The report entitled, "Canada's Forests at a Crossroads: An Assessment in the Year 2000", was prepared by the World Resources Institute (WRI)'s Global Forest Watch Canada, managing editors Wynet Smith WRI, and Peter Le, Global Forest Watch Canada, November 2000. The report found that Canada's timber, "harvest quotas are often set above long-term sustainable yields. For example, in British Columbia, the leading provincial producer of timber, 90 percent of lands managed for harvest (timber supply areas) are logged above the long-term sustainable levels set by the government." The forest industry in Canada generated over $68 billon (US $47 billion) in total sales in 1996. It directly employed over 350,000 Canadians in 1998. Canada continues to be the world's largest exporter of forest products. Forests in Canada continue to be converted at a rate of about 55,000 to 80,500 hectares per year, and logging is occurring on about 1 million hectares per year. Of Canada's 922 million hectares of land area, 417.6 millio n hectares are forested. This total includes areas clearcut and left to regrow, along with forests not considered commercially productive. Forests currently cover 45 percent of Canada's landmass. Over half, 244.6 million hectares of Canada's forest area is considered commercial or timber productive forests, which is suitable for timber harvest. Of this amount, 235 million hectares are actually available for commercial use. Nine million hectares are not available for harvesting. The report found that forest, "industry consolidation has resulted in the concentration of vast areas of forest in the hands of a few companies in Canada. Thirteen companies have holdings at least the size of Switzerland, accounting for over 48 percent of Canada's forest tenure areas." The federal government reported that approximately 60 percent of logged areas in Canada are left to regenerate naturally and 40 percent are seeded or planted, although the numbers vary significantly by region. For example, in B.C., the area prescribed for natural regeneration has declined from 50 percent in 1998 to less than 35 percent in 1992-1993. National data on the regeneration status of areas logged prior to 1974 are not available. The report found that, "regeneration efforts prior to 1975 were generally inadequate or non existent, and as a result there was a substantial backlog of understocked forests which reached 2.5 million hectares in 1996. Some recently logged areas are reported as understocked due to the time lag between logging and the results of silvi cultural treatments (tree planting), or natural stand development." It also found that there is a problem with soil erosion and the loss of sufficient topsoil to support the regrowth of another generation of commercial trees, following clearcutting. See the full Sierra Legal Defense Fund report at http://www.sierralegal.org/reports/SLDF_stumpage3.pdf
IN 1998 FOUR U.S. ENVIRONMENTAL GROUPS SUE U.S. OVER CANADA SOFTWOOD LUMBER AGREEMENT On December 10, 1998, four environmental groups filed suit in a U.S. court, in an effort to require the United States to apply environmental laws to the softwood lumber trade agreement with Canada. The five-year Softwood Lumber Agreement, struck in 1996, settled a long-running trade dispute with Canada and slowed Canadian shipments of softwood lumber into the United States. But the environmental groups say the agreement encourages the province of British Columbia to harvest too many trees from its forests. The groups were concerned that, "the over-cutting would harm wildlife such as grizzly bear in Canada, and also hurt wildlife across the border in the United States." Bill Snape, Legal Director for Defenders of Wildlife said that, "we want the agreement to take into account environmental and endangered species considerations." The lawsuit seeks to apply the Endangered Species Act and National Environmental Policy Act to the Canada - U.S. Softwood Trade Agreement. Also joining the suit were the Earthjusti ce (the old Sierra Club Legal Defense Fund), Northwest Ecosystem Alliance, Kettle Range Conservation Group and Pilchuck Audubon Society. The suit was filed in the U.S. District Court for the District of Columbia. Visit the Earth Justice website at http://www.earthjustice.org/