End of Softwood War Good for B.C. Economy
10/7/99
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Title: End of softwood war good for B.C. economy
Source: Vancouver Sun, www.VancouverSun.com
Status: Copyright 1999, contact source for permission to reprint
Date: October 7, 1999
A changing attitude toward B.C.'s non-market stumpage system and the
increased clout of retailers and consumers should help to de-escalate
the hostilities over access to U.S. markets.
The battle between Canada and the U.S. over softwood lumber is taking
an inevitable turn. To win, or at least to stop losing, we have
always had to get enough Americans on our side. The battle looks less
lopsided now and it is as a result of the workings of the very
marketplace that the U.S. Coalition for Fair Lumber Imports has
incessantly lectured Canada on.
Companies serving the U.S. homebuilding market used to agree (but
only theoretically) with the Canadian argument that our lumber should
have unrestricted access to the U.S. But in recent months, alarmed at
how the quotas on Canadian lumber allowed U.S. manufacturers to
control the price, lumber buyers, among them the powerful Home Depot,
have become active lobbyists against the coalition. They have begun
to weaken the coalition's influence in Washington, according to the
woodworkers' union, IWA-Canada. The customer is becoming angry and in
a free marketplace the customer rules.
In the marketplace for currencies, the Canadian dollar has sunk to
such depths against its U.S. counterpart that American companies are
finding bargains in B.C. Weyerhaeuser hopes to pocket MacMillan
Bloedel, Champion has already bought Weldwood and Louisiana-Pacific
bought Evans Forest Products. Although none of these U.S.-based
companies has been outspoken on either side of the softwood issue,
ownership of Canadian forest assets is going to change that, predicts
IWA-Canada president Dave Haggard.
He says the combination of these two evolutions -- in U.S. customer
attitude and ownership of Canadian resources -- will strengthen the
Canadian lobby in Washington as the two countries meet to discuss a
replacement for the softwood agreement, which expires in 2001. The
new clout could result in the end of quotas and duties on softwood
exports. Canadian stumpage systems -- long targeted as a subsidy by
the U.S. Coalition -- might survive. Two of the three international
trade panels that have examined Canadian stumpage have concluded it
is not an unfair subsidy and not injurious to U.S. producers.
The softwood agreement's quota system shows how distorting such non-
market measures can be. An efficient sawmill in Boston Bar -- J.S.
Jones Ltd. -- expects to close within six months because it cannot
obtain any quota. So, on this side of the border as well "there is no
appetite for renewing the lumber agreement in its current form," says
Jake Kerr, co-chair of the B.C. Lumber Trade Council.
U.S. trade ambassador Peter Scher's recent letter to Canadian Trade
Minister Pierre Pettigrew proposing the two countries stop regulating
the lumber trade suggests nothing has changed in U.S. strategy. As
the Coalition's John Ragosta said, it merely reminds Canadians that
the stumpage system continues to be a sore point.
Still, the IWA makes a case that there is cause for optimism. The
B.C. economy can use some of that.