Friends should work out dispute over lumber
Copyright 2001 Seattle Times
December 04, 2001
By Donald F. Mazankowski and Clayton Yeutter
Editorial
Miles or kilometers? Prime minister or president? Baseball or hockey? Despite a long and valued friendship as neighbors, allies and trading partners, the United States and Canada occasionally have their differences. But, as old friends are apt to do, we usually manage to work through them, or at least "agree to disagree."
Speaking as longtime friends and government servants, we believe one area where the United States and Canada can no longer afford to disagree is the 20-year-old softwood lumber dispute. This quarrel is straining the relationship between our two countries and harming our economies at a time when we should be pulling together.
Some U.S. lumber producers believe that Canadian softwood lumber is subsidized, thereby giving it an unfair advantage in the U.S. market. The specific argument is that Canadian governments charge inordinately low "stumpage" fees to log public lands.
Canadian lumber producers, on the other hand, do not believe such fees are any bargain. And their provincial governments believe that in setting such fees they do a reasonably good job of reflecting long-term market forces. Canadian producers also contend that U.S. homebuyers and other lumber consumers ought to have unfettered access to Canadian lumber. This, after all, is the spirit of our free-trade agreement.
The reality is that both sides need each other. The United States consumes a whopping 54 billion board feet of lumber annually. It must import more than a third of this, because U.S. timber supplies are inadequate to meet the demand. Ninety-four percent of those imports come from Canada, persuasive evidence that we truly have a North American lumber market today, rather than separate Canada and U.S. markets.
Since the early l980s, our two governments have been wrestling with this dispute, without much success. Periodically, we've put in place short-term agreements to relieve the political and economic pressures, but those accords have created additional uncertainties and volatility in the market. And they've done nothing to provide a long-term solution to the controversy.
The situation is now getting worse, not better. The latest interim agreement expired in March, and U.S. producers have since filed countervailing duty and antidumping actions against their Canadian counterparts. These have resulted in imposition of an interim countervailing duty of about 19 percent, plus an interim antidumping duty of about 12 percent, on softwood lumber entering the U.S. from Canada.
That is a huge penalty on Canadian producers and U.S. consumers. It has already resulted in thousands of job losses in Canada, and though U.S. lumber producers may reap short-run benefits from this, thousands of U.S. jobs will soon be lost at businesses that process, distribute and use lumber products.
Based on our experience as trade negotiators for our respective countries, we have learned that both sides prosper through give and take that leads to the viable, long-term resolution of a festering issue. That is what is required here, for we are now in a "lose, lose" situation on both sides. Continuation of the present course — interim agreements of dubious merit, followed by costly, time-consuming legal actions — will only benefit competitors elsewhere in the world.What we now need is for both governments to focus on a creative, flexible, long-term mechanism for resolving these issues. The context should be "North American," for we no longer have separate marketplaces, and never will have. Canada and the United States need a long-term, market-oriented agreement that fosters competitive pricing throughout the lumber cycle while also properly protecting forest ecosystems.
This is a formidable task, or it would have been accomplished long ago. One major complication is that the public owns most of Canada's forest lands, whereas in the U.S. most lumber supplies come from private lands. Hence, both countries look at this dispute from a different perspective. But it is not an impossible task. In both countries, the growing cycle for trees is measured in decades, not months or "a few years." So both need long-term answers, not short-term, patchwork solutions.
In resolving this contentious issue, Canada will undoubtedly have to allow market forces to play a more important role in lumber pricing than has previously been the case. Those market forces must also be reflected in a timely way. The government of British Columbia has already offered several proposals of this nature that are worthy of consideration.
For its part, the U.S. needs to give thoughtful consideration to whatever Canadian proposals emerge, to think long-term rather than short-term, and to contemplate market-opening solutions rather than market-closing ones.
With good will and a positive attitude on both sides, this longstanding disagreement can be relegated to history — not through verbal or legal combat, but through good-faith negotiations. We are each other's largest trading partner and best ally. Good friends can — and should — work out their differences.
Donald Mazankowski of Vegreville, Alberta, is a former Canadian deputy prime minister, minister of finance and member of Parliament. Clayton Yeutter of Potomac, Md., served as U.S. trade representative and as secretary of agriculture. Both serve on the Weyerhaeuser Company Board of Directors.