MacBlo Deal Impacts Lumber Trade Fight
6/22/99
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Title: MacBlo deal's impact on lumber trade fight uncertain
Source: Reuters
Status: Copyright 1999, distribute freely with credit given to source
Date: June 22, 1999
Byline: Allan Dowd
VANCOUVER (Reuters) -
Guessing the impact on the Canada-U.S. lumber dispute of Weyerhaeuser
Co.'s planned acquisition of Canadian forestry giant MacMillan Bloedel
Ltd. left observers scratching their heads Tuesday.
MacMillan Bloedel has been an active player in the debate over the
Canada-U.S. Softwood Lumber Accord, in contrast to Weyerhaeuser, which
has stayed neutral on the restrictions on Canadian lumber exports to
the United States.
Weyerhaeuser is the largest softwood lumber producer in the world and
largest forest-products exporter in the United States. MacBlo is one
of Canada's largest forest-products companies.
Canadian producers contend that the 1996 softwood trade pact unfairly
limited their access to U.S. markets, and are pushing for the import
quotas to be modified or scrapped when the agreement expires in
2001.
If its deal to take over MacBlo, announced Monday, is successful,
Weyerhaeuser suddenly becomes an even bigger producer of softwood
lumber in Canada. The $2.45 billion acquisition of MacBlo means that
the softwood lumber the Washington-state headquartered company
produces in Canada jumps to nearly 43 percent of its total output.
Weyerhaeuser already has significant production in Canada.
``We think the sheer math of having almost half their production on
this side of the border is going to change the dynamics for them and
put more pressure on them to get involved,'' said Doug Smyth, research
director at Industrial Wood and Allied Workers-Canada.
The union has joined Canadian producers in complaining about the
agreement, which was intended to quell a long-running lumber trade war
between the two countries. Weyerhaeuser would be a welcome ally in
lobbying for Canada in Washington.
The Coalition for Fair Lumber Imports, which represents U.S. lumber
producers that support limits on Canadian imports, said it is too
early to predict the impact on the trade spat or if Weyerhaeuser will
end its neutrality.
``They are large company and you always have to pay attention when
somebody like that takes a position, but we also have several large
companies in the coalition,'' Executive Director Scott Shotwell said.
The coalition, which has accused Canada of trying to bypass the
treaty, has recently persuaded U.S. customs officials to broaden the
definitions of the types of Canadian lumber that are subject to quotas
and tariffs.
MacMillan Bloedel, which also has operations in the United States, has
warned tighter U.S. restrictions could force it lay off workers
British Columbia, where the bulk of its Canadian lumber production is
based.
Observers said they are also watching for the impact on the trade
talks of the decision taken by outspoken MacBlo Chief Executive Tom
Stephens not to join Weyerhaeuser if the acquisition goes through as
planned in the fourth quarter of 1999.
Stephens has championed a controversial plan to make British
Columbia's system of charging logging fees more market-oriented.
The U.S. has accused Canada of using the current system to subsidize
its producers.
MacBlo's operations are located in coastal British Columbia and
Stephens' proposal has drawn opposition from lumber producers in the
province's Interior, where Weyerhaeuser's sawmills are located.