Ottawa's softwood dilemma: Should it bail out B.C. forest firms?
Move to post bond may anger U.S. even more, Pettigrew says
Copyright 2001
The Vancouver Sun
August 22, 2001
By Petti Fong
VICTORIA - The federal government is considering a bailout for B.C.'s forestry industry, which is laying off thousands of workers because of a new U.S. duty on Canadian softwood lumber.
"We are exploring all kinds of tools and all kinds of ways to assist our industry," said International Trade Minister Pierre Pettigrew, who met with Premier Gordon Campbell and Forests Minister Mike de Jong on Tuesday.
Chief among those tools, Pettigrew said, is for the government to provide a so-called blanket bond. Earlier this month, the U.S. commerce department imposed a 19.3-per-cent tariff on imports of Canadian lumber, half of which come from British Columbia. Canada responded by saying it will fight the duty, but while that battle is taking place, Canadian forestry firms must post bonds to ensure they will pay the tariff if Canada ultimately loses.
Those bonds, forestry companies say, will cost a total of $2 billion each year.
If a blanket bond is introduced, Ottawa would pay the money up-front for producers.
Campbell said the bond must be the responsibility of the federal government. "It will be a strong statement from the federal government that they understand this is a federal issue and I'm expecting them to carry that case forward," he said.
But Pettigrew and the forest industry warn that such a bailout has huge risks. They worry that a blanket bond will prompt more retaliation from the United States.
"There are countervailing elements," Pettigrew said. "We are not neglecting any possible review, but we want to be realistic and not aggravate our case with the Americans."
John Allan, head of the B.C. Lumber Trade Council, said while a bond will keep people working, it may also be considered a subsidy by the Americans and trigger even more countervailing duties.
"My concern would be it's treating the symptom and not the disease. We're really looking for a cure."
But the province's largest lumber union on Tuesday demanded that Ottawa step in to put thousands of workers back on the job immediately.
"For the smaller outfits, a bond will allow them to operate, to stay in production while the government works towards a solution," said Dave Haggard, president of the Industrial, Wood and Allied Workers of Canada. "It's a short-term solution while a longer-term one is being figured out."
The union estimates between 2,000 to 3,000 workers will be laid off as a result of the new tariff.
The job losses could rise to 14,000 in B.C. alone, the Coast Forest and Lumber Association says, with the cuts first hitting mills, then drivers and loggers.
Pettigrew said Canada will challenge the U.S. decision at the World Trade Organization, but Haggard said that process will take time. "It takes up to four years to get to the WTO, by God. We are losing a large percentage of our coastal operation right now and something needs to be done right now."