Canada/US Softwood Stumpage Settlement Reached
8/25/99
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Title: Softwood Stumpage Settlement Reached
Source: Environment News Service
Status: Copyright 1999, contact source for permission to reprint
Date: August 25, 1999
VANCOUVER, British Columbia, Canada, August 25, 1999 (ENS) - British
Columbia has agreed to limit its exports of duty-free softwood to the
United States in an attempt to avert another lumber dispute.
British Columbia will compensate the U.S. timber industry for the
increased volume of exports after timber stumpage royalties paid to
the provincial government were chopped 16 percent over a year ago. The
settlement agreement is due to be signed by Ottawa and Washington
later this week.
Canadian industry agreed to a binding dispute resolution mechanism,
which was put in place to resolve differences under the Softwood
Lumber Agreement (SLA) between the United States and Canada.
In order to avoid a panel report due on August 27, on the issue of
B.C. stumpage reduction, Canada has acquiesced to an out-of-court
settlement which makes explicit the linkage between stumpage rates in
B.C. and softwood export quota levels.
The agreement provides that softwood exports from B.C. cannot exceed
the "historic level of shipments" during the first two years of the
SLA or they will face duties of $150 per thousand board feet, the
highest export fee now charged on Canadian lumber exceeding 14.7
billion board feet a year. As well, the U.S. industry would be
compensated for the increase in imports after B.C. lowered its royalty
rate.
This most recent development follows unilateral actions by the U.S.
government August 9 to reclassify Canadian softwood lumber products
not previously covered by the quotas of the softwood lumber agreement.
These actions substantially reduce the duty-free quota of Canadian
softwood lumber shipments to the U.S.
Carl Grenier of Canada's Free Trade Lumber Council, maintains the
settlement will only mean more hurdles for B.C. exporters of softwood
lumber to the U.S., and may seriously adversely affect producers and
exporters in other provinces.
Ottawa and representatives from B.C.'s primary industry negotiated a
solution without the other provinces' input, even though this solution
may have serious implications for producers in provinces other than
B.C. "What good is a dispute resolution mechanism, if parties do not
abide by it?" questioned Michel Desbiens, chief executive officer of
Donahue Inc., a company which has operations in Quebec, Ontario and
B.C.
But the British Columbia Lumber Trade Council Tuesday expressed
support for the settlement. "We are pleased the arbitration process
provided for under the Canada-U.S. Softwood Lumber Agreement has
resulted in this decision," stated Jake Kerr, chairman and CEO of
Lignum Forest Products and co-chair of the Council. "It is very
encouraging that the decision is supported by the federal governments
of Canada and the United States, the B.C. provincial government and
the forest products industries in B.C. and the United States."
The decision will allow for the continued shipping of historic volumes
of B.C. lumber to the United States while providing U.S. producers
additional assurance that B.C. product will not flood the U.S. market.
Shipments over and above established levels will incur graduated
charges paid to the government of Canada.
"This is a classic win-win situation and a good deal for B.C. as it
provides trade peace at a reasonable cost," said B.C. Lumber Trade
Council president Bob Plecas. "The decision is not only important to
the B.C. forest industry but to our economy and simply would not have
been reached without the commitment of both our national and
provincial governments and the effort of Doug Waddell, deputy head of
mission at the Canadian Embassy in Washington, DC. To them we owe our
thanks," he said.
Copyright Environment News Service (ENS) 1999