' What is at issue in the softwood lumber dispute?
For 20 years, the US industry has tried to control and
restrict the Canadian share of the US lumber market
based on an unproven accusation that Canadian lumber
is subsidized. Though they've never been proven right,
they believe that Canadians enjoy an unfair price
advantage over American softwood producers in the
massive US housing market.
How important is this issue to our two nations?
Canada and the United States have benefited mutually
from the largest trade relationship in the world, but this
issue threatens to undermine that. The US lumber
industry's action is a frontal assault on Canada and
Canadian jobs and American consumers. This dispute
between Canada and the United States must be a top
priority of Prime Minister Jean Chretien and President
George Bush.
Are Canadian softwood lumber producers subsidized?
No. The claim by US producers that public ownership of
forests and the stumpage charges imposed by the BC
government amount to a subsidy and that Canadian
lumber is being "dumped" in the US is completely without
basis in fact.
While it is true that Canada has a different forest
management model than the United States, Canadian
lumber industries are not subsidized. International trade
law does not require all countries to have identical
forest management systems to the United States.
Tenure holders of Canadian public forest lands bear
many costs in addition to the stumpage fees they pay
for the timber. These include reforestation levies, permit
and license fees, road construction and maintenance,
forest inventory and timber management. Charges of
dumping are merely another effort to protect US
producers from competition.
What impact will the US actions have on American
consumers?
The US industry is seeking countervailing duties and
anti-dumping duties that would put very high duties on
Canadian lumber going into the US. The American
consumer will bear the brunt of these increased duties
on Canadian lumber when they buy or renovate their
homes.
Do Americans need Canadian lumber?
Canadian lumber contributes significantly to building
America. We supply over 30% of the total US lumber
needs each year.
Is the US position on softwood lumber consistent
with their stance on other trade issues?
Absolutely not. Americans want free trade access to
Canadian water and energy and all sorts of exports, so
it is highly inconsistent for them to attempt to control
our access to the American lumber market.
What is the Softwood Lumber Agreement (SLA)?
Since 1982, there have been three major legal cases
over Canadian softwood lumber. The most recent
manifestation of the ongoing dispute between Canada
and the US is the Softwood Lumber Agreement.
Signed in May 1996, the SLA restricted Canadian
softwood lumber imports into the United States through
a quota that limited Canadian producers in British
Columbia, Alberta, Ontario and Quebec to 14.7 billion
board feet annually. Exports beyond that amount are
subject to escalating duties. An additional 650 million
board feet were allowed to be shipped with a fee of $50
per thousand board feet. Shipments exceeding this
amount faced a $100 fee per thousand board feet. The
allocation of the quota among the four provinces and
their producers was based on historical shipment levels
to the US.
What happened to BC's softwood lumber exports
under the SLA?
BC lost roughly 20 percent of its US market share while
the six provinces not covered under the deal have seen
their market share rise by over 100 percent. At the
same time, employment in BC's forestry industry has
dropped by approximately 20,000 jobs, a situation that
is in large part due to BC's decreased access to the US
market under the SLA.
What does the BC Lumber Trade Council believe the
solution is?
The BC Lumber Trade Council believes that what is
needed is a North American free trade solution that
ensures long-term peace. We need a trade peace, free
of tariffs, duties and litigation.
What are stumpage fees?
Stumpage fees are the mechanism by which the
provincial government in British Columbia collects
payment from companies who harvest timber on publicly
owned lands. In British Columbia, forest companies are
required by law to pay the government stumpage fees
when they harvest timber on publicly owned land.
Stumpage is determined through a market adjustment
formula which involves appraisal of each stand or area
of trees that will be harvested for a given timber mark.
The stumpage rate is determined and applied to the
volume of timber that is cut.
Has BC proposed an export tax?
At a meeting earlier this year with Canadian Trade
Minister Pierre Pettigrew, US Trade Representative
Robert Zoellick suggested Canada consider imposing its
own export tax on Canadian lumber being shipped to the
US. The BC Lumber Trade Council has said an export tax
is not our preference, but we should hear Mr. Zoellick
out and explore any alternative that will avoid punishing,
arbitrary and unfair US trade litigation. The BC Lumber
Trade Council fully expects the Government of Canada
to examine any and all options that would give us time
to reach free trade with the US.
Rather than allow massive job losses here in Canada
starting as early as May 2001, it's only prudent for the
Canadian Government and all of the Canadian industry
to explore options that would allow the Americans time
to come to the table. The appointment of special
envoys as proposed by Canada is another step that
would also help the process along.
Who does the BC Lumber Trade Council represent?
The British Columbia Lumber Trade Council is the voice
for BC companies involved in the $10 billion (CDN)
Canada-United States trade in softwood lumber. The
Council supports and seeks free trade in softwood
lumber with the United States. The Council represents
more than 100 companies in the lumber industry. These
companies account for:
95% of the total BC lumber production;
about 50% of Canadian lumber production; and
about 50% of Canadian lumber exports to the
United States.
What is the goal of the BC Lumber Trade Council?
Our objective is a North American free trade solution
that:
Ensures long-term trade peace;
Includes efforts to combat wood substitutes; and
Ensures Canadian lumber exports are treated no
less favourably than any other non-US lumber
shipments and therefore recognizes that some
form of transition to free trade may be required.
How much softwood lumber does BC export to the
United States?
British Columbia exported more than $4 billion (CDN)
worth of lumber products to the United States in 1999,
or close to half of the Canadian total.
What is the value of BC's forestry industry to BC's
economy?
Forestry is the core sector of BC's economy. Far from
being a sunset industry, forestry is responsible for nearly
17 percent of BC's total economic output, making it the
largest contributor to the province's economy.
Forestry keeps BC working. According to
PriceWaterhouseCoopers, about 14 percent of British
Columbians make their livelihood from forestry, either
directly or indirectly. In fact, many communities
throughout the Interior and Northern British Columbia
rely entirely on forestry for their economic stability. The
potential additional costs resulting from countervailing
duties and anti-dumping charges could result in job
losses and mill closures throughout BC unless a
successful resolution to the Canada-US softwood lumber
issue is found. Revenues derived by government from
forestry equal the costs for running the entire education
system in British Columbia alone.
How costly will it be to fight the American's
countervailing and anti-dumping duties?
The result of fighting the cost of duties and the legal
battles over the anticipated four-year case will result in
the demise of some companies and the economic
instability of many other companies, communities and
families across British Columbia. The BC Lumber Trade
council anticipates it will spend $1 million CDN each
month.
Will there be a "wall of wood" - or dramatic
increases in the amount of wood shipped to the US
from Canada?
Shipments of lumber are at the discretion of individual
operators and those decisions are driven by market
conditions. It is unlikely we will see a dramatic increase
as lumber prices in the US are very low. Minister
Pettigrew has initiated a monitoring system requiring all
lumber exports to obtain a permit to ship to ensure
Canada has factual information to rebut any claims by
the US about a 'wall of wood' descending upon them.
What is a countervailing duty?
In this case, a countervailing duty is being applied by
the United States as a way of offsetting the effect of
alleged subsidies that the US lumber industry believes
Canada is providing its industry in the form of stumpage
prices and other means. These duties are passed on to
the American consumer in the form of higher lumber
prices, driving up the cost of home building and
renovating.
What is an anti-dumping duty?
An anti-dumping duty is applied to products that are
sold by one country in another country at dramatically
lower rates than had the product been sold in the
country of origin. In this case, there is absolutely no
question that the opposite is true. Over the life of the
SLA the price of Canadian lumber in the US has been
dramatically higher than the price of that same lumber in
Canada. The facts show that the US industry request
for an anti-dumping duty is arbitrary and completely
without foundation.
Why does the BC Lumber Trade Council say the
playing field is not level?
The rules governing the imposition of extremely
damaging countervailing and antidumping duties are set
by the Americans, arbitrated by the Americans and
finally decided upon by the Americans. Canada has no
input into these rules but has to live by the outcome of
any decisions made. '
bclumbertrade.com
Way too diplomatically stated this overview, imho, to a point where that makes it incorrect ... for example, it says at the start that 'they believe' canadian forestry is subsidised - well that timber baron lobby certainly doesn't believe that, they say that's what they believe because by mouthing the words and greasing the right Washington palms they can have their way with the US federal government .... but the ending note, that 'Canada has no input' to the ways the 'Commerce' department rules are made, that's exactly the case |
