Canadian industry supporters are urging national unity against pressure to forge a deal with the United States to resolve the softwood lumber dispute.
With lumber companies dealing with 27.2 per cent countervailing and anti-dumping duties, a co-sponsored bill before Congress by Montana Senator Max Baucus and Idaho Senator Larry Craig recently recommended an increase of the duties to 45 per cent.
In addition, United States Commerce Underscretary Grant Aldonas, in January, forwarded a paper calling for the Canadian provinces to sell a significant portion of their forest lands at private auction.
Canadian Federation of Municipalities (FCM) softwood lumber taskforce co-chair and also the mayor of Timmins, Jamie Lim, scoffs at both documents.
“The legislation that has been proposed is similar to a Private Member’s Bill in our Legislature and how many of those do you see get passed in a year?” says Lim. “As for Undersecretary Aldonas’ paper, it was brought out to bring Canadians back to the bargaining table. This document was so repugnant, I felt sorry that it wasted the paper.
“The whole gist of the document was that our forestry practices should be governed by the United States. At the very least, it should mirror their forestry practices,” she says. “What it fails to take into account is that we’re not the United States. It’s time for Canada to get a new attitude and say that we will not negotiate a bad deal. We have a history of negotiating bad deals.
“Another feature of the Aldonas paper is that saw logs should cross from Canada to the U.S. Just how stupid do they think we are?” adds Lim. “They think we should be creating sawmill jobs in the United States and closing them in Canada. There is just such an air of trade arrogance all over every page of that document.”
The proposed hike on duties to 45 per cent was dismissed with equal disdain by Ontario Forest Industry Association (OFIA) president Tim Millard.
“I completely discount it,” Millard says. “It’s a tactic of intimidation.” As for the Aldonas proposal, he says that while Aldonas is trying to come up with a solution to the issue, he is a representative of the American government and is looking out for America’s interests.
What is working in Canada’s favour, Lim says, is that the World Trade Organization (WTO) has already declared a large part of the American duties on softwood lumber illegal. The WTO has launched yet another panel to consider a portion of the countervailing and anti-dumping duties with a decision expected in little less than a year.
Ironically, there is support for Canada’s position coming from south of the border. The Value-Added Wood Products Alliance, representing nearly 400,000 jobs including manufacturers of trusses and mobile homes, has urged the United States to back off their hardline position.
The Alliance stated that the duties have put softwood lumber mills in Canada who are now looking at manufacturing of value-added products like skids, wood panelling, doors and other products, in direct competition with their members in the United States. Many of these products are not impacted by the tariffs and can be manufactured and shipped at less cost by Canadian manufacturers. Tembec president Frank Dottori says that the current climate for softwood lumber is costing his company between $80 million and $100 million per year. Part of the difficulty is in getting a united voice.
“We don’t have a strong pan-Canada position,” Dottori says.
Part of the problem, he says, is that each province is able to negotiate its own deal, including British Columbia whose trade minister Mike de Jong recently put forward a proposal that would replace the duties with a border tax that would be in effect until Canada’s provinces change the way they charge companies the right to cut timber. The Canadian method of charging a stumpage fee is considered by the American lumber industry to be a form of subsidy since, they allege, the fees are not reflective of market costs.
Lim says the FCM, which includes members such as Prince George, B.C. mayor Conlin Kinsley and taskforce co-chair Joanne Monaghan of Kitimat, is urging British Columbia to resist the urge to make a deal at any cost.
“We’ve stayed united on the platform that no deal is better than a bad deal,” Lim says. “It’s not been easy for our colleagues in British Columbia. But they’ve met with the provincial government and made it clear where they stand. The Task Force is hoping to meet with trade minister de Jong to and impress on him the need to deliver our message with a unified voice. If we’re divided, then that weakens us. We understand that British Columbia has paid the biggest price. At the same time, another short term bad deal does not benefit British Columbia either.”
Dottori says that the markets are looking up for all sectors of the forestry industry for 2003 and on. Even softwood lumber would be a profitable business if not for the crippling duties the industry is having to pay out. The industry is unwilling to make any long-term investments in its operations while the lumber duties issue remains unresolved, he says.
He also adds he does not understand why Canada is still negotiating with the United States.
“I have no problem with short-term pain for long-term gain,” Dottori says. “What the U.S. is proposing is long-term pain.”
Millard says that, while the OFIA’s main concern is for the Ontario industry, whatever is negotiated by another province would have an impact on Ontario’s concerns as well.
He adds that true, unfettered free trade is the only solution since that is the spirit of the North American Free Trade Agreement (NAFTA).
The prosperity of dozens of Ontario communities – hundreds across Canada - and hundreds of thousands of people are what’s at stake, he says.
“This affects hundreds of thousands of jobs,” Millard says. “It’s a highly integrated industry with downstream impacts to a number of different areas including the sawmills but also the pulp and paper, the OSB plants, etc. This is a $15 billion industry in Ontario.”
