Free trade with U.S.
an ever-elusive goal

here is no trade and economic issue as
important to nearly every part of Canada as
the softwood lumber issue. The United States
only talks about free trade when it wants
access to resources or investors’ rights for its
ies multinational corporations.

“Free” and fair trade is what the I.W.A. and the country
wants, but can we get it? If we fight the U.S. trade action
through trade tribunals of the North American Free
Trade Agreement, a final appeal could take 26 months. A
further appeal, by either party to the World Trade
Organization could take three years. By that time, if
lumber markets can’t absorb the punitive tariffs and
potential antidumping charges yet to come, most of
Canada’s forest industry, as we know it, could be finished
for good.

Even if Canada wins, American lawmakers will change
their domestic trade rules and we'll be back at square one,
as we have been so many times before. Even with so-
called “free trade deals” like the Canada-U.S. Free Trade
Agreement of 1989 or the NAFTA of 1994, there has
never been free trade in lumber.

To add insult to injury, the tariff that our industry will
pay at the U.S. border will go straight into the pockets of
our U.S. competitors, subsidizing their smaller, inefficent
operations that are forced into destructive high-bid
processes on mostly private lands.

Because Canadian sawmillers can land top-quality,
straight, tight-grained lumber into U.S. markets, beating
the Americans in their own back yard, the protectionist
lobby group, the U.S. Coalition for Fair Lumber Imports, is
joining with the U.S. government to push “a massive reform
of the way Canadian provinces sell timber cutting rights to
lumber companies”, according to The Globe and Mail.

Top Canadian trade officials from the federal and
provincial governments across Canada began high-level
meetings in Washington on August 30 to look for “root
causes” of the dispute between the two countries,
according to an official from International Trade Minister
Pierre Pettigrew’s office.

Coalition spokesperson John Ragosta pointed to the
United States’ desire for “systemic reforms” in Canada
and put long-term timber cutting agreements (public
tenure) on the list along with timber pricing and
harvesting restrictions (supply-management tenure).

The U.S. is also pushing for unfettered access to
Canadian logs, even though its federal and states lands
have, in some cases, stricter log export restrictions than
we do.

Where all of this will lead nobody yet knows. Canada
says it isn’t “negotiating” with the Americans — it only
wants to get to the “root” of the thing.

In B.C. the government is consulting with the forest
industry itself over the issue of “market-based” timber
pricing reforms, and is on the verge of launching a process
of reviewing the publicly-owned tenure system. What that
process looks or what mandate or time frame it will
operate under, nobody knows yet.

When Canada’s and B.C.’s top people were in
Washington on August 30, the day of the I.W.A. rally in
front of the U.S. Consulate in Vancouver, B.C. Forests
Minister Michael de Jong, an invited speaker, told the
media that “I’m a bit busy this week but we are beginning
with our process on timber pricing and you'll hear an
announcement on the tenure reform from me in the days
ahead.”

Stay tuned.

LUIMBERWORKER

Official publication of I.W.A. CANADA

RMAN DAVE HAGGARD . . President
No EAN ARGUS NEIL MENARD . . Ist Vice-President
HARVEY ARCAND . . 2nd Vice-President
5th Floor, DAVID TONES . . 3rd Vice-President
1285 W. Pender Street NORM RIVARD . . 4th Vice-President
Vancouver, B.C. WILF McINTYRE . . 5th Vice-President
VGE 4B2 TERRY SMITH . . Secretary-Treasurer

BROADWAY .<s PRINTERS LTD.

i }

AMERICA'S FAVOURITE PASTIME

Bringing us to our knees for tenure changes

“My view is that trade law
in the United States is
designed to bring you to your
knees and either bankrupt
you or cause you to negotiate
an agreement governing the
trees and the product,” said
John Allan, president of the
B.C. Lumber Trade Council
in early August.

The newly-appointed
spokesperson, a former top
NDP bureaucrat in
ministries of forests and
mining, intimated his strong
gut feelings to a Vancouver
Sun reporter.

The tremendous financial
wallop that the U.S. Trade
Department of Commerce
laid on the Canadian forest
industry on August 10 may
be designed specifically to
make penny stock out of
forest companies in Canada
and, yes indeed, force “an
agreement governing the
trees and the product.”

In fact it’s already
happening. Share prices of
forest companies are
dropping. One major
company in B.C., Doman
Forest Industries, may have
to soon be put on life support.
Industry sources say that
fully half or more of workers
in B.C. may soon be on lay-
off.

Are American timber
interests trying to break the
back of the Canadian forest
industry and force the way
Canadian governments
govern the trees? With a
19.31% preliminary duty on
lumber, and upcoming
antidumping charges yet to
come, how could anybody
dismiss the notion?

In an early June article of
Business in Vancouver,
Duncan Davies, president
and CEO of International
Forest Products, and one of
the corporate chiefs (he’s a co-
chair of the council that Mr.
Allan works for) predicted an
over-haul of “government-
controlled tenure and pricing
systems.”

Certain indications point
that is where the new B.C.
government is headed.

When the government
talks about tenure reforms,
they don’t mean
nationalizing private lands
to become public lands —
they mean taking at least
part ofthe province's publicly
held lands and putting them
into the hands of private

shareholders.

The B.C. government has
already started a process of
“market-based” timber-
pricing reforms, consulting
with the industry itself on
the issue.

Despite Canada’s, and
certainly B.C.’s claim that
revenue-targeted stumpage
rates north of the line are
not a subsidy and that every
effort will be made to defend
the Canadian industry in
the softwood lumber war, it
appears the landscape is
tilting fast.

Forest Minister Mike de
Jong told the Sun in mid-
August “it makes sense to
have a more market-based

The tremendous
financial wallop
that the U.S.
DOC laid on
Canada’s forest
industry may
break companies
and force tenure
changes.

lumber pricing (policy)” and
that it would be “irresponsible
of us not to test the American
committment to free trade.”
Will there be a complete
overhaul of timber pricing
and the “government
controlled” tenure system
— both changes that the
industry in both Canada and
the U.S. has long sought?
The Liberals say a process
on tenure reform is coming
up in the weeks head. What
type of a process will it be?
An official in De Jong’s
office told The Globe and
Mail that three options of
stumpage reform are under
consideration by the
government and a final
decision depends and how
the United States reacts.
The Bush administration,
which supports the U.S.
Coalition for Fair Lumber
Imports, wants changes to
Canadian provinces’ tenure
systems. The Coalition exalts
free trade in logs. So do
timber-strapped states like
Idaho, Montana and the
states in the Pacific

Northwest.

On July 31, TimberWest,
which dumped 200 I.W.A.
members at its Cowichan
Lumbermill in Youbour
earlier this year (see stories
pages eight and nine) and
filed a court action against
the federal government to
force it to lift private log
export restrictions which
have been in place since 1906.

Those current regulations,
which were designed to
ensure that B.C. sawmillers
get the first right of refusal
of private wood, are under

attack by the company in
the Federal Court of Canada.

TimberWest, owned by a
majority of U.S. share-
holders, noted that log export
restrictions in Canada are
an important part of the
dispute over softwood
lumber.

“The common goal of
achieving free trade in
lumber cannot be attained
with such an obvious and
unjustified trade restriction
remaining in B.C. and
contrary to private land
rights in the rest of North
America,” notes the
company’s backgrounder on
the court case.

Should TimberWest win
its case, its annual cut of 2.4
cubic meters, enough wood
to feed 5 or 6 coast mills,
could be freely exported out
of the country, by-passing
B.C. communities altogether.

Weyerhaeuser, which
joined TimberWest earlier
this year in lobbying the
federal government for the
right to export private land
wood, would stand to benefit
by the same rules.

And Weyerhaueser’s
position is that privitization
of the tenure system in the
province may be a “possible
solution” to the dispute with
the U.S., according to The
Globe and Mail.

If and when the Liberals
put Crown lands into private
hands, palate property
rights will apply to them.

Only time will tell if Mr.
Allan’s gut feelings bear out.
How many companies may
go bankrupt down the line
and how much tenure may
the Liberals privatize and
put on the bidding block?
U.S.-based multinationals,
running out of timber south
of the line, may be very
interested in these issues. B

LUMBERWORKER/SEPTEMBER, 2001/5