In order to understand what has led up to the inevitable duties that will probably be coming from the United States I suggest a number of sources.
First is a November 2008 article “After the Windfall Plotting a New Course for BC Beyond the Softwood Lumber Agreement,” by Ben Parfitt who is a resource policy analysis with the Canadian Centre for Policy Alternatives. (CCPA) B.C. office.
The B.C. Government sources also cover the material, but I think Mr. Parfitt provides critical information that helps under this rather complex agreement.
In the fall of 2006, the Canadian and U.S. governments ended a prolonged trade dispute by signing the Softwood Lumber Agreement (SLA), a deal they said would bring greater certainty to the cross-border lumber trade.
“The dispute, which had dragged on for 54 months, revolved around U.S. allegations that Canadian lumber producers were subsidized by provincial timber-pricing policies that effectively undervalued the trees the companies used to make their lumber.
Under the new deal, $4 billion — 80 per cent — of the duties collected by the U.S. on Canadian lumber shipments were returned to Canada. The federal government then reimbursed individual Canadian forest companies based on the duties they had paid," Parfitt wrote.
The US kept $1 billion of the collected duties, sending half to the Coalition for Fair Lumber Imports, the very lobby that had pushed for duties to be imposed on its Canadian competitors. The remaining half went to the United States Government which would no doubt help with future court costs.
Parfitt went on to describe how B.C.'s five biggest forest companies used these funds to purchase a variety of forestry companies in the U.S.
While the SLA ended the U.S. duties, a new and controversial export tax was imposed. The tax, collected by the Canadian government, applied to lumber shipments to the U.S. in the event that lumber prices fell below certain levels or exports exceeded certain volumes.
The agreement has generally weakened the position of the B.C. forest industry while strengthening the hand of U.S. lumber producers. First, the export tax has dragged down forest company fortunes. As of July 2008, B.C. companies had paid more than $540 million in export taxes.
In conclusion the Parfitt described how the SLA has served to stimulate B.C. forest company investment in the U.S. at the expense of the province’s forest industry workers and rural resource communities.
“Exercising Canada’s right to withdraw from the SLA, however, carries risks. For that reason, it makes sense to work creatively within the confines of the SLA to increase forest allocations to B.C. First Nations, which would have the added benefit of creating new partnerships between individual nations and forest companies, and to value-added manufacturers. At the same time, the province should immediately explore what prospects there are to fundamentally rewrite provincial timber pricing policies so that the province is, for once and for all, free of any charges of subsidizing the provincial forest industry through its timber pricing policies. If, at the end of the day, the changes required to appease the US softwood lumber lobby are deemed too onerous, Canada should exercise its right to terminate the SLA and pick up the legal battle where it left off in 2006.”
In a future article I will look at what has transpired since the 2008 paper.
