Environmentalists, Congress and the wood products industry rarely sing the same tune, but last week theirs was a chorus in unison: Canada must reform its unfair timber practices, or face the consequences of retaliatory U.S. trade policies.
On Friday, Sen. Max Baucus was in Missoula to hold a hearing on the softwood lumber dispute between the United States and Canada. For five years the Softwood Lumber Agreement regulated the amount of timber Canada could ship duty-free into the United States each year. Under that deal, which expired March 31, Canada could export 14.7 billion board feet into the U.S. duty-free, with tariffs imposed on shipments that exceeded that level. This year Canada unilaterally elected not to renew the treaty.
People close to the issue in both countries have long acknowledged that Canada has not lived up to its side of the deal. American mill owners have complained for years that Canada’s provincial governments set timber prices at one-quarter to one-half of its actual market value.
Moreover, in order to maintain full employment, Canadian timber licensees are required to cut trees regardless of what global market conditions dictate. This results in subsidized Canadian lumber being dumped cheaply on the U.S. market.
“Canada has cheated from day one on this agreement,” says Rusty Wood, chairman of the Coalition for Fair Lumber Exports and himself a mill owner from Georgia. “We have the technology and we have the investments. But all that cannot compete with Canadian subsidies.”
Likewise, environmentalists in both countries have condemned Canada’s destructive “use-it-or-lose-it” logging practices, where companies that engage in low-impact logging practices pay higher stumpage fees than those that do not. At least 90 percent of Canadian logging is done in virgin, old-growth forests using clear-cut methods prohibited in this country. Canada also has no endangered species protections, and few regulations to protect fish or water quality.
For a variety of reasons—not entirely related to Canadian timber policies—American timber mills have taken devastating blows in recent years. Last year alone, 160 mills closed nationwide, 27 permanently, resulting in the loss of some 13,000 jobs. In the first three months of 2001, nearly 4,000 timber jobs were lost, with more layoffs and mill closures threatened.
Baucus says that while the International Trade Commission has ruled on three separate occasions that unfair Canadian lumber practices are injuring U.S. mills, little progress has been made in changing Canadian practices.
“What this industry is asking for is very simple: a level playing field for lumber,” says Baucus. “I would like to see an end to this ridiculous cycle of cases, negotiations, settlements and studies. Canada must once and for all end the unfair subsidies and dumping for this to happen.”