Forest depletion is at core of softwood disputes
by Margret Kopala

Published by the Ottawa Citizen, December 13, 2003

"... The British Provinces have almost inexhaustible supplies of pine lumber. This is greatly needed ... But Maine, from which a large share of the best timber is already cut, wants to exclude the lumber of the Canadas, and to force her spruce and inferior pine on the market at high prices ... The hardy lumbermen ... are not benefited in the least, but rather injured by high duties; and all this humbug of protection is not designed for their benefit but for the benefit of the wealthy few."
-- Ohio Congressman,Reciprocity Debates, 1853

A hue and cry erupted across the land this week as details of the latest proposal for a deal with the United States on softwood lumber were revealed. Along with a number of controversial provisions, the five- year deal would replace 27-per-cent current duties on Canadian exports with duty-free access to a 31.5-per-cent share of the American market.

For Les Reed, this is another salvo in The Softwood Lumber War, the single biggest irritant in Canada-U.S. relations for the last two centuries. In a paper prepared for the Free Trade Lumber Council in May 2001, the former assistant deputy minister and chair in forest policy at the University of British Columbia returns to the origins of The Softwood Lumber War when, in 1789, with its first tariff act, the U.S. imposed a duty of five per cent on Canadian lumber.

Applying the rudimentary parameters of supply/demand economics to the relationship between tariffs and softwood-lumber depletion, he concludes the two are inseparable and that disputes will continue until that relationship is understood and addressed.

"It is unfortunate," he writes, "that evidence of saw timber depletion is generally lost sight of during the contentious dispute over subsidiary issues such as difference in stumpage and log export regulation ... Without recurring timber deficits, and the resulting negative impact on U.S. sawmill costs, it is highly improbable that the clamour for tariffs would have persisted to this day."

Historically, the sawmill industry followed the same pattern of forest depletion in both countries -- harvesting a forest and then migrating to the next one. The common lifetime of a sawmill was 20 years until well into the 20th century. The vastly larger American population and growing trend to preservation meant its supply problem would inevitably spread north.

From the time of the Aroostook Lumber War in 1839, which rallied militia from Maine and New Brunswick, to abrogation of the Reciprocity Treaty in 1866, to the Great Depression in which the highest-ever U.S. tariff closed the Canadian sawmill industry, Reed shows how depleted forest reserves led to a protectionist response from the Americans. Even the post-Second World War General Agreement on Trade and Tariffs didn't stop the lumber lobby from renewing efforts to exclude Canadian lumber. By 1962, Canada had a 13-per-cent share of the U.S. market which, a U.S. Tariff Commission concluded, was the result of "limited commercial availability of softwood timber."

A renewed effort to halt imports in 1980 led to Lumber I, a countervail-duty complaint in 1981 and the beginning of a series oftrade disputes that led to Lumbers II, III and IV. A memorandum of understanding in 1986 precluded softwood lumber from the Free Trade Agreement of 1989. Eventually, in 1996, Canada was forced into the five-year quota system known as the Softwood Lumber Agreement, which expired on March 31, 2001. Two days later, Lumber IV commenced, this time as a combination of the countervail tagged at 40 per cent for alleged subsidization of Canadian sawmills because of low stumpage and log-export constraints, and an anti-dumping charge of 27 per cent.

This week's proposal is the latest attempt to break the logjam on Lumber IV.

And so, without respite, The Lumber War rolls on only today, but instead of New Brunswick, it is British Columbia and Quebec that make up the bulk of exports to the U.S. Given the overwrought and predictable outcomes that Reed's historical perspective provides, it's clear that without systemic solutions, The Lumber War will continue.

His paper suggests that besides pursuing legal avenues, a Timber Supply Outlook Task Force be struck to set the terms of reference for parallel studies in the U.S. and Canada on softwood lumber depletion. Leadership in this exercise should come from the lumber-consuming public that have the most to gain from the enduring solution that genuine free trade -- and a clear grasp of forest depletion problems -- would provide.

Margret Kopala writes weekly on western perspectives.

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