Softwood Lumber

[BHS]

I'm surprised that no one has bothered to post on this issue since the NAFTA tribunal issued it's ruling that American tarriffs are illegal and the US government owes BC logging companies $5 billion. I've been intentionally cutting back on posting lately, and I looked at the new posts tonight expecting at least something - I mean, their are plenty of Hate America First members who I'm sure are royally upset about Bushco's intransigence in the matter. So where's the bile?

[Riverwind]

I looked at the new posts tonight expecting at least something - I mean, their are plenty of Hate America First members who I'm sure are royally upset about Bushco's intransigence in the matter. So where's the bile?

What's to be said. The American's say they want to have a negotiated deal but what they will have to answer the question why we should trust any negotiated deal on softwood when they can't be trusted to follow the rules of the negotiated deals called NAFTA and the WTO.

For better or for worse, Bush is our best friend in Washington right now since he is a big promoter of free trade and screwing Canada on softwood is not going to go over well with other potential trading partners. We just have to play nice and see if they will see the light. If not we will have to retaliate. But the trouble is any retaliation is going hurt other Canadian businesses so we will probably need some mechanism to compensate businesses who get hurt in the retaliation.

[theloniusfleabag]

Dear BHS,

I mean, their are plenty of Hate America First members who I'm sure are royally upset about Bushco's intransigence in the matter. So where's the bile?

Are you suggesting that any comment about this is going to be 'bile', and only based on anti-americanism? I personally don't know enough about tarrifs to understand why the decision was taken, but Canada should be suing, and then sending a report to a collections agency.

Barring that, NAFTA should be scrapped if the US doesn't pay. If any company tried to not only engage in less than fair trade practices, and then ignore court rulings, no one would do business with them.

Refusing to pay is pretty cheesy.

[PocketRocket]

Bile is not necessary. Facts are all that is required.

The simple fact of the matter is that the USA is doing what they want, simply because they can get away with it.

Can't blame them for refusing to see that in this matter they're in the wrong.

When you're the biggest, toughest, and richest, kid on the street, often you feel that this gives you the "right" to impose your will on others.

But the words "retroactive, with compound interest" has a nice ring to it.

Doubt we'll ever see it happen, though.

The USA is simply playing fast and loose with the NAFTA guidelines that they themselves helped to draw up, and will continue to do so as long as they feel they can get away with it.

Gee, can we think of anyone else inrecent times who played fast and loose with some rules, until he got spanked out of power???

Unfortunately, because this has a negative impact on Canada only, it's doubtful that there will be any "coalition of the willing" to help put a stop to it.

[Mad_Michael]

I'm surprised that no one has bothered to post on this issue since the NAFTA tribunal issued it's ruling that American tarriffs are illegal and the US government owes BC logging companies $5 billion. I've been intentionally cutting back on posting lately, and I looked at the new posts tonight expecting at least something - I mean, their are plenty of Hate America First members who I'm sure are royally upset about Bushco's intransigence in the matter. So where's the bile?

<{POST_SNAPBACK}>

Trade disputes with the USA have nothing to do with merit or fairness. It is all about political clout.

The lumber industry in the USA is particularly powerful, thus Canadian lumber is tariffed to protect domestic industry - regardless of trade agreements. Sure they lose in court (again and again) but they just keep doing it because they can.

As far as I understand the Canadian government position here, is that softwood lumber is too small to worry about. Fact is, the Americans don't dispute 90% of our trade and that's what's important. If they twitch over softwood lumber, that's a small price to pay. So we fight them in the tribunals, win every time, but still the Americans tariff softwood lumber. Why? Because they have the political clout in Washington that enables them to do so.

[Riverwind]

As far as I understand the Canadian government position here, is that softwood lumber is too small to worry about.

Softwood is extremely important to BC which means that BC needs Canada to 'go to the mat' with Americans on this one. One of the principle arguments for creating larger, more diverse, entities like Canada is to increase our collective clout. But to have clout there must be a willingness to use it.

[B. Max]

Didn't the american consumer pay the tariffs which added around 2500.00 dollars to the price of a new house. One should think the moneies should be returned to them that payed.

[Riverwind]

Didn't the american consumer pay the tariffs which added around 2500.00 dollars to the price of a new house. One should think the moneies should be returned to them that payed.

Canadian companies cannot control the price of lumber so the tariffs were not 'added' on like the GST. Instead, they were deducted from the market price of the lumber which reduces the revenue that the Canadian companies received. In other words, the tariffs were directly paid by Canadian companies and should go back to Canadian companies.

The extra cost to consumers shows up as higher prices for lumber because the tariffs have the effect of reducing the amount of lumber that Canadian companies ship to the US. A significant portion of the higher prices paid by the consumers went to US lumber companies that made extra profits. In other words, there is no mathematicay relationship between the extra costs to consumers and tariffs collected so it makes no sense to refund the 'tariffs' to the consumer unless you are suggesting that US companies be forced to refund their 'excess' profits as well.

[August1991]

Didn't the american consumer pay the tariffs which added around 2500.00 dollars to the price of a new house. One should think the moneies should be returned to them that payed.

B.Max, you are correct, so I guess I disagree with Sparhawk.

Both Canadian producers and American buyers paid the $4-5 billion accumulated in this special fund as a result of the countervailing duties. By rights, these two groups should be refunded the money paid.

More seriously though are the Americans who chose not to buy a house because it was simply too expensive for them. Similarly, there are lumber workers in Canada who lost their jobs.

The law may say that you pay the GST but in fact both stores and consumers change their behaviour as a result of the tax. The burden of the tax is shared in practice.

[Guest eureka]

There is one provision in NAFTA that we could use to retaliate and put great pressure on the American administration. I forget just how it works (I seem to recall Sec.89) but we could end the sharing of resource, or energy, wheer we are required to provide equal access to the Americans in time of shortage. We could cut off their easy access to Canadian oil and Hydro.

I don't recall enough about it to elaborate but will look it up later.

Of course, that might start a spot of bother with Ralph Klein who would not care too much about the lumber industries in B.C., and New Brunswick, and Quebec, mostly.

[Riverwind]

Both Canadian producers and American buyers paid the $4-5 billion accumulated in this special fund as a result of the countervailing duties.  By rights, these two groups should be refunded the money paid.

The extra cost paid by consumers is a side effect of the tariffs not a direct expense paid for by American consumers - if they are entitled to compensation it should come from the American lumber producers - not the tariffs. Think about it - Canadian lumber is only makes up 30% of the US lumber market which implies that 70% of the $2500 paid by the consumer went into the pockets of the American producers. It would simply add to the injury caused by these tariffs to give them to American consumers instead of going back to the companies that were unfairly targeted.

[kimmy]

Canadian lumber producers were ripped off by the tariffs. US consumers were ripped off by artificially high prices that resulted. I would assume that compensating US consumers for past market conditions is beyond the scope of the trade tribunal.

-k

[Mad_Michael]

As far as I understand the Canadian government position here, is that softwood lumber is too small to worry about.

Softwood is extremely important to BC which means that BC needs Canada to 'go to the mat' with Americans on this one. One of the principle arguments for creating larger, more diverse, entities like Canada is to increase our collective clout. But to have clout there must be a willingness to use it.

<{POST_SNAPBACK}>

So Canada ought to "go to the mat" for this one eh? In order to protect 2% of our GDP, we ought to risk the other 98%?

In order to protect our right to clear-cut forests and export raw lumber - a policy that can only be popular only with the union labour doing the cutting - we ought to risk all the valuable and value-added exports that Canada engages in.

In other words, Canada is a drawer of water and hewer of wood (just like were were in the 19th century) and this must be defended at all costs. Government subsidies are not enough. Wholesale tradewar is needed to defend the subsidised industry of forestry. Canada needs to be clear-cut of all those nasty forests and exporting those forests (raw) to the USA is the number one goal of Canada.

One blip in Canada's export of automobiles to the USA and boy-oh-boy you will feel the recession hit you out there in B.C.!!!

[Riverwind]

So Canada ought to "go to the mat" for this one eh?  In order to protect 2% of our GDP, we ought to risk the other 98%?

Letting the Americans get away with ignoring NAFTA rulings would be the dumbest thing we could do. Do you really think it would stop at lumber? Wheat, pork, beef and steel are already on the radar screens of protectionists in the states. What would happen if the US auto workers unions decided that Canada unfairly subsidized car manufacturers because of free healthcare? That arguement is as logical as the US timber lobby's argument that Canada's stumpage system respresents a subsidy.

In other words, Canada is a drawer of water and hewer of wood (just like were were in the 19th century) and this must be defended at all costs.  Government subsidies are not enough.  Wholesale tradewar is needed to defend the subsidised industry of forestry.  Canada needs to be clear-cut of all those nasty forests and exporting those forests (raw) to the USA is the number one goal of Canada.

Do you know anything about forestry? It is one of the more high tech and efficient value add industry in the country (thanks to the pressure of the American tariffs). The Americans want us to ship raw logs directly to them - they don't want any lumber or pulp mills in Canada. So giving into the Americans on softwood would actually kill one of the value add industries that you think are so important.

[Mad_Michael]

Letting the Americans get away with ignoring NAFTA rulings would be the dumbest thing we could do. Do you really think it would stop at lumber? Wheat, pork, beef and steel are already on the radar screens of protectionists in the states. What would happen if the US auto workers unions decided that Canada unfairly subsidized car manufacturers because of free healthcare? That arguement is as logical as the US timber lobby's argument that Canada's stumpage system respresents a subsidy.

1. How long have you been following this issue? 2. Where did I suggest that Canada ought to do nothing about it?

I said that "going to the mat" is poor policy. Challenging the US under NAFTA mechanisms is critically important for not to do so is negligent and it will be used against Canada in another dispute. That being said, Canada has won 90% of the Softwood lumber disputes going back to the 1970's. It doesn't seem to matter much. The US Softwood lumber industry is extremely politically connected and they will get tariffs put on Canadian softwood lumber no matter what. Tribunals will rule, the tariffs will be repealed and new tariffs applied. This game has been going on for decades now.

Do you know anything about forestry? It is one of the more high tech and efficient value add industry in the country (thanks to the pressure of the American tariffs).

Bemused giggles. No it is not. It is a very low tech industry with very low skilled employees. The sooner the BC economy can wean itself off resource-extraction the better it will be for all of BC.

A couple of high-tech gizmos doesn't make a high tech industry. High tech must describe the condition of the average worker, not the toys used by the experts in their labs.

They use some pretty high-tech gizmos to find fish these days, does that make fishing a high-tech industry? If so, its the only one where 90% of those employed don't need high school educations.

The Americans want us to ship raw logs directly to them - they don't want any lumber or pulp mills in Canada. So giving into the Americans on softwood would actually kill one of the value add industries that you think are so important.

<{POST_SNAPBACK}>

Yes I'm familiar with this issue. Indeed, I've been following it for 25 years now. Nothing ever changes so forgive me if I don't get all riled up.

The Canadian government policy is simple and predictable here. They will fight the Americans on softwood lumber - legitimately and through the dispute mechanisms. The USA has shown they have no intention of 'fair' trade in lumber of any kind so that is just the way it is. Canada will fight them formally, but cannot do anything more. To rock the boat in favour of softwood lumber is insane policy because in any serious trade dispute between the USA and Canada, Canada will lose. As it stands, 98% of Canadian exports to the USA are doing just fine.

Only beef and lumber have problems. Why is this? Because the Americans are trying to protect/subsidise the same industries we are protecting/subsidising and for exactly the same reasons - jobs in uneconomic regions for politically favoured groups. That's all well and fine, but to expect Canada to go to the mat on this basis is madness and bad public policy.

[Riverwind]

2. Where did I suggest that Canada ought to do nothing about it?

Then we are arguing about nothing. I did not intend to suggest that Canada should engage in the 'nuclear option' over this issue - just that it should not be ignored.

A couple of high-tech gizmos doesn't make a high tech industry.  High tech must describe the condition of the average worker, not the toys used by the experts in their labs.

I don't agree your definition of high tech. To me it means an industries that are willing and able to make use of technology to produce better product cheaper. That usually requires that their workers have different kinds of skills (i.e. be able to work with computers) rather than requiring a university education. Their workers must also be able to learn new skills quickly because processes change. There are very few industries that would fit into your definition of high tech.

Only beef and lumber have problems.  Why is this?  Because the Americans are trying to protect/subsidise the same industries we are protecting/subsidising and for exactly the same reasons - jobs in uneconomic regions for politically favoured groups.  That's all well and fine, but to expect Canada to go to the mat on this basis is madness and bad public policy.

Canadian farmers are among the least subsidized in developed world. The lumber industry is only subsidized because the restrictions on log exports makes the price of logs artificially low in Canada. Canada has a lot of resources - that _is_ our competitive advantage so we must make sure we can take full advantage of those resources - especially since we have a small population which puts us at a disadvantage in other sectors. It is a mistake to write off the entire resource development/extraction industry as uneconomic.

[Mad_Michael]

2. Where did I suggest that Canada ought to do nothing about it?

Then we are arguing about nothing. I did not intend to suggest that Canada should engage in the 'nuclear option' over this issue - just that it should not be ignored.

Then I must have misunderstood the remark about "going to the mat".

As I said, Canada ought to go through the motions of appeal through the requisite dispute mechanisms, for to ignore it would be madness and a precedent that will haunt us in later disputes. That being said, the 'nuclear' option ought to be saved for a trade dispute that actually affects the Canadian economy substantially.

A couple of high-tech gizmos doesn't make a high tech industry.  High tech must describe the condition of the average worker, not the toys used by the experts in their labs.

I don't agree your definition of high tech. To me it means an industries that are willing and able to make use of technology to produce better product cheaper. That usually requires that their workers have different kinds of skills (i.e. be able to work with computers) rather than requiring a university education. Their workers must also be able to learn new skills quickly because processes change. There are very few industries that would fit into your definition of high tech.

The small number of industries that fit this definition does not preclude the utility as a definition. Indeed, it preserves the meaning of the term and prevents every industry from claiming that they are "high tech". If every industry is "high tech" none are - or the term is useless.

Car-designing/engineering is pretty damn high-tech. As are the robots used on assembly lines. But the bottom line is that 99% of the people working the assembly line at Ford or GM don't have (or don't need) a high school education.

Is the automotive industry high-tech?

Canadian farmers are among the least subsidized in developed world. 

In a world where nations compete to see who can have the highest subsidies on agriculture, this achievement doesn't say much.

I agree that Canadian agriculture is the lowest subsidised in the western world. However, that means that we waste a few less billions than some others do. Bottom line is that all Canadian agriculture is massively subsidised. Going to the wall to export subsidised products is bad policy, though that's what Europe and USA do every day. The mind boggles.

Personally, I think its a bit odd to demand "fair trade" in tax-subsidised products.

The lumber industry is only subsidized because the restrictions on log exports makes the price of logs artificially low in Canada. Canada has a lot of resources - that _is_ our competitive advantage so we must make sure we can take full advantage of those resources - especially since we have a small population which puts us at a disadvantage in other sectors. It is a mistake to write off the entire resource development/extraction industry as uneconomic.

<{POST_SNAPBACK}>

I'm not writing it off entirely. I just oppose any set of public policy designed to give advantage to these industries at the expense of any other industry - particularly when those other industries are comparatively 'clean' and 'subsidy-free'.

In addition, I criticise the BC government for perceiving forestry as a growth industry or any kind of solution to unemployment. Encouraging kids to drop out of school to work in forestry is not good policy. To be honest, its been a common Government policy for decades in a variety of regions across Canada, though more often and more damaging in fishing.

BC (NDP) governments love forestry because of the number of unionised forestry workers in BC. To them and for their interests, the more the merrier, regardless of whether or not any of it is good for Canada. And I will never have any sympathy for the export of any raw material. Fine if you can sell it, but subsidies and government support ought to be saved for industries that have a real future.

Btw, do you know that the cultivation of hemp for paper production would wipe out about half the forestry industry in Canada? BC leads the fight against this. I wonder why?

[Guest eureka]

Why would we not "go to the mat" at this time? Significant products that are coveref by NAFTA have been embargoed or penalised by the USA already. Is the deliberate breaking of a contract not important enough unless it bankrupts the injured party.

We need to deal with this now and do so forcefully. What a pitful attitude it os to say "don't hit back unless they hit us very hard.

The US has been showing its complete for binding agreements for some time now: bilaterally with Canada and internationally with the abrogation of a number of highly important ones by Bush.

We have the mechanism to hurt more than we can be hurt. It is not true that we are so dependent on the US as to be hamstrung in contempalting any action. The emerging energy economy, particularly, makes the US very much in need of Canada's trade.

If they won't fight fair and they will ignore the referee, we must meet them on their rules except that we can do it legally.

[August1991]

Is the automotive industry high-tech?

God knows, and who cares. And God forbid that you, or some government bureaucrat decides that my tax money should be used to foster an industry because it is "high-tech" or "high-valued added" or whatever term or strategic industry is in vogue this year.

Individuals are perfectly capable of deciding for themselves what business they want to do. If things work properly, their choice will bring the greatest value to society.

Iceland has one of the highest GDP per capita and a large cod fishing industry. I met a fisherman this summer who was hauling in 50,000 lbs of shrimp for three days work. Does it matter that the guy smelled of fish? Canada has lots of land and few people. I'd be surprised if many Canadians were not involved in natural resource industries.

As I said, Canada ought to go through the motions of appeal through the requisite dispute mechanisms, for to ignore it would be madness and a precedent that will haunt us in later disputes. That being said, the 'nuclear' option ought to be saved for a trade dispute that actually affects the Canadian economy substantially.

I agree. You pick your fights.

I agree too that the US lumber industry and the Canadian lumber industry are using their respective governments to advance their interests. The ultimate loser is US consumers who pay higher prices. If the Canadian industry were better organized, they would agree to limit voluntarily their sales to the US (the Canadian government could help them do this, ugh) and then the issue would disappear from newspapers completely.

[mirror]

Is the automotive industry high-tech?

God knows, and who cares. And God forbid that you, or some government bureaucrat decides that my tax money should be used to foster an industry because it is "high-tech" or "high-valued added" or whatever term or strategic industry is in vogue this year.

Individuals are perfectly capable of deciding for themselves what business they want to do. If things work properly, their choice will bring the greatest value to society.

Iceland has one of the highest GDP per capita and a large cod fishing industry. I met a fisherman this summer who was hauling in 50,000 lbs of shrimp for three days work. Does it matter that the guy smelled of fish? Canada has lots of land and few people. I'd be surprised if many Canadians were not involved in natural resource industries.

As I said, Canada ought to go through the motions of appeal through the requisite dispute mechanisms, for to ignore it would be madness and a precedent that will haunt us in later disputes. That being said, the 'nuclear' option ought to be saved for a trade dispute that actually affects the Canadian economy substantially.

I agree. You pick your fights.

I agree too that the US lumber industry and the Canadian lumber industry are using their respective governments to advance their interests. The ultimate loser is US consumers who pay higher prices. If the Canadian industry were better organized, they would agree to limit voluntarily their sales to the US (the Canadian government could help them do this, ugh) and then the issue would disappear from newspapers completely.

<{POST_SNAPBACK}>

You are one weird Canadian. Did it ever occur to you that perhaps it is the Canadian workers who have lost their jobs that are paying the biggest sacrifice?

Here are some tangible and realistic solutions to deal with these Yankee bastards:

Canada should invoke powerful NAFTA provision

Canadian policy-makers and pundits are predictably outraged by the United States' refusal to abide by the final NAFTA appeal ruling in favour of Canadian lumber exporters. The premiers have called on Ottawa to take all necessary measures to force Washington to respect the ruling.

Here's a measure it could take that has not yet received public attention. Canada could and should now invoke a powerful and to date unused NAFTA provision — Article 1905. This article would allow Canada to trigger a bilateral consultation process on the grounds that the U.S. is violating the Agreement. A win, which is very likely, would give Canada the right, as trade experts have told the Commons trade subcommittee, to begin to withdraw benefits that it extended to the United States under NAFTA. The most obvious candidates for the withdrawal of benefits are the investment provisions — for example, (investor-state) privileges which allow U.S. corporations to sue Canadian governments, or the benefit extended under the deal that obligates Canada to share its energy resources with the U.S. in times of shortage.

Gordon Ritchie, deputy chief negotiator of the original free trade deal, and currently appointed by the international trade minister to negotiate a settlement to the lumber dispute, wrote in his memoir Wrestling with the Elephant, that Canada would never have signed the free trade agreement without the dispute settlement system, certainly not if it thought the United States government would show such disregard for its own commitments. If Canada continues to cave in, the U.S. will continue to trample over us whenever it has an important interest to protect. We are not powerless. We do have alternatives. It is time to draw a line in the sand.

[PocketRocket]

.....or the benefit extended under the deal that obligates Canada to share its energy resources with the U.S. in times of shortage.

Do that for a couple days in July when the temperature is at it's hottest, and every New Yorker who can't use his/her air-conditioner would be screaming

I love it.

[BHS]

.....or the benefit extended under the deal that obligates Canada to share its energy resources with the U.S. in times of shortage.

Do that for a couple days in July when the temperature is at it's hottest, and every New Yorker who can't use his/her air-conditioner would be screaming

I love it.

<{POST_SNAPBACK}>

And when the deaths of elderly New Yorkers from heat stroke are inevitably blamed on lack of air conditioning, due to our little electricity stunt, then what? Think this through carefully.

I'm not happy with the American response to the NAFTA ruling. I think we should look at tarriffs and even cutting back on resource sharing to get our point across. But shutting off the power in the middle of a heat wave would have at least some of the hotter heads in Congress calling it an act of war, and there would be a lot of pressure to scrap free trade altogether.

Like it or not, our economy is highly dependent on our participation in the American market. Dismantling NAFTA and FTA are always an option, provided they're done over a period of years. A unilateral pullout by the US would kill us.

[Guest eureka]

A pullout from NAFTA and FTA would affect trade hardly at all. Those agreements merely gave America better access to Canadian markets, less restrictions, and safeguards against energy shortages in the US. The effect on Canada has been little short of disastrous as we struggle to keep control of our own economy and to keep American hands off the levers.

I posted a week or so ago about this provision in NAFTA - the only saving feature for Canada - and how it is time for us to use it. We should do so now.

we should use it for purposes of retaliation and pressure over the bullying of Bush.

We should also use it before we slip accidentally into a situation where we are forced to greatly increase our oil exports to the US in the current emrgency. We would then not be able to return to normalcy if the crunch eases.

[shoop]

We should also use it before we slip accidentally into a situation where we are forced to greatly increase our oil exports to the US in the current emrgency. We would then not be able to return to normalcy if the crunch eases.

<{POST_SNAPBACK}>

The current situation is far from an emergency. Oil prices swing, they are currently on an upswing. They will come back down.

We won't be forced to do anything.

[Guest eureka]

We will! That is what NAFTA is all about. You should read the appropriate provision: it has been commented on in the Press many times, though, so it should be obvious.

The problem is that people know little about it just as they knew little at the time of the Agreement. That is why it went ahead without public outcry then.