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Softwood lumber sellout?


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Are the unions correct with their analysis that this softwood deal is a "sellout of Canadian interest".

"The CEP analysis says:

"This treaty is worse than the framework because:

- the scope of the treaty is expanded to capture remanufacturing

- regional quotas and the surge mechanism will operate on a monthly basis, not allowing balancing of exports over long periods

- proposed "regional exemptions" would make Canadian authorities responsible to American oversight and prevent Canadian provinces from enacting progressive forest policies in the future

- the BC government is specifically prohibited from future changes to provincial policies that conflict with commitments that the Campbell government has made to the U.S.

- The U.S. will be able to abrogate the treaty after two years on three months notice - a perpetual "gun to the head" of Canada meant to intimidate the Canadian industry and policy makers

"The Canadian government should not sign this proposed treaty, and instead return to the negotiating table to get a better deal for Canada that provides stability for our industry and respects the integrity of Canadian forest policy."

CEP represents a total of 150,000 workers across Canada, with more than one third of them employed in forest related industries."

Or do you think Canada as not much of a choice to expect anything better from the U.S.?

http://www.sootoday.com/content/news/full_...oryNumber=18279

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Unions howl no matter what, generally in union relations I find that when unions lose, everyone else in Canada wins.

On top of that, their statements are emotional ploys. The gun to the head? Not really, it's kind of the point for Canada to follow the rules, makes sense that the US should have the ability to cancel if we don't...

I wonder when Canadians will realise that we are in the wrong here. Sure, there has been NAFTA rulings in our favour. There has also been WTO rulings in the US favour. The situation is clear, we subsidize our forestry through ridiculous low (comparitively, to the entire world not just the US) stumpage costs. The deal should be in the American's favour to compensate for our unfair trade practices.

It also needs to be fair to Canadians, which it is. It does provide a profitable lumber industry.

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The softwood lumber deal is exceptionally good for Canadian lumber company owners and workers. They are greedier than most and they are angling to sweeten the pot at the last minute. That's not uncommon in a negotiation and it seems that it's the negotiating style of lumber types.

The deal will go through regardless. And then we won't hear about softwood lumber for a couple of years.

The losers in all this are ordinary people in the US buying new homes and doing renos. The Bush Administration didn't have the courage to protect these people against the lobbying efforts of US softwood producers.

The whole process is enough to make one wretch, and then become a libertarian.

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The softwood deal is crap. Is it a subsidy to determine a price level? The damned terminology is misleading. A subsidy is a payment to a producer is it not? There have been no such payments made has there? What of the Billion dollars we left behind?

Who benefits from an agreement that sanctions tarrifs?

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Canadian lumber companies will be able to retrieve $4-billion out of $5-billion in previous penalities which is not bad considering the contentiousness of the issue.

The deal allows either the U.S. or Canada to withdraw after three years.

And under international law countries can withdraw from the agreement with one years notice so it seems no one is holding a gun to anyone's head.

For the most part all provinces seem to be in agreement except B.C.

In this case I would agree with Quebec as it is better to have a "reasonable deal" than no deal than to continue court action with lawsuits.

http://cnews.canoe.ca/CNEWS/Canada/2006/07...1670005-cp.html

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The softwood deal is crap. Is it a subsidy to determine a price level? The damned terminology is misleading. A subsidy is a payment to a producer is it not? There have been no such payments made has there? What of the Billion dollars we left behind?

Who benefits from an agreement that sanctions tarrifs?

There are no tariffs.

The agreement amounts to a VER in which Canadian lumber producers (happily) limit their exports. The effect is to restrict lumber supply in the US market and make US softwood lumber prices higher. This is to the benefit of both US and Canadian lumber producers. In practical terms, the agreement creates a cartel of North American lumber producers sanctioned by the US and Canadian governments. The only loser in all this is US consumers.

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In practical terms, the agreement creates a cartel of North American lumber producers sanctioned by the US and Canadian governments. The only loser in all this is US consumers.
Are we forgetting Canadian consumers? Will it not raise market prices on our side of the border too?
The agreement amounts to a VER in which Canadian lumber producers (happily) limit their exports.
If there are no tariffs, what prevents Canadian exporters from cheating and breaking the cartel?
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The softwood deal is crap. Is it a subsidy to determine a price level? The damned terminology is misleading. A subsidy is a payment to a producer is it not? There have been no such payments made has there? What of the Billion dollars we left behind?

Who benefits from an agreement that sanctions tarrifs?

There are no tariffs.

There are no tariffs? Really, read this and tell me that again will you.http://www.cbc.ca/news/background/softwood_lumber/

The agreement amounts to a VER in which Canadian lumber producers (happily) limit their exports. The effect is to restrict lumber supply in the US market and make US softwood lumber prices higher. This is to the benefit of both US and Canadian lumber producers. In practical terms, the agreement creates a cartel of North American lumber producers sanctioned by the US and Canadian governments. The only loser in all this is US consumers.

Are you an American consumer? From what I can figure out letting the Americans keep a billion dollars makes Canadian producers the losers in this. That in addition to the betting they will take when they have to pay an EXPORT TAX, which must be far different than a tarrif....

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There are no tariffs? Really, read this and tell me that again will you.

http://www.cbc.ca/news/background/softwood_lumber/

The deal removes tariffs on lumber, but includes export taxes that kick in when the price of lumber drops.
CBC Link

Well, of course, the US producers want a guarantee. But those export taxes would never kick in because they are not in the interest of Canadian producers.

Both US and Canadian lumber producers are in cahoots to form a cartel and raise US lumber prices. This is happening at the expense of US consumers and the Bush Administration is doing nothing to defend their interests. OTOH, Bush did the same with steel.

Are you an American consumer? From what I can figure out letting the Americans keep a billion dollars makes Canadian producers the losers in this. That in addition to the betting they will take when they have to pay an EXPORT TAX, which must be far different than a tarrif....
Since American consumers paid most of the $5 billion of the counterveiling duties collected, it seems a very good deal that Canadian producers will get $4 billion.
Are we forgetting Canadian consumers? Will it not raise market prices on our side of the border too?
Interesting point. I think Canadian prices may in fact be lower than otherwise since there will be excess lumber available here. To my knowledge, the quotas only apply to cross border trade and have no effect on Canadian production.
If there are no tariffs, what prevents Canadian exporters from cheating and breaking the cartel?
I would imagine that any Canadian producer who tried to cheat on his quota would quickly find his business surrounded by angry Canadian loggers wielding chainsaws. Or maybe he'd wake up to find a Douglas Fir log dripping sap in his bed.

Seriously though, the agreement has its enforcement clauses. Jerry above noted the threat of export taxes. I suspect this final noise is the sound of Canadian producers jockeying to make their final cut of the pie a little larger before the quotas lock in.

What is the famous quote of Adam Smith? “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

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It seems to me that there is little difference between a tarrif and an export tax. When the variable economic considerations of the market place determine a decline in prices profits shrink, and that is amplified for Canadian producers with this export tax. In short when times get tough, it will be tougher on us than on them. Isn't the whole idea to level the playing field? This agreement creates an uphill climb for our producers when industry is thrown into a defensive position in terms of both market share and profitability. As far as I am concerned we have effectively hamstrung ourselves.

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I think Canadian prices may in fact be lower than otherwise since there will be excess lumber available here. To my knowledge, the quotas only apply to cross border trade and have no effect on Canadian production.
I am leary. I bought a bunch of plywood last year and the manager at the hardware store put a limit on how much he would sell to me. (Luckily I did not need more.) He said he was running out because his supplier was not sending in the next shipment until he learned more about the dispute.
I suspect this final noise is the sound of Canadian producers jockeying to make their final cut of the pie a little larger before the quotas lock in.
I fear it is worse than that.

Now, I wonder about the Canadian tax-payer. The U.S. justifies its tariffs by accusing the provinces of subsidization and dumping.

The dispute centred on stumpage fees – set amounts charged to companies that harvest timber on public land. Many in the U.S. see Canadian stumpage fees as being too low, making them de facto subsidies. A U.S. coalition of lumber producers wants the provincial governments to follow the American system and auction off timber rights at market prices.

---

A NAFTA decision on Aug. 13, 2003 was considered a partial victory for the Canadian side. A panel ruled that, while the Canadian lumber industry is subsidized, the 18 per cent tariff imposed on softwood lumber by the United States is too high. While the ruling didn’t throw out the duty imposed more than a year earlier, it ordered the U.S. Commerce Department to review its position.
http://www.cbc.ca/news/background/softwood_lumber/

In other words, we are the bad guys. Maybe we are. Maybe we are misusing non-private land. Maybe we are screwing our own tax-payers. [Funny, something is starting to smell like....]

The premier of B.C., Gordon Campbell wrote to the feds government about some concerns:

Ken Dobell, B.C. Premier Gordon Campbell’s special adviser on the softwood issue, wrote to senior federal negotiator Claude Carriere on Friday—the day before the signing in Geneva.

He said British Columbia wants changes to the deal’s two-year termination provisions, taxation of lumber milled from privately-owned timber, treatment of the remanufacturing sector, and rules covering the way border taxes are calculated.

----

Federal negotiators fought hard to ensure British Columbia’s main concern—preservation of its market-based timber-pricing reforms and sovereignty over forest policy—were protected within the agreement, added Emerson.

“Then late in the negotiation, the issue of a termination clause became a new hill to die on,” he said. “So we went back as late as an hour before the initialling to get an improvement in the termination provision.”

Emerson wouldn’t discuss the specifics of Dobell’s letter.
http://www.fftimes.com/index.php/3/2006-07-06/26034

Would not discuss the specifics. Hmmm? It sounds like they are hiding something. Maybe we are the bad guys. Maybe we have something to hide.

Saying "market-based timber-pricing reforms" sounds like a euphemism for hiding subsidies (or some sort of intervention!) otherwise, what the hell is the government doing? Hey! Government! Can you help ME with some market-based pricing reforms, too?? I have a phone bill, a hydro bill, a water bill, an insurance bill, a laundry bill, a tax bill.....

What is the famous quote of Adam Smith? “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Oh, but now we have evolved to "governments" conspiring together against the public!
Isn't the whole idea to level the playing field?
I doubt it. I believe that the reason is more simple (but disappointing): "friends" of the governments are using their clout to screw the consumers.

Again from the same CBC webpage:

The agreement didn't apply across Canada. Since lumber harvested in the Maritimes comes mostly from private land, Maritime provinces weren't subject to the U.S rules. With no extra duties to deal with, Maritime producers saw business rise.

Funny, private land ownership can lead to prosperity without the perfidious coercion and intervention of government.

The whole process is enough to make one wretch, and then become a libertarian.
Come to the dark side....
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It seems to me that there is little difference between a tarrif and an export tax.
There is a big difference in who gets the revenue of the tax/tariff.

Jerry, the metaphor here is not leveling a field, or a big US ogre dominating a Canadian child.

The purpose is to restrict supply of softwood lumber into the US market. By doing so, the price of lumber in the US will be higher and this will mean more profits for US lumber producers. Canadian producers are more than happy to participate in this because it will mean more profits for them too.

To make this work, the Canadian producers must agree to restrict their exports to the US market and that's what the agreement does. Critically, the agreement imposes specific production quotas on different producers. Producers together want the pie to be smaller (restrict supply) but each individual producer wants a large piece of the pie. I suspect this recent media attention is the noise from individual producers trying at the last minute to make their piece a little larger. I frankly don't think that's a good way to negotiate but I gather that's how lumbermen do things.

Cartel's are inherently unstable (it's always better to be outside of a cartel than inside it) but Canadian lumber producers have succeeded to make them work in the past and I have no doubt they'll succeed to make it work this time too. The Canadian government will help them.

I think Canadian prices may in fact be lower than otherwise since there will be excess lumber available here. To my knowledge, the quotas only apply to cross border trade and have no effect on Canadian production.
I am leary. I bought a bunch of plywood last year and the manager at the hardware store put a limit on how much he would sell to me. (Luckily I did not need more.) He said he was running out because his supplier was not sending in the next shipment until he learned more about the dispute.
Given the dispute over the past few years, I would imagine that Canadian lumber prices will rise in the short term. But overall, I would expect that Canadian prices would be lower than US lumber prices.

I'm not sure you'd see much difference at your Home Depot though. Local taxes and retail market conditions would have a big effect on such prices.

The dispute centred on stumpage fees – set amounts charged to companies that harvest timber on public land. Many in the U.S. see Canadian stumpage fees as being too low, making them de facto subsidies. A U.S. coalition of lumber producers wants the provincial governments to follow the American system and auction off timber rights at market prices.

---

A NAFTA decision on Aug. 13, 2003 was considered a partial victory for the Canadian side. A panel ruled that, while the Canadian lumber industry is subsidized, the 18 per cent tariff imposed on softwood lumber by the United States is too high. While the ruling didn’t throw out the duty imposed more than a year earlier, it ordered the U.S. Commerce Department to review its position.

In other words, we are the bad guys. Maybe we are. Maybe we are misusing non-private land. Maybe we are screwing our own tax-payers.

This is an entirely different issue and one of the several ironies of the dispute.

I don't know if stumpage fees are too small. But I'm inclined to believe they may be since Canadian governments tend to underprice all our natural resources. Ultimately, this is an environmental issue and so the irony is to see the NDP (the Green wannabe Party) defending the lumber lobby.

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Wasn't the intent of the North American Free Trade Agreement about unfettered market access. I thought the intention was to create a level playing field where open competion and the free market determined prices. What we see with this arrangement is market restrictions that limit competition and increase the price to the consumer.

While I don't disagree that keeping prices higher benefits producers, but correct me if I am wrong but didn't the Conservative government run around the country selling NAFTA on the basis of claimed reduction in prices to consumers? Wasn't that how we got behind the idea of eliminating protectionism to improve our economy because it would benefit the consumer?

What I am hearing in this forum is that the consumer was not the true beneficiary of this agreement but instead it was designed to protect the interests of business at the expense of the citizen.

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Wasn't the intent of the North American Free Trade Agreement about unfettered market access.
The NAFTA was a large trade agreement that had the words "free" and "trade" in its title. I am not trying to sound flippant or smart. The truth is that some sectors were excluded and others were treated differently and some were set free.
What I am hearing in this forum is that the consumer was not the true beneficiary of this agreement but instead it was designed to protect the interests of business at the expense of the citizen.
Correct. You could say that we have "freer" trade but in general, but we do NOT have true free trade across all sectors.
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Wasn't the intent of the North American Free Trade Agreement about unfettered market access. I thought the intention was to create a level playing field where open competion and the free market determined prices. What we see with this arrangement is market restrictions that limit competition and increase the price to the consumer.
Jerry, you're right. The purpose of NAFTA was to remove arbitrary barriers on cross border trade and to make it difficult to impose new ones. [The level playing field metaphor implies 'fairness' and that's not what NAFTA is about. Its intent is merely to remove barriers.]

The problem is that firms will try every trick in the book to restrict trade. Why? Because if they can keep a competitor out, then that means higher prices and more profits for them. This is what US lumber producers managed to convince the US government to do despite the tremendous cost it imposed on US consumers.

In some ways, I admire the federal Liberal government's response which was to try to make NAFTA work (cynically, the Liberals also appeared to be defending a Canadian David against a US Goliath which was a vote-getter in some parts of Canada).

The Conservatives have given up on NAFTA (at least in the lumber sector) and have just gone to a VER. In strict terms, the Conservatives are acting in the best interests of Canadians in the short term (this particular issue) but may be not in the long term. The US government never defended the interests of its consumer at all.

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It seems to me that politics have degenerated into something other than what they were designed to be. I had always thought that politicians were responsible for advocating the will of the public. I was wrong, that much is clear. I will now spend the rest of my days in this life wondering what would serve to fix the system.

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The brinksmanship! Let's see who blinks first!

"Anybody who stands up and says they want to kill this deal, I'm fine with that," Emerson told CTV's Question Period in an interview aired on Sunday.

"As long as they take the responsibility in their communities for the consequences when we go back into litigation, and all of the fallout from that is going to be on their shoulders, frankly."

CTV

Offhand, I would say that Harper got a real lumberman in David Emerson.

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Emerson! Interesting character, maybe he will switch to the NDP next election. That might be the only way to keep his seat.

Anything on the issue or just another shot in the dark at a decision that was already cleared by the ethics commissioner as being completely reasonable?

--

I still stand behind the deal, I think it's a great compromise. The problem with the general public in Canada is that they think in dealing with the US, we should get 100% our way, all the time. Even in the NAFTA rulings, comments were made about our ridiculously low stumpage costs. And the WTO ruled that Canada is violating free trade principles. So come on people, give a little, get a little. That's how real people do business.

Sitting on the floor crying until you get 100% of what you want only worked until age 3, it's time Canadians grew up.

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I still stand behind the deal, I think it's a great compromise. The problem with the general public in Canada is that they think in dealing with the US, we should get 100% our way, all the time.
Geoffrey, this has nothing to do with the general public and everything to do with some lumber men who want to squeeze out a few more bucks for themselves (from CTV link above):
Carl Grenier, executive vice-president of the Free Trade Lumber Council, also has serious issues with the agreement.

He said he believes the agreement is lacking industry support and is far from being a done deal, but he acknowledged each company will make its own decision.

"This will be a decision for each company to make. ... This is a business decision. Every business has its own particular circumstances and we know a number of our members are in financial difficulties because of all those years of fighting the U.S."

Emerson is calling their bluff, in lumberman style. The lumber industry has always been a rough and ready business. It's part of Canadian history.

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I should have been more detailed in my post. This guy is an opportunist, plain and simple. He is cock sure and doesn't give a damn what people think. He wants power he craves the limelight, your basic politician I guess but he doesn't give me a warm a fuzzy feeling. Neither did Belinda, I value loyalty highly, changing sides is a bit dangerous, and this is the case in politics as well.

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I should have been more detailed in my post. This guy is an opportunist, plain and simple. He is cock sure and doesn't give a damn what people think. He wants power he craves the limelight, your basic politician I guess but he doesn't give me a warm a fuzzy feeling. Neither did Belinda, I value loyalty highly, changing sides is a bit dangerous, and this is the case in politics as well.

Winston Churchill changed sides and was regarded as one of the of the greatest prime ministers of all time in Britain.

But I knew Winston Churchill and Belinda, well, she ain't no Winston Churchill.

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