Softwood lumber sellout?

[jdobbin]

You KNEW Sir Winston? I met Trudeau a couple of times, Turner once, Tobin a few times..three actually but that is about it for Canadian politicians.

I must agree Belinda isn't Churchill, but this isn't England mate!

Winston was a fine fellow. Not an robust as Sir John A. MacDonald when I met him but a fine fellow nonetheless.

[jdobbin]

And by the way...I was just teasing on meeting Winston Churchill et al.

I was channelling Lloyd Bentson from the vice-presidential debates.

[Jerry J. Fortin]

You would have had to be a lot older than I. I remember watching his funeral vaguely. I don't remember John F. Kennedy's funeral but I do remember Robert F. Kennedy's funeral. I am only slightly old. You would have had to be very old to have talked to him!

Churchill was a master politician, but that didn't save him from peacetime politics. Although I will be beaten for it, Trudeau was also a master politician. I don't think Mulroney was though. We need a master politician just to deal with the USA on this softwood lumber deal and Harper isn't qualified.

Softwood is the tip of the iceberg because it sets the tone for market access. Look at the duram issues that are still outstanding. We have steel issues as well. Softwood set a precedent that we will now have to pay for. When prices fall our exporters take a back seat to their internal producers. Their internal producers gain with increased market share to enhance their profits and remain viable, on the other hand our exporting producers are gauranteed a disadvantageous position in the same market place. Isn't this the definition of protectionism? Can me a fool but I would have thought that our government would have sought to achieve at least a level playing field in this regard. By entering into this type of agreement we are creating the conditions for failureof our industry when prices fall. Now when that does happen, don't you think that the American producers will think it prime time to buy up more of our companies? Considering that the cost of acquiring those companies will be considerably lower at that point, and they can literally use their own enhanced profits realized through the same market conditions to finance they purchase.

We need a politician that seeks fair and equal treatment for Canadian interests.

[Wilber]

One incentive for the larger wealthier forest companies to nix the deal and keep the litigation going is many of their smaller less well healed competitors will not survive much longer in the present climate. Doman Industries, the last major family owned forest company in BC went under a couple of years ago because of this dispute.

[August1991]

I can't believe these lumbermen. Look what they are objecting to:

The association wants, among other things, a change to the termination clause to ensure a period without conflict of at least five years. A clause in the deal signed July 1 allows the United States to withdraw after three years.

The council wants more flexibility on the export cap, which allocates each company a quota. Companies are concerned that under the rules they won't be able to ship 100 per cent of their authorized volumes.

Quebec producers also don't like the anti-circumvention clause.

Toronto Star

First, they get an agreement for three years but they want it extended to five years. (IOW, the agreement is good they just want a longer one.) Second, the export cap and company quota - that translates as: "some of us want more". Third, the last one, the anti-circumvention clause, is the "no cheating allowed clause". Translation: "we don't trust our fellow members."

I dunno. Maybe these guys aren't greedy and kamikaze negotiaters. Maybe these guys are just greedy and dumb.

----

Softwood set a precedent that we will now have to pay for. When prices fall our exporters take a back seat to their internal producers. Their internal producers gain with increased market share to enhance their profits and remain viable, on the other hand our exporting producers are gauranteed a disadvantageous position in the same market place. Isn't this the definition of protectionism? Can me a fool but I would have thought that our government would have sought to achieve at least a level playing field in this regard.

Jerry, you are entitled to your opinion but what you have written there is just plain silly.

[Jerry J. Fortin]

Silly? Do you really think the Americans are amatuers at this stuff ? Do you think that after having set a precedent that they will not use it when they deem it to be necessary?

The Canadian government agreed to restricitions to market share, they agreed to export taxes, they agreed to to cease litigation. Is any of these things innaccurate?

[August1991]

Silly? Do you really think the Americans are amatuers at this stuff ? Do you think that after having set a precedent that they will not use it when they deem it to be necessary?

The Canadian government agreed to restricitions to market share, they agreed to export taxes, they agreed to to cease litigation. Is any of these things innaccurate?

Jerry, all of what you say is in the interest of Canadian lumber producers. And if the Americans use it as a precedent, more power to Canadians.

The Canadian lumber guys just won the lottery. Unfortunately, being lumber guys, or just being human, they're now involved in a stupid dispute about how to share the lottery winnings. In response, Harper and Emerson have wisely told them to stop arguing because otherwise, the car is turning around and going home.

Despite what you read in too many MSM articles, and too many blogs, this lumber deal says absolutely nothing about the relative strength (rapport de force) of the US government and the Canadian government.

To be vulgar, this lumber deal is all about North American lumber producers screwing American buyers of new houses. Emerson and Harper got Canadian lumber producers in on the action. If you think Canada's PM should act as a pimp on behalf of Canadian exporters, then you should applaud the deal.

[Riverwind]

Silly? Do you really think the Americans are amatuers at this stuff ? Do you think that after having set a precedent that they will not use it when they deem it to be necessary?

Softwood was exempt from NAFTA by the US just like Culture was exempt from NAFTA by the Canadians and Oil Companies were exempted by the Mexicans. The Canadians were able to get a NAFTA ruling in their favour despite this exemption for some reason (I don't really know why). However, a side deal on softwood is not necessarily a precedent for this reason.

[Jerry J. Fortin]

I am not sure the lumber guys won the lottery. Look what happens in a declining market where prices fall, we have accepted quotas and export taxes at the exact time when competition starts really kicking in. Correct me if I am wrong here but doesn't having your market share reduced and your profits comprimised by another tax mean bad things for your company?

[August1991]

British Columbia and Ontario this week backed the agreement.

The Quebec Forest Industry Council said "changes and clarifications and side letters" promised by David Emerson, the Trade Minister, have allowed it to broadly endorse an accord to end the softwood lumber dispute between Canada and the United States.

"It is now each exporting company's responsibility to respond," said Guy Chevrette, the council's president.

"It's their money that's involved."

The B.C. Coast Forest Products Association yesterday offered its support for the softwood agreement after it learned its largely privately owned timber would get special treatment in the pact through a new binational panel.

National Post

Guy Chevrette, you gotta love the guy.

I don't think these lumbermen got anything more than what they had before (which was already plenty). Emerson just called their bluff and forced them to decide. And they've had the summer to divide the "spiles" amongst themselves. And the low US dollar hasn't hurt.

The lumbermen on both sides of the border are a greedy, rough bunch. The Canadian ones have suckered in the nationalists to their side and the American ones suckered in a few key US politicians. Ordinary Canadian nationalists who defend Canadian lumbermen are simply fools, the US politicians will at least get campaign contributions.

The irony is that there's good reason to believe we are selling off our birthright for a song. Anyway, these lumbermen are going to have thick wallets for another couple of years.

Who was the poster asking about public policy? This is a textbook example of public policy on both sides of the border and how a small lobby group can get what it wants at the expense of the broader public.

[August1991]

"This agreement will end years of costly legal wrangling, and allow us to move on to build a stronger, more prosperous Canada," Harper said in a brief appearance in the foyer of the House of Commons.

"As such, and because of its fiscal measures, the vote on this will be a confidence measure."

CP

Well, that's one Harper knows he'll win, and he also knows that softwood lumber will disappear for a couple of years. I wonder if Harper feels a tad cynical watching the North American lumbermen stick their heads in the trough.

Ah, politics...

They say that politics makes for strange bedfellows but I'm surprised that the NDP would play this nationalist card in such a way:

The NDP declared within minutes of Harper's announcement that it would vote against the deal, which leaves its destiny in the other parties' hands.

"Any enlightened parliamentarian will be voting against this deal," said NDP industry critic Peter Julian.

"As enlightened politicians, we're going to vote against it. We've read the agreement, we've seen the capitulations, we know it's not in Canadians' interests. . .

"This sellout is Stephen Harper trying to cozy up to George Bush. It is not about standing up for Canadians."

Julian said lumber officials have warned that the deal will mean severe job losses in certain sectors of their industry.

I thought the NDP had principles. The NDP defended the little guy. The NDP defended the environment. The NDP was against Big Pharma, Big Tobacco. Well, in this dispute, for some reason, the NDP is defending the interests of Big Lumber.

This agreement creates in effect a North American cartel in softwood lumber, limiting supply, raising prices and leaving fat profits in the pockets of the lumbermen. It comes at the expense of US consumers and the environment (current Canadians who collectively receive too little for this resource and future generations who will have fewer forest resources).

The secret, it appears, is for an industry to get a nationalist spin and present yourself as the Canadian David against the American Goliath. Canadian pharmaceuticals and Canadian tobacco companies got the spin wrong.

[jbg]

It would be darned nice if the government fell on this. Imagine, the Liberals campaigning against something they couldn't accomplish?

[jdobbin]

It would be darned nice if the government fell on this. Imagine, the Liberals campaigning against something they couldn't accomplish?

The government is not going to fail over this. And the reason that there was no deal is because the U.S. didn't want a deal. However, after losing NAFTA and now WTO, they could have eventually had to obey the law or face countervailing duties.

It was starting to get embarassing for the president who was advocating freer trade. After last year's steel embarrassment, they wanted to make a deal rather than face countervailing duties.

[geoffrey]

It would be darned nice if the government fell on this. Imagine, the Liberals campaigning against something they couldn't accomplish?

Agreed. I think they'll play brinkmanship with it, but end up supporting it. Recent polls put them 10% behind the CPC and voting against such a deal would further distance themselves from the big business community that used to pay the bills at Liberal party headquarters.

[WestViking]

It would be darned nice if the government fell on this. Imagine, the Liberals campaigning against something they couldn't accomplish?

The government is not going to fail over this. And the reason that there was no deal is because the U.S. didn't want a deal. However, after losing NAFTA and now WTO, they could have eventually had to obey the law or face countervailing duties.

It was starting to get embarassing for the president who was advocating freer trade. After last year's steel embarrassment, they wanted to make a deal rather than face countervailing duties.

Sure, Canada was going to impose countervailing duties on...., well on.... and on ....... what? What countervailing duties would get American attention?

Please, please tell us. Enquiring minds would like to know.

[geoffrey]

I think the goal was to put duties on corn?

I'm fine with admitting that Canada was in the wrong from a practical sense, and still is. We need to accept this agreement, it's the best we are going to get. $4b is better than none.

[jdobbin]

Sure, Canada was going to impose countervailing duties on...., well on.... and on ....... what? What countervailing duties would get American attention?

Please, please tell us. Enquiring minds would like to know.

http://canadagazette.gc.ca/partI/2004/2004...ml/extra-e.html

List of the products that would have faced countervailing duties. That was for the Byrd Amendment. The list was similar for the defeat the U.S. experienced last week in the WTO.

http://canadagazette.gc.ca/partI/2004/2004...ml/extra-e.html

And the duties got the U.S. attention very quickly when the steel industry in Europe drew up a similar list.

So please, please tell me you have read this before.

[jdobbin]

I think the goal was to put duties on corn?

I'm fine with admitting that Canada was in the wrong from a practical sense, and still is. We need to accept this agreement, it's the best we are going to get. $4b is better than none.

It was a long freakin' list, let me tell you. That was what the WTO loss last month meant. I posted a list that would have hurt several states that supported the tarriff.

But it would have meant a trade war and further lawsuits.

[geoffrey]

2203.00.00 Beer made from malt

22.04 Wine of fresh grapes, including fortified wines; grape must other than that of heading 20.09

2208.30.00 Whiskies

2208.40.00 Rum and tafia

2208.60.00 Vodka

24.01 Unmanufactured tobacco; tobacco refuse

2402.20.00 Cigarettes containing tobacco

Hmm...

[August1991]

Sure, Canada was going to impose countervailing duties on...., well on.... and on ....... what? What countervailing duties would get American attention?

Please, please tell us. Enquiring minds would like to know.

http://canadagazette.gc.ca/partI/2004/2004...ml/extra-e.html

List of the products that would have faced countervailing duties. That was for the Byrd Amendment. The list was similar for the defeat the U.S. experienced last week in the WTO.

http://canadagazette.gc.ca/partI/2004/2004...ml/extra-e.html

And the duties got the U.S. attention very quickly when the steel industry in Europe drew up a similar list.

What are you on about here, Dobbin?

The Canadian list you present above dates from November 2004. Are you seriously suggesting that the threat of such duties made the lumber deal possible? Why did it take so long?

I think you've got the wrong idea about this issue because you want to see it as a sports match between Team USA and Team Canada with the WTO as a referee and various duties/tariffs as low blows to keep the opposing side in line. This analogy is entirely wrong.

Countervailing duties would hurt Canadians just as much as it would hurt Americans. Bush's softwood lumber policy has been far more hurtful to the US than it has been to Canada.

By imposing a tariff on Canadian softwood lumber going to the US market, Bush simply made softwood lumber more expensive for new home buyers in the US but made US lumber producers richer. This was a bad policy for the US economy but Bush did it because US lumber producers are influential in certain US states.

Harper and Emerson just got Canadian lumber producers in on the action. In effect, we now have a North American cartel of lumber producers. Like any cartel, they are limiting supply, raising prices and getting rich at the expense of US homebuyers.

Canadian lumber producers don't want free trade. The only reason they hesitated to accept Emerson's agreement is because individual producers wanted a better deal for themselves, at the expense of their fellow Canadian producers. They were trying to get more headroom at the trough.

I am generally appalled when I read most news reports about this issue because they are so fundamentally wrong about what is happening. Your post above reflects the standard news version and it is similarly wrong.

[jdobbin]

I am generally appalled when I read most news reports about this issue because they are so fundamentally wrong about what is happening. Your post above reflects the standard news version and it is similarly wrong.

Prior to these negotiations, Canada made it clear that if an agreement wasn't made that further legal action would follow and if the WTO agreed with Canada's argument, the list that was given in 2004 would apply in terms of countervailing duties.

No one wanted that but items like the Byrd amendment and further disagreement on this key isue meant that a list had to be drawn up.

What's so hard to figure out about that?

[August1991]

Prior to these negotiations, Canada made it clear that if an agreement wasn't made that further legal action would follow and if the WTO agreed with Canada's argument, the list that was given in 2004 would apply in terms of countervailing duties.

No one wanted that but items like the Byrd amendment and further disagreement on this key isue meant that a list had to be drawn up.

What's so hard to figure out about that?

You persist in seeing this as tit-for-tat. They hurt us by imposing a tariff so we threaten them with a countervailing duty. That perception is wrong.

In the case of trade, you are arguing that to make me stop hitting my own head with a hammer, you are threatening to hit your own head with a hammer. That makes no sense and neither does your argument.

One thing to consider Dobbin is that when a government imposes a tariff, it hurts its own citizens as much if not more than it hurts citizens in the foreign country.

----

For purely domestic reasons, Bush decided to do something harmful to the US economy. He limited softwood imports by imposing a tariff on Canadian softwood lumber.

This latest agreement doesn't change that fact. Instead of the US government imposing a tariff, Canadian producers have agreed to limit their sales into the US market. This is very much in their interest because, like OPEC, they can sell their wood for a higher price and make greater profits. In effect, Canadian producers are going to be collecting the tariff revenues. This is much better for them than free trade would be.

The losers are US homebuyers.

We have had agreements like this in the past and the Liberals could have negotiated the same. I think they chose not to because it was politically convenient to appear to have a trade dispute with Americans.

The Liberal strategy seems to have worked because the common perception is that the US government is mean to Canadians and the Tories have just surrendered. In fact, nothing could be further from the truth.

[jdobbin]

You persist in seeing this as tit-for-tat. They hurt us by imposing a tariff so we threaten them with a countervailing duty. That perception is wrong.

In the case of trade, you are arguing that to make me stop hitting my own head with a hammer, you are threatening to hit your own head with a hammer. That makes no sense and neither does your argument.

One thing to consider Dobbin is that when a government imposes a tariff, it hurts its own citizens as much if not more than it hurts citizens in the foreign country.

I have been referring to what the strategy was prior to the present agreement. The Conservatives kept on with the Liberal strategy because it is the only recourse when the WTO says another country is in violation.

And Canada kept trying for agreement on lumber but the U.S. kept upping the ante. Even the industry blamed U.S. Congress for the lack of a deal, not the Liberals.

If Canada had not drawn up that list, the Byrd amendment would have seen the money collected by the U.S. given to Canada's lumber competitors in the U.S. This was a clear violation of WTO rules and the only way to bring it to the attention of Congress was to target certain States that had huge exports and who were also in support of the Byrd Amendment.

In terms of the lumber talks, Canada was waiting for last week's WTO decision and if there was still no agreement in place was prepared to consider the countervailing duty.

It is the last weapon in an arsenal of weapons to use. But it is one that has worked on the U.S. on steel and the Byrd amendment.

Yes, it would hurt Canada but it was targetted at U.S. industries that would a lot more.

[Wilber]

The US administration has always been able to say they can't control Congress as a reason for not coming to an agreement. Harper is playing the same game by making it subject to a confidence vote with a minority government. Make us a deal we can live with or you risk winding up with no agreement and dealing with another Liberal government. Be interesting to see how it shakes out.

It is the smaller lumber producers who don't have the deep pockets to continue this fight who need the deal most, not the big guys. It killed off Doman Industries, the largest remaining family run forest company in BC a couple of years ago

I have no sympathy for US home buyers. It was their government who instigated this. Let them fight their own battles.

[Charles Anthony]

It is the smaller lumber producers who don't have the deep pockets to continue this fight who need the deal most, not the big guys.

Need the deal?

It is the smaller lumber producers who get put out of business by trade restrictions.

It killed off Doman Industries, the largest remaining family run forest company in BC a couple of years ago

Hunh?

Are you advocating for free trade in lumber or for trade restrictions in the lumber market?

I have no sympathy for US home buyers. It was their government who instigated this. Let them fight their own battles.

Canadians lose too.