Martin and softwood diplomacy

Figureheads posing for a photo-op. That is how I would characterize recent reports that Paul Martin and George Bush will discuss softwood lumber when they chat on April 30.

It is virtually guaranteed that nothing will come of this chat. The Canadian government has had little to do with softwood negotiations for months, leaving the heavy lifting around the negotiations to the cabal of BC industry and government insiders who are pursuing BC-only negotiations.

Martin has to balance antagonoistic and competing interests on softwood, especially with a close election looming. Quebec and Ontario softwood exporters want to pursue the much touted but less than successful litigation approach at WTO and NAFTA.

BC wants to negotiate, and is preparing to request a “changed circumstance” review from the US Department of Commerce. The basis for this review? The “forestry revitalization” package–in effect a privatization of the woods–the BC government passed this past year. Our government is hoping the new laws will hoodwink the Americans into believing we have a real market in lumber in BC.

In the unlikely event that BC was able to negotiate a BC-only deal, the rest of the provinces would have to capitulate or lose market share to BC corporations that could sell at a cheaper price because they would be subject to lower tariffs.

As we have said before, there are serious impediments to a BC-only deal:

  • BC alone cannot make the ongoing litigation go away, an inevitable condition the US would attach to any softwood deal;
  • The $2 billion pot of collected tariffs remain a deal breaker. BC logging corporations percieve this money to be theirs, despite the fact it was intended to raise cost of wood to the fair market return the BC public should have been getting from stumpage system. US sources have said BC companies will get that money back “over their dead bodies. … they’d rather burn it in the street then give it back to BC industry;”
  • The so-called market-based system for pricing timber that BC is promoting is anything but. Stumpage is going down in many areas, not up, and a tidal wave of beetle-infested and fire salvage wood is about to flood the market further. The rigged market that gives corporations more power to manipulate log prices in BC is unlikely to satisfy the Department of Commerce or the US softwood coalition.

But it is the internecine east-west politics that will continue to scuttle the chance of any deal. Although Ottawa has given a vague endorsement of BC’s go-it-alone approach, the matter is a political hot potato.

The stranglehold Quebec has on issues with federal-provincial impacts, along with Martin’s desire to appease the west, mean the feds have to walk a tightrope on softwood. They always have, which is why they are leaving the heavy lifting to the provinces: it’s better not to choose sides.

Canada’s only safe course of action, to avoids alienating the heavily subsidized loggers from one province or another, is to bash the Americans as protectionist. So that is what Canada does.

Looming in the background of the current chat are the various trade panel decisions from WTO and NAFTA. On April 30, NAFTA is scheduled to release its latest decision on “injury” (i.e. whether the U.S. has adequately shown that the subsidized lumber given to Canadian exporters adversely affected the US softwood industry).

As with all Canadian propaganda on softwood, this is touted as “the most important ruling yet.” The ruling that will turn the tide and push Canada to a softwood victory.

Despite the rhetoric from the government, these rulings are never definitive. Canada never wins on the merits (on the key subsidy issues); rather, it wins short-term victories on technical arguments about the methods the US uses to implement trade law. Methods the US can quickly remedy by changing its implementation to overcome any adverse ruling.

Canada and particularly BC will continue to face softwood problems until we face up to the reality and change our laws and policies to get rid of the preverse subsidies big tenure holders continue to rely on. These subsidies are not good for the public, communities, First Nations or our public forests.

Let’s fix the problem. Join other concerned citizens and support the Coalition for Sustainable Forest Solutions efforts to promote sustainable, community-friendly reforms.

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