Softwood – more stupid politics

Canada’s Conservative government claims to have resolved the longstanding softwood lumber dispute. Don’t count on it!

After months, more like years, of confusing Canadian headlines whiplashing back and forth about the status of a potential softwood deal, at press time Mr. Harper’s minority government appears to have bludgeoned the disparate Canadian industry and governments into holding their noses and supporting his agreement with the U.S. at least for the time being.

But at what political cost?

Back in January I predicted no deal would be forthcoming until 2007. Why? Well, to twist the famous line from James Carville, former Bill Clinton political adviser and aw shucks pundit-It’s the politics stupid!

Weak federal governments and internal political tensions on both sides of the border made the likelihood of a deal remote. I doubted either government would risk the political capital needed to impose a less than desirable deal on the divergent state and provincial governments and timber corporations.

The politically crippled Bush administration didn’t have to squander much political capital to pressure the formidable political forces allied against Canada in southern and border states into the deal because the terms are more beneficial to U.S. industry.

In Canada, Harper’s bullying actions to build support for the deal are surprising because it may sabotage his dream a majority government. Simply put, by imposing a deal and twisting government and industry arms so aggressively his government risks alienating voters and political support in Ontario, BC and Quebec, who hold conflicting views on the best tactics and terms needed to resolve the long-standing conflict. Voters in rural BC and Quebec may make the Conservatives pay for sacrificing their interests to build relations with President Bush.

And, don’t be fooled by the rhetoric that minor adjustments to the deal increased support and led to radical about faces by the various premiers and CEOs. Their arms were twisted and their words of support were uttered through clenched teeth.

The only explanation for the reversals is that serious incentives were being offered under the table. I expect the details of the quid pro quo’s and corporate benefits, Harper and Bush have given to various state, provincial and industry interests will come to light over time.

The terms of the deal create regional winners and losers. Expect more corporate consolidation, as some corporations flush with cash from the returned tariffs consume their competition to monopolise even more control over Canada’s public-owned forests.

I doubt the ceasefire will last long. Although I don’t expect the bark-but-don’t-bite opposition parties to force an election over the issue, the imposed deal has too many opponents, and will create too many losers, to survive for long. 

While it will create a lull in the skirmish, the ceasefire does nothing to resolve the fundamental conflict. The two sides remain ideologically entrenched in their positions. The Americans are convinced that the almost criminally low stumpage in Canada, especially in BC, is a subsidy. The Canadians believe the U.S. is a trade bully and the dispute is all about market share. And they are both right.

That is why when I recently spoke to someone close to the U.S. industry they confirmed that the U.S. timber lobby was preparing new challenges focussed on all the new subsidies given to BC timber companies as part of the BC government’s forestry reforms.

There will be no end to the war until Canadian governments and industry agree to negotiate reforms that address the driving force antagonizing the U.S., – the low stumpage charged for timber on public lands.

At the end of the day, politics are likely to once again sabotage Canadian unity and the longevity of the tentative deal. The wisdom of Mr. Harper’s belligerent actions will be judged soon – when Canadians go to the polls.

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