The scoop on softwood

On January 19, 2003, the World Trade Organization (WTO) Appellate Body released its decision confirming that that Canada subsidizes its forest industry. This is no surprise to those familiar with BC’s, antiquated, environmentally destructive and economically bankrupt forest policies. However, this news will be a big surprise to those who rely on mainstream Canadian media for their information on softwood.

In the penultimate trade ruling in the Byzantine softwood legal wars, the WTO Appellate Body – which cannot be appealed – ruled against Canada’s appeal of U.S. softwood tariffs. This ruling torpedoes Canada’s ill-advised litigation-based softwood strategy and will inevitably send BC and industry negotiators back to the negotiating table.

Last week Canada officially rejected a U.S. proposal to end the multi-billion dollar dispute. This proposal would not have addressed the perverse subsidies built into Canada’s, and B.C.’s, forest policies, rather they would have imposing quota’s on exports. The proposal was scuttled by internal diversions between provinces and industry lobbying groups, all of whom are seeking some escape hatch that would allow them to end the software war without making real reforms. further negotiations will be hampered until next fall by impending federal election in both countries.

The appellate ruling may seem like an about face given Canadian propaganda about previous WTO rulings. In fact, the recent ruling mirrors previous WTO findings that Canada’s policies provide a financial benefit to Canadian loggers – the WTO definition of a subsidy.

However, the WTO Appellate Body accepted that in some circumstances cross-border pricing comparisons could be used to quantify the subsidy. This partially overturns previous WTO trade rulings that Washington’s use of comparison with U.S. prices in calculating countervailing duties was unfair.

The reasoning in the decision indicates that the numerous amicus curia (friends of the court) briefs submitted by Dogwood Initiative and its NGO and First Nations partners had an impact. The WTO seldom accepts submissions from non-parties. But on softwood, the WTO accepted briefs from Dogwood’s coalition of U.S. and Canadian NGO’s and, for the first time, from indigenous organizations like the BC-based, Indigenous Networks on Economies and Trade.

Given the recent WTO losses, expect a renewed Canadian interest in negotiating a solution. The question remains: will B.C., and other softwood producing provinces like Quebec, agree to implement policy reforms that will begin to address the hidden subsidies to logging corporations? These subsidies promote corporate oligopolies, clear-cut logging, habitat destruction and machines over jobs.

Despite the rhetoric the forest policy changes BC is implementing will not create the diversity and competition essential to market pricing. For a critique of these changes click here.

Until now, the largest logging companies have been unwilling to discuss meaningful reforms to tenure and pricing that would diversify the industry, ensure full value for the use of public resources, and acknowledge First Nations’ proprietary interest in the trees they log. These victories will perhaps renew U.S. appetite for negotiated solutions based on real reforms.

The ruling highlights the poor performance of Canadian media on softwood issues. In the past most articles parroted government and industry propaganda that Canada was winning at the WTO. This time, the Canadian media had to acknowledge that Canada lost the decision.

The WTO rulings were the latest in a series since the U.S. slapped permanent anti-subsidy (“countervailing”) and anti-dumping duties totalling 27.2 per cent on softwood imports in May 2002. The WTO announcement came on the heels of the separate decision by a WTO trade panel that the U.S. was within its rights to impose anti-dumping duties on Canadian softwood imports.

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