Trade Bullies are Sometimes Right

Canadian pundits, politicians and industry are pillorying the U.S. for their position on various trade issues. As they should–the U.S. is a trade bully, no doubt about it.

On issues as diverse as cattle, grain, and softwood lumber, the U.S. has played hardball politics with Canadian interests, with little respect for the rules.

Their behavior shows that trade rules are made to be broken. And their actions–like those of the governing Liberals in Ottawa and Victoria-illustrate that the driving force in trade matters is the ephemeral political interests of the governing party and their key donors.

And Canadians suffer as a result.

Unfortunately, in response to this bullying our Canadian politicians huff and puff and blowwwwww… smoke. When they want to get real aggressive, hold your breath, they… cancel a meeting.

But the problems we have been having with softwood go beyond wimpy politicians. Greedy Canadian logging companies are also at fault. The fact is that the U.S. is right about an essential element of the softwood dispute-Canada does subsidize its forest industry. And Canadian companies have been fighting for decades to keep and expand these hidden and direct windfalls.

The reality of Canadian logging subsidies is unpopular, but true. Most Canadians get whiplash from competing WTO and NAFTA rulings. We are lost in endless Byzantine trade panel rulings on cross border pricing, or the definition of “injury” and “dumping.” We don’t understand why the softwood subsidy issues continue.

A quick review of a few simple numbers makes the essense of the softwood dispute, and the US concerns, very clear.

  1. For 36% of the wood cut in BC since 2001, logging companies paid only 25 cents a cubic metre.
  2. In 7 forest districts in 2005 25 cent stumpage was paid on over half the logs cut.
  3. And in the North Coast Forest District, home to a big portion of the yet unprotected Great Bear Rainforest, over 85% of the logging produces only 25 cents a cubic metre.

 

Would you allow someone to log a tree the size of the average Canadian telephone pole from your backyar and pay you only a quarter?

If that is not a subsidy, what is?

Discussion about the low return Canadian governments get for trees logged on public lands is overlooked.  The average Canadian gets whiplash from competing WTO and NAFTA rulings about the vagaries of Byzantine trade panel rulings on cross border pricing, or the definition of “injury” and “dumping.”

Frankly, I am not interested in supporting either side in the dispute. Nor are WTO or NAFTA panel rulings good for anything but putting us all to sleep. More important is a fulsome discussion in Canada, particularly in B.C., about whether we are getting a fair return on our public assets. 

This is not an academic discussion. It will determine the revenues we as British Columbians have available to pay for things like schools, and health care.

For example, recently the U.S softwood lobby alleged that the low stumpage paid for beetle wood is a subsidy. They argue that the stumpage is reduced (often to 25 cents), but the companies are enriched because the timber’s market value isn’t affected. Again, the U.S. timber lobby is right. This is the untold story of the so-called beetle crisis.

How come this obvious subsidy hasn’t been exposed by the Canadian media? Good question!

The way the BC Liberal government and the timber industry are taking advantage of the beetle problem to enrich themselves is one the biggest untold stories of the last few years.

There are real winners and losers here. And the resulting impacts on already threatened rural communities are long term.

The unsustainable logging of millions of beetle affected trees, won’t reduce the beetle problem, but will likely turn dozens of rural communities into ghost towns for however long it takes merchantable trees to grow back. The inevitable falldown in timber supply after the beetle frenzy is over will shut down mills and cut jobs in just a few years.

Who benefits from this policy? No surprise, the big timber companies-who just happen to be big Liberal Party donors.

Who loses? Forest dependant communities and workers who won’t have any logging jobs for the 40, 80 or 120 years it takes for the trees to grow back. Wildlife, like grizzlies, wolverine, caribou, and moose that won’t have anywhere to live or eat for the same 40, 80 or 120 years.

And you and I-average British Columbians-who are being bilked out of potentially hundred of millions of dollars in stumpage that is rightfully ours.

John Allan, spokesman for the B.C. timber industry has been quoted as saying that these low rates are necessary to entice companies to salvage the wood.

But since the beetle damage is done-and there is no increased risk of further beetle problems-if it is not economic to log these trees at fair stumpage rates, then they should be left standing. Jobs can be created   managing for fire.

To do anything less is a subsidy.

So in addition to focusing on the bullies down south, British Columbians need to start demanding our politicians address the low stumpage rates that are driving the softwood dispute. Until these issues are addressed softwood battles with the U.S. will continue.

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