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COLUMN

Chances for Lasting Unity Are Slim in Lumber Dispute

John Clarke 

If the chief executive officer of some big lumber corporation in Canada were to ask John Q Public, or anybody else who reads the newspapers, what he thinks about this softwood lumber thing, he might get some surprising and disturbing answers. As he surveys the fallout from this dispute, John Q might wonder how Canada and the United States, who've been feuding over softwood for over 100 years, still can't find a solution that will last beyond the next anniversary date. And he might wonder at the ease with which Canadians can turn on each other when the Americans bring out the big threats. 

Quebec and the Atlantic provinces say out loud that they think British Columbia is subsidizing exports through its stumpage system. So that right there gives the Americans a point. The Atlantic region has pushed its share of the US market to the highest it's ever been during the five-year export agreement -from which it was exempt. It's breathing easier now that the Americans have apparently exempted it again from countervail action because its lumber comes from private forests just like theirs. But they find themselves possibly facing anti-dumping penalties for shipping wood at less than the cost of production. 

BC calls the Atlantic accusations hugely damaging, which, of course, they would be under any regime that could cut exports or force a permanent tax on its lumber. When BC proposes a Canadian tax instead of an American countervailing duty, it's accused of breaking the united front so carefully crafted in the last year. And BC feels affronted when Prime Minister Jean Chretien travels to Alberta and promises open borders for gas and oil, while not bothering to go on out to the coast to hold BC's hand in the lumber crisis. Like a frustrated schoolmaster, Trade Minister Pierre Pettigrew chastises everybody for acting like spoiled children instead of Team Canada. 

We deserve free trade and we'll get it, he says. Just be of strong heart. Well, maybe. But the five-year deal has changed the landscape. The chances for any lasting unity on this side of the border have gone from likely to not likely at all. The Americans know the Canadian regions don't have very much in common. The Atlantic provinces with their private woodlots that are out of the cross hairs. Quebec with its pulp and paper industry historically more interested in chips than lumber, but with enough lumber to see a growing market for it too. 

The five-year softwood lumber deal has changed the landscape.

Ontario more dependent on automobiles than trees. BC with one job in five indentured to the forest industry. The Americans call Canadians too clever by half for using loopholes to get around export quotas-pre-drilled studs, notched and rougher-headed lumber and the like. If those products aren't tricks, as the US charges, they're certainly an imaginative response to restrictions Canada thinks are unfair in the first place. As the public-unschooled in the affairs of this complicated industry-watches with growing alarm, American Tom Stephens, former head of MacMillan Bloedel, urges Ottawa to play the energy card-no Canadian oil or gas unless lumber is also allowed free access into the US. No, no, no, says Energy Minister Ralph Goodale, the two industries are entirely different. In other words, the chances for a continental energy program, in which Canada stands to make billions, shouldn't risk failure because of lumber. 

The lumber regions delink themselves from each other when it's in their interests to do so, anyway, so what's the point. But the Americans like linkage in their dealings with other countries. Stephens is an American so he should know, which is why he recommends using the energy card. When all is said and done, says BC Lumber Trade Council president Bob Plecas, the lumber market is already integrating across the border. He pleads for time and enough freedom of trade to let the process continue naturally. But if there's some kind of market convergence going on, the Canadian public, the people who may have been only vaguely interested, may be wondering what all the fuss is about. 

Well, it's about the Americans accusing us of subsidizing the cost of the logs out of which we make the lumber we want to export freely into the US. Oh, John Q might ask, are we selling the trees we own too cheaply? Are we getting all the value we should expect from our forests? It all depends on how you count the cost. We don't sell the logs on an open competitive market the way the Americans want us to because governments, which manage the forests for us, can't be expected to behave like crass entrepreneurs. Why not? Because governments are policy makers. 

The forests have to be run for the public good and that means having a healthy private forest industry. If you start auctioning off the trees, you might have to change the tenure system under which the corporations are licensed to manage and harvest the forests according to public policy objectives in return for access to the trees. Those public policy objectives are costly for the corporations. Stumpage isn't cheap. So says the forest industry. But if the Canadian public is expected to fight this fight at the industry's side, it should be convinced that there's a good fight to fight. There has to be a public perspective on these things. 

If integration is the answer to the problems of self-interest rampant on both sides of the border, should it mean more integration of conditions as well on both sides of the border? It's all a question of values. Sometimes the US Congress behaves like the biggest little parish pump council in the world, where local interests play all sorts of games to protect their little kingdoms and stymie any kind of national interest or policy. But 51 senators say they're fed up with all the warfare over lumber and want a lasting solution now. And so does John Q Public in Canada. But his support shouldn't be taken for granted.

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