Softwood dispute settled

I know I have talked about this issue about the softwood dispute, but today's Canadian news has covered the deal; it will probably get very little press in the states. I have taken this news report from the CBC site. I have seen a number of American's complain about how the price of lumber has gone up making it more expensive for benchwork. When I told them it was primarily because of this dispute, I know they were skeptical.

You should also see more lumber once again coming into the states on CN trains, and I predict you will see lumber prices fall. So here is the news story:

The U.S. government and American lumber producers agreed Saturday morning to lift the 27 per cent duty on Canadian exports in return for Canadian concessions.


The duties imposed in August, 2001 have cost workers thousands of jobs and the industry billions of dollars.

"This is the right action at the right time," John Weaver, CEO of forest industry giant Abitibi-Consolidated Inc., said Saturday.

Both side have compromised, he said in a release. "For the first time, Canada and the U.S. have come up with a framework for ultimately achieving free trade."

But the U.S. government and forest companies won, said Doug McArthur, a professor at Vancouver's Simon Fraser University who helped negotiate the previous softwood deal.

"They've got most of what they want," he told CBC News.

The reduction in Canadian exports under the deal will cut 15,000 jobs in British Columbia and "probably an equal number across the rest of the Canada," he said.

Under the deal, Canadian companies will have to pay a penalty if they continue to ship as much lumber as they are today, so reducing exports will make sense to the companies.

But they'll also make more money, because the deal will end the 27 per cent duty on U.S. exports that companies pay today.

The duties were imposed to mollify the U.S. lumber industry, which says that low stumpage fees charged for logging on Crown land constitute a subsidy. Canada disagrees, and has won trade rulings backing its position.

The deal will require further talks between Canadian negotiators and the provinces, which control access to the forests.

An Abitibi spokesman confirmed media reports that the deal will:


give Canadian lumber 31.5 per cent of the U.S. market without penalty (it now has about 33 per cent), but beyond that, producers would have to pay a tariff of $200 US per thousand board feet;

return just over half (52 per cent) the $1.6 billion US in duties Canadian firms have paid, with U.S. companies keeping the rest;

give more market access to companies in provinces that change the way they allocate cutting rights to be more like the U.S. model after three years, provided the U.S. government approves the changes; and

require Canada to drop its complaints to trade tribunals, where it has won decisions against the U.S. duties.
The three-year deal could be extended.

McArthur said he expected opposition to the deal, but B.C. backs it and the opponents won't be able to block it.


Written by CBC News Online staff

 

Thanks for the update on this situation.

I was aware of the impact of this situation on wood prices in the U.S. I know of a few sawmills here that are doing quite well for themselves because of the tarriffs...it will be interesting to see what effect this will have on the industry as a whole as this settles itself out.

JDLX
Elko, NV

 

Let me see if I get this right....

THEY have very poor mills, very poor wood and an artificially strong dollar.

WE reduce our o/p to the customer in the US.

WE pay 48% of an illigal duty directly to OUR competitors.

WE have to change the way we've worked for 100+ years.

THEY get to tell us if WE are doing it right -THEIR way.

and WE have to stop winning our case in every international court.

...and I thought the US was fighting the terrorists.

Hmmmmmmm.

 

Dave,
Relax guy, its all part of the negotiating. My take out in BC is that the wood industry wants to turn the treaty down and take their chances in the courts.

I'm also wondering if a change in Prime Ministers might alter the negotiations. However to keep this a RR thread, it will be good for BC transportation industry when this thing is resolved. And it will be good for industry in BC to have a favourable decision.

With CN taking over BC Rail I am also wondering about BNSF, as that RR receives about 60 to 80 cars a day from BC Rail and takes them south; almost all the cars carry wood products. I wonder if they have just lost a major contract or will once the deal goes through.