U.S. trade officials take step toward reopeining softwood lumber dispute

Posted by Rumin Mann
October 8th, 2010

United States trade officials, on Friday, took the first step toward reopening the Canada U.S. softwood lumber dispute over British Columbia’s pricing method for harvesting mountain-pine-beetle damaged timber.

U.S. Trade Representative Ron Kirk has requested consultations with Canada, as prescribed under the 2006 Canada Softwood Lumber Agreement, with the accusation that the prices being charged to harvest pine-beetle timber on public lands is too low amounting to a subsidy to Canadian companies.

B.C. officials argue that it is the same market-based pricing system that was written into the softwood lumber agreement, which both countries agreed to.

“We have followed the rules and I fear that this is more closely related to the electoral cycle in the U.S. than it is any sort of trading relationship,” B.C. Forest Minister Pat Bell said in an interview.

Kirks request kicks in a process that requires Canada U.S. trade officials to begin consultations on the issue within 20 days, and if they cannot reach an agreement within 40 days, either side can request arbitration by a three-member panel as prescribed by the softwood lumber agreement.

Bell said the timing of Kirk’s request, just before the Canadian Thanksgiving long weekend and in the middle of some heated midterm federal election races in the U.S., seems to support his argument.

The Coalition For Fair Lumber Imports, a lobby group for the U.S. lumber industry, has continued to press U.S. officials to take action on what it still considers the unfair pricing of B.C.’s publicly owned timber, and on Friday applauded Kirk’s request to initiate consultations.

The coalition argues that B.C. has been using the export taxes it charges on lumber under the softwood lumber agreement to artificially reduce stumpage rates on pine-beetle-damaged wood, which encourages B.C. sawmillers to produce too much lumber in a weak market.

“British Columbia’s stumpage practices depress already weak lumber markets at a cost of U.S. jobs in communities that can least afford such losses,” coalition chairman Steve Swanson said in a news release.

Canadian Trade Minister Peter Van Loan said he was disappointed with the U.S. decision and Canada would argue forcefully in the upcoming consultations that there is “no justification for arbitration.”

Bell said U.S. lumber producers have seen their share of the American market increase over the past four years and Canada’s share has decreased, and the 15-per-cent export tax gives U.S. mills an advantage.

Bell added that Kirk’s request does not come as a surprise since B.C. has hosted representatives of his office on a couple of occasions to review B.C.’s policies for pricing beetle-damaged wood, which he said have not changed since the softwood agreement was signed in 2006.

B.C. did implement a new auction-based pricing method for beetle timber July 1, but Bell said the intent of that was to strengthen its market-based system and it kept U.S. trade officials informed of that move.

Source: Vancouver Sun – October 8, 2010

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