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Thursday, March 30, 2006

It's time the American consumer entered the softwood lumber debate

Today, for the first time in their official roles, my President met (for most of you) your Prime Minister.  Topping the subject list (or at least coming very close) was the softwood lumber dispute. 

I may be wrong here (feel free to correct me if I am), but my guess is few Canadians (and very few east of Saskatchewan) are directly affected by the softwood lumber tariff.  Westerners probably know a few who have been hurt by the damage to the Canadian lumber sector, but beyond that, this issue is a more a Rorshach test for feelings about my country than anything else.  The irony of that is this: the overwhelming majority of victims (at least in population, if not in economic cost) of the American-imposed tariff are Americans, not Canadians.

I should know, I had to pay the lumber tax (all tariffs are taxes with fancy names, as most of you know already) when I purchased my home.  I'll be paying it when we (finally) finish our basement.  Millions of American homeowners have had to pay it.

Yet, for some reason, we have largely been absent from this debate.  There are reasons for this: the free-trade constituency in America being largely Republican, the frostiness between Washington and Ottawa between 2001 and last February, and the biggest one - the focus of the American people on the War on Terror (whether in support or opposition over the Iraq file).  What has surprised me, though, is the fact that, to date, no Canadian Prime Minister, as far as I know, has ever tried to bring the American people into this discussion.

Mr. Harper's tenure is still far too short to judge on this matter, but most political economists would likely disagree with me on the political value of reaching out to the American people.  After all, one of the great axioms about trade protection is the notion of concentrated benefit and diffused cost, which in the political economy means the cohesive producers of the protected good will always win out over the more vastly spread-out consumers.

However, I think that's changing.  The rise of the Internet has done more than merely make information readily accessible to so many.  Much more importantly, it has also allowed for the creation of large communities spread out over vast distances.  The fact that my words are here, on a medium owned by a magazine that serves a readership no less than 1,500 miles from where I sit, is a testament to that.

In election campaigns, the "blogosphere" has thus been able to have a profound impact, both down here and up there.  Why can't the same be true for trade issues?  A cluster of web sites can now ensure millions of Americans become aware of just how much they're paying above market value to enrich a federal government that already spends over $2.5 trillion a year.  Homeowners from Seattle to Sarasota would be able to see, and via e-mail protest, this market distortion.  The politics of trade need not be what it once was.

For all I know, Messrs. Harper and Bush will come to an agreement during this trip, but should it not come to pass, I recommend the Prime Minister take time out his first trip to America to address the lumber consumers and retailers here about the added cost from this tariff.  President Bush's reluctance to adhere to inconvenient decisions from trans-national bodies is well known, but I don't think he can resist a groundswell from Americans who don't want to pay for lumber overpriced by government fiat.

Complete Non-Seq: Anyone interested in how Pope Benedict XVI's defense of Hong Kong democracy is giving me spiritual whiplash can go here.

Posted by D.J. McGuire on March 30, 2006 in Canadian Politics, International Affairs | Permalink


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I hope President Bush agrees with the Canadian postion on this issue. After examining the US official postion on why there should be a tariff, I was even more confused. It seems pretty clear to me that Canda is right and the US is wrong. For the record I am a US citizen and reside in Chicago. The only thing this tariff does for me is raise the price of lumber that I want to buy for any home remodeling projects or if I want to build a new one. Oh I forgot, the tariff does one more thing - It irrtates citizens of our closest neighboring country. I guess this is a good way of repaying Canada for being the single largest supplier of oil to the US but somehow I fail to understand the logic. Sorry for the sarcasm, but the more I think about this issue the more I am embarassed by the my government's position on the softwood lumber tariff.

Posted by: alan neumann | 2006-03-30 1:15:54 PM

I think you've got the issue completely and totally wrong. You imply that it's about federal (US) taxes and a direct result of Bush (whom it is becoming clear you dislike). It isn't about either. You seem to think that your US federal gov't is just hungrily taxing cheap Canadian lumber and, pity the poor American homebuyer.

It's about fair costs. And good government is not carried out by mob rule and popular emotions. You can see the results of mob rule in the Cartoon riots.

The problem is the cost of the lumber. In Canada, the forests are publicly owned; in the US, the forests are privately owned. The private owner's costs of purchasing and cutting the lumber on his property are, X- dollars. In Canada, the forester doesn't own the property; he pays 'stumpage fees'. The argument is that since these fees have been heavily below the costs of the American foresters, this effectively amounts to a public subsidy (by the Canadian taxpayer) to Canadian foresters. That's why these Canadians could offer their lumber so cheaply to Americans. It didn't cost them much in the first place.

So, American foresters, who have to make a living, just as do you, feel that it's unfair competition. They have to pay a lot for their lumber, and Canadian foresters don't. Unfair. That's what it's about.

It isn't your big bad federal gov't eager to tax hapless Canadians. It's more complex than that; it involves a difference and inequality in resource costs, and in what amounts to public subsidies.

And, mob rule is rarely democratic. I think it would be extremely improper for our prime minister or your president to ever, 'appeal directly' to the citizens of a country of which he is not the leader.

What is being done, now, to my understanding, is an acknowledgment by the Canadians that yes, indeed, their low stumpage fees did amount to a subsidy, and these fees are being raised to equate with the costs of the American foresters. Once these basic resource costs are equivalent, then, the tariffs would stop - and markets would take over.

Posted by: ET | 2006-03-30 1:24:28 PM

Oh darn, and I was hoping that Jack Layton's plan to suspend energy exports to the US would be implemented to 'teach them Yanks a lesson!'

Once again, America saves Canada from its own stupidity.

Posted by: Scott | 2006-03-30 1:35:48 PM

Right you are ET. I used to live in B.C. and the clear cutting that the NDP allowed on crown land at LOW stumpage costs has taken a terrible revenge on the environment. Why did the Dippers do this - because the forest worker's unions and the government worker's unions (the Parks and Forestry) supported the high wages they were demanding. Something had to give - it was the environment. USA subsidzes farmers and ranchers, I think the government of Canada should make a 'trade' - we raise stmpage fees and subsize farmers and ranchers to the same extent USA and Europe does. I also believe that people who own property and pay taxes on the same are much more inclined to take care of the land so I think the Canadian government should sell most of the crown land to individuals.
I also think that all Indian Reservations should be divided among the individuals on that reservation and turned into private property.
You make good sense ET. BTW the Liberanos never lifted a an air hole to solve the trade disbute. Mr. Duncan and Mr. Day (Canadian Alliance) were on the Liberanos to go iron it out before the previous agreement had lapsed, the Americans were ready to deal but the Liberano trade min snubbed the American envoy. I think it was the 'Paris Apt guy' but I am not sure. Don't blame the Americans blame the Liberano/Dipper gang and the Union people in B.C.

Posted by: jema54j | 2006-03-30 1:44:32 PM

Sorry for spelling mistakes - I should have reviewed the above before I posted it.

Posted by: jema54j | 2006-03-30 1:46:46 PM

Right, jema54. But anti-Americanism was a kay political platform for the Liberals; so, they set up the image of the 'nasty, capitalist Americans, demanding huge tariffs on lumber from poor hapless Canadians'...They didn't inform the public of what was really going on.

I'd never heard of stumpage fees or the fact that Canadian lumber is cut from public, not private lands..and that the chief bone of contention was that the low, low 'cutting' or 'stumpage fees' enabled Canadians to market cheap, cheap lumber. While the American softwood producers couldn't compete, because they had to purchase their land and trees. I had to educate myself on this; the gov't and the MSM said nothing about these basic facts to Canadians.

Yes - it was all about unions and wages; it had nothing to do with the Evil Americans.

I agree with you that the forests should be privately owned and cared for - and that reservations should be parcelled out as private lots to the natives.

Posted by: ET | 2006-03-30 2:24:37 PM

When the softwood lumber issue is resolved, what will you Canadians complain about? Oh wait, you'll find something. Never, ever happy with how good you have it. That's what happens when you have Toronto in charge.

Posted by: Scott | 2006-03-30 2:28:33 PM

Agree with the other comments above, except for Scott - Scott this one is with the West in charge not Toronto.

The reason the Prov. Crown Corp owns the land is so that the market doesn’t get to behave like a real market.

CeLobby makes a good point, but it actually applies to Canadian consumers who should “enter the debate” and ask their governments: what is it you are trying to distort in the market place by owning the land instead of privatizing it? The answers will involve patronizing the unions.

As long as we’re getting consumers involved, we should ask them what they think about marketing boards on dairy products that subsidize Quebec dairy farmers. Also, let’s ask consumers if they still think it’s a good idea that in 2006 Quebecers not be allowed to buy margarine if it’s coloured to look like butter. How infantile is that?

And Yes Jema54, don’t the reservation chiefs look a bit like Mullahs? Isn’t this tribalism déjà vu? The whole idea that reservations are a commune, nobody owns anything and the Chief gets to hand out all the goodies to relatives and friends, isn’t that a lot like a tribal Theocracy. That’s fine if that’s the way everybody on the rez wants it, but shouldn't we treat the Chiefs like we did Hamas yesterday, shouldn’t we say:
either behave according to democratic principals or we’re not giving you our aid.

Or maybe we should just leave this alone for awhile until we Harpers 5 points accomplished and he wins a majority, there sure is a lot that needs fixin'.

Posted by: nomdenet | 2006-03-30 2:35:49 PM

Excellent posts ET and Jema54j,

ET, in usual elegant fashion has hit on exactly the problem, and Jema has proposed the proper solution.

As usual Canada is its own worst enemy in this and other disputes. The constant screaming about "public" or "crown" ownership has cost this country huge in all areas of industry with the Americans.

The best example possible is when here in Alberta the government, under huge pressure form the "public" decided to claw back the rights and what they perceived as unfair revenue from agricultural lease holders.

In the ensuing battle which of course was replete with the usual misrepresentations and untruths that came from an uninformed and unknowing press on this issue. This of course was welcomed by the government as they saw an easy way get this past the masses i.e. the voters without much fanfare. Those votes of course were far more important than the ones of the few leaseholders.

But the screaming and the untrue headlines caught the attention of the Americans who immediately slapped a tariff on cattle imports, and in turn launched a complaint with the WTO using exactly the same reason. Cattle being raised on what they perceived on public land had to be cheaper to raise than on private.

This caught the government completely by surprise and they found themselves in the embarrassing position of having to hire American lawyers to side with the lease holders in the WTO hearings.

They of course easily won the hearing because facts, rather than what was reported in the press were used. It is a no brainier if you have a lease on the land you are entitled to certain rights. When it was pointed out the leases were actually bought and traded on the free market at costs equal to that of private, as well as taxes being paid the case was thrown out and the tariffs refunded.

This constant reference to "public" or "crown" ownership, even when in some cases where it has no bearing is a constant irritant in many sectors, logging, farming, cattle, and others when dealing with the Americans. And it is not going away. Certainly not while Canada is under control of the Liberals as they absolutely exploit it and find a way to blame the Americans while making themselves look rosy. That is a reality, and why they are so hated in business, as they are absolutely useless at it.

Your solution Jema is a quick and easy, as well as the right way to fix this problem. These crown assets should simply be sold off to the people using them.There is no question the owners of these lands stand the most to lose and would certainly provide the best stewardship. What advantage is there to the government to own them?

As you have pointed out it is the government who has damaged them the most. They are far to removed from the actual land use issues, to be deciding those issues.

Posted by: deepblue | 2006-03-30 2:46:11 PM

This is probably THE day when "W" will focus more attention upon the Canadian softwood issue than any other day.

You see, W is also meeting with our great friend, Vincente Fox, today.

The American public is in the middle of Jihad vis a vis every "Republican" member of our Congress - TODAY! regarding the INVASION of illegal Mexican aliens over our southern border, so that those otherwise very fine and wonderful people can work as slave labor low wages so much so that ALL of the American Small Business community has been either coerced into law breaking, or they are enduring tough price competition from their fellow businessmen who do in fact hire illegal aliens at low-slave wages.

But, hey, who really cares if we trash our long long history of FAIR DEALING in small business (and big business), where people PRIDE themselves on being absolutely honest and your "word is as good as your bond" etc. etc. cliche' "Oh you fools" and "Who REALLY believes in that CRAP?" and stuff like that, Ha Ha Ha!

Well who do you think sends their sons or volunteers themselves to go fight a war in Iraq to free 25 million people from a mad man?

PLEASE don't bother me with the shit about the WMDs "not being there". I literally prayed when our guys were entering Baghdad that crazy Saddam would not detonate a nuclear bomb and kill everyone within ten miles. I was amazed that it didn't happen. Our guys had those dumb ass chemical protection suits. I've been in the U.S. military - I don't want to waste your time telling you about what we were trained to do in the vent of a nuclear detonation. Unbelieveable.

Do you think it is the cheaters who hire illegal aliens for slave wages? Do you think the America that gives charity annually in amounts that equal the entire gross national product of many many of the nations on earth, is the kind of people of cheat and screw their employees?

Think again.

Well our president is just flushing the toilet on our American CULTURE of a RULE OF LAW by allowing and encouraging this INVASION of illegal Mexican aliens.

And Americans are burning down the telephone lines to congress about it.

So, "W" will spend every minute of today talking ALL ABOUT THE SOFT WOOD PROBLEM.

He is the guy who thought that his secretary who fixed his parking tickets, aka Hariett Meirs, should be on our Supreme Court, AFTER that insane body (the Supreme Court) has turned our Constitution on its head with leftist "rulings"
for decades.

Yeah, soft wood tarrifs relief is gonna happen TODAY.

I'm a rabid supporter of "W" in his action vis a vis the War on Terrorism. For the castrophe of illegal alien invasion, I am outraged and I'll never let this criminal treasonous action go.

Posted by: Conrad-USA | 2006-03-30 3:07:15 PM

"Yet, for some reason, we have largely been absent from this debate."

Let's face the facts, the average American could care less about this issue. Seriously, how many people Republican or Democrat that you know can actually tell you something coherent about this issue?

Posted by: Arun Kumar | 2006-03-30 3:16:54 PM


Have a little hope, it has not passed the house and they claim it won't. Only the gutless senate has sold you out so far, lets hope it doesn't go all the way.

As I heard it said today, anytime you think you are the right side of something, and look to your side and see Ted Kennedy there, you know its bad.

As someone living a "shining" example of multiculturalism, I am pulling for you.

Posted by: deepblue | 2006-03-30 3:17:43 PM

Conrad-USA - I'm also with you on this one.

But just think about it. What is Fox achieving? He's getting rid of Mexican unemployment; he's getting rid of having to develop an economic infrastructure that can employee all these people. What country elsewhere can deal with their unemployment, by sending the labour force elsewhere?

Fox encourages them all to rush to the USA, where they work at low wages, BUT, BUT, these wages may be low, but, since there is no income tax deducted, no benefits deducted - hey - they aren't as low as they, on the surface, appear.

And then, these people insist on public benefits anyway. And, they get the benefits already paid for by taxpayers (roads, hospitals, schools, etc). But they don't pay for any of this.

And, as you point out, the legitimate employer can't compete with the low-wage jobs; he has to pay more to legal employees.

And - what about immigrants trying to enter the country legally? It's almost as if the US (and Canada too) is saying - Don't bother with legal immigration. Just come anyway, overstay your visa..and we'll 'pardon' you and you can stay.

I've read other stuff about the 'ideology' of 'taking back the land from the USA to Mexico'..but, that's superficial. A deeper reason is how it benefits Mexico - which doesn't have to develop an economic infrastructure to provide jobs and social services for these millions. What a savings for Mexico!!

Posted by: ET | 2006-03-30 3:33:02 PM

The Mexican government (nation?) is TOTALLY CORRUPT! They have fantastic natural resources. They have wonderful people, a beautiful culture, music, food, etc. How can anybody screw this up? EASY just run a terrorist Kleptocracy of TOTALLY corrupt police and corrupt government at every single level of that ROTTEN society.

Mexico has ONE EXPORT product - CORRUPTION!

And they are sending it to America via the dumbest bastard who could ever be sitting in the White House in history.

How on earth some dums SOB could get the idea that it would be clever to "get the hispanic vote" by means of allowing an INVASION of illegal Mexican aliens - DURING WARTIME ????

The numbers OVERWEALM our border patrols system.

This is insane on every score.

I know lots of people of Mexican descent who have been in America AS LEGAL CITIZENS for decades. THEY HATE THIS INVASION !!!

Mexico has one problem - totally corrupt system of government which makes all people SLAVES except for the very very few KINGS.

America should send all of these superb people back and tell them to overthrow their ROTTEN government.

I'm not kidding, these illegal Mexican people are just wonderful people individually and collectively, but they are overwhealming our systems and our CULTURE.

WE don't need to "LEARN" corrpution, that is in the nature of mankind, but in America we have a clean fair structure which generally operates well, but it is being destroyed - and the DEMOCRAT PARTY is entirely the heirs to the Communists (e.g. Atheists and Socialists) and they are willing to sabatoge their own nation in order to get government "POWER" (their GOD).

We need to wake up "W"

and me and my freinds are doing all that we can.

Posted by: Conrad-USA | 2006-03-30 4:03:19 PM

Stumpage rates are not based on the going market rate (there is no timber auction and in the past the rate has been varied depending on how competitive BC timber was versus the US competition) and thus are a subsidy. Even worse is the fact that the stumpage sytem encourages high-grading with only the best species and biggest trees being taken off of the cut blocks (and thus the only ones that get charged stumpage). The amount of slash left behind would shock a forester living in Eastern Canada. A collosal waste of a resource.

As for farm subsidies - when you factor in the imputed $15 BB/yr subsidy paid to the supply-managed sectors of Canada's farming industry,Canadian farmers are significantly more subsidized than US farmers.

Posted by: Gord Tulk | 2006-03-30 4:05:52 PM


Be calm, don't shout. We know. Discuss. Inform.

Every country in the world has a national government. That government has the acknowledged right and responsibility to ensure the safety and security of that country's national borders. Each country also has the acknowledged right to restrict entry of non-status non-citizens for whatever reason. (The EU has internal agreements allowing free internal travel, but can still restrict entry by non-citizens.) Each country has a duty to allow entry (especially for immigration purposes) only to those who will a) not become a burden to the country (criminals, etc), and b) will be a benefit to the country.

The Canadian government has failed to assert it's acknowledged right to restrict entry to non-citizens even for valid reasons. There are tens of thousands of non-citizens with pending deportation orders that no-one is looking for; the Immigration department is prohibited by law from releasing the names of those who promised to show up for their flights and didn't. The police can ask is a person is on the list, if the person is already under arrest. Meanwhile, co-workers with permanent-resident status, good secure employment and flawless legal history, have trouble with Immigration.

The US government, as constituted by the President, Senate, Congress and the bureaucracy, as well as the Border Patrol, various state governments and police forces and numerous businesses, are participating in the willful violation of existing laws concerning immigration, labour, health, safety, and taxation, mostly by ignoring the ongoing illegal immigration. And the entire country is paying the price.

Mexico doesn't need any further introduction.

Why? Votes, fear of PC-inspired attacks, votes, lack of will, votes, division of citizens into smaller more-easily controlled votes, profit, votes. Think of some more.

The major responsibility of any national government is to ensure the rule of law. The three governments meeting in Cancun are failing at that task.

Posted by: foobius | 2006-03-30 6:26:47 PM

Forests in Canada are worth nothing to Canadians. Government gives away our forests to companies and their unions in order to shut them up at election time. The billions of dollars in tariffs that the Americans imposed should have gone into Canadian government coffers so we could have lower tax bills. Forests should be auctioned to the highest bidder so that Canadians know our resources aren't simply being squandered.

Posted by: sucker | 2006-03-30 7:32:56 PM

I sure hope there's a "sucker" born every day.

Posted by: nomdenet | 2006-03-30 7:46:13 PM

foobius - I'm a religious guy. You would be made a Saint in my tribe. Somehow, I'm counting on a death bed absolution. Until then, we HAVE to nearly burn the White House down or maybe even do something extreme to get our electeds' attention.

It actually works down here.

I would rather do "jobs Americans won't do" to quote an idiot, than participate in political junk (you honestly cannot believe what the people are like who just hang around in this stuff).

The forces arrayed against us do not care if they screw up and destroy these blessed nations.

Europe is a museum about to be torched or blown up just like the Taliban "took care of" the ancient Bhudist statues.

I'm glad to be able to access smart and reasonable people like you for wise counsel but right now, I want every person in office with an (R) behind their name to understand that they are going to be finding new careers soon.

Posted by: Conrad-USA | 2006-03-30 7:48:36 PM

Forgive me for being cynical, and by the way, I'm more of a pragmatist and a centrist than a polarity enthusiast: why the hell do we have to have fricking Harper in government before the USA will condescend to actually sit down and solve this longstanding dispute.

Consider this: if we actually were subsidizing the lumber industry for all these years (100+), then why isn't Canada bankrupt, or a banana republic, with rampant violence in every city? (other than Toronto)

My real objection is in aligning oneself with a political party for a twenty or thirty year stretch. Of course this has no bearing on life, but didn't somebody say:'we won't get fooled again?'

Posted by: terry | 2006-03-30 8:17:57 PM

Terry I think the answer is, that it is actually a difficult POLITICAL problem for both sides. Jimmy Carter is a landowner. It won’t matter whether it’s GOP or Dims. It’s a political problem. And the best way to solve political problems (except with terrorists) is to sit down and discuss it in a civilized way. But Liberals get too much MSM free propaganda to avoid sticking pencils in the eyes of the White House, to grow up and behave like adults, so they just kicked sand and we got nowhere.

In the end it will only get solved because our 2 heads of state want to help each other. That will take:
honesty, courage, goodwill, a willingness to use up political capital etc …
none of those are qualities that PMPM had.

Posted by: nomdenet | 2006-03-30 8:37:08 PM


You aren't going to like this map


don't forget to read the comments.

Posted by: nomdenet | 2006-03-30 8:46:07 PM

As you can see from Conrad's post, Americans are quite capable of being infuriated at Waahington.

The problem with illegal aliens in the United States is a huge one, and my friends and I are burning up the telephone lines to our senators just as Conrad is. We are putting lots of pressure on them, and they know it. Tom Tancredo, a leading advocate for hard line reform of the borders and a Republican representative to the House from Colorado, has promised to run for president just to amplify the issue.

There is one thing that Canadians are missing in respect to this matter.

If 10 or 20 millions Mexican illegals become legal residents in the United States, the US will automatically become much more Mexico-centric. The loyalty that these new citizens would have to Mexico would be deeply ingrained and would automatically cause Mexico to have a lot more influence with the United States.

Should this happen, Canada's influence would be considerably diminished if a huge number of Mexican Americans could always come down on the side of Mexico.

Canada is just pulling out of a long period of anti-Americanism, and a lot of Canadian citizens are still very unfriendly to the US. Thank God Harper is now Prime Minister, and it is very easy to see that he and Bush have a collegial relationship with the possibliities of warm friendships.

I would not like to see the day when all of America's attention was placed on Mexico's concerns because of a virtual colonization of the Southwest.

Where would Canada be under those circumstances?

Posted by: Greg outside Dallas | 2006-03-30 8:56:30 PM

Close to Alaska?

Posted by: Vitruvius | 2006-03-30 9:51:35 PM

TIME mag just started it's voting thingy to help them select the most influencial person in the world for next years award. It's unbelievable.


Posted by: Duke | 2006-03-30 10:03:36 PM

You’re mistaken on the disagreement on stumpage costs. About 35% of American trees are harvested from government land and they pay stumpage to the US government for this. They compare that cost to our cost of stumpage for timber taken from crown land. In the US, all the preparatory work is done by the US Forest Service (cruising, layout, logging plans, road construction) as is reforesting and reclamation. In BC, those costs are bourn by the forest company.

In addition to that, Americans only pay for about half of their timber, because American stumpage is based on a board-foot scaling system. That scaling system determines the amount of lumber that can be recovered from a log using 1930’s technology, and only that lumber is paid for. Waste such as slabs or sawdust is free. We use a firmwood cubic measure scaling system that measures every bit of sound wood inside the bark of a log, and all of it is paid for, no matter if it becomes sawdust or lumber. The board-foot scale has a conversion rate of 5.8 bd. ft. per cubic foot of wood. In the 1970’s, progressive mills were already getting a recovery of 9 bd. ft. per cubic foot of wood, and technology has improved immensely since then, so Americans are getting half their wood for free, whether from government land or private. (I have a friend who guides American hunters, and one of his clients owns a mill in the States, and he admitted that he makes his profit from the wood he gets for free.)

BC has always been a leader in sawmill technology. About 15 years ago an investigation found out that worker productivity in American mills was about ¼ that of BC mills. We have never subsidized our mills and have won every fight with the Americans on that issue for the last 30 years.

Posted by: dirtman | 2006-03-30 10:35:32 PM

Gord Tulk,
You also don’t know what’s happening in our forest industry. Stumpage rates in BC are a percentage of the price of lumber. They are adjusted every 3 months to reflect changing values. Prices are set by the markets. It has nothing to do with how competitive BC is. BC is very competitive, having the most technologically advanced sawmills in the world. ALL trees are required to be removed from cut blocks (except for rotten ones). Waste is charged stumpage and removed from quotas. Any practices violating contract conditions are heavily fined. Our forest practices are ranked among the best in the world.

Posted by: dirtman | 2006-03-30 10:36:54 PM


dirtman's posts are right on the money.

I would add that until about 30 years ago, most U.S. logs also came from public land. Thanks to poor forest management plus the stupid exclusion of millions of acres from logging for specious environmental causes (eg. spotted owl "habitat") mills have been closed all over the Pacific Northwest and most U.S. softwood lumber is now produced from farmed trees, including a lot of inferior southern pine. Builders prefer the superior Canadian product so U.S. mills scream "unfair competition"!

Its not just the NDP who favor playing the energy card. In fact, they are latecomers to that approach. Plenty of conservatively minded folk, including hard-eyed Yankee traders, think that we're patsies for not tying a natural gas export tax to the U.S. softwood lumber tariff - not a big enough bill to hurt the U.S. economy and/or set off a full blown trade war, but a businesslike approach of quid pro quo. In the high stakes trade game, natural gas is the only ace that we have. Would playing it contravene NAFTA? Of course, and we'd lose under the dispute settling mechanism, just as we've always won on the lumber side. Winning hasn't helped us so, by the same token, I guess that losing wouldn't be the end of the world either.

Would we be "punished" for showing a little backbone? Not as long as we hold that
great big energy ace, and I really don't see the Americans sending in the marines to take the ace away from us.

Posted by: Zog | 2006-03-30 11:34:13 PM

dirtman is right. We have undertaken a lot of work in the lumber industry, focused on feasibilty studies, business plans and marketing
strategies over the past three decades; know it well on the international and domestic level. The last thing one would want to do is to get the US consumer involved in the debate. Softwood
lumber debate is driven by US politics, Southern Republican style. We think Harper and Emmerson-Wilson, three pretty smart guys are going to win a major concession from President GW Bush. Canada may be asked to cut of the PRC - but so what; China buys (steals) most of its lumber from the ignorant and unwary. Readers might wish to check out some of the technology available in
2006 for production of prefabricated, panelized housing and commercial structures; impressive.

Posted by: Jack Macleod | 2006-03-31 4:14:43 AM


Just a few things FYI:

While I usually discuss issues where he frustrates me, I voted (and volunteered) for the President's re-election. It appears we see eye to eye on the issue of illegal immigration. I only mention these so it's clear we're not polar opposites.

Now, on to the lumber issue.

"It isn't your big bad federal govt. eager to tax hapless Canadians." Acutally, Americans are paying that tax. That was the whole point of my post.

I'm well aware of the low stumpage rates, which is a de facto export subsidy. However, the only people that hurts are Canadians. If British Columbians would rather spend their $$ making it easier to sell wood than on educating their kids, health care, or lessening their tax burden, that's their decision.

Bush, however, is reacting to complaints from the lumber hewers here to keep the benefits of BC's decision away from the American consumer.

The American economy is large enough to adapt to one sector distortions like this. Protectionism for economic reasons alone are never justifiable in the macro-economy (security reasons are different issue).

If the stumpage issue is that important to you folks up there (and I think it should), you should take the time to show BCers and Albertans why the benefit to lumberers from the de facto subsidy isn't worth the cost to the rest of society.

Posted by: China e-Lobby | 2006-03-31 5:53:46 AM

By "we" on illegal immigration, I mean ET and me, not the President and me . . .

Posted by: China e-Lobby | 2006-03-31 5:54:56 AM

Although I will note a large part of immigration problem is driven by a Mexican economy that (sorry, ET, I can't help it) loses 100,000 jobs a year to Communist China; in part through goods smuggled in over the same, porous, US-Mexican border.

Posted by: China e-Lobby | 2006-03-31 5:57:00 AM

"'It isn't your big bad federal govt. eager to tax hapless Canadians.' Acutally, Americans are paying that tax. That was the whole point of my post."

Actually that depends on whether or not Canadian lumber companies raised our prices. If we raised our prices, we are passing the cost of the tarriffs onto the consumer. If we did not, then the lumber companies are absorbing the cost to remain competative. Since several seem to have gone under or need temporary financial assistance by way of a guaranteed loan from the government, I would doubt that the prices were raised much. That is just a guess though. Anyone on have facts on this?

Posted by: jmrSudbury | 2006-03-31 8:13:29 AM

China eLobby,

There is NO subsidy, defacto or direct, on our forest products. Our stumpage reflects the fact that the companies have to do all the planning, development, road construction, silviculture, reclamation and planting on crown land. The US companies stumpage is higher because they don't do any of that, the government does it for them. And the US companies are subsidized by the fact that they only pay for half their timber (see my above posts).

Posted by: dirtman | 2006-03-31 2:19:50 PM

Dirtman and Zog and Jack, as I said I agree it’s about “politics”. Also that technologically Canada has put a surprisingly large amount investment into even x-raying the logs to optimize the cuts etc.

However, the fact remains Crown Corps are there for some reason right? This isn’t the USSR. So why isn’t the land privatized, the stumpage value issue would no longer an issue because price would be established in the market and we’d at least get the optics right for once.

I know politics would still exist in the US but at least our case would be on solid capitalist ground, why don’t we privatize?

Posted by: nomdenet | 2006-03-31 3:06:40 PM

>This isn’t the USSR.<

Funny, that was Trudeau's favorite holiday spot, called it the nation of the future. Of course that was before it collapsed...

Posted by: deepblue | 2006-04-01 11:13:25 AM

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