Prince Rupert Daily News
|Lumbering dinosaurs fear extinction
July 8, 2002
If asked to name the cause of the softwood lumber dispute, most would likely say Canada’s stumpage pricing system. The U.S. charges that stumpage amounts to an unfair subsidy for Canadian lumber producers at the expense of U.S. producers who have to pay market rates to harvest trees on private land. In fact, this is how the Canadian media, to its shame, has also cast the debate.
Fact is, stumpage is irrelevant. It’s a red herring thrown up by U.S. lumber lobbyists to mask demands for protectionist legislation. The lobby goes by the Orwellian-sounding euphemism “Coalition for Fair Lumber Imports.” Its chairman is the aptly named W.J. “Rusty” Wood, president of Tolleson Lumber in the State of Georgia. The significance of this last fact was explained to me by Skeena MLA Bill Belsey, who addressed the annual meeting of Pacific NorthWest Economic Region last month in Mount Hood, Oregon.
“The anti-softwood lobby comes out of the southern and southeastern states, where lumber mills are inefficient and labour-intensive, and where the available wood is second-growth,” he said. In contrast, Canadian mills are highly efficient and modern because their owners invested in new technologies, and designed them to cut lumber for Asian markets.
“We’re so efficient we could sell lumber into the States even with the 29 percent duty and still make money,” said Belsey.
On July 24, 2001, Professor William D. Nordhaus of Yale University issued a report on the nature of Canada’s long-term tenure (stumpage) system with the unwieldy title An Economic Analysis of Whether Long-Term Tenure Systems In Canadian Provincial Forests Provide Countervailable Subsidies to Canadian Softwood Lumber. He concluded that stumpage in no way confers a subsidy as charged by the U.S. lumber lobby.
“It is only a subsidy when dollars flow from the government to the tenureholders. When dollars flow from the tenureholders to the government, as is the case with the B.C. forest industry, then this is the economic equivalent of taxes and cannot constitute a subsidy.”
Even if the U.S. lumber lobby argued that stumpage rates were too low, its case would still be a pile of wood chips. The amount of timber to be cut is fixed by the annual allowable cut, so stumpage rates cannot increase the supply of lumber or lower its price. Because stumpage rates do not affect production, they cannot be considered a form of subsidy. Loggers would make more money, but so what?
Nordhaus’ report formed a major part of a July 6, 2000, study called Nailing the Homeowner, by the Center for Trade Policy Studies at the Washington D.C.-based Cato Institute. It is a devastating account of how protectionism hurts not only Canadians but also U.S. homebuyers:
“The price of lumber has risen substantially since the onset of measures to protect the U.S. softwood lumber industry Between 1980 and 1985 the price of lumber averaged just under $200 per thousand board feet, whereas between 1986 and 1998 the price averaged a little over $300.”
After accounting for other factors the report’s authors concluded that trade restrictions were responsible for raising lumber prices by $50 to $80 per 1,000 board feet. The result is $800, to $1,300 added to the cost of a new home, which translates into 300,000 people not being able to buy shelter.
There is not a damned thing “fair” about the “Coalition for Fair Lumber Imports.” Their demands for barriers to Canadian lumber amount to a de facto subsidy for U.S. inefficiency and an indirect tax on U.S. homebuyers. In a delicious irony, Belsey said Wood, the coalition’s driving force, has had to shut down two of his mills because of a lack of timber.
The softwood lumber dispute represents the true spirit of the Canada-U.S. Fraud Trade Agreement. Canada will never achieve any measure of justice so long as it allows the U.S. to misrepresent the issue to prop up its lumbering dinosaurs.
Typical is this February 2001 whine from Georgia (!) Congressmen Charlie Norwood: “The Clinton Administration has all but shut down timber production in our National Forests, and imposed so many new environmental restrictions that they’ve even jacked the cost of U.S. timber on private lands.”
Of course. The U.S. wants to keep its parks forested and its environment unpolluted, so Canada’s softwood lumber producers must be penalized, even though U.S. producers can’t satisfy domestic demand.
It’s time Canada went after illegal U.S. softwood subsidies.