Canada-U.S. Lumber Dispute: Lobby Threatens To Thwart Canada In Trade Deal

Posted: Updated:
LUMBER
The powerful softwood lumber lobby in the United States is suggesting it could thwart Canada's efforts to join a Pacific free trade zone if its neighbour refuses to address long-standing irritants. Workers pile logs at a softwood lumber sawmill Friday, Nov. 14, 2008 in Saguenay, Que. | CP

VANCOUVER - The powerful softwood lumber lobby in the United States is suggesting it could thwart Canada's efforts to join a Pacific free trade zone if its neighbour refuses to address long-standing irritants.

Zoltan van Heyningen, executive director of the U.S. Lumber Coalition, said the Trans-Pacific Partnership agreement negotiations could provide a chance to "make some progress on this file."

The agreement talks offer a new chance to address complaints that the lobby group hasn't had solved to its satisfaction under the U.S.-Canada softwood lumber agreement or NAFTA, he said.

"It provides an opportunity," van Heyningen said in an interview during a visit to Vancouver.

The Trans-Pacific Partnership agreement — or TPP — is a proposed tariff-free zone that would include more than 500 million consumers from nine countries, including Australia, Malaysia, Vietnam, Singapore and Chile.

Canada wants in, but its system of supply-management of eggs, milk and other farm products is seen as a stumbling block to participation in the new free-trade zone.

In a meeting with U.S. President Barrack Obama earlier this month, Prime Minister Stephen Harper did not answer a direct question on whether he was prepared to abandon the marketing boards, but said his government would do what is needed to protect industries.

The coalition has long seen Canada's pricing and marketing of softwood as policies that allow Canadian producers to dump into the U.S. market and harm the U.S. industry. It wants softwood added to the TPP discussion, along with eggs and milk.

David Yocis, a coalition lawyer, said his group alone can't block Canada from getting into the TPP.

But he suggested the coalition's support could move things along toward ratification of the deal and conversely, coalition opposition could slow things down.

"At the end of the day, this agreement would have to be ratified by the U.S. Congress. So if, at the end of the day, this negotiation makes progress on issues that we care about, then that makes it more likely that we would support that agreement and support it being passed through Congress," Yocis said.

"In the U.S., that's how you get coalitions for trade agreements. If there are enough industries who feel they are getting something out of this deal and there is a large enough coalition that supports it, then it passes Congress easily. That's the political reality of how that works in the U.S."

Earlier this year, the two countries agreed to a two-year extension of the 2006 Softwood Lumber Agreement, meaning the deal will now expire in October 2015.

But despite the agreement, the two countries continue to battle out differences. Late last year, the U.S. coalition launched another grievance, saying B.C. is exaggerating the damage from the mountain pine beetle infestation to reduce stumpage fees.

The B.C. industry disputes that claim.

The coalition has now seized on rules being negotiated within the TPP about state-owned enterprises.

Yocis said those discussions are taking place with an eye to China, "but the governments selling timber would probably meet that definition."

The coalition wants an end to the exemption Canada received under NAFTA allowing provinces to ban exports of unprocessed logs, a policy the coalition argues in a letter to the U.S. Trade Representative has no place in a "high-standard, 21st century trade agreement."

The coalition also wants any new agreement such as the TPP to end the dispute resolution mechanism provisions in NAFTA, saying it is "based on outdated Canadian concerns that have long since been addressed elsewhere and has proven unworkable in practice.

"A TPP agreement that includes Canada should put an end to this highly problematic provision," the letter states.

John Allan, president of the B.C. Lumber Trade Council, said he's concerned, but not surprised, that the coalition is looking to the TPP to resolve its frustrations.

"We've used NAFTA with great success in the lumber wars with the U.S. and they sure don't like it," Allan said in an interview.

He said the coalition's demand for an end to British Columbia's ban on exporting unprocessed logs is also dubious.

"I would look south across the border and suggest to you that log export controls in the U.S. are tighter than they are in British Columbia by many fold. It's a bit of the pot calling the kettle black there."

Allan's group sent a letter to the trade policy division at Canada's Foreign Affairs department saying the council supports Canada's participation in the TPP.

But the group warned the U.S. coalition is "merely using the TPP negotiations to muster U.S. administration support for new actions against both the structure of our trading relationship with the United States and substantial elements of Canada's timber pricing and forest management systems."

Rudy Husny, a spokesman for International Trade Minister Ed Fast, did not indicate that Canada is concerned by the notion that the U.S. softwood lumber industry might try to make Canada's entry into the agreement difficult.

Instead, he noted the coalition welcomed Canada's participation in the TPP in its comments to the U.S. Trade Representative.

"Canada is looking to expand opportunities in this region for our lumber companies by joining the TPP negotiations as soon as possible," Husny said in a statement.

B.C. Jobs Minister Pat Bell said the coalition's sabre rattling over the TPP will make no difference for British Columbia.

"We are already working with the federal government on efforts in Japan, Korea, in India, in China. We have a very good bilateral relationship already," he said, noting a third of B.C. lumber already goes to China.

"I'm feeling very good about our relationship with Asia-Pacific. In Canada, British Columbia specifically, we're seen in a very positive light as a free and open market that wants to trade fairly. I'm happy to have our record stand up against American industries any day of the week."

Around the Web

Softwood lumber dispute could resurface in TPP negotiations ...

Pacific Customs Brokers Inc. - Forestry and Lumber Industry

International Trade News - ABC Customs Brokers Ltd.

Why Certain Trade Agreements Are Approved as Congressional ...

Canada–United States Free Trade Agreement - Wikipedia, the free ...

B.C. Businesses over European free trade | Europe