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New date set for lumber deal
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Saturday, October 7, 2006
by GORDON HOEKSTRA Citizen staff
The Canadian government announced Friday its is ready to implement the softwood lumber agreement with the U.S. on a new date, Oct. 12.
The government had missed a deadline to implement the deal on Oct. 1, and said last week it was giving itself until Nov. 1 to enact the deal.
"Through flexibility, understanding and co-operation, both countries have successfully met all the requirements necessary to implement the softwood lumber agreement next week, and have found a satisfactory resolution to the outstanding legal and administrative issues," said International Trade Minister David Emerson.
One Prince George lumber producer said he believes Ottawa was getting pressure to implement the deal earlier because the market has been in turmoil during the time it takes to put the deal into force.
Large volumes of lumber are being shipped across the border to be stockpiled, as the 10.8-per-cent tariff will be replaced by a 15-per-cent border tax, which had put increasing downward price pressure on an already-slumping lumber market, noted Brink Forest Products owner John Brink.
As part of the seven-year deal, Canadian lumber producers will also get 80 per cent of the 10.8-per-cent tariffs returned, so there is virtually no border measure right now, added Brink.
"This is very timely and the right thing to do," said Brink of the new implementation date.
The deadline had been extended, Ottawa said last week, in response to requests from industry to allow it more time to complete the complex but necessary paperwork required on both sides of the border.
One key area that had been creating a problem, for example, was an injunction granted to Canadian companies that prevents the more-than-$5 billion in duties from being dispersed. The U.S. has applied to get the injunction removed, but some Canadian companies had applied to keep the injunction in place.
If the injunction doesn't come off, then the U.S. can't return the tariffs to Canada.
Provincial NDP forestry critic Bob Simpson was surprised at the new deadline, as he said industry sources in B.C. had told him recently that companies were about two weeks away from completing due diligence on the legal and administrative concerns.
Simpson, a former forest company executive from Quesnel, said he will believe the deal is implemented when he sees it happen. Simpson said he would not be surprised to see some new problem arise in the interim.
Under the seven-year deal, $1 billion of the more than US$5 billion in tariffs will stay in the hands of the American lumber coalition, which launched the trade complaint that resulted in the tariffs.
One border measure would charge companies an export tax that increases from five to 10, and finally 15 per cent, as lumber prices drop. Prices are low enough for the 15-per cent level now.
There is also an option that sets export taxes between 2.5 and five per cent, which includes quota limits.
The measures are intended to prevent Canada from increasing its one-third share of the U.S. softwood lumber market.
©Copyright 2006 Prince George Citizen
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