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Deal hammered out over weekend
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by GORDON HOEKSTRA Citizen staff
B.C. Forests Minister Mike de Jong reacted less than enthusiastically Sunday to
the latest proposal to resolve the long-running softwood lumber dispute with
the U.S.
The tentative deal -- hammered out by the lead negotiators from the two sides
iover the weekend -- would put an end to the punishing 27 per cent tariffs being
paid by Canadian producers. But it would also return Canada to a lumber quota
system for at least the next three years.
Canada would also have to drop its legal challenges at the World Trade
Organization and under the North American Free Trade Agreement, where it
had several successes.
The deal does have a bridging mechanism to free trade in lumber, but
the provinces which made changes to create more market-based timber
pricing systems would be subject to a review by the U.S. Commerce
Department.
"We know what the status quo is -- and that involves pain upwards of $1 billion a year from British Columbia alone going down south (to the U.S. in lumber tariffs)," de Jong told reporters on a conference call Sunday afternoon. "A deal along the line (proposed) here will end that, leave the money in B.C. and possibly get us to free trade. The big question today is whether the price for
achieving that is too high -- involving as it does a quota that could potentially last for five years."
De Jong said the province will be analyzing the proposed deal and discussing it with all the stakeholders. He said he believed there'll be an answer before Christmas.
The forests minister said he will also be seeking clarification on specifics of the deal, including how quota will be allocated in Canada and exactly when and how Canada's legal case will be impacted.
The latest talks have been touted as the last chance to reach a negotiated deal before the U.S. gets swept up into the presidential election scheduled for November 2004.
Talks in the past six months have centred around a quota deal, which would set a duty-free cap on Canadian lumber shipments to the U.S.
Recent reports indicated the two sides had closed the gap. Penalties of $200 US a thousand board feet will kick in when Canadian shipments reach a 31.5 per cent share of the U.S. market. In 2002, it would have meant Canada could have shipped about 17.6 billion board feet penalty-free into the U.S., with another 1.3 billion board feet subject to a penalty.
De Jong has said before he's uncomfortable with a quota, and reiterated that Sunday. Under the B.C. Liberal's sweeping forest policy reforms, more timber is meant to be sold on the open market, creating opportunities for smaller companies, value-added producers and First Nations. Quota could hamper that development.
The last quota agreement -- a five-year deal ending in 2001 -- had been almost universally maligned for creating have and have-not companies, as well as stifling innovation and investment.
This deal is different because provinces have an opportunity to get to free-trade through policy changes that create market-based timber pricing systems, demanded by the U.S. Coalition for Fair Lumber Imports.
However, de Jong acknowledged there are no guarantees B.C.'s aggressive reforms will meet U.S. Department of Commerce approval. There are "risks," said de Jong, which is why the province has to decide whether to embrace the deal.
John Brink, who heads up Brink Forest Products based in Prince George, said he understands a concession has been made to the Maritimes which did not want to be included in the deal. The Maritimes, which have more privately-held timber, will pay $150 US in penalties, not $200.
However, there's been no such concession for lumber remanufacturers which had also been insisting they should get an exemption, said Brink. It means it's more important than ever that quota be set aside for lumber remanufacturers, he said. Without quota, remanufacturers could be devastated which would lead to thousands of job losses, said Brink. Remanfacturers take lower-grade lumber and trim ends, sawing and gluing them to create high-quality finger-jointed lumber.
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