While I have great respect for former U.S. President Jimmy Carter, I feel obliged to respond to his piece A Flawed Timber Market that appeared in the March 24^th edition of your paper. While I am sure that former President Carter is a keen and responsible private woodlot owner and operator, he paints a picture that, with respect, is out of touch with current realities.

The first such reality is that an independently selected panel struck under NAFTA rules concluded that lumber producers in Canada were not subsidized. Prior to that, technical reviews of the very same issues by the U.S. Commerce Department and the U.S. International Trade Commission have led them to the same conclusions – starting as early as the mid 1980’s! Frankly, bullying tactics by the U.S. have resulted in these objective assessments being repeatedly ignored.

The other myth being perpetuated by both Mr. Carter and the unholy alliance between the U.S. environmental movement and the U.S. producers (what is the quid-pro-quo I wonder!) is that forest management practices in Canada lag behind those in The U.S.A. Such is not the case. While forest Management practices in both Canada and the United States are indeed in a needed state of continuous improvement, Canada is an acknowledged world leader in forest stewardship. Our industry is second-to-none in silviculture, harvesting and reforestation practices

When the American producers argue that the price Canadian producers pay for their timber is too low, it is obviously in comparison with what U.S. producers pay. Very few ask the questions "Do the American sawmills pay too much for their timber?" or "What indeed is a fair price"? The latter question is difficult, perhaps impossible, to answer.

There is, however, much evidence to suggest that the price US producers pay is ‘too high’. Lands taken out of active forestry production, particularly in US States such as Washington and Oregon, because of environmental pressures (e.g. spotted owl), have resulted in an imbalance in the supply/demand for timber (too many loggers chasing too little wood!). Auction prices have been driven sky high and out-of-line with economic realities. When futures contracts mature, loggers are often faced with prices for timber that would leave them devastated. During the Reagan administration it was widely acknowledged that the White House intervened on a few occasions to release logging companies from their auctioned price commitments for timber located on US Forest Service Lands. Perhaps former President Carter did not intervene in a similar way during his tenure – but is this how the market fairly sets prices? I guess not - when prices bid are not honoured.

What the Canada-USA softwood wars have been, and are, about is the softwood lumber market share by Canadian producers in the US market. Anything over 30% market share (it is now around 34%) causes the US to launch its countervail duty system which is stacked in favour of your own producers. The US countervail process, for example, does not allow Canada to attack US subsidies to your own lumber producers – those that are well known by the industry to occur at the state and local government level. 

These subsidies include cheap industrial land, sales tax abatements, property tax holidays, co-generation agreements, etc. If a Canadian (or other) forest company expresses an interest in building a sawmill in the US southeast (e.g. Mississippi, Georgia etc.) – just watch the US Governors of those states pile up the ‘goodies’! There is also clear evidence that many U.S. forest service timber sales to loggers in that country don’t even cover the agency’s costs.

What is at stake here is Canada’s sovereign ability to establish our own national forest policy – at the provincial and national level. The American position essentially argues that because our timber resources are owned primarily by the crown through the provincial governments, and not primarily privately owned as they are in the USA, our prices are wrong and theirs are right. This is an absurdity. Let me give you an example. The U.S. producers argue that Canada’s ban (or virtual ban) on the export of raw logs constitutes a subsidy. In fact, in the last U.S. lumber countervail duty case, log exports comprised just less than one-half of their alleged subsidy argument! They contend that the ban results in more logs finding their way into the domestic market –thereby depressing prices! Can you think of a more convoluted argument? More importantly, it attacks our ability to set our own forest policy. Exporting raw logs would rob us of our ability to ‘add value’ here in Canada. This policy has nothing to do with subsidies –it has everything to do with our federal and provincial policies designed to move us up the commodity product ladder into higher value-added products –policies supported by the vast majority of Canadians. And, by the way, the export of raw logs has more recently been banned from federal and state lands in the U.S.A. – thereby putting even more pressure on private forestlands to satisfy the lucrative demand for raw logs emanating principally from Asia.

Mr. Carter also sidesteps certain realities of the U.S. marketplace. Surveys in the U.S.A. show that construction workers in your country prefer Canadian softwood lumber over U.S. southern pine. They say it handles better, has less warp and wane, nails easier, etc. In a North American commodity market, this translates into greater demand for Canadian lumber. Builders and consumers in the U.S.A. also argue, often to deaf ears, that restricting lumber imports increases the price of a typical home in the U.S.A. by about U.S. $1,000. Isn’t it ironic that consumers and builders would be denied their product of choice in a country that prides itself on the wisdom of the free markets!

Regrettably, Canada may face yet another round of lumber wars. The U.S. producers have yet to convince anyone, apart perhaps from former President Jimmy Carter, on the merits of their argument. Because of the strength of the U.S. lumber producer lobby, however, and the way the rules are stacked against Canada, they have succeeded in the past in their quest to reduce the volume of Canada’s export of softwood lumber into the U.S. market, through volume quotas, tariffs, and export taxes. They will try again.

Let’s hope that sanity prevails before consumers and producers on both sides of the border suffer – and lawyers and lobbyists in Washington D.C. strike it rich again!