Here we go again
B.C. forest industry annoyed to be embroiled in yet another dispute with U.S. over softwood lumber
It’s deja vu as Okanagan lumber mills grapple yet again with the Americans in a softwood lumber dust-up.
“The whole Canadian industry has to be careful about what it says because the Americans will use it against us, just as they have in the past,” said Nick Arkle, chief forester at Gorman Bros. Lumber in West Kelowna.
Yet, Arkle isn’t particularly cautious when, in the next breath, he blasts the U.S.
“This isn’t about fairness,” he stated.
“It’s about American process to cause as much pain as possible in the Canadian industry so that when we finally get to the negotiating table Canada will give the Americans what they want.”
What the U.S. government wants right now is a 19.5 to 24.1 per cent duty slapped on all Canadian softwood lumber exports, likely starting May 1. To add to the insult, the levy is set to be retroactive 90 days.
Besides Gorman Bros., which employs 300 making one-inch boards, the other big Okanagan producer is Vernon-based Tolko Industries, which has lumber and plywood plants in Kelowna, Armstrong and Lumby.
While Arkle spoke out, Tolko deferred comment to the B.C. Lumber Trade Council, which held a conference call with reporters Tuesday to condemn the countervailing duty.
“The duties are unwarranted and without merit,” said council president Susan Yurkovich.
“The U.S. is just being protectionist. They are using the same arguments as those overturned in the past by NAFTA (North American Free Trade Agreement). We want a new negotiated agreement and we will be successful, just as we have been in the past.”
Council co-chair Duncan Davies, who is also CEO of forest company Interfor Corp., likened the American action to a “shakedown.”
“There was a predictable inevitability to this,” added Arkle.
“When the previous 10-year deal was struck a decade ago, we knew this day would come and there would be yet another round of punitive duties.”
The U.S. government maintains Canadian softwood is unfairly subsidized because most of the trees are grown on Crown land that is supported by taxpayer dollars.
That claim has been repeatedly shot down and the duties deemed illegal under NAFTA.
But, that doesn’t stop the Americans from instituting and collecting the extra charges and then paying them back slowly, only if they are mandated to do so.
Arkle said there’s another layer to the U.S. hostility.
“Most of the timber in the U.S. is grown on privately owned land, and the owners want to see a duty to drive up the price of lumber and make their land and their product more valuable,” he said.
“They don’t care that the duty will put prices up for the American consumer, because it will be the consumer that the increases will ultimately be passed on to because the U.S. needs Canadian lumber.”
The U.S. industry can’t supply all the domestic demand with the U.S. housing market booming and construction needing vast amounts of softwood.
While B.C. has diversified its markets for softwood to include many Asian countries, still more than half of the production in the province is exported to the U.S.
Gorman has diversified even further, cutting exports to the U.S. from 65 per cent in 1996 to 41 per cent today.
“It’s the American consumer who will end up paying more in all this,” said Arkle.
“They should be talking to their congressmen about this now being in the best interest of the average American.”
Of course, the issue has become political, especially with the provincial election campaign in full swing.
“Now more than ever, British Columbia needs to be strong,” said Premier Christy Clark.
“We will stand up for B.C. forest workers and communities by fighting this unjustified U.S. trade action with every tool at our disposal.”
The NDP responded by taking a jab at the premier and one of her political donors, forestry giant Weyerhaeuser.
In a news release, the NDP said Weyerhaeuser’s U.S. parent company petitioned the U.S. Commerce Department that B.C. subsidizes the softwood industry by promoting the processing of B.C. timber in B.C. mills.
B.C. timber being processed here cuts into the export of raw logs.
Weyerhaeuser doesn’t like that because it would like to import more raw logs into the U.S. at a better price and process them itself at American mills.
The NDP said raw log exports have led to mill closures and killed 30,000 forestry jobs in the province.
Clark’s Liberals shot back with Forestry Minister and Kelowna-Mission MLA Steve Thomson raking NDP Leader John Horgan over the coals for saying “Good luck with that,” in reference to getting a softwood deal.
“It’s more than disappointing to see the B.C. NDP give up on such an important deal for B.C. workers,” said Thomson.
See also CLARK/page A8
VANCOUVER — The softwood lumber dispute sidetracked the British Columbia election campaign Tuesday as every party leader pivoted to address the impact a new tariff will have on a key industry in the province.
Premier Christy Clark held a meeting with members of her cabinet as she suspended campaigning for the May 9 election and cautioned against knee-jerk reactions to the duties that would jeopardize negotiations.
“This needs to be calm. Cooler heads need to prevail,” the Liberal leader said outside a lumber mill in Maple Ridge.
Clark said the government tried to persuade the previous administration of Barack Obama to reach a new deal on softwood, but the U.S. didn’t want to negotiate.
“It’s my hope that the Trump administration, despite some of the rhetoric that we’ve seen, because they have been squarely focused on American jobs and growing the economy, will recognize that choking off the supply of Canadian softwood is only going to kill jobs. It’s going to make houses way more expensive, and that’s going to be a real drag on American economic growth,” she added.
The U.S. is imposing duties of up to 24 per cent on lumber imports from Canada.
Former federal cabinet minister David Emerson, who Clark appointed as the provincial softwood envoy, said small forestry operations could be hurt almost immediately by the duties, but high lumber prices and a low Canadian dollar will keep most B.C. companies working at full force.
“We’re a ways away from seeing a bloodbath in the woods,” he said.
New Democrat Leader John Horgan says he’s disappointed by the American tariffs and is accusing Clark of failing to make the ongoing trade dispute enough of a priority.
“After sitting idly by and watching 30,000 fewer people work in the forest sector over the past 16 years, I’m not surprised Christy Clark and the Liberals are once again doing nothing,” he said at a campaign stop outside a hospital in Burnaby.
The forest sector in B.C. is a free and fair trader, Horgan said, and past trade disputes have been decided in Canada’s favour after lengthy and expensive court cases, which can be avoided.
“We need to up our political participation in this so that the United States knows absolutely that there are other interests at play between British Columbia and the United States,” said Horgan, promising to visit Washington within 30 days of being elected.
Green Leader Andrew Weaver said the province has awarded too many forest tenure licences to multinational corporations “that have no interest in keeping value and jobs in B.C.” as he pushed his plan to place restrictions on the export of raw logs.
“Forestry is one of our most important resource sectors, and the current government has undervalued it,” he said in a statement.
Shortly after the duties were announced on Monday, Clark said the province has started to diversify its lumber export markets, with the U.S. accounting for 59 per cent of softwood exports in 2015, down from 82 per cent in 2001.
The B.C. Lumber Trade Council says the province exports $4.6 billion in softwood lumber to the United States each year and the tariffs will drive up the cost of building a home south of the border.
Interfor Corp. CEO Duncan Davies said the tariff is an attempt by the U.S. to gain leverage in negotiations.
“This is just a way of the U.S. government putting political pressure on the Canadian industry and the Canadian governments to find a longer-term settlement that will be more favourable to the U.S. industry than has otherwise been the case,” said Davies, who is also a lumber trade council board member.
Council president Susan Yurkovich said softwood disputes between Canada and the U.S. span three decades and Canada has always won in the courts.
“We are not subsidized. That has been proven out in successive actions by the U.S. industry,” she said.