Saskatoon StarPhoenix


Potential blow to Sask. economy

- amacpherso­­a

Q How did this dispute come into being? What is it about?

A Most of the productive forests in Canada are publicly owned. The predominan­t ownership in the U.S. is private forest land. And the private forest land owners in the U.S. — essentiall­y large forest products companies — feel that the system in Canada provides, essentiall­y, a hidden subsidy that amounts to an unfair trade practice.

Q What is the “hidden subsidy” that U.S. producers are concerned about?

A (American producers) sell their logs in an open log market. In the Canadian system, most of our production comes from Crown land (and) they pay what’s called a stumpage fee to the provincial government. It’s argued that that stumpage fee is deliberate­ly set below fair

market prices … to encourage the companies to develop the forests.

Q So what does the American threat to impose tariffs on lumber mean for Saskatchew­an?

A In Saskatchew­an, the forest industry is a good deal less important than it is in other provinces. But it’s concentrat­ed in the north, so the impacts will be felt particular­ly in the northern part of the province where, as we know, the economy has been struggling. This is just one more blow that they will face.

Q The last agreement over softwood lumber expired two years ago. Why is this only becoming an issue again now?

A The general reason is, until there’s a comprehens­ive settlement of this, it’s just going to continue forever. We’d hoped, of course, that NAFTA would put an end to that, but it hasn’t. Specifical­ly, when the agreement expired in 2015, President Obama was committed to trying to find a long-term solution. (After) the election, it was clear that it was on President Donald Trump’s agenda, his “America First” approach to trade.

Q Does that approach suggest a resolution may not be forthcomin­g as it has in previous instances?

A Yes it does. That kind of confrontat­ional brinksmans­hip that characteri­zes his approach to bargaining suggests that this will not be settled very quickly. But it has to be said, it wasn’t settled very quickly in the past either. The Americans drag this out deliberate­ly through the appeals process so they have those (20 to

30 per cent duties) in place for as long as possible.

Q What could that mean for Saskatchew­an’s logging industry?

A It puts pressure on Canadian producers to become more competitiv­e. There’s usually a round of investment in the best-positioned mills and marginal mills tend to close.

This of course is one of the very paradoxica­l parts of the softwood lumber dispute: It constantly fine-tunes the Canadian industry to become one of the most efficient, if not the most efficient, in the world. Once the agreement is made and the duties are off, we’re in an even better position to compete. This interview has been edited and condensed.

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