Softwood lumber will be a battle again
Some tactics have changed, and the opponents have upped their armament and rewritten some rules to their liking, but the war is the same.
That was the assessment Wednesday from David Emerson, B.C.’s trade envoy to the U.S. on softwood lumber, after an initial tour of the battlefield.
Canada is fighting a lumber coalition that “has legal framework that allows them to shake us down and drag us into multi-year negotiations … It’s designed to bring foreign suppliers to their knees. That part hasn’t changed.”
He led the last fight nationally a decade ago, and was recruited by Premier Christy Clark last month to represent B.C.’s interests this time around. His views are based on some sessions in Ottawa, a meeting with a provincial counterpart from Quebec and several exchanges with officials in Washington, D.C.
The tour was somewhat incomplete. The Trump administration is adept at churning out shocking news stories by the carload, but has been laggard when it comes to staffing up. As many as 3,000 key posts are still unfilled, and some of them are crucial to the future of the next round of the never-ending softwood-lumber dispute.
The commerce secretary was just confirmed this week, and the U.S. trade representative has been named but not yet confirmed.
Emerson noted the administration is “still far from stabilized. There are an awful lot of gaps in terms of staffing the administration needed to carry out negotiations,” he told reporters on a conference call.
Before hostilities truly begin, Emerson stressed the need for the Canadian side to hang together.
The provinces and dozens of large and small lumber companies, all with disparate interests, have had trouble keeping a united front in the past.
Emerson said: “The most difficult and problematic thing that can happen is to get into divisions amongst ourselves.”
“That’s been a problem in the past. It’s no secret that different parts of the industry look at B.C. as creating problems,” he said, because it has the largest share of the U.S. market.
“We’re more unified now than I recall in the past, but it is so easy when you get into these confrontations, companies start to feel the heat and all of a sudden you start turning on each other.”
Much of Emerson’s role so far has been intelligence-gathering, but he also conveyed a message at most stops.
“B.C. is not anxious to take a long, costly, damaging litigatory process. We’d like to see softwood resolved in a more reasonable, fact-based framework. We are in litigation and we will fight as long as we have to, but that is not the preferred route.
“We all know there is a negotiated solution at the end of litigation.”
In 2006, he was part of the negotiated solution that he acknowledged wound up giving away $1 billion.
The U.S. government had collected $5 billion in penalties over several years, but the deal that concluded that round involved returning only $4 billion to Canadian companies. Even worse, the money that was kept went into the coffers of the U.S. coalition members who launched the attack on Canadian imports.
Emerson presented the settlement “take it or leave it” to the Canadian interests and it was grudgingly adopted.
“You could say it was a Pyrrhic victory,” Emerson recalled, although he said the deal did work for a time.
There are some differences this time around, and none of them work to Canada’s advantage.
Softwood litigation and negotiations have to be factored into a drive to renegotiate the larger NAFTA deal.
“We do not know the degree to which softwood would be caught up in NAFTA negotiations … we’ve got to keep our heads above water.”
Trade law has changed, “which makes winning in precisely the way we did in the past a little more complex.” (Canada routinely won court and arbitration decisions last time, but eventually negotiated a settlement regardless.)
Also, this time around, the U.S. lumber producers have launched a more inclusive and broad attack on Canadian products.
It was a characteristically frank assessment. But not an optimistic one.