POLITICS TRUMPS ALL IN LUMBER TRADE DISPUTES
As Canada, U.S. gear up for battle, it’s important to remember history
Through two decades in and out of government, Mike Apsey served in the front lines of the lumber wars, successive battles to maintain access to U.S. markets for B.C. softwood.
Apsey was deputy minister of forests, then president of the council of forest industries in the ’80s and ‘90s, years recounted in What’s All This Got To Do With the Price of 2x4s?, a memoir published in his retirement.
He was writing at the time of what he characterized as Softwood Lumber War IV, the showdown that produced the 10-year agreement to manage the cross-border lumber trade expiring last fall.
With B.C. and the rest of the country on the threshold of what is shaping up as Softwood War V, Apsey’s book has some relevant observations on what to expect.
He started his chapter on the Lumber Wars with a reminder that the struggle has deep and intractable roots.
“Canada and the United States have had disagreements over the lumber trade since before there was a Canada,” he wrote.
It was almost 200 years ago that the Americans raised the first barrier against lumber imports from what was then British North America.
Secondly, these trade imbroglios are expensive. During Softwood III, Apsey estimates the industry spent $40 million on “hired help” (lawyers, lobbyists, consultants) defending Canada’s and B.C.’s interests in legal, trade and political forums. Governments spent at least as much, maybe more.
Third, for all the effort put into litigation and diplomacy, the outcome will more likely be determined by political considerations.
“U.S. trade law is a highly malleable construct that can be made to do pretty much what U.S. political forces want it to do,” wrote Apsey.
In Softwood I, the U.S. commerce department concluded, contrary to claims of the American lumber industry, that Canadian lumber was not, in fact, subsidized.
That should have been the end of it. But politics took over, courtesy of the U.S. industry-funded exercise in self-interest that calls itself the Coalition for Fair Lumber Imports.
“U.S. industries are old hands when it comes to working the levers and pulleys of the American political system,” wrote Apsey. “The next step was to rewrite trade laws so that the Coalition could get the funding it wanted (and) they proceeded to do just that.”
In later rounds, lumber from this side of the border was subjected to review by trade tribunals that were increasingly politicized. “It was a bitter joke amongst our forces that in Softwood Lumber I, the quasi-judicial process had been 90 per cent judicial and 10 per cent quasi,” says Apsey, mixing wit with indignation.
“By Softwood Lumber III, the proportions were reversed.”
Not all of the dirty tricks at B.C.’s expense were played on the U.S. side of the border. The book recounts how in order to secure the CanadaU.S. Free Trade deal (precursor to NAFTA), Canada agreed to exclude softwood lumber from guarantees of access to the U.S. market.
The book also recounts the fallout when Jack Kempf, blunderbuss forests minister in the Bill Vander Zalm government, announced that B.C. was not charging industry nearly enough for harvesting trees in provincial forests.
The Americans seized on the minister’s statement as proof that B.C. was subsidizing softwood via discounted stumpage.
“We have to remember that the U.S. is closely monitor- ing what we do,” cautions Apsey. “When we throw new ideas on the table, we are also throwing them on the Canada-U.S. negotiating table. We cannot afford to forget that with the Americans, everything is always a negotiation.”
In that regard, the book would appear to have some cautionary advice for the Opposition New Democrats, with their calls for new restrictions on log exports. Apsey recounts how back in the 1990s (when the NDP was last in government) the province’s then-restrictions on log exports provided the basis for an unfair trade finding in the U.S. and a 6.5 per cent tariff on B.C. wood.
The former CEO of the council of forest industry also warns B.C.-based companies against “spouting off about how they are continually operating in the red.” Such talk feeds suspicions that our product is being dumped in the U.S. at less than a fair market price.
The chapter is salted with anecdotes about the author’s experiences in the trenches. One is particularly instructive at a time when the new president of the United States has delivered a fiercely protectionist inaugural speech on the theme of putting America First.
As Apsey tells it, during Softwood War III, he and some industry CEOs were gathered in the Canadian embassy in Washington D.C., when someone asked the ambassador what the Americans really want from us on the lumber file.
“Without a word, his excellency rose from his chair, walked around his desk, dropped on all fours, crawled across the office and kowtowed to us. He couldn’t have said it better.”
So as another softwood showdown looms, B.C. and the rest of the country should by all means spend what it takes on lobbying, diplomacy and making its case through the quasi-judicial panels, however quasi they are.
But at the end of the day, the fight will be decided and probably lost in the political arena.
Then the country will have to cut the best deal it can for continued access to the U.S. market until the inevitable Softwood Lumber War VI rolls around.
Canada and the United States have had disagreements over the lumber trade since before there was a Canada. MIKE APSEY, former forests deputy minister