Softwood Lumber Trade Realities

As the United States-Canada Softwood Lumber Agreement of 1996 enters its final twelve months, the core issue preventing unimpaired access to the US market is coming into focus. Since the early 1980s, the US Coalition for Fair Lumber Imports has maintained that Canadian softwood exports are subsidized principally as a result of provincial stumpage practices that do not reflect market pricing for timber resources.

USTR Special Ambassador Peter Scher made plain that the US government considers provincial measures to be "trade-distorting practices." It is clear that unhampered access to the US market will entail the reform of provincial lumber pricing practices. The options-oriented Canadian government is unlikely to dismiss US views out of hand in the face of a potential countervail in the run up to the general election, expected within the next fifteen months. Negotiations between Canada and the US are likely to seek a basis for eventual free trade based on a transition period during which the key exporting provinces effect changes in stumpage practices. Increases in quota free access could be based on verifiable changes in provincial pricing. Such an approach may be the only avenue available to avoid a new trade remedy case.

A significant influence on both sides of the border is Weyerhaeuser, which bought MacMillan-Bloedel Ltd., Canada's largest publicly traded forest firm, in November 1999. The acquisition makes the U.S. firm the proprietor of the largest collection of forest operations in B.C. In January 2000, Weyerhaeuser CEO Steve Rogel noted the company would use its influence to lobby government for a "balanced, long-term resolution" to the quota question. To achieve this goal, the company may draw BC companies that do not have quota access to the US into the fray.

Profile Services Search Trade Analysis Updates
Contacts Trade News Policy Street Link To Us Site Search

For services and information, contact Thunder Lake Management Inc.
Copyright © 1998-2003