When wood from Canada is sold for a fraction of the cost of U.S.-grown timber, there is no way companies on this side of the border can compete. A 2006 agreement between the two countries was meant to even out those differences. That agreement works only if both sides adhere to its terms.
With a strong push from Sen. Olympia Snowe, the U.S. government is investigating whether Canada is violating the Softwood Lumber Agreement by underpricing wood in British Columbia. Because much of the western Canadian province’s timber is harvested from government-owned lands, a pricing system was set up for wood from those lands to ensure the prices aren’t artificially low. Low-grade timber was priced at 25 cents per cubic meter. In the last two years, the percentage of British Columbia lumber being rated low grade has tripled, according to a February 2009 letter to the president written by Sen. Snowe. The letter also was signed by Susan Collins, along with senators from other logging states.
Despite being labeled low grade, the wood is turned into building-grade lumber by Canadian mills. In addition, the pine beetle and other problems in British Columbia couldn’t account for the jump in low-grade timber.
British Columbia lumber companies now are expanding into the eastern U.S. market. Because of their low stumpage prices, they can afford the additional cost of transporting wood from the West Coast.
“Such unfair — and under the SLA, impermissible — practices have exacerbated a lumber market collapse of historic proportions,” the senators wrote to the president. “The U.S. lumber industry has never had the levels of production curtailments and layoffs that it is experiencing now.”
The lumber industry has been hard hit by the recession, which has curtailed much construction. Being undercut by timber from Canada worsens the situation.
That’s why the U.S. trade representative is right to ask the Canadian government to discuss the situation. After Sen. Snowe, later joined by Sen. Collins and Rep. Mike Michaud, pressed the administration to intervene, U.S. trade representative Ronald Kirk earlier this month requested consultation with Canada, a formal process set up by the Softwood Lumber Agreement.
This request begins a dispute resolution process in which the countries try to find a resolution to their differences. If this fails, either country can request arbitration.
Two other lumber disputes have been handled through this process. One is ongoing. In the other, a tribunal found that Canada improperly calculated quotas in early 2007. More than $86 million in additional export duties on Canadian softwood lumber were assessed.
Maine’s timber industry faces many challenges. Unfair subsidies shouldn’t be among them.