Business

INCHING TO A DEAL

Julian Beltrame December 3 2001
Business

INCHING TO A DEAL

Julian Beltrame December 3 2001

INCHING TO A DEAL

Business

History is decidedly against the negotiators as they grope for a way out of the dense forest of the Canada-U.S. softwood lumber dispute. Punitive tariffs were slapped on Canadian lumber for the first time in 1789, and there’s hardly been an era of peace since. In the latest flare-up, the U.S. has hit Canadian softwood exports with duties averaging 32 per cent, and Canada has responded by launching an action against Washington at the World Trade Organization. Remarkably, negotiators are holding out hope that this time, the result will be different. “Both sides have an incentive to reach a deal,’’ says a senior Canadian official.

Canadian producers need peace more than their U.S. counterparts. With the duty in place, U.S. sawmills can now hold their own against northern exports. Meanwhile, it could take up to two years before the WTO gets around to a ruling. So if there’s movement, it will mostly come from Canada. Officials say British Columbia, Alberta, Ontario and Quebec-the main producers in the talks-are open to changing the system where stumpage fees paid by sawmills are set by the provinces at what the U.S. alleges are artificially low prices. In return, Ottawa will demand that Washington immediately lift the duties and guarantee secure market access-with no ceiling-in the future. “We’re looking at a long-term solution so we don’t have to face this same situation five years from now,” says the official. John Ragosta, a lawyer for the U.S. Coalition for Fair Lumber Imports, also says he wants a once-and-for-all agreement. “Canadians are always saying their sawmills are more efficient,” he notes. “Well, let’s have open competition and see what happens.”

As usual, the devil is in the details. Canadian officials note that since most of Canada’s lumber resources are on Crown lands-as opposed to the U.S. where the vast majority are privately owned-Canadian producers have a greater responsibility to protect the environment, adding to costs. As well, Canadian officials say marketbased pricing wouldn’t necessarily result in identical charges for lumber in both countries.

The two sides are still aiming to establish by Christmas a framework of principles for an eventual agreement. Meetings will go on all this week in Washington and Toronto. “We should know by then whether we’re going to meet the target date,” says the Canadian official. And whether negotiators can finally put an end to 200 years of skirmishes.

Julian Beltrame