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Lumber layoffs begin, Canada considers options (September 01, 2001)

VICTORIA, B.C. - Layoffs in B.C.'s coastal forest industry have already begun, and politicians fear an all-out trade war could result from the U.S.-imposed 19.3 per cent tariff on Canadian softwood.B....

TRADE WAR: This may get ugly.
TRADE WAR: This may get ugly.

VICTORIA, B.C. – Layoffs in B.C.’s coastal forest industry have already begun, and politicians fear an all-out trade war could result from the U.S.-imposed 19.3 per cent tariff on Canadian softwood.

B.C. Forests Minister, Mike de Jong, was part of a conference call Aug. 14, with other provincial forestry ministers and federal Trade Minister Pierre Pettigrew, in which the politicians discussed this country’s next course of action. Pettigrew will be calling on Prime Minister Jean Chretien to appeal to U.S. President George Bush to reconsider the heavy tariffs.

“The Prime Minister will engage Mr. Bush sooner rather than later, and it can’t be soon enough,” de Jong told local media.

The politicians also discussed launching an ad campaign south of the border to inform U.S consumers that they, too, will be impacted by the tariff.

American lumber barons have been calling for duties on Canadian wood since the 1930s. International trade bodies have upheld Canada’s timber policies three times in the last 20 years.

“Realistically, we know we’re going to get a determination we like,” says Luke Popovich, spokesman for the U.S. lumber lobby. “What we don’t know is whether the sentence (duty) will fit the crime.”

But de Jong feels differently.

“This tariff only satisfies the interest of a select few in the U.S timber lobby … the American public needs to know the cost of building a house in their country has just gone up tremendously,” he says. “The possibility of this escalating into a full-scale trade war is there. Our long-standing good relations are at risk.”

The punitive duty imposed by the U.S. could hurt an already fragile economy pushing them even closer to a recession. The import duty, retroactive to May will add between US$250 and $400 to the average $169,000 cost of the 1.6 million new homes built each year south of the 49th parallel. Since the announcement on Aug. 10, more than 600 Doman Industries employees have been laid off, and up to 1,000 loggers were expected to receive their pink slips by September. Other logging companies are also laying off workers, and the trickle down effect will be felt by log haulers, as well.

B.C. Premier, Gordon Campbell remains confident the duty will be overturned by NAFTA, as similar duties have been in the past.

“They’ve gone to bat three times and they have struck out every time they have tried to say there is a subsidy for Canadian goods,” Campbell told local media.

This is the fourth and perhaps the most serious rift over the issue of softwood lumber in the past 20 years – closely following other wrangles over P.E.I. potatoes and western wheat, as well. It threatens to drag the two countries into a costly, and potentially embarrassing, trade war.

Alberta Premier Ralph Klein has been a vocal opponent of the U.S. plot to harm Canadian softwood producers. He promises strong reaction if the U.S. doesn’t back down.

“We are very concerned about the preliminary findings relative to softwood lumber. We feel we are not in violation of any trade agreements,” Klein says. He insists that if the U.S. goes ahead and implements tariffs Alberta will, “intervene with the federal government. We will present our case as strongly as we possibly can … We will be very vigorous in our opposition to U.S. claims that we are providing subsidies.”

Klein went on to say “I’ve been hearing concerns that we have to win this. It would have tremendous impact on our ability to export and export freely without the burden of excessive tariffs.”

On the other side of the country, New Brunswicker Andy Savoy, MP for Tobique-Mactaquac, will meet with Maine Congressman John Baldacci later this month to discuss the entire issue. Also at the table will be lumber industry stakeholders from both sides of the border voicing specific regional concerns caused by the current state of the softwood lumber industry.

Savoy first met with the congressman when he travelled to Washington, D.C. in June.

“During my meeting with Congressman Baldacci on the softwood lumber trade issue, I was impressed with his level of commitment to the Atlantic region,” Savoy says. “As a result, we both decided to establish a dialogue this summer to address mutual regional concerns (such as) environmental, economic, border, and of course, trade issues.”

There has been talk of an exemption for Canadian softwood producers in eastern Canada.

Softwood exports to the U.S. are estimated at $10 billion annually. However, Canadian mills may begin slowing production as early as today and some will likely close if they lose access to the giant U.S. market. The effects would quickly spill over into the nearly 300,000 people employed in the sector across Canada. n

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