Softwood lumber, Canadian Establishment and Cuba
By Peter Ewart
Once again, the US Lumber Coalition, in league with the US government, is bullying Canada over softwood lumber trade. The Coalition has filed a petition requesting that the US Department of Commerce investigate Canada’s lumber exports to the US with a view to imposing steep new duties, as has happened in previous years.
At the core of the dispute is that Canada is subsidizing its forest industry by ‘giving away timber” to Canadian-based forest companies through low stumpage fees and other means.
However, the US government and Lumber Coalition face a major problem. Time and again, over many decades, the World Trade Organization, FTA and NAFTA review panels have ruled that the Americans have no case, that Canada has not been subsidizing its lumber industry.
The reality is that Canada and the US have two very different forms of forest land ownership. As a result of our British colonial legacy, most forest lands in Canada are owned by the Crown. In the US, the majority of forest land is privately owned, of which about 67 million acres are owned by forest product companies.
Forest companies in Canada pay a small royalty or stumpage fee to provincial governments for the right to harvest timber. In the US, royalties are paid, mainly through auction, to private interests in the form of a ground rent or absorbed into the final cost of lumber (if the timber is owned by the forestry company that processes it).
Generally speaking, Canadian forest companies and provincial governments have historically not found it in their interests to have forest lands owned privately. One of the problems for corporations is that privately-owned forest land ties up capital for long periods of time and can lower return on investment.
Under the Crown-owned land system in Canada, capital is freed up and more flexible, whereas in the US added value is sucked away in ground rent to landowners or, alternatively, forest company capital is tied up for decades. These factors are one of the reasons why US mills in the past have often lagged behind Canadian operations in productivity and technological development, and, as a result, have been less competitive.
For their part, Canadian provincial governments have preferred the Crown-owned systems because it gives them access to the added value created from forestry operations, which they can use for various purposes. In the US, this added value ends up in the pockets of landowners (often with no other connection to forestry production) in the form of ground rent.
So one thing is clear: Canada and the US have two different systems of forest land ownership and royalty collection, which is their right as sovereign countries. Yes, in Canada we have our own disputes about the way logs are priced, access to timber, tenure, domination of major licensees, and so on. But it is our sovereign right to work these things out ourselves, not some foreign country.
However, in their arrogance, US negotiators and lumber lobby insist that Canada must give up its forestry system to conform with the more backward US system. This constitutes a blatant interference in the internal affairs of our country. Following that logic, we could demand, in turn, that the Americans give up their system of private ownership and nationalize their forest land to more correspond with Canada’s. After all, their system of strangling industry with private ground rent seems to be much less efficient and competitive than Canada’s.
The American lumber lobby position is like claiming in trade negotiations that the medicare system in Canada constitutes a so-called government “subsidy” to companies and that we should conform to the abomination in the US known as Obamacare.
The irony is that, no matter what concessions and reforms Canada has made in the past as a result of US pressure, the American lumber lobby always demands more punitive tariffs once the price of lumber dips below a certain point. Indeed, it wouldn’t matter if we changed our log pricing and land ownership system to be exactly like the US one. The American Lumber lobby would always find some excuse to complain and impose tariffs and quotas against a more efficient Canadian industry.
Unfortunately, the US, as an imperial power, often makes such demands of other countries backed up by punitive duties, trade sanctions, blockades and other forms of bullying.
The problem in Canada has not been our stumpage pricing system or forest land ownership as some weak-kneed commentators claim and who, despite the WTO, FTA, and NAFTA panel rulings, insist on swallowing the line that Canada is dumping lumber into the US. Rather, our problem has always been whether or not our government negotiators will stand up for the interests of Canadian workers, communities, First Nations, and Canadian-based companies against the bullying and extortion of the Americans.
Unfortunately, the record of Canadian governments standing up to the Americans on softwood lumber has not been good. This is despite the fact that we have leverage because US companies cannot normally meet the huge US demand, i.e. US construction, housing and real estate interests desperately need lower-priced, high quality Canadian lumber.
Furthermore, we have some leverage in that we have other vital resources and products that American industry needs, along with political and military arrangements which can be terminated, a possibility to which President elect Trump himself has opened up the door with his critical comments on NATO and NAFTA during the recent US election campaign.
In that regard, it was unfortunate to see last week the spurious attacks of Canadian politicians and the Establishment media against Fidel Castro and Cuba. Since its revolution in 1959, Cuba has been a symbol of a country that has stood up to the US and its neo-liberal globalist agenda.
Just as the US demands to interfere in our internal affairs as a country over stumpage and forest land ownership, it has demanded that Cuba conform to the US dictate in political and economic affairs. Yet Cuba has never capitulated and has always stood proud. It is that feature of defiance that has irked the Americans the most and is at the root of all their slanders, blockades, and assassination attempts against Cuba and Castro.
John Diefenbaker, to his credit, was the Canadian prime minister in the early 1960s who refused to break off diplomatic relations with Cuba despite all sorts of threats and bullying from US president John Kennedy. Since then, our ongoing relationship with Cuba has been one of the few vestiges left of any form of Canadian independence by our politicians.
So it is disturbing to see that current Establishment media outlets and political leaders in Canada are so craven and eager to attack Castro and Cuba and thus prostrate themselves before the Americans. Is this prostration an indication of things to come in the upcoming trade negotiations with the US regarding NAFTA and Softwood Lumber?
In an unfolding world of Trump administration and “America First” hardball, Canadian politicians could well benefit from more Castro “grit” in the upcoming softwood lumber and NAFTA negotiations. They will need it.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: firstname.lastname@example.org