When the Trade Bully Is Right

Once again, Prime Minister Paul Martin and the Canadian government are talking tough about softwood lumber. But, as usual, it is all talk.

Last week, the prime minister told CNN and the Economic Club of New York that softwood "…threatens the integrity of the North American Free Trade Agreement, as well as future economic relations." He said the US actions were "nonsense" but immediately went on to promote increased Canadian fossil fuel exports to the US in his next breath.

Therein lies the problem; the Canadian economy is so dependant on exporting resources to the US that Canadian politicians like Martin are scared of taking the actions needed to address the real problems.

The US should be criticized for their trade policies. No doubt about it, they are trade bullies. On issues as diverse as cattle, grain, and softwood lumber, the US has played hardball politics with Canadian interests, with little respect for the rules.

But the problems we have been having with softwood go beyond wimpy politicians. Greedy Canadian logging companies are also at fault. The fact is that the US is right about an essential element of the softwood dispute: Canada does subsidize its forest industry. And Canadian companies have been fighting for decades to keep and expand these hidden and direct windfalls.

25 cents a telephone pole

The reality of Canadian logging subsidies is unpopular, but true. A quick review of a few simple numbers makes the essence of the softwood dispute, and the US concerns, very clear.

1. For 36 percent of the wood cut in BC since 2001, logging companies paid only 25 cents a cubic metre.

2. In seven forest districts in 2005, 25 cent stumpage was paid on over half the logs cut.

3. And in the North Coast Forest District, home to a big portion of the yet unprotected Great Bear Rainforest, over 85 percent of the logging produces only 25 cents a cubic metre.

Would you allow someone to log a tree the size of the average Canadian telephone pole from your backyard and pay you only a quarter?

If that is not a subsidy, what is?

Trade talk whiplash

Discussion about the low return Canadian governments get for trees logged on public lands is overlooked. The average Canadian gets whiplash from competing WTO and NAFTA rulings about the vagaries of Byzantine trade panel rulings on cross border pricing, or the definition of "injury" and "dumping."

Frankly, I am not interested in supporting either side in the dispute. Nor are WTO or NAFTA panel rulings good for anything but putting us all to sleep. More important, is a fulsome discussion in Canada, particularly in BC, about whether we are getting a fair return on our public assets.

This is not an academic discussion. It will determine the revenues we, as British Columbians, have available to pay for things like schools and health care.

For example, recently the US softwood lobby alleged that the low stumpage paid for beetle wood is a subsidy. They argue that the stumpage is reduced (often to 25 cents), but the companies are enriched because the timber's market value isn't affected. Again, the U.S. timber lobby is right. This is the untold story of the so-called beetle crisis.

How come this obvious subsidy hasn't been exposed by the Canadian media? Good question!

The way the BC Liberal government and the timber industry are taking advantage of the beetle problem to enrich themselves is one the biggest untold stories of the last few years.

There are real winners and losers here. And the resulting impacts on already threatened rural communities are long term.

Beetlenomics

The unsustainable logging of millions of beetle-affected trees won't reduce the beetle problem, but will likely turn dozens of rural communities into ghost towns for however long it takes merchantable trees to grow back. The inevitable fall down in timber supply after the beetle frenzy is over will shut down mills and cut jobs in just a few years.

Who benefits from this policy? No surprise, the big timber companies-who just happen to be big Liberal donors. Who loses? Forest dependant communities and workers who won't have any logging jobs for the 40, 80 or 120 years it takes for the trees to grow back. Wildlife, like grizzlies, wolverine, caribou, and moose that won't have anywhere to live or eat for the same time frame.

And you and I, average British Columbians, who are being bilked out of potentially hundred of millions of dollars in stumpage that is rightfully ours.

John Allan, spokesman for the BC timber industry has recently been quoted as saying that these low rates are necessary to entice companies to salvage the wood. But since the beetle damage is done, and there is no increased risk of further beetle problems, if it is not economic to log these trees at fair stumpage rates, then they should be left standing. Jobs can be created managing for fire.

To do anything less is a subsidy.

So in addition to focusing on the bullies down south, British Columbians need to start demanding our politicians address the low stumpage rates that are driving the softwood dispute. Until these issues are addressed softwood battles with the US will continue.

Will Horter is Executive Director of Dogwood Initiative, a Victorian-based NGO which helps people change the balance of power to create healthy prosperous communities. See www.dogwoodinitiative.org for more news and views on trade, First Nations, communities and democracy.