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An OPEC for the forest industry

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Well, they did it. The United States slapped a 29 per cent duty on Canadian softwood, essentially shutting our lumber producers out of the biggest market in the free world.

American forestry companies set the wheels in motion for this over a year ago because they said they could no longer compete against Canadian timber prices, which they believe are artificially low because of government subsidies.

Industry analysts believe this move will cost 10,000 jobs in the province, many of them in rural town already hit hard by mill closures, slowdowns, and other fallout from the depressed world market.

Canadian companies argue that they’re not subsidized, that Canada just has a different land tenure system than the U.S. – we log publicly held crown land, they log private land, but otherwise things are not that different.

The proof, they say, is in the numbers – if things are so unfair, why aren’t Canadian companies only scraping by, losing money or falling short of projections three years out of four?

Like it or not, the Americans do have a point. Last year some logging companies in B.C. were caught cheating the province out of stumpage fees. They would drag only poor quality wood out of a cutblock to the side of the road, which a forest ministry official would set a lower stumpage price for. The company then would log all the choice wood in that block for a far lower stumpage fee than it would fetch in the marketplace. In some cases, companies were paying 25 cents per cubic metre for wood that’s valued up to $40 per cubic metre.

In other cases, the government would knowingly reduce stumpage fees to make logging operations more profitable for the companies, which have to compete on the world market.

The provincial government put an end to the scam, but the lasting impression is that forestry is subsidized industry within Canada.

When the 29 per cent duty became official, enraged union leaders suggested boycotting other American products in retribution, cutting off power sales to the U.S. because it’s publicly owned, and by the American definition that means power is subsidized, too.

It’s not an "us verses them" issue, however. This isn’t the gold medal game at the Olympics, and it has nothing to do with the rocky relationship between our Prime Minister and their president.

A large number of Americans also oppose the duty on the grounds that it will drive the price of lumber higher in the U.S., significantly raising the price of homes and other commodities. They’re fighting the duty alongside our own trade ministers.

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