U.S. sawmill jobs at stake in battle over Canadian lumber


By DON McINTOSH, Staff Reporter

April Fools Day 2001 could signify the beginning of the end for tens of thousands of U.S. sawmill jobs, millworker union leaders say, if a U.S.-Canadian trade agreement signed in 1996 is not extended.

On that day, barring the extension of the agreement, the U.S. wood products industry could begin to see a massive increase of imports of soft-wood lumber from western Canada, at less than the price U.S. mills can afford to offer.

Such a surge could cripple a U.S. industry already in bad shape, in which 100 mills have closed temporarily or permanently in the last six months.

U.S. mill owners say they can't compete because Canadian mills receive substantial government subsidy in the form of below-market timber. About 95 percent of forests in Canada are government-owned, and lumber companies there enjoy long-term leases and harvest rights at one-third to one-quarter the price U.S. timber companies pay.

Competition from subsidized Canadian companies has plagued U.S. producers since the mid-1970s. But after Canada ended voluntary limits in 1991, lumber exports took off.

To fight back, the Coalition For Fair Lumber Imports, representing U.S. sawmills and forest landowners, filed suit before the International Trade Commission (ITC) of the U.S. Department of Commerce, charging that the Canadian industry receives unfair subsidy and was dumping lumber on the U.S. market at less than the cost of production.

To avert a punitive 15 percent tariff the ITC was prepared to levy, Canada signed the U.S.-Canada Softwood Lumber Agreement, which limited exports to the United States from British Columbia, Alberta, Quebec and Ontario to 14.7 billion board feet a year - still an enormous amount by previous standards. [In 1986, Canadian imports were 28 percent of U.S. consumption. Since the agreement, they've held steady at about 34 percent.]

Even under the agreement, though, U.S. producers continued to suffer. Since 1996, an estimated 52 mills in Oregon and Washington, citing competition from Canadian softwood lumber as a factor, have closed or cut back production, with 4,900 jobs lost.

Plus, its critics say, the agreement has been hard to enforce. Denny Scott, assistant director of the Portland-headquartered Western Council of Industrial Workers, a division of the Carpenters Union, said Canadian lumber companies have circumvented the agreement by calling lumber something else, such as "truss parts" or "pre-manufactured studs for electrical conduits."

"They would put a notch in them and call them 'rafters,'" Scott said.

Even with its flaws, however, the agreement limited Canadian exports and served to protect U.S. millworker jobs.

"If the agreement is not renewed, our members will be deeply impacted and harmed," Scott said. With the agreement set to expire April 1, a political battle is brewing over whether to renew or replace it, or plunge full speed ahead into unrestricted free trade.

On one side are the U.S. forest product unions; environmentalists in both countries, who fear the agreement's end will encourage overcutting; U.S. woodlot owners, who anticipate price depression; and U.S. treecutting and milling operations, including International Paper, Georgia-Pacific, and 200 small sawmills federated in regional associations.

On the other side are U.S. homebuilders and lumber retailers, and Canadian lumber companies. Notable for their absence from the debate are U.S.-based multinationals like Weyerhaeuser, which stand to gain no matter what, since they have holdings on both sides of the border.

No negotiations to extend or replace the agreement are currently under way. The Bush Administration, like the Clinton Administration before it, reportedly opposes extending the agreement on the grounds that it's out of step with the country's free trade policies.

Scott Shotwell, executive director of the Coalition For Fair Lumber Imports, counters that "free trade" isn't "fair trade" when one party is getting a massive subsidy, and he thinks his group has a good enough case under existing trade and anti-dumping laws to block the feared surge in imports.

The Coalition For Fair Lumber Imports wants more than just an extension of the existing agreement, Shotwell says, because it's poorly enforced and doesn't apply to other Canadian provinces. The group plans to file a lawsuit with the ITC when the agreement expires, asking for a 15 percent tariff on all Canadian soft-wood lumber until Canadian companies pay the same market-set rates for their lumber that U.S. companies do.

They will also petition for temporary duties on Canadian soft-wood lumber during the three to five months it may take to adjudicate the case.

Mike Pieti, executive secretary of the Western Council of Industrial Workers, hopes the Canadians will see the writing on the wall and voluntarily agree to limits to avoid the punitive tariffs. Shotwell doesn't think that's likely, and notes that the Free Trade Lumber Group, a Quebec-based Canadian industry group, is calling for unrestricted exports.

Shotwell says if the Canadians flood the U.S. market starting April 1, it will only make his group's anti-dumping case easier to prove. Still, the situation has union representatives worried. They're calling for support from their congressional representatives and they are considering taking their case to the public.

"Virtually every sawmill worker in the United States is at risk," Scott said.


February 16, 2001 issue

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