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It’s over: Softwood deal done

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blixa442

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It took Harper only few weeks to do what the Liberals couldn't achieve for years.

It’s over: Softwood deal done
Agreement would appear to end bitter trade war between two countries
Apr. 27, 2006. 06:51 PM
CANADIAN PRESS


A deal endorsed by Canada and the United States to end the decades-long softwood lumber dispute will help all regions of Canada, Prime Minister Stephen Harper said Thursday as he announced the agreement in the Commons.
Harper said Washington met several conditions set by Canada for the seven-year deal, which will refund about $4 billion of duties collected over the last few years but limits Canadian shipments to the U.S. market if U.S. lumber prices begin to fall.

Specifically, the deal helps British Columbia, Canada’s dominant exporter, Quebec’s border sawmills and keeps Atlantic Canadian lumber mills out of the trade fight, Harper said.

“Canada’s bargaining position was strong, our conditions were clear, and this agreement delivers,†the prime minister told the Commons.

“This is what Canada wanted. This is what Canada got. This, colleagues, is a good deal. . . . It helps Canadian companies, communities and workers. The vast majority of Canada’s softwood production have given us their support.â€

In Vancouver, British Columbia announced it has agreed to support the lumber deal.

“On balance, it’s a reasonable deal for Canada and a good deal for British Columbia,†said Premier Gordon Campbell.

“We think we’ve crafted a trade agreement that allows for different responses from different parts of the country. This is a fair trade agreement which will provide the stability we want.â€

Even Ontario, which had opposed an earlier leaked version of the agreement as too restrictive, changed its mind Thursday and came out behind the framework agreement when the province was assured it would get a bigger share of the U.S. market.

“A lot of work went into negotiations that have led to this framework, and we have steadfastly defended Ontario’s interests throughout the process," said Natural Resources Minister David Ramsay.

"While this arrangement would require each jurisdiction to make some concessions, Ontario got a critical element — a more reasonable share of softwood exports."

In the Commons, Liberal Opposition Leader Bill Graham was snide on hearing about the agreement, calling it “a great day — for the American industry.â€

And NDP Leader Jack Layton called it “a sellout . . . it’s really shocking.â€

B.C. support was pivotal because the province accounts for more than half of Canada’s $10-billion annual lumber exports to the U.S. construction and home renovation market.

“Our market share has been protected and for the first time ever we have some ability for our market to grow without penalty,†Campbell said in Victoria.

The framework, which is supposed to form the basis for a final deal, lifts onerous duties on Canadian softwood but caps Canada’s share of the U.S. market and imposes a border tax when prices fall below a certain level where American producers say they can’t compete.

The seven-year deal also leaves about $1 billion of the $5 billion in duties collected by U.S. Customs since May 2002 in American hands, half of it going to U.S. lumber companies whose complaint triggered the duties in the first place.

The announcement came following feverish discussions between the B.C. government and lumber industry officials to amend a framework put forward earlier this week.

Michael Wilson, Canada’s ambassador to Washington, forwarded the modified package to American officials Thursday morning.

Canada has tabled an amended version of the framework after the original deal sparked an outcry.

Sources told The Canadian Press that Michael Wilson, Canada’s ambassador in Washington, came back with a package that changes the point where a border tax kicks in.

It also changes the definition of market share related to the cap on Canada’s slice of the U.S. market and amends the so-called anti-surge rate, which penalizes lumber-producing regions and companies that exceed their quotas under the seven-year deal.

Sources said the changes were aimed at addressing concerns from the Canadian lumber industry about the original framework hammered out Tuesday by Wilson and Deputy U.S. Trade Representative Susan Schwab.

The framework is intended to settle the latest round of a long-standing trade war over Canadian lumber exports to the United States.

American producers have complained for years that Canadian softwood is subsidized through low provincial timber-cutting fees known as stumpage and other forestry policies.

Details of the framework leaked out early this week and International Trade Minister David Emerson, former CEO of B.C. forest giant Canfor Corp. (TSX:CFP), was left to insist that there was no deal — yet.

The surge mechanism, which tacks an extra border charge on regions that exceed 110 per cent of their quota, was thought to be aimed at B.C. Interior mills, the most profitable and efficient, and which would also handle an expected flood of hurriedly logged, beetle-infested timber in the next decade.
 
And it only cost us a billion dollars to achieve what would have shaken out of the NAFTA proceedings. Of course, this sets a bad precident. Any US industry or special interest can confidently lodge a complaint about 'unfair' Canadian trade practices and maybe get a billion dollars of their own...
 
So much for free trade. This is nothing but "managed" trade.
 
Hmm, how wonder how similiar this "new" agreement is from the one that has been blocked by Emerson when the Liberals were in power.

AoD
 
And it only cost us a billion dollars to achieve what would have shaken out of the NAFTA proceedings. Of course, this sets a bad precident. Any US industry or special interest can confidently lodge a complaint about 'unfair' Canadian trade practices and maybe get a billion dollars of their own...
NAFTA has already agreed with Canada multiple times. The USA doesn't care, and wouldn't have caved to the new upcoming NAFTA panel.

Of course any US industry can lodge ilfounded complaints against Canada and sometimes win big, they know we're dependent on them. No one says we have to sell anything to the USA, so it's our own fault for building our industrial base around US customers. If you don't like the player, play with someone else. If you don't have anyone else to play with, then either change the game, or suck it up and do what you're told.

In the end, the provinces and industry have agreed to accept this proposal. We can't blame Harper. If the provinces had refused to sign on, then it would have gone to the NAFTA panel for a decision, and we'd still be stuck.
 
The softwood cause was currently before the US Court of International Trade when this deal came out, a court that the Canadian case had yet to be heard in. Knowing the results of the NAFTA rulings, odds are that the court would have ruled in our favour. The CIT has the legal authority to force the American government to accept its decision and act, unlike NAFTA and WTO rulings. The CIT ruling was expected a month from now.

Luckily, the part of the original agreement that capped Canada's market share at 34% didn't remain in this new one.
 
But if we decide to capitulate every time the US finds NAFTA inconvenient, then NAFTA is pointless and should be abrogated. Currently the US has unacceptable ability to infringe on our sovereignty. We're not allowed to ban carcinogenic gasoline additives (that are banned in most of the US) because of Chapter 11 of NAFTA. It's foolish treaty that evidently doesn't guarantee free-trade any more than WTO. At the very least, NAFTA needs to be renegotiated.
 
NAFTA works fine for the vast majority of Canadian made goods that cross the border into the USA. Currently there are zero duties for almost all goods shipped from Canada to the USA. That's what free trade is about.

Sure some big lumber companies in western Canada may be peaved, and their employees annoyed, but in the grand scheme of things, softwood lumber is not an overly significant % of our overwise smooth sailing trade with the USA under NAFTA.

Canadians have the ability to sell lumber elsewhere. I suggest they start looking for new markets. Or how about reducing capacity and industry size to reflect supply? Even this Conservative supporter appreciates the wilderness, tourism and environmental benefits of uncut forest.
 
Everyone seems to blame NAFTA's failing for this softwood lumber issue.

NAFTA was not a complete deal -- in fact many things related to agriculture were not dealt with in this agreement.

What is it that NAFTA ruled on? From what I understand is that they ruled on was that the United States was not applying American law properly -- in the calculation of the duty (and they did not show harm in exports).

That comes us back to the fact that WE did not want to have the lumber industry to be included as fully "free trade". If this was the case the process by which a number of provinces (especially in the West) was not open and free. A large amount of raw lumber is sold from Crown owned lands in the West. The price is set by the government and not by the market, and thus the government in fact does subsidize the industry by setting the price lower than the market would likely set that price (compare price of raw lumber north of the border and south of the border). That would not have been a big issue IF the government did not restrict the sale of this lumber to CANADIAN COMPANIES ONLY. This is why we did not want it fully covered by NAFTA. This is the foundation of the differences between Canada and the United States.

So this left us with two options:

- Open up the industry fully to free-trade
- Come up with a compromise with the United States

I would have preferred the first option.
 
Ah yes, the Conservative apologists are out.

Sure some big lumber companies in western Canada may be peaved, and their employees annoyed, but in the grand scheme of things, softwood lumber is not an overly significant % of our overwise smooth sailing trade with the USA under NAFTA.

Canadians have the ability to sell lumber elsewhere. I suggest they start looking for new markets. Or how about reducing capacity and industry size to reflect supply? Even this Conservative supporter appreciates the wilderness, tourism and environmental benefits of uncut forest.

Some of these companies are more than peeved. Some of their employees may be without jobs, so those people may be more than annoyed, too. As for the overall value of lumber to the Canadian economy, it is in the billions and is concentrated in certain regions of the country, regions that will suffer a significant impact due to these new rules. The Americans illegally collected five billion in duties. This should give you an idea that there is significant money inlvolved. Oh, and it is nice of you to be so casual about other people's employment, particularly when it is actually viable employment.

American homebuilders are very much against this deal. They see it as benefitting a small number of private woodlot owners in the United States who have strong political influence. Those private land owners are the huge winners. Their high prices are artificially preserved in the US.
 
Guys, I am not a Conservative apologist. The first PM I voted for was Paul Martin. If the Libs can clean out their IMHO corrupt backroom folks and present a viable alternative I'll vote Liberal again. The Conservatives have not presented any scary platforms, and in fact seem bent on cleaning up the operation of government. They may fail in the end, but I'm willing to give them a try.
 
The Liberals are holding a big meeting in Toronto from May 5th to 7th where there will no doubt be the long knives for the former Martinites. From what I understand, the party plans to start rebuilding its policy platform from the ground up.

I still have many contacts in the public service. It will be interesting to hear what they will hve to say the "cleaning up government" thing. One friend at Treasury Board tells me that John Baird has not changed from his days in the Harris government.

The tragic irony is that Baird and Flaherty are the best bets for Ontario (and by extension, Toronto). The Conservatives are going to play hard to get seats in Quebec, and not really worry about Toronto because the city is isloated. Baird and Flaherty will be the guys looking out for Ontario.

Ouch.
 
The softwood deal is barely a deal at all. After all the job losses they are going to hold the market share at basically what it is now. Basically the job losses are locked in in exchange for 80 of the money they took from us. Lets apply this kind of dealing to the justice system. A robber breaks into a house, injures a family member, and takes all your jewelery. In a plea bargin Harper would accept getting 80% of the jewelery back in exchange for a promise further injuries to family members would be focused on those already injured.
 
Lets apply this kind of dealing to the justice system. A robber breaks into a house, injures a family member, and takes all your jewelery. In a plea bargin Harper would accept getting 80% of the jewelery back in exchange for a promise further injuries to family members would be focused on those already injured.
Your analogy is flawed. No one forced Canada to sell lumber to the USA, nor pay the duties.

A correct anaology would be....you're a business owner, who has intentionally built your business and growth around one large customer. Now the large customer is making demands you don't like. You must therefore decide to suck it up and do what your one and only customer wants, or tell them to suck an egg, refuse to sell to them at all and find new customers for your wares.
 
The Conservatives have not presented any scary platforms, and in fact seem bent on cleaning up the operation of government. They may fail in the end, but I'm willing to give them a try.
oh they're failing alright. quite miserably. you're fooling yourself if you think the conservatives are any "cleaner" than the liberals.

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