The Consultant - 2016 - (Page 42)

UPDATE Cross-Border Trade Disputes Heat Up Expiration of the latest lumber trade agreement between the US and Canada likely heralds further dispute GARY ZAUNER O ctober 12 marked the beginning of a new era for the contentious lumber trade relationship between the U.S. and Canada. On that day, the 2006 Softwood Lumber Agreement between the two nations expired. Although not perfect, the agreement did bring an element of certainty to markets. With its expiration, uncertainty now clouds the picture for the North American lumber industry. 42 A new agreement will surely be in the offing but will likely not take place until well after October 2016. According to the most recent agreement, neither country can take any action against the other for a period of one year after the agreement ceases. These actions, such as tariffs imposed on Canadian lumber entering the U.S., seem to be an inevitable precursor to the two sides seeking any pact. And if history is an indication, any new agreement will be one reached by extended negotiations, prickly exchanges, intense debates and a multitude of judgments, followed by claims of triumph and tacit recognition of defeat. Although lumber trade between the two countries was contentious well before 1982, that is when the modern day dispute began. That year, the U.S. lumber industry complained the Canadian industry was receiving an unfair advantage in the form of lower log prices (stumpage fees). In 1986, taxes were imposed on Canadian lumber exports entering the U.S., initiating duties intended to level the competition between the two countries. The most recent trade agreement between the two countries was established in 2006 and ran for seven years prior to both sides agreeing to a two-year extension. Underlying the long-standing dispute between the two countries is their varying economic ideologies. On the one hand, Canadian provincial and national governments focus a considerable amount of attention on keeping their citizenry employed. With that comes the assurance of taxable income, which can then be spent on developing or sustaining business-and the cycle goes round and round. On the other hand, U.S. governments, while also considering employment an important aspect of their economies, take a more "hands off" approach, expecting businesses to "hash it out" competitively with little or no interference from government. Thus, each country approaches free enterprise differently. Canadian free enterprise is simply less "free" than in the U.S. This greater government control in Canada extends into the country's timberlands. Most timberland in Canada is government owned. In the U.S., most is privately owned. Canadian provincial governments offer tenures to lumber companies, whereby lumber companies pay fees to governments for the right to harvest public timberlands. From the payments for these tenures, stumpage fees are calculated. Those stumpage fees are often considered by the U.S. industry to be below market value, which has been the major point of contention between the two countries. These differences in the two countries' economics and timberland ownership tend to create a sense of distrust, especially on the U.S. side, with regard to subsidies given to Canadian lumber companies by Canadian governments. U.S. interests argue that these subsidies provide Canadian producers with an unfair advantage. At the same time, the Canadian industry argues that U.S. lumber demand is far greater than the THE CONSULTANT 2016

Table of Contents for the Digital Edition of The Consultant - 2016

From the Executive Director: The Elephant in the Room
From the President ACF – We Join You
Member Profile: Keville Larson, Renaissance Forester
The Value of a Consulting Forester
Fracking and the Landowner
Two Weeks at the Gates of Hell
If It Walks Like a Duck and Quacks Like a Duck…
Proposed Unmanned Aerial Vehicle Regulations from the FAA
Cross-Border Trade Disputes Heat Up
Will Small Firms Have to Specialize to Survive?
The Cradle of Forestry
Products & Services Buyers’ Guide
Index of Advertisers
A Call to Order

The Consultant - 2016