Panel bullies U.S. lumber industry

Canada may be claiming victory, but the dispute over softwood lumber is far from over.

This is a dispute that will not go away just because a three-person panel says it is over. That's because U.S. lumber producers have very real grievances and worries that simply weren't satisfied by the recent ruling from an "Extraordinary Challenge Committee" that was impaneled under provisions of the North American Free Trade Act.

The committee dismissed U.S. claims that formed the basis for punitive duties that have been imposed on Canadian softwood lumber that is sold in the United States.

"We fully expect the United States to abide by this ruling, stop collecting duties and refund the duties collected over the last three years," huffed Jim Peterson, Canada's trade minister.

Not so fast. The office of the U.S. trade representative responded by flatly rejecting the ruling: "We continue to have concerns about Canadian pricing and forestry practices. We believe that a negotiated solution is in the best interests of both the United States and Canada, and that litigation will not resolve the dispute."

So the tariffs stay in place, and rightly so. Canada is in no position to presume it has unfettered access to the American lumber market when that access harms U.S. lumber mills.

Regardless of what the NAFTA grandees say, Canada's timber industry is patently subsidized by the government.

It really isn't that complicated. Most U.S. timber comes from private land through competitive bidding, and when it comes from public lands, there can be considerable competition because supplies are restricted, largely to comply with environmental standards.

Not so in Canada. In the Great White North, lumber producers get raw product on the cheap, sourcing the vast majority of it from crown timberlands. Canada's biggest timber companies are given exclusive rights - with no competition - to huge "working circles" of crown timber. Because there's no competition, they pay absolute minimums for timber rights, and if swaths of timber have been damaged by fire or insects, even cheaper rates are negotiated.

As far as environmental standards, there is no comparison between U.S. and Canadian forest management, which prompts us to wonder why U.S. environmental groups don't pay far more attention to what's happening on Canadian forests, rather than pursuing agendas that increasingly restrict timber sales to the detriment of small mills like the recently closed Owens & Hurst mill in Eureka.

For those who doubt that Canadian lumber production is subsidized and carried out with few environmental impediments, how can it be that many of Canada's largest mills have been operating 24 hours a day, seven days a week, ramping up exports and driving down lumber prices in the U.S. - even with punitive tariffs in place?

Last August, Canada's primary exports of spruce, pine and fir were peaking at $470 per thousand board feet of two-by-fours, and $500 per thousand of two-by-sixes. This month, those respective prices are at $298 and $264.

Lumber prices have been falling, yet Canada's position has been shamefully enabled by groups like the National Association of Homebuilders, which has weighed in on the dispute with complaints about lumber prices driving up the cost of homes.

How can that be when lumber prices have been plummeting, mainly because of a flood of Canadian lumber? Never mind that lumber accounts for less than 20 percent of home construction costs.

And yet there doesn't seem to be much discussion about concrete prices doubling or rising mortgage rates and land prices contributing to the increased cost of a home.

The bottom line is the association has taken a position that is detrimental to another American industry, one which has suffered huge losses, particularly here in the Northwest.

For years, American lumber producers have played second fiddle to Canadian producers by virtue of a lopsided trading table. It's time for it to stop, through negotiation or protectionism.