VANCOUVER -- The solidarity of the Canadian lumber industry, fragile at the best of times, cracked Tuesday as talks in Washington to resolve the softwood dispute with the United States pushed towards a Thursday deadline.
The Montreal-based Free Trade Lumber Council attacked talks aimed at producing a framework for a settlement, saying Tuesday the terms undercut gains Canada has made in years of trade litigation and jeopardizes the future of the Canadian lumber industry.
Council executive vice-president Carl Grenier said Washington appears to be exploiting the new Conservative government's desire for better Canada-U.S. relations.
"They're testing the Canadian government's resolve to improve the relationship,'' he said in an interview.
The U.S. government is also pushing for a deal by Thursday, the last day it can file a final challenge against a NAFTA ruling that orders an end to countervailing duties against Canadian lumber imports, said Grenier.
Details of the proposed framework that began leaking out Monday include an effective cap on Canada's share of the U.S. lumber market and a border tax on future exports keyed to market share, lumber prices and the exchange rate between the Canadian and U.S. dollar.
The tax, collected by Ottawa, would presumably kick in when lumber prices drop and Canadian softwood gains its traditional competitive advantage over American production.
Grenier said the exchange-rate mechanism triggering the border tax is a new wrinkle that would also erase any advantage when the Canadian dollar loses value against its U.S. counterpart.
"This would basically ensure that it would be very, very hard to imagine any circumstances where we wouldn't be paying an export tax on our exports of softwood lumber to the U.S. market,'' he said.
"I don't know of any international trade agreements that have a foreign-exchange clause in it.''
Other sectors of the Canadian industry, especially in British Columbia where more than half of Canada's lumber exports originate, have supported a border tax as a necessary compromise to guarantee access to the U.S. market.
The Americans also reportedly will be allowed to keep more than a fifth of the $5 billion in lumber duties collected since mid-2002.
"What would we be buying for that money?'' Grenier asked.
The Free Trade Lumber Council historically has pushed for Canada to press its case before trade panels under North American Free Trade Agreement and World Trade Organization rules.
The council said Tuesday by accepting American demands, Canada is throwing away the victories won in three years of trade litigation.
"The proposals will limit our upside opportunities and marginalize the Canadian industry in a poor market,'' the council said in a news release.
"This can seriously jeopardize the future viability of the Canadian industry.''
Grenier said there's no talk of any so-called exit ramp that would allow the producing provinces and lumber exporters to get out from under the restrictions.
"We're left with the impression that indeed it's a permanent system, managed trade for the foreseeable future,'' he said.
International Trade Minister David Emerson told the Commons on Tuesday there is no agreement yet, "and when there is, this House will be informed.''
White House press secretary Scott McClellan confirmed Tuesday that President George W. Bush had spoken about softwood with Prime Minister Stephen Harper during a call to offer condolences on the death of four Canadian soldiers in Afghanistan.
"Both leaders reiterated their commitment to resolving the matter,'' he said. "We remain in discussions with Canadian officials about how to move forward and get this resolved.''
Industry sources said talks between Michael Wilson, Canada's ambassador in Washington, and Deputy U.S. Trade Representative Susan Schwab were continuing Tuesday.
Government officials from lumber-producing provinces have representatives to Washington this week because their consent will be needed on issues connected with provincial forestry policies.
B.C. Premier Gordon Campbell sent senior aide Ken Dobell, who is handling the softwood file.
"As has been so often in the past, it's trying to see if the Americans are sincere about moving forward towards a resolution,'' said Campbell. "We would like to find a resolution that works for B.C. and for Canada and we're working on that now.''
Industrial representatives weren't invited to this round of talks.
"We are being briefed and updated on the progress,'' the source said.
http://www.canada.com/vancouversun/news/story.html?id=7f23bfea-ba8c-43ff-8079-285c204c88cc&k=94471
All Hail America.
The Montreal-based Free Trade Lumber Council attacked talks aimed at producing a framework for a settlement, saying Tuesday the terms undercut gains Canada has made in years of trade litigation and jeopardizes the future of the Canadian lumber industry.
Council executive vice-president Carl Grenier said Washington appears to be exploiting the new Conservative government's desire for better Canada-U.S. relations.
"They're testing the Canadian government's resolve to improve the relationship,'' he said in an interview.
The U.S. government is also pushing for a deal by Thursday, the last day it can file a final challenge against a NAFTA ruling that orders an end to countervailing duties against Canadian lumber imports, said Grenier.
Details of the proposed framework that began leaking out Monday include an effective cap on Canada's share of the U.S. lumber market and a border tax on future exports keyed to market share, lumber prices and the exchange rate between the Canadian and U.S. dollar.
The tax, collected by Ottawa, would presumably kick in when lumber prices drop and Canadian softwood gains its traditional competitive advantage over American production.
Grenier said the exchange-rate mechanism triggering the border tax is a new wrinkle that would also erase any advantage when the Canadian dollar loses value against its U.S. counterpart.
"This would basically ensure that it would be very, very hard to imagine any circumstances where we wouldn't be paying an export tax on our exports of softwood lumber to the U.S. market,'' he said.
"I don't know of any international trade agreements that have a foreign-exchange clause in it.''
Other sectors of the Canadian industry, especially in British Columbia where more than half of Canada's lumber exports originate, have supported a border tax as a necessary compromise to guarantee access to the U.S. market.
The Americans also reportedly will be allowed to keep more than a fifth of the $5 billion in lumber duties collected since mid-2002.
"What would we be buying for that money?'' Grenier asked.
The Free Trade Lumber Council historically has pushed for Canada to press its case before trade panels under North American Free Trade Agreement and World Trade Organization rules.
The council said Tuesday by accepting American demands, Canada is throwing away the victories won in three years of trade litigation.
"The proposals will limit our upside opportunities and marginalize the Canadian industry in a poor market,'' the council said in a news release.
"This can seriously jeopardize the future viability of the Canadian industry.''
Grenier said there's no talk of any so-called exit ramp that would allow the producing provinces and lumber exporters to get out from under the restrictions.
"We're left with the impression that indeed it's a permanent system, managed trade for the foreseeable future,'' he said.
International Trade Minister David Emerson told the Commons on Tuesday there is no agreement yet, "and when there is, this House will be informed.''
White House press secretary Scott McClellan confirmed Tuesday that President George W. Bush had spoken about softwood with Prime Minister Stephen Harper during a call to offer condolences on the death of four Canadian soldiers in Afghanistan.
"Both leaders reiterated their commitment to resolving the matter,'' he said. "We remain in discussions with Canadian officials about how to move forward and get this resolved.''
Industry sources said talks between Michael Wilson, Canada's ambassador in Washington, and Deputy U.S. Trade Representative Susan Schwab were continuing Tuesday.
Government officials from lumber-producing provinces have representatives to Washington this week because their consent will be needed on issues connected with provincial forestry policies.
B.C. Premier Gordon Campbell sent senior aide Ken Dobell, who is handling the softwood file.
"As has been so often in the past, it's trying to see if the Americans are sincere about moving forward towards a resolution,'' said Campbell. "We would like to find a resolution that works for B.C. and for Canada and we're working on that now.''
Industrial representatives weren't invited to this round of talks.
"We are being briefed and updated on the progress,'' the source said.
http://www.canada.com/vancouversun/news/story.html?id=7f23bfea-ba8c-43ff-8079-285c204c88cc&k=94471
All Hail America.