Canada-US softwood lumber pact paves way for greater co-operation between Harper and Bush

Four of the almost $US5.3 billion dollars that Washington has collected since duties were imposed in May 2002 will be returned to Canadian lumber producers. Half of the remainder will go to US lumber companies under the so-called Byrd amendment—US legislation that, in contravention of World Trade Organization rulings, provides for antidumping duties to be handed over to the US companies that pressed for their imposition.

In return, the Canadian government has committed itself for the next seven years and possibly longer (the pact is renewable) to tax Canadian softwood lumber exports should the price fall below $355 for a 1,000 board-feet or if Canada’s share of the US softwood lumber market exceeds 34 percent.

“Canada’s bargaining position was strong, our conditions were clear and this agreement delivers,” a jubilant Prime Minister Stephen Harper told Canada’s parliament. “Canada asked for stable and predictable access to the US market,” he continued. “The United States has agreed to provide Canadian producers with unrestricted access under current market conditions.”

There is a strong element of political boasting and posturing in the Canadian prime minister’s claims. Having for years ignored rulings by various panels and tribunals established under the North American Free Trade Agreement (NAFTA) that its duties on Canadian lumber exports were illegal; Washington has now agreed to withdraw them. But far from access being “unrestricted” as Harper suggests, free trade in lumber will end the moment that the Canadian share of the US market exceeds 34 percent.

Because of this and because of the half billion dollar subsidy being given US producers under the Byrd Amendment, Canada’s lumber industry is far from enthusiastic about the deal. A minority of companies are outright opposing it, as are the three federal opposition parties—the Liberals, pro-Quebec independence Bloc Québécois and the social-democratic New Democratic Party. Interim Liberal leader Bill Graham has condemned the softwood lumber deal as a “disaster for Canada, for free trade and for Canadian industry.”

Canada exports some $10 billion worth of lumber per year to the US. But the softwood lumber dispute’s significance goes well beyond the large sum of monies involved. The conflict over softwood lumber has brought home to Canadian big business its vulnerability to protectionist and unilateralist sentiment in the US and the fragility, therefore, of a key tenet of its class strategy, fostering ever-greater Canada-US economic linkages so as to take advantage of Canada’s proximity to the world’s largest market. Canada’s ruling elite was particularly shaken by the temporary shutdown of the Canada-US border by American authorities after the terrorist attacks of September 11, 2001.

Canada’s Minister of International Trade David Emerson concedes that the softwood lumber agreement does not amount to free trade, but argues that it is the best Canada can hope for given the strength of the US lumber lobby and Canada’s dependence on trade with the United States. “The Free Trade Lumber Council [a Canadian forest industry lobby group], I’m sure, will carry on the good fight for perfection in free trade,” Emerson told a parliamentary committee. “But I think I’ll be dead and buried when they arrive at their destination.”

Gordon Ritchie, one of the Canadian architects of the 1988 Canada-US Free Trade Agreement (the predecessor to NAFTA), was even blunter in his assessment of the recent lumber deal. “It’s a bit of a hold-your-nose deal, but that said, I am a realist and I know the kind of obscene political strength the US industry possesses.”

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http://wsws.org/articles/2006/may2006/cana-m30.shtml