Canada blindsided by U.S. lumber bill

The legislation, a farm bill, contains a last-minute addition on softwood lumber that Canadians fear will wrap lumber exports in red tape.

"It's a small poke in the eye that we are going to have to deal with," said B.C. Forests Minister Rich Coleman of the new legislation, which he said likely violates the 2006 softwood lumber treaty. "I don't under-estimate this. We have to watch it."

The Canadian embassy in Washington has also taken a stand against it.
"We have expressed our concerns [to the U.S. administration] and will continue to do so," said Tristan Landry, a spokesman for the embassy.

The renewed American attack on softwood lumber took Canada by surprise. On Wednesday, the federal  Department of International Trade did not think the farm bill would pass a vote in the U.S. House of Representatives.

But it cruised through. And on Thursday, the U.S. Senate approved the bill, including its last-minute softwood addendum. The legislation requires Canadian lumber exporters to provide importers with proof that they have paid export taxes on their products. It also includes enforcement measures like intrusive company audits, penalties, and fines.

If it becomes law, Landry said, the extra paperwork "will be an unnecessary burden, and will add further instability to this sector and to the U.S. supply chains."

B.C. lumber exporters, who account for more than half the lumber sent across the border, say it will add paperwork and anywhere from $5 to $20 in additional costs to the hundreds of thousands of shipments they make each year. Sawmillers here already pay a 15-per-cent export duty on shipments to the U.S. under the terms of the softwood lumber treaty.

A spokesperson for U.S. Trade Representative Susan Schwab also criticized the softwood addition in the farm bill.

"We oppose that portion of the farm bill," said Gretchen Hamel.

But there may be little that the Bush administration can do. President George W. Bush has said he will veto the farm bill, but because it passed through Congress with an 85-15 Senate majority and a 318-106 majority in the House of Representatives, it may be virtually veto-proof. A 65-per-cent majority is all that is required to over-ride Bush's veto.

Coleman said Canada has the option of taking it before an international court of arbitration to determine if it does, in fact, violate the softwood agreement.
The 2006 softwood treaty was a compromise aimed at ending decades of animosity over lumber shipments.

U.S. timber companies say Canadian lumber is subsidized and have launched four trade actions against Canada since 1982.

However, the farm bill with its softwood addition, is the first time the lumber lobby has been able to get its views expressed through legislation. Montana Senator Max Baucus and Georgia Senator Saxby Chambliss, long-time opponents of Canadian lumber, sponsored it.

"It is high time we enforce our softwood lumber agreements, so that Montana and all American lumber industries get a fair shake in a fair market," Baucus said in a news release on the bill.