Walter Bradley, Minister of Agriculture, Fisheries and Forestry, and Chair of the Canadian Council of Forest Ministers (CCFM) expressed satisfaction with the signing on Friday evening of an Agreement-in-Principle between Canada and the United States with respect to Canadian softwood lumber exports. The agreement culminates lengthy consultations between Canada and the United States which focused on US industry claims that Canadian lumber was subsidized. "The Agreement will result in a combination of reduced production and/or increased stumpage rates for several Provinces but it will not change the competitive position of Maritime lumber moving into the US," said the Minister.
"The three Maritime provinces worked cooperatively with the Maritime Lumber Bureau over the past number of months to convince the US Trade Representatives Office and the US Department of Trade and Commerce that lumber, particularly sawlogs harvested from Crown Land, was not subsidized," noted Mr. Bradley. The American lumber industry was pushing the U.S. government to impose a countervailing duty on imports of Canadian softwood lumber which the industry contended was being subsidized by below market prices for Crown stumpage. Stumpage is the royalty charged for the right to harvest wood on provincial government owned land.
"The Maritime position was that Crown land stumpage prices are either tied to private land stumpage prices as in New Brunswick and Nova Scotia or are determined by public tender (the case in Prince Edward Island). This has been the case for a number of years and had been the rationale accepted by the Americans when excluding the Maritimes from the previous countervail duty investigations and the 1987-91 Softwood Lumber Agreement," stated the Minister.
"I'm pleased to say that Island produced lumber will continue to be sold in the US on a fair basis," Bradley said. "It surprises many people to know that lumber from Prince Edward Island is exported internationally, but upwards of 20 million board feet of Island lumber are shipped to US markets annually, which is testament to the hard work and quality products of local businesses." The value of these US sales approaches $8 million annually.
The Agreement reached on Friday will result in a 14 percent reduction in lumber exports from BC, and a $100 million increase in stumpage revenues from Crown owned timber sales in Quebec, as well as a reduction in exports to 89 percent of 1995 levels. Ontario and Alberta have agreed to stumpage increases or forest management fees as well. In return for these concessions, the American lumber industry and the US government have agreed not to initiate any trade actions for at least five years. The almost never-ending threat of investigations and countervailing duties have cost the Canadian lumber industry hundreds of millions of dollars over the last decade. Even though the Canadian industry has won previous US initiated lumber countervails , the US industry refused to accept the legal decisions and continued to push for sanctions against Canadian lumber imports.
"This Agreement should provide the stability in the market place which both Canadian and American lumber producers have been looking for," concluded Mr. Bradley.