© Wes Cheston, Deputy Assistant Forest Minister of B.C. says the government would
be concerned about exports of raw materials to Mexico.

Speakers answer questions
on trade with U.S.-Mexico

Three guest speakers to the labour-
industry sponsored Western Wood
Products Forum in Vancouver had
interesting things to say about Free
Trade with Mexico and the United
States in an exclusive interview with
the Lumberworker.

Gianni Scaramella, Consultant
with H.A. Simons Ltd., an industry
consulting firm with a global client
base said Mexico must be considered
as a player.

“J would imagine that most people
in industry are at least looking as the
economics of barging lumber down to
the Maquiladoras (the Mexican low
wage trade zone) and having it
remanned there.”

e Industry consultant Gianni Scaramella

suggested industry is looking at barging
lumber to Mexico.

“With the geentality and the mind-
set that exists here, which is basically
an eye on costs, unless you legislate
against it you probably will see lum-
ber barged down to Mexico and
passed paianeh reman plants down
there.”

Scaramella said that he can foresee
legislation to be put in place in the
US. to poset or pou raw metal
exports infringe upon free
market forces.

“Even though the end products are
going into an affluent society...” said

Scaramella, “they are not necessarily
manufactured in the affluent societies
which they are bought.”

He said that currently ponderosa
pine from the US. is flowing into the
Maquiladora trade zone and is being
remanufactured into components and
blanks for the affluent North Ameri-
can society. In addition,he said Mexi-
can based companies are moving to
take advantage of opportunities as
they get materials from other loca-
tions and compete just as effectively.

Canadians can overcome the threat
of Mexican labour by “being smarter”
through the entire processing chain,
said Scaramella. He says that if we are
not “smarter” then we are going to
rely on our legislators to prevent the
shipment of raw lumber materials to
Mexico.

“T think the industry will evolve
but that’s a painful process,” said
Scaramella.

British Columbia’s Small Business
Enterprise Program, the Govern-
ment’s touted value-added industry
program is a “red-herring” according
to Scaramella. He said the govern-
ment should not rely on the SBEP but.
“should be using systems and organi-
zations which we have.”

Wes Cheston, Deputy Forest Min-
ister of B.C., told the Lumberworker
that “the only thing that could con-
ceivably be exported out of this prov-
ince (to Mexico) would be what we call
‘square logs’.”

He said that the Ministry, as a
result of government direction, has all
but shut off log exports and he fore-
sees a further tightening up on log
exports.

ven though GATT (General Agree-
ment and Trades and Tariffs) frowns
up it, Cheston suggests government
would be concerned about large quan-
tities of square logs leaving the prov-
ince and winding up in Mexico where
labour costs are low.

He said how far the government
goes into stopping the export of
square logs will depend on the govern-
ment of the day.

“Let's face it, no matter how you
look at it those type of products
(square logs) going out of this prov-
ince (where) it is known that they are
going to be remanufactured, is another
way of exporting jobs, in the same
context as the exporting of round
logs.”

Cheston said our supply/manage-

ment system of public tenure where
regulations specify that logs must be
processed in the province, “helps a
lot” to create jobs. :

Japan has launched a formal com-
plaint to the GATT over U.S. imposed
log export restrictions on public lands
managed by the U.S. Forest Service
and Bureau of Land Management
and Mr. Cheston said it is possible
that there will be a challenge to export
restrictions from B.C.

However Cheston said “any type of
restriction from an out side country
certainly infringes upon our sover-
eignty and sovereign right of a prov-
ince to manage its resource the way it
sees fit.”

Cheston said that the sovereignty
issue is uppermost in the 1986 Memo-
randum of Understanding between
the U.S. and Canada which clearly
regulates and controls the price of
timber in BC.

He said that the MOU limits the
stumpage system’s flexibility in reces-
sionary times and that it is very
“repugnant to have another nation to
tell us what we have to price timber
(at).”

Because of the constraints on the
exports of round logs out of the U.S.,
Cheston said the Japanese are look-
ing to BC. to buy semi-finished or
finished products.

When asked if the government is
looking at revamping the minimum
manufacturing requirements for tim-
ber, Cheston said Forests Minister
Claude Richmond and the Ministry is

very concerned over the export of
timbers and also said the government.
is concerned how far they can go to
limit those exports in view of GATT.

Cheston said that government must
identify the disincentives that exist
for creating value-added industry and
put incentives into place.

He sees successive government tak-
ing a very strong position in terms of
promoting and providing the atmo-
sphere for value-added.

When asked by the Lumberworker
if that will mean government regula-
tion or not, Cheston said that regula-
tion of industry is needed when there
is no other realistic solution.

He said that if “laissez-faire” ways
of doing things don’t correct them-
selves “within a time frame that you
want, then regulations may have to be
put in place” to create value-added
jobs.

When asked if there will be the
export of raw logs to Mexico, Cheston.
said that it is possible with the pres-
ent day restrictions in place.

As far as square and rectangular
logs, Cheston admitted that the door
is open to Mexico and expressed con-
cern that doing so would be exporting
jobs.

Industry marketing consultant,
Ted Cameron, sees some American
and Canadian companies establish-
ing in Mexico to import hardwood
logs and make product but says the
supply of hardwood log “has gone
right down the chute.”

Wood products forum
urged to expand efforts

At the conclusion of the Western
Wood Products Forum Conference,
National fourth vice-president Roger
Stanyer summarized the events that
preceded.

Stanyer, who sits on the IWA strat-
egy committee for the WWPF, said
the Forum may act to coordinate lob-
bying and research, and act as an
educational body in the future.

He said that the industry and work-
ers must develop a clear understand-
ing of what a value-added industry is
in order to start developing an indus-
trial strategy.

The conference expressed concerns
over the allocation of timber and strat-
egies to develop markets for the
future.

Stanyer said training is a critical
element in the competitive success of
the forest industry. He said training
must happen in 3 major areas; train-
ing prior to employment, training of
displaced workers; and skills training
of the existing workforce.

Stanyer said the emphasis for train-
ing usually concentrates on trades-
people and often overlooks produc-
tion workers where employees could
be trained to interact with customer
expectations.

With regards for Timber Supply,
Brother Stanyer said that the Forum
realizes that not enough attention is
being paid to the biological side of the
equation. He said that current timber
inventories are not reliable and that
the Forum must re-emphasize its
Spring 1990 initiative to influence the
BC. government to do a province
wide inventory.

The speaker also said that the
Forum could coordinate labour and
managements positions on public
policy.

The WWPF, according to Stanyer,
should also endeavour to broaden its
base amongst forest industry em-
ployers.

Kd

© Workshop groups of industy and union members met to discuss topics. Local 1-424
President Frank Everitt (mid right) makes a point during workshop session.

Lut

ETN ORIAELL