EDITORIA os Lumber industry is at historical crossroads members and other Canadians are living through one of them right now. Our industry is under attack by our supposed best friends, the United n the history of the Canadian forest industry there eS) have been many historic junctures. I.W.A. States of America like it never has before. The U.S. Department of Commerce has nailed Canada with some 82% in countervail and anti-dumping duties and the whole forest industry is near the brink of disaster if the issue isn’t resolved. The United States, embroiled in a war against terrorism led by President George W. Bush, has bigger fish to fry than Canada’s forest industry. Rather than treat Canada like a trade enemy, the United States must cease its war on our country’s most vital industry. The Canadian forest industry is our largest employer, with nearly 1 million direct jobs. American consumers need our lumber for its quality, price and reliability. It’s time for Ottawa to speak out for workers and the hundreds of communities across the country that are so industry. And it’s time dependent on the well-being of the softwood lumber for the industry in different provinces and different regions to pull together and not be divided, conquered and picked-off by the Americans. As the industry works its way through the trade dispute with the Americans, it should take a good look at where its future lies in the global economy. _In 1999 the country exported nearly 90% of $12.6 billion in lumber to the United States. Like lemmings going over a cliff, lumber producers in Canada have produced more and more dimensional lumber for a single market and have not diversified products lines and markets like they should have. Over ten years ago, the I.W.A. sat down with industry and consultants in B.C. to look for solutions to future markets. Industry was told to look for new opportunities and develop an industrial strategy to create new product lines, lessening its dependency on the U.S. market. It didn’t. It was told to develop well-financed value-added operations on a large scale to compete in global markets, especially in British Columbia. It didn’t. ‘The province’s competitive advantages of an abundance of old growth fibre, a skilled workforce and existing infrastructure were factors that should have led to more investment and not less. They didn’t. Today, in addition to our trading relationship with the United States, jobs and community stability are ata crossroads in the province. The B.C. government appears ready to cut the industry loose from long-standing regulations and let the “free market” rule. The I.W.A. believes that government can and should not walk away and leave the industry to market forces alone. It still believes that the government and the industry have to work together, with labour, to develop a viable industrial strategy. That strategy must create an environment for modernization and upgrading of production facilities and the diversification of products. It must enhance the value and quality of exports and deal with the necessary workforce training to pprpduce new products, despite the cyclical nature of the forest industry. The B.C. government says it will provide greater security of fibre supply for forestry firms. It says it will create an environment where there can be enhanced silviculture and increases in future timber yields. The work that it has done with the Council of Forest Industries to develop markets for lumber in China is commendable and should be increased, The federal government has chipped in with over $5 million to help lumber sales to that country. Money will be spent training Chinese house builders, providing technical information and promoted wood-frame construction. In Canada there ill be joint venture projects with industry associations and technical colleges. Much work is yet to be done and governments must play a leading role. We can truly be world leaders in expanding markets and avoid becoming mere hewers of wood. © LUINBER Official publication of I.W.A. CANADA NORMAN GARCIA —_- DAVE HAGGARD. . President Editor NEIL MENARD ... Ist Vice-President bth Floor, DAVID TONES . . 2nd Vice-President 1285 W. Pender Street NORM RIVARD . . 3rd Vice-President Vancouver, B.C. WILF McINTYRE . . 4th Vice-President V6E 4B2 HARVEY ARCAND . . Secretary-Treasurer BROADWAY eg PRINTERS LTD. JHE UNITED STATES HAS No MORE IMPORTANT RELATIONSHIP IN THE WORLD THAN THE ONE WE HAVE WITH MEXICO. HELLO MEKICO? You DON'T KNOW ME BuT | WAS THE IMPORTANT RELATIONSHIP BEFORE You:-- B.C. government capitulates towards lousy deal “You cannot capitulate your way into a deal with them (the Americans),” said I.W.A. Canada president Dave Haggard, after the Canadian softwood lumber industry was hit with an additional 12.58% anti- dumping duty on top of the already crippling 19.31% countervailing duty im- posed by the U.S. Commerce Department commencing August 15. Haggard commented on the B.C. government’s tactical blunder to offer concessions to U.S. lumber negotiators, even prior to being hit with anti-dumping charges on October 31. The union president pointed out that the B.C. government’s negotiating team has already given up several negotiating items to appease the Americans. mage) items, which are believed to potentially have huge impacts on I.W.A.. members, (see story pages six to eight) include the elimination of minimum cut requirements, the elimin- ation of the requirement for companies to both harvest and mill timber, the elimination of appurtenance agreements tying timber supplies to local mills, the loosening up of wood utilization standards, the elimination of the 5% “clawback” option when crown lands are sold or transfers, and the intro- duction of a_ so-called ‘market-based’ pricing system. “Now they (the Amer- icans) will demand more,” said Brother Haggard. “It’s a rotten way to negotiate.” American negotiators have the B.C. government painted into a corner. Industry consultant Charles Widman made a similar point after the anti- dumping charges were announced. “So we're stuck,” he said. “We're going to have to work out a deal with the U.S. or we're going to die.” “Canadian workers, busin- esses and communities dependent on our country’s $10 billion softwood lumber industry are now facing an even greater economic threat to their future,” said John Allan, president of the B.C. Lumber Trade Council, outlining the gravity of the situation from the perspective of the province’s largest lumber producers. The U.S. Commerce Department has made rulings which threaten the very foundation of the forest industry in Canada. Acrippled Canadian forest industry will bring a greater devaluation in the assets of forest company _ share- holders. With the Canadian dollar at an all-time low, their undervalued assets will be even easier for U.S.- based multinationals to snap up at bargain prices. Canfor president and CEO David Emerson said “This is a neutron bomb the Americans have used to nail their competitors.” Emerson called the U.S. Department of Commerce, “diabolical in the extreme.” He added that the alternative to high-level negotiations between the two governments is that the Canadian industry “will be picked off bit by bit until we are soaked up by the U.S.” The preconditions for a bit by bit U.S. takeover of Canada’s forest industry are being put into place. The countervailing and anti-dumping duties have placed a defacto trade blockade against lumber exports to the United States. Companies still exporting are posting bonds which they may forfeit once final determinations are made by the International Trade Commission in Washington. “There is nobody in Canada that can sell lumber at today’s prices and generate a penny of cash,” commented Reid Carter of National Bank Financial, after the preliminary anti- dumping duties were announced. Industry estimates are, in B.C., that there may be 80,000 direct forest industry jobs lost by December alone. The effects will be felt across the country. The American eagle is swooping over Canada’s forest industry just like it has swept in on the country’s oil patch. The U.S. forest industry is increasingly running out of timber and can’t compete with its Canadian counterparts — thus the protectionist tariffs. So it may appear the American strategy is: “If you can’t beat ‘em — cripple ‘em and take ‘em over.” Since the Canada - U.S. free trade agreement was signed in 1989, Canada’s oil industry has slid into the hands of the Americans. This year alone, American corporations purchased over $27 billion of Canadian oil and gas assets to move over the 50% ownership mark. Observing the huge rash of U.S. takeovers this year alone, columnist Jeffrey Simpson of The Globe Mail pointed out that, in light of the September 11 tragedies U.S. interests will now be pushed in a way that is unprecedented. “Canada will be squeezed as never before to adopt U.S. models, copy U.S. laws and regulations, or adapt Canadian ways to accom- modate the U.S.,” wrote Simpson. Perhaps sharing Mr. Emerson’s lament in the spring of this year that the Canada is “completely dependent on them (the U.S.) more deeply than we should be for our own economic well-being,” the columnist observed: “Canada, doing 86% of its trade with the U.S., is now almost totally dependent on that country’s decision, whims, and preferences. A few months ago Canada talked tough on softwood lumber; now, it’s ready to cave in by negotiating a deal, part of which will be a slow adaptation of domestic lumber practices to Amer- ican preferences.” In mid-October B.C. Forests Minister Mike de Jong said: “The Americans have yet to understand that they are not going to impose their idea of what a forest industry should look like in British Columbia or Canada.” Many Canadians say now it’s time to stop playing into American hands. LUMBERWORKER/NOVEMBER 2001/5