PHOTO BY NORMAN GARCIA,

= More value-added is needed.

The Pas local optimistic about new value-added program

The IWA‘s northern Manitoba local has reacted positively to news that there will be more money spent to assist the province's value-added industry diversify. In mid-March the not-for-profit Forintek announced that it will participate in a $1.04 mil- lion value-added and wood technol- ogy program with funding provided through the Canada-Manitoba Economic Partnership agreement. Forintek is putting in $225,000 over three years. As part of the province's Northern Development Strategy, a Forintek representative will be stationed in The Pas to assist Aboriginal development and north- ern communities develop new wood products. There will also be a. focus on linking primary and secondary wood manufacturers. Currently there are some 250 companies that employ about 7,000 workers in the province's forest industry. A second Forintek advisor will be stationed in the Winnipeg area where there is a clustering of smaller operations. Forintek can call on over 200 spe- cialists to help out.

“We need to have a more diverse industry that creates family and community supporting jobs,” says Local 324 president Judy Anderson. “A lot of these smaller companies, especially in the north, can become more competitive will new technolo- gies in new markets.” Sister Anderson adds that IWA operations in Roblin, Dauphin, Neepewa, and the Winnipeg area may benefit by linking with the program when it’s up and running.

= The Chinese government sets up foreign investors with pools of displaced labour numbering in the millions.

Using cheap Chinese labour

Multinationals export capital and technology to Orient

IF WE WONDER WHY good-paying manufacturing jobs are being lost in western, industrial countries we have to consider labour and the economy in Communist China, which is not an opportunity foreign companies are about to pass up. The official People's Daily of Beijing, for instance, reported that foreign investment in China totalled $US 33.4 billion in the first seven months of 2003, a rise of $26.6 billion over the same period in 2002, a year in which a total of $52.7 billion flowed into Chinese industry. Already 23.5 million workers are employed in foreign-funded enterprises, helping to pump up Chinese exports to over $430 billion last year, a year in which it passed both Japan and Mexico to become the U.S's second largest trad- ing partner, after Canada. And it is expected to pass Canada by 2006.

In the highly-industrialized city of Shanghai alone, over 4000 foreign investments totalling $10.4 billion had been already been approved for the year 2003 by last November, according to the Chinese Foreign Affairs Ministry, which added that

300 of the world's 500 leading com- panies have invested in Shanghai.

Today China produces over half the world's manufactured goods, includ- ing 38 per cent of mobile phones; half the world's cameras; half its shoes and 40 percent of laptop computers. China expected to produce 210 mil- lion tons of steel last year and receive steel-sector investments of $15.9 bil- lion, up from a record 182 million in 2002 and an increase in investment of 87 per cent.

The country's auto industry is also expanding rapidly: The New York Times reported earlier this year that the number of cars produced there has grown from 1.8 to 3.8 million over the last three years.

China expects to produce seven million vehicles a year by 2010, which would make it second only to the U.S. among the world's auto producers. Recently Ford announced that it would build a second plant in China, which already hosts plants owned by Daimler Chrysler, GM, Nissan and Volkswagen.

In textiles, according to the

American Textile Manufacturers Institute, likely Chinese market-share gains following the planned removal of tariffs in 2005 could result in the loss of 630,000 U.S. jobs. "It would not be unrealistic to expect China to capture 70 to 75 per cent of U.S. mar- ket share in two to three years," a spokesman for the American Manufacturing Trade Action Coalition told The International Herald Tribune.

Canadian firms have invested about $7 billion in China, according to The Vancouver Sun, most of it in the last two or three years.

Telecommunications giant Nortel

Networks, for instance, which recent- ly cut thousands of jobs in Canada, operates four joint-venture manufac- turing operations in China, as well as research and development and a cus- tomer-service facilities. Recently a subsidiary of auto-parts manufacturer Magna International announced plans to invest in China.

More in.a future issue!

= article by Kim Pollock

THE U.S. CONTINUES TO CLING stubbornly to Testrictions on Canadian lumber, even though their case is rapidly crumbling after a series of setbacks before North America Free Trade Agreement panels.

NAFTA has twice rejected the U.S. claim that its softwood lumber sector is harmed by Canadian

ABOUT THE ECONOMY BY KIM POLLOCK

imports. The American argument, a key support for the current 27 per cent duties on our lumber, is sim- ply “not sufficiently supported by the evidence," the panel ruled in April, a position it has since affirmed. ‘The U.S.'s last appeal on the so-called injury question is slated for later this summer.

Meanwhile, West Fraser Timber set i cat ada the pigeons: its dumping assessment below per cent, the threshold f for duty assessment under US, regulations. West Fraser asked for its money

back — some $14 million of the total $2 billion collect- ed from Canadian firms since 2002. The implica- tions? If West Fraser wins, it's a precedent for every- one paying duties.

Canadians have now won so many rounds that the Canadian Lumber Trade Council, representing firms in the major lumber-producing provinces, is cautious- ly optimistic, believing that NAFTA will rule that there is no injury. We might like our chances in the courts and legal tribunals, then. But though there might be light at the end of it, it's still a long tunnel. Many observers believe a judicial end to the dispute is easily a year away.

The CLTC's John Allan, for example, suggests that the coalition of U.S. firms behind the lumber dispute will use every remaining legal avenue to stave off a final decision. As our late secretary-treasured Terry Smith used to say, "just because there's cows standing in the field, it doesn’t mean there'll be steak for the boys."

Can we negotiate our way out? Again, only long- term. A likely-indecisive Canadian election will be fol- lowed by a November U.S. election.

Despite NAFTA decisions softwood solution a ways off

Few politicians, especially in the war-obsessed U.S., will make lumber a top issue, unfortunately, so real talks are unlikely before 2005.

The Americans might have been gored by NAFTA panels but they certainly won't rush to cut a deal that's likely to be far less attractive than the one concocted in December, 2003 — a deal so flawed it was rejected on this side of the border by everyone who read it.

No, in the foreseeable future Canadians will have to savour our legal triumphs and the rewards of a fickle market. Lumber's at or near $400 per thousand board feet and our dollar's down in the 72 cents U.S. range: many firms can make money in spite of the punish- ing tariff. With markets so volatile, however, all this is cold comfort for Canadian workers — we want reason- able long-term access to the U.S. market.

The United Steelworkers of America, it should be noted, recently lobbied successfully for a Canadian exemption from U.S. tariffs on steel. Steel's cout would help in the struggle for fair lumber-market tules. We'll need it.

Kim Pollock is the IWA’s Director of Public Policy and Environment

JUNE 2004 .THE.ALLIED. WORKER: ] AS...