Note on June 7, 2015: I’m even more sympathetic to the idea (which isn’t happening) of measures (besides subsidies) focused on protecting Canadian industries against predatory globalist interests, including other governments. With the TPP, etc. it looks like there is going to be no protection at all. So everything has gone in the wrong direction.
Softwood lumber dispute
www.cbc.ca/news, Aug 23 ’06
..the most recent conflict boiled over in May 2002, when the United States imposed duties of 27 per cent on Canadian softwood lumber, arguing that Canada unfairly subsidized producers of spruce, pine and fir lumber.
Canada’s protracted dispute with the U.S. over softwood lumber finally ended in April 2006 with an agreement that would require the U.S. to return about 80 per cent of the more than $5 billion in duties it had collected on lumber imports. The deal was signed in July 2006, but lumber industry groups in three provinces and the B.C. government said they would not support the final draft agreement. However, after the federal government made some adjustments, provincial governments agreed to support the deal….
…The deal removes tariffs on lumber, but includes export taxes that kick in if the price of lumber drops.
…The dispute centred on stumpage fees – set amounts charged to companies that harvest timber on public land. Many in the U.S. see Canadian stumpage fees as being too low, making them de facto subsidies. A U.S. coalition of lumber producers wants the provincial governments to follow the American system and auction off timber rights at market prices.
…The agreement [previous one that ended March 31, 2001] didn’t apply across Canada. Since lumber harvested in the Maritimes comes mostly from private land, Maritime provinces weren’t subject to the U.S rules. With no extra duties to deal with, Maritime producers saw business rise.
…A NAFTA decision on Aug. 13, 2003 was considered a partial victory for the Canadian side. A panel ruled that, while the Canadian lumber industry is subsidized, the 18 per cent tariff imposed on softwood lumber by the United States is too high.
…NAFTA decisions are legally binding and must be put into effect within 60 days.
…a WTO panel concluded that the U.S. wrongly applied harsh duties on Canadian softwood exports. The panel also found that provincial stumpage programs provide a “financial benefit” to Canadian producers. But, the panel made it clear that the benefit is not enough to be a subsidy, and does not justify current U.S. duties.
… on April 26, 2006, came word that Canada and the United States had reached a framework agreement that could form the basis for an end to the dispute.
…called for the U.S. to return about 80 per cent of the $5 billion in duties that U.S. Customs has collected in the previous four years. Canadian-sourced lumber would also be kept to no more than its current 34 per cent share of the U.S. softwood market.
Canada will also collect an export tax on softwood lumber exported to the United States if the price drops below $355 a thousand board feet.
On July 1, 2006, trade ministers from Canada and the U.S. signed the final legal text of the softwood lumber deal….
…[international trade minister David] Emerson says he will introduce legislation in September 2006 to confirm the agreement and hopes to have it in place by October 1, 2006.
…Import duties of $4 billion the U.S. charged Canadian companies since 2002 will be returned. But the U.S. keeps $1 billion.
…Restrictions on Canadian exports will kick in if prices fall too far.
…extra clauses give the lumber industry more stability…
From the Maritimes example, it would be better if public land was sold in a fair way to private Canadian citizens. A free market approach would lead to rational decision-making about land use and would end any question of subsidies. Obviously the U.S. government subsidizes its own industries also and appears to be much guiltier in terms of applying these massive duties, so it’s not a good example of free market either. With respect to NAFTA and the WTO, I disagree with these supra-governmental bodies that seem to put restrictions on what the Canadian government can do. I don’t trust this managed approach to fixing this problem. If there were duties in the past, then they must have adjusted their business to account for the costs. So how can it be fairly determined who should get the money? The U.S. govt was robbing their own consumers of cheaply produced lumber. I don’t think NAFTA is a good idea. It’s another level of government – unaccountable to the people. If Canada were to become more libertarian, it would be important to assert its sovereignty, because the effort at freeing trade, reducing taxes and ending prohibition might receive hostile political responses from the U.S.