Multiple Ways Out of U.S.-Canada Timber Dispute, Say Experts
Negotiation of another U.S.-Canada softwood trade agreement, dual government restrictions on timber supply, and creation of a joint governmental commission are all feasible paths forward out of the U.S.-Canada lumber dispute, trade experts and former officials from both countries’ governments said during a panel discussion on March 29. The 2006 Softwood Lumber Agreement between the two nations—the fifth iteration of such a deal—expired on Oct. 12 (see 1510070032). The White House on March 10 announced that President Barack Obama and Canadian Prime Minister Justin Trudeau tasked the countries’ trade ministers with exploring “all options” for concluding another softwood agreement, and with reporting back to the heads of state within 100 days on their findings.
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Elaine Feldman, senior fellow at the University of Ottawa Centre on Public Management and Policy, during the discussion at the Wilson Center said that Obama’s and Trudeau’s joint initiative is the best chance to reach a conclusive agreement before the heat of the presidential election cycle and subsequent government staff attrition inevitable when presidential administrations conclude. “If we don’t have a deal by then, we’ll be into the U.S. election cycle, and then with the election and whoever wins, there won’t be an interlocutor for Canada to talk to for quite a long time, given the U.S. system, where everybody at a senior level needs to be confirmed by Congress,” said Feldman, who has also served as Canada’s Associate Assistant Deputy Minister for Trade Policy and Negotiations.
Other challenges beyond the election cycle also remain ahead. Past U.S.-Canada lumber negotiations indicate the two governments are scarcely willing to cede enough of their position to find common ground, National Foreign Trade Council Board Chairman Alan Wolff said during the panel discussion. Absent Congressional legislation, the executive branch cannot prevent domestic companies from requesting antidumping and countervailing duties on softwood lumber, which would hamper negotiations, Wolff said. “We have to go through a lot to get to a final settlement, and it’s just very hard to do,” he said. “Absent legislation, the U.S. executive branch cannot stop industries from filing antidumping/countervailing duty applications. So it would have to be approved by the Congress. So that’s one aspect of that.”
Perhaps a more ambitious undertaking would be for the two sides to include a lumber deal as part of currently non-existent broader bilateral negotiations, Wolff said. The two sides could negotiate through Canada’s opposition to Buy American policies, and the likelihood that European industry will have better access to Canadian government procurement than the U.S. would when the Comprehensive Economic and Trade Agreement (CETA) takes effect. Or, the U.S. and Canada could defer persisting lumber disputes to independent arbitrators to impose binding rules.
Policy changes would just be one step to resolving the issue, and economic practices should be implemented as well, Auburn University forest economics professor Daowei Zhang said during the discussion. While demand for timber has fallen, supply has increased in both countries, he said, adding that an ideal way for U.S. stakeholders to ultimately profit would be to restrict timber supplies. Although government intervention in this regard this could conflict with U.S. antitrust laws, investors could circumvent this problem by buying sawmills in the U.S. and Canada, Zhang said. Stimulating demand is key, he added.
But the most likely bilateral attempt to solve the dispute would involve creation of a joint commission made up of neutral individuals to look at the countries’ common interests in promoting a sustainable lumber supply in North America, and the differences in equities and interests across the U.S., “because actually, some yellow pine is a little different than the spruce pine fur of the pacific Northwest,” Wolff said. “And across Canada, as this agreement outlines, you got to find out where the provinces are,” in terms of how they carry out stumpage and other logging-related policies.