FOREST SECTOR BALKS AT NDP CALLS FOR AID

April 9, 2009

By Gordon Hamilton, Vancouver Sun

An NDP plan to aid the forest sector despite restrictions in the Softwood
Lumber Agreement is an invitation to reignite the lumber trade war, B.C.
forest industry officials say.

Thanks but no thanks, said John Allan, president of the B.C. Lumber Trade
Council, following a call by NDP forests critic Bob Simpson for subsidies
and aid in Canada to match packages now being handed out in the United
States.

"Just look at what President [Barack] Obama is doing down in the United
States with the stimulus package. There will be direct subsidies to
forest-dependent communities, forest workers, and the forest industry,"
Simpson said in an interview. "We should not use the Softwood Lumber
Agreement as an excuse not to do what we believe is the right thing to do
for the forest industry."

The U.S. stimulus package includes aid to the forest sector, such as a
green-energy tax break for using pulp mill byproducts for fuel.

Allan said that, like it or not, Canada is obliged to live up to the terms
of the agreement if it wants to sell lumber in the U.S.

"It doesn't work like that," Allan said of Simpson's call for a level
playing field between the two countries. "The Americans can do anything they
want. It's up to us not to offset the border measures -- that is, the tax --
by subsidizing our industry."

Allan views the agreement as a shield against unfair American accusations as
much as it is a spear. "The fact of the matter is, what we pay today is far
less than we paid in litigation. I don't see any point in adding gasoline to
the fire that is already raging in Washington about protectionist sentiments
and enforcement of trade deals."

Rick Jeffery, president of the Coast Forest Products Association, said the
agreement is not perfect but it has worked, protecting the industry against
politically motivated actions of the U.S. forest industry.

The softwood agreement was signed by Canada and the U.S. in 2006 to regulate
Canadian lumber exports into the American market.

American producers, fearful of losing a share of their own market to
Canadians, had complained to their government that Canadian lumber was being
subsidized.

The agreement prohibits Canada from offering any financial measures to the
industry that would offset the agreed-to taxes and quotas. It ended the
longest and costliest trade war ever between the two countries.

Simpson made the call for aid earlier this week at a labour conference in
Kelowna. He repeated the plan to aggressively challenge the restrictions
contained in the agreement in an interview with The Vancouver Sun.

B.C. should funnel aid to communities, workers and the industry and let an
international court of arbitration decide if it's legal, he said.

"We shouldn't use the Softwood Lumber Agreement as an excuse," he said. "We
shouldn't be hamstrung by the deal."

The NDP call to match aid in Canada with that in the U.S. comes at a time
when Canada and the U.S. are again at odds over lumber.

The London Court of International Arbitration ruled Feb. 26 that Canada
violated the agreement and gave the federal government until March 28 to
impose a 10-per-cent tax on producers in Saskatchewan, Manitoba, Ontario and
Quebec. The tax was to remain in place until Ottawa had collected $54.8
million US to cover over-shipments of lumber in 2007.

Unable to find an equitable way of collecting the tax -- many of the
producers who over-shipped in 2007 are either bankrupt or out of business,
and not all provinces support the federal position -- Ottawa instead
proposed a lump sum payment of $36.6 million US to settle the breach of the
agreement. The U.S. rejected that and stated Tuesday it intends to impose a
10-per-cent duty on shipments from the four provinces effective April 15.

Prime Minister Stephen Harper said Wednesday he wished the Americans hadn't
been so hasty in imposing a duty. He said Canada is not disputing that it
breached the agreement, only what is the appropriate penalty.