When
British Columbians vote on May 12, 2009, it will be seven
months after the earliest possible date for notice of early
termination of the Softwood
Lumber Agreement 2006 (SLA 2006).
On October
13, 2006 the US Coalition
for Fair Lumber Imports issued a news release in which
it welcomed the implementation of SLA 2006 and concluded:
"we look forward to working with the U.S. government
to ensure that the agreement provides the intended benefits
to U.S. sawmills and mill workers." Some consider it
a safe bet that the Coalition will use the $500 million
it pocketed from duties kept as part of the deal to begin
lobbying in preparation for the next round, whether that
is in 2013 or 2008, the difference being the end of SLA
2006 or its earliest possible notice of termination.
The
US Presidential election is on November 11, 2008, one month
after the earliest possible date for serving notice that
the agreement will be terminated. Notice to terminate the
agreement can only be served by Canada or the United States;
third parties, like the Coalition, do not have standing
to terminate the agreement, and any attempt by third parties
to initiate countervailing duties while the SLA 2006 is
in force must be denied. It is unlikely that the US would
serve notice to terminate SLA 2006 on the eve of a Presidential
election; it is also unlikely that a new government would
have the agreement on its radar screen in its first few
months in office.
When
Forest Minister Rich Coleman appeared on Voice of BC on
November 8th with host Vaughn Palmer, he was taunted with
the possibility that the US might terminate the agreement
once lumber prices rise; there is no export tax once the
Random Lengths Composite exceeds $US 355. There is a 15%
export tax when that price is below US$ 315, as it is now.
The duty can increase by 50% if the "surge penalty"
kicks in, which happens when quotas are exceeded. Instead
of responding by saying that he expects SLA 2006 to survive
its full term of seven years, plus a possible two year extension,
Coleman chose to argue that pressure to terminate the deal
would be greater when prices are low rather than when they
are high. Does Coleman question whether the deal will survive?
It is
arguable that the US Coalition would want to return to punitive
duties no matter what the price. They object to any forestry
regulations that encourage BC mills to continue to operate
when prices fall; they also say that "timber
accounts for 65-70% of U.S. softwood lumber variable production
costs." If it is true that timber costs in BC do
not rise as fast as timber costs in the U.S. when lumber
prices rise, then the advantage for BC producers would increase
when prices rise. If Coleman is right that the opposite
is true, i.e. that pressure to countervail against BC producers
is greatest when prices are low, then the Coalition would
be working hard now to lobby for early termination of the
deal. One way or the other, the call is up to the U.S. government
so it is a question of whether domestic politics will result
in the government serving notice for early termination of
the treaty. Protectionist Democrats may make that more likely,
but not for three or four years, possibly in time for their
mid-term elections in 2010.
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