Softwood Deal: Follow the Money
Pact lets dollars pour into mergers, not jobs and communities.
Suddenly, we have a softwood lumber deal.
A few days ago, Canada was on track; still steaming steadily onward toward an inevitable legal win before North American Free Trade tribunals and at the World Trade Organization. The US was already reduced to appeals of decisions in "extraordinary appeal" processes, an avenue which pointed glaringly toward defeat. Another 18 months and we would win a clear, resounding victory over the obnoxious US coalition.
The Byrd amendment, which gave US producers a reward for launching trade disputes, was shot out of the sky.
The US case for injury was already wrecked, most recently by a WTO ruling of April 13. The case for subsidy, similarly, was done in by a March 17 NAFTA ruling. Soon, the level of alleged subsidy would likely be set at a de minimus level, that is, so low as to be pegged at zero. A de minimus ruling would mean the countervailing duty, already down to a manageable 8.7 percent, could no longer be imposed.
Then, the only fight left was over the roughly $5 billion US held by the US administration in countervailing duties and anti-dumping tariffs. The Canadian industry was salivating for it, of course, panting to use it for more mergers, foreign acquisitions and payouts to shareholders.
In recent years, indeed, Canadian firms have already used a disturbing proportion of their profits to buy one another out, buy assets in the US or abroad and invest outside the forest sector. That's why the Steelworkers urged the federal and provincial governments to make their support at NAFTA and the WTO contingent on investments in job creation, industrial diversification, upgrading, training and communities here in Canada.
Now that's all gone.
US back in driver's seat
The deal hatched by Canadian and US and negotiators this week might do much to ease the concerns of Canadian and US governments and corporations, although many observers agree that they might just as likely hate it once they fall under it. But it does nearly nothing for workers or their communities.
Politically, the deal indicates how eager Stephen Harper's likely short-lived federal government is to please US President George Bush. Instead of being reduced to such desperate measures as almost-hopeless appeals of its failed "extraordinary challenges" of past NAFTA panel rulings, the US and its lumber coalition are back in the driver's seat.
The nearly-defeated US companies get a $500 million reward, half the 22 percent of the duties and tariffs the Americans now get to keep a lovely, Byrd-quality nest egg with which the coalition can kick start a new round of challenges in seven years when this deal dies.
Canadian firms, meanwhile, are saddled with another sodden half a loaf. Prime Minister Stephan Harper crowed al a Brian Mulroney that we got "stable and predictable access to the US market" with "unrestricted access under current market conditions." In fact, it is merely another quota deal, similar in some respects to the horrible Canada-US Softwood Lumber Agreement of 1996 to 2002.
Canada's total exports will be capped at 34 percent of the total US lumber market. Firms will pay a 5 percent border tax, collected by the Canadian government, every time the price of lumber falls under $355 US per thousand board feet. This seems like a high threshold now, given that lumber prices fell below that for only six weeks in 2004 and four weeks last year. But remember, they stayed under that rate all but six weeks of 2003. If lumber prices fall, the border tax is here to stay.
In addition, firms face a "surge mechanism" penalizing them every time shipments from their region rise above 110 percent of their share of the 34 percent for two quarters in a row. Mills in Atlantic Canada are exempt because most of their timber comes from private lands -- they conform comfortably to the US lumber lobby's prejudices.
Why retreat now?
All this might represent an acceptable, though hardly attractive deal, had the federal government insisted on measures to ensure that a share of the $4 billion US coming back to Canada goes toward much-needed investment in job creation, training and communities. But there was absolutely none of that stuff.
Instead, we get the usual, lame assurances that what's good for corporations must be good for workers, communities or Canadians in general. We know it's not. Companies have used their profits in recent years to merge - think Canfor-Slocan; West Fraser-Riverside-Lignum; Cascadia-Western - buy foreign assets, such as the mills Canfor bought in South Carolina; the particle-board plants Ainsworth bought in Minnesota; the US assets purchased by Domtar or Interfor's Pacific Northwest sawmills. Without direction from government, the companies will simply use their cash-back from the US Commerce Department to buy even more foreign firms.
Harper's weasel words aside, the industry has also gone into full spin mode. Executives who only a few days ago raged against all the elements of the current compromise now say it is the only possible deal, way better than two more - BC Premier Gordon Campbell topped that at five more - years of uncertain litigation. The BC Lumber Trade Council's John Allan, hitherto Canada's litigation hawk and our chief legal optimist, now warns that you never know what will happen in court.
In fact, the litigation is almost done and Canada would certainly have won. Why retreat now? The truth is this deal represents a sordid sell out. For Harper, at least, it paid, though, when Bush praised his "leadership in resolving this issue." You know: "Yer doin' a helluva job, Stevie." One BC forest company rep was more honest. He said the Harper government would probably have been uninterested in pursuing the legal fight any longer in the face of pressure from the White House.
For companies, it's clearly about the money. Instead of fighting or negotiating, they get $4 billion right now, no strings attached. No job creation targets, no share for workers or communities. It's pathetic.
In the end though, we should remember the words of former BC chief bureaucrat Doug McArthur. After about a year, he said, especially if the price of lumber falls, Canadian firms will be screaming to get out of it. Then what?
Kim Pollock is a Canadian Research Representative for the United Steelworkers, based in Burnaby, BC. For 12 years he was a senior staff rep for the Industrial, Wood and Allied Workers of Canada. ![]()



30
Login or register to post comments
Capitalism
5 years ago
Comments on "Softwood Deal: Follow the Money"
I know you left wing loonies will not understand this, but mergers are necessary.
We are competing in a global market. We have seen first hand, the impact that tarrifs (or artificially increased pricing) on the lumber industry. The US duties crippled the entire industry.
If we are going to compete, we are going to have to become lean. If we don't, customers will buy their lumber from Brazil.
The Canadian market alone does not support our lumber industry, and how can we tell international customers to buy our more expensive product - because it is creating more jobs for Canadians.
Again, an unfortunate reality for capitalism. What I recommend we do is use the government royalties generated on the lumber lands for economic diversification in those areas - as opposed to putting them back in general revenues - and ridiculous social programs that only benefit the union hacks in Victoria.
freebear
5 years ago
The dispute seems to have been a convenient situation for forestry companies.
Cry about the duties/tarriffs Americans are charging; use it to justify closing operations; then receive the "settlement" millions when the "dispute" is resolved-priceless!
It will be interesting to see how the returned monies are spent/invested. Will CEO's get a compensation increase for resolving the trade dispute?
Realist
5 years ago
Capitalist: Most people learn at an early age "if all your freinds are jumping off a cliff would you jump too?". Thinly thought out critisims like yours are soo easy to shoot down. Give it up son.
jesterjogger
5 years ago
How much longer is this globalization madness going to last? The hydrocarbon economy which has propped up this monstous folly is in it's twilight.
Ridiculous social programs!!!
Well in the dog eat dog world you embrace maybe I'll steal your supper and your daughter!
What will you do to stop me?
Jack's
5 years ago
In the 1980s and prior, Canada was indeed guilty of everything the U.S. accused it of.....relatively free stumpage - dumping when our supplies exceeded demand.
We could go on and on with this dispute but unless we are willing to play the oil card, the only people who are thriving on this thing are lawyers.
I admit that the U.S. have become even more protectionist in trading than Japan. Mulroney capitulated 20 years ago and the Free Trade agreement should be named Free Trade Only If It's Advantageous To The U.S.
At least our lesson has not gone unnoticed by South American countries.
G West
5 years ago
But for God's sake why cheer the result and pretend it's good for anyone but the 20% of people who own shares in the forest companies?
bob the cat
5 years ago
Capitalism
http://www.counterpunch.com/roberts05032006.html
You might find this fella interesting. He was the Asst. Sec. of the Treasury in the Reagan Admin.
He`s really good at answering e-mail.
bob the cat
5 years ago
jesterjogger
When the political "leadership" of the state so obviously hold the "Rule of Law" in such contempt
it almost makes
seem quite rational..quite logical...just TAKE it..all options are now legitimate and on the table.
Welcome to Hell.
Capitalism
5 years ago
G West:
In the short term you are correct. However, this enables the forest companies to invest in technology and increase efficiencies. The day of the mill-worker is over. The day of the engineer is upon us.
The machinists, the technicians and the engineers are the future. Unfortunately, most of this work is performed outside of the forest companies.
A new day is upon us - innovation is the word of the 21st century!
I am excited!!
fanshaw
5 years ago
It was also the word of the 20th, 19th, 18th and so on. Innovation is nothing new (ha-ha!), Cap, it's how we got from living in caves to where we are today.
There will be mill workers as long as we continue to manufacture lumber, there will just be fewer of them, a trend that started in the 19th century.
bob the cat
5 years ago
"A new day is upon us - innovation is the word of the 21st century!" mr.c
Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism in the American cotton districts, in the old rubber plantations, and in the factories of India, China, and South Italy, appeared as generous supporters of and subscribers to the sacred cause of individual liberty.
H.G. Wells, The Shape of Things to Come
bun
5 years ago
R-i-ight. Increase competition by reducing[\i] the number of firms competing.
so by this genius' logic Cuba, China, etc have followed the necessary path to its logical conclusion, by merging all firms in a sector into one so that it can compete in the global market.
This sort of nonsense from so-called 'capitalists' reminds me of a little rhyme "One bright day in the middle of the night, two dead boys got up to fight. back to back they faced each other, drew their swords and shot each other. A deaf policeman heard the noise and came and shot the two dead boys. if you don't believe this lie is true, ask the blind capitalist, he saw it too".
---
[i]ridiculous social programs that only benefit the union hacks in Victoria.
another line comes to mind: "Freedom of speech means having to put up with people saying truly truly idiotic things".
freebear
5 years ago
So if we could harvest trees and mill them without employing anyone; would we do it?
What is the point of having an economy if it does not provide livlihoods?
G West
5 years ago
Even an unregenerate racist like Henry Ford understood that the workers in his plants were not only his employees, but also his customers. Pay them a living wage and they can afford to buy the products they are producing. Today's capitalists are more concerned with enslaving a work force that can't afford to buy its products…they’re just smart enough to make sure they situate them in the far east or in the Maquiladora zone so they are not a constant reminder of the scam or a goad to the public conscience. At the same time, upper management is rewarded at levels out of all proportion to need and still they steal and lie and reach out for more and pretend they have a compassionate heart beating in their chests. Goya did an etching in 1818 called Bobabilicon that would be an appropriate representation of these monsters.
BC Dude
5 years ago
Harper is a very lonely Lil bully who will be tossed out with the rest of the garbage ie Emmerson, these aren't Canadians they are nothing.
Why don't the great people of Canada shut this (our) country down untill this evil is gone?
The papers aren't signed yet?
IAMC
5 years ago
G West
You are out to lunch with your assertions that workers are getting screwed around by their employers.
Employees are in the drivers seat right now.
Did you here about the PEI lobster packing plant that has imported Russian workers to get work for a eight month period, due to the fact that they can't get Canadians to take this $9.00 per hour job. This is $19,000 per year, admit tingly not a great sum.
An electrician in Victoria makes $29.00 per hour.
I won't even go to what a worker can make in Alberta.
So I ask, what the F are you talking about.
I am in management and I am not making as much as the workers.
You are full of it.
Good times are here now.
Don't try to BS us.
G West
5 years ago
I AM Clueless
If you were capable of reading more than five lines and reviewing some of the other things I've written on this subject you wouldn't make such a fool of yourself by posting nonsense. Read a few more comments and do some thinking.
What kind of an enterprise would hire you as a manager?
If times are so good, why are you always coming back here for validation? I’m certainly not going to waste my time trying to explain the obvious to you for the thirty-third time.
IAMC
5 years ago
Well G West you validated my critical eye on you. Again you didn't attack my ideas, you only attacked me.
I assert that employees are in the drivers seat, and your outdated ideas about exploitation of workers by employers is stupid. Open your eyes. We are rockin and rollin right now.
Don't BS us with your negative, old fashioned , 1980's view of the modern economy.
You are out to lunch. And I am thinking ( about you, you useless piece of crap }
What a loser you are, but back to the subject you posed, workers are ruling right now.
You cannot possibly deny this.
G West
5 years ago
I already told you I've addressed the subject several times before. The fact you won't take the time to read what I've written is not my concern. Where precisely are workers ruling? Do you have any idea what the differential between the average industrial wage and executive compensation actually is?
DO you know what validation means? Are you capable of saying anything that isn't ad hominem?
IAMC
5 years ago
Who cares about the difference between the differential between wages for workers vs. management ?
The answer is that workers are fairly compensated. The workers are having their day, and your feeble attempts of hiding this is pathetic.
bloodnok
5 years ago
Some people are just bad at math. They think that because numbers on paychecks are higher, buying power is higher. Some people have no perspective. They think that what they see in front of them is all that there is in the world and everything, everywhere else, must be just the same. Some people have no integrity. They get their opinions from others, without verifying them, and look to still others to help them feel comfortable by agreeing with them. (Psst, that's what validation means.) Some people are bad at probablities. They buy lottery tickets and ignore lightning rods, not realizing that a person is more than 10 times more likely to be hit by lightning than win the 649. Some people are just stubborn. They hear about downsizing and see unions being forced into bad contracts by legislation or under the threat of outsourcing, yet they feel workers are in control. There's just no talking to some people. And yet we still try. What optimists we are.
G West
5 years ago
bloodnok
;-D
Cheers!
Coyote
5 years ago
Much enjoyed your short piece above here bloodnok. Which about describes what we are up against here, withe these neoconazis.
They can even turn an unequal, quasi-colonial realtionship, which allows almost entire foreign ownership of the main sectors of our economy, such as our forest industry, into a positive-, an example of progressive innovation!
Free Trade, my ass. What we have here is another good old US capitalism style rip-off to which our ruling class again lowers our drawers and lets them have at us. We have more in common with the states of Latin America fer chris'sake, who are currently organizing themselves to defend their societies and their economic base against US capitalism, and their economy destroying, so-called Free Trade.
And yea, that includes Cuba.
They at least are coming to understand at some level that we all need to secure our own maximum economic independence and self-sufficiency as sovereign nations first, husbanding our resources so that their primary use goes to our own needs first, now and to be there in the future, before we can talk prudently about production for "export" for those things we are not self-sufficient in. Which is an economic language capitalism doesn't understand, of course, where the only matters of real concern are their so-called bottomline considerations: sources of cheap labour to play off one against the other, cheap resources, and private wealth opportunity maximization. These latter all concepts and a language that we "the people" need to move away from for its scarcely concealed impoverishing exploitation of us all, which is the real root source of global tensions that move things towards war, and destruction of the natural assets of the planet.
Time for a new "self-sufficiency", "co-operative rather than competitive" and "democratized" model of economics, and the end of the old self-serving and exploitive ruling class based model. It is the past, which no doubt has got us to here, but no longer contains a future worth anyone in the working class or progressive in their right mind wanting to have, save for those few here who see their self-interests tied to the apron strings of that ruling class of course. (Thinking of Oilbertan and IAMC.)
We are approaching a time where it is ever becoming more clear that there is a need to move history and society forward, one more full notch-, and as was done with the old slave owning class of slavery, and later the landed aristocracy of feudalism, to leave the old ruling class of capitalism and "its" concept of "property rights" behind in ancient history as well.
Part of the problem with the current period, for those of us in the working class at least, is "they" have lost their fear of us. We have of recent history become too timid and bogged down in their view of the world. All this needs to be corrected and got beyond.
BC Dude
5 years ago
Coyote, bloodnok, gwest great posts now if we could all come together on July 1st Canada Day and show these harper neo-Nazi bush/bum buddies that the majority of Canadians are fed up with Ottawa and the psycho mentality ruining (giving) our once great country away like softwood, our oil rights etc
Harper is only a minority gov how in hell does he have the power to OK the sellout of the softwood US deal for $1.3 billion less?
In BC Gordo involved with organized crime BC Rail, Terasen gas, privatizing all of our public utilities, etc
Boneman was giving out bribes to basi, verk but instead of being charged, he is now a Crown witness, go figure, & this is justice.
juskatladude
5 years ago
Soooo, back to the original story.
"That's why the Steelworkers urged the federal and provincial governments to make their support at NAFTA and the WTO contingent on investments in job creation, industrial diversification, upgrading, training and communities here in Canada."
OK, so by an extension of this logic, the author would be OK if the government were to say: Regarding the refund you have coming to you on your income taxes there Mr Pollock, we realize that it always was your money rightfully, but we are going to make the refund cheque payable only to your kids RESP fund. We think the idea of paying down your mortgage with the refund is not in our best interest and we know best.
Please, please try to remember that the $5B was paid to the US gov't by the forest companies, not the government or a union.
The author also seems to deliberately ignore the social side of the agreement. $500M will go to rebuilding New Orleans. Not to corporate featherbeds, but to help a city full of poor people who lost everything. But I guess this was not worthy of mention.
Duncan (Sask Farmer)
5 years ago
justkatladude:
Regarding your last few lines, do you really believe everything you read?
Good point about the money coming out of the forest companies though. Canfor will see 280 million out of that 4 billion coming back.
How many Canfor shares do you think former CEO Honorable David Emerson still has? From 99 to 2001, he issued 8.6 million shares to himself and his directors (through his CFO, of course) with it trading at 9 to 12 bucks. Anyone have any guesses as to why David Emerson really jumped to the Cons? I hear tell the guy is a Buddhist. Couldn't be that 42% of his newest riding of Kingsway just happens to be Chinese. Could it?
With this deal, we got screwed, plain and simple. There was no need to negotiate at all. We had them under international rulings. It was cut and dried. This 1.1 billion dollar throw away was an insult to the real issue of the disparency of currency. Factor in a .65 cent dollar in 2002 alone... no, we were screwed out of 2.5 billion plus, when currency comes into question. If there was a need to negotiate, it would have been with currency compensation. Simply put, we got screwed, this time by the Cons before they had a chance to pass one bill. Just another U.S. lovin crooked bunch of thieves, in my opinion. They didn't have enough crooks, they had to take one from the Libs.
steerpike
5 years ago
The rules of NAFTA were thrown out.
The dispute mechanisms of NAFTA were circumvented.
NAFTA is dead.
Jack's
5 years ago
Good post Coyote - and right on the money!!
hannibal
5 years ago
It is not free trade but managed trade.
All rules favour America .
Harpo the pea-brained idiot sold out the lumber industry and left almost 3,billion on the table.
Funds adjusted from the beginning of this dispute.
If Canadian companies are stupid enough to sign on to this piece of shit they deserve what they get. Period.
Funny how the companies that own assets on both sides of the border come out of it looking a lot better .
BC Dude
5 years ago
That extra money maybe helps Harpo get re elected? Harper = USA politico = Traitor!