BANGOR, Maine — Advocates for the U.S. softwood lumber industry say a 2006 trade agreement with Canada has been effective, but suggested that international politics play too heavy a role in the process, slowing down action on potential violations.
The United States and Canadian softwood lumber industries are inherently different, said Zoltan van Heyningen, executive director of the Coalition for Fair Lumber Imports. The U.S. is a traditional free market system, with private owners of forestlands selling logs into the lumber industry. In Canada, most of the forestlands are owned by government. The governments sell logs to industry at vastly reduced prices — essentially, a subsidy — in order to preserve forest products jobs.
That system works fine on its own, said van Heyningen, but is unfair when its products are sold into a free market system like the one in the United States. The subsidies give Canadian lumber companies an unfair advantage on pricing, he said.
The 2006 trade accord was an attempt to even the playing field and resolve decades of legal disputes. It essentially froze Canadian government subsidies at the 2006 level and imposed some taxes and quotas, while U.S. companies agreed to forgo some of their rights under U.S. trade law. And disputes would be heard by an impartial body, the London Court of International Arbitration.
So far, there have been three disputes brought to the court. The first two found in favor of the United States. The third was filed in January.
Van Heyningen said during a visit to Maine on Tuesday that the latest case involves allegations that the government in British Columbia allowed logs graded for pulp — not for lumber — to be used for lumber. That allowed the government to sell the logs to industry for up to 90 percent less than normal. Between 2007 and 2010, when the coalition alleges the problem existed, RBC Bank estimates that Canadian industry saved at least $500 million due to the lower-priced raw materials, said van Heyningen.
Two and a half years passed between identifying the problem and having the U.S. Trade Representative file a complaint with the London court, he said.
“Any delay in enforcement of this trade agreement causes harm to U.S. industry, in the form of lost wages and jobs in the communities that can least enforce it,” said van Heyningen.
Generally, the coalition finds out there may be some sort of problem, he said. They investigate it further, look at data and imports, identify the issues and bring it to the USTR. That’s where the delay comes in, said van Heyningen. In the latest case, it took more than six months for the USTR to move forward.
The problem, he said, was that when Canadian authorities get wind of the investigation, they work to persuade the U.S. government to not pursue the allegations.
“All of Ottawa is in D.C., we know what’s slowing the process down,” said van Heyningen. “They literally send an army that talks to every level of every department in Washington.”
Heyningen said Maine’s federal delegation does a good job of keeping the pressure on the USTR, and suggested that should continue.
Sen. Olympia Snowe, R-Maine, agreed with the coalition and said the USTR should move more quickly when it comes to initiating arbitration.
“This is a real problem and Canada’s repeated violations of the agreement threatens the livelihood of the industry and the jobs it supports here in Maine. This cycle is harmful to U.S. workers, and it must stop,” said Snowe in a written statement. “But this will only happen if the industry in Canada knows moving forward that when it violates this trade agreement, enforcement action will be immediate.”
Snowe said her decisions on upcoming trade policies will depend on the U.S. government’s ability to put forward an effective strategy to enforce trade commitments and “fight back against those who seek to evade our trade laws.”
Sen. Susan Collins, R-Maine, said for years that the Canadians have “skirted” the trade agreement, and that it was imperative that the Obama administration not allow them to “flout this agreement with impunity.”
And in a written statement provided Tuesday, U.S. Rep. Mike Michaud, D-Maine, said he was disappointed that action had taken so long in the latest dispute, but was pleased to see some forward movement.
“It is my hope that arbitration will lead to full compliance with the agreement as soon possible. American companies cannot and should not have to compete against unfairly subsidized Canadian lumber imports,” said Michaud. “For mills in Maine, enforcement of this treaty is literally a matter of keeping their doors open or not.”