Canada contemplates softwood deal

Marketplace Staff Aug 21, 2006


BRIAN WATT: If a tree falls in Canada . . . does it make a sound? Well, absolutely. Canada’s softwood timber dispute with the US is as old as the trees themselves. But the two countries have a new deal, and Canadian timber companies must decide if they back it by today. Under the agreement, the Canadian industry stands to get back more that $4 billion in US duty payments. But the companies worry the pact would allow the U.S. to impose new tariffs in as little as two years. So there’s still a lot to work out. Jason Paur reports.

JASON PAUR: Each year, Canada sends more than $7billion in timber products across the border. US companies complain Canadian exporters can flood the market with subsidized timber and undercut prices for US-grown wood products.

Industry analyst Paul Latta says the complaint stems largely from the fact that most timber in Canada comes from publicly-owned forests.

In the US, most timber products come from private forests.

PAUL LATTA: The Canadian system, it is different than the US system and the ability to change it to the US system would be a nightmare to try and undergo a free market switch over at this point in the view of the fact that the provinces own the bulk of their own timberland.

Public ownership of forests means Canadian companies pay less to remove and process timber than their American counterparts, which critics south of the border call a de facto subsidy.

Ending the timber dispute is a key goal for Canadian Prime Minister Stephen Harper, who has vowed to improve relations with the US.

I’m Jason Paur for Marketplace.

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