Damage Control Needed After Battle

Some U.S. lumber producers contend that the way Canada sells timber to its lumber companies amounts to a subsidy that allows those companies to unfairly compete against lumber mills in the United States. The Bush administration is just the latest in a string of administrations - Republican and Democratic - that have tussled with the Canadian government over this issue for more than 20 years. Earlier skirmishes were calmed with negotiated agreements aimed at “protecting” American consumers from the menace of cheap lumber, but the last of those agreements expired in 2001. After that, things turned particularly nasty. The Bush administration imposed high duties, which dealt a severe blow to Canadian lumber-mill profits and employment. The resulting economic hardship in lumber towns north of the border received scant attention down here but became a huge political issue in Canada. We certainly profess no expertise in international trade matters, but this is an issue we've spent a good deal of time researching over the past couple of decades, including a close examination of Canadian provincial timber-sale practices. Our conclusion is that comparing U.S. and Canadian systems is an apples-and-oranges proposition, but both countries subsidize their industries more than either wants to admit. Canada sells timber-harvesting rights to its companies at low prices, but those companies also must assume land-management responsibilities not shouldered by buyers of public timber in America. The bulk of the timber used by U.S. mills comes from private lands, many of which our government originally gave away to railroads and other companies; public timber is more expensive in the United States, but the government here also handles most land-management, road-building and environmental protection expenses. Companies in both countries are eligible for a range of tax breaks, loan guarantees, training grants and other government aid. Our sense is that the Canadians have the timber-selling system U.S. mills would love to have. Canada's greatest “unfair” advantage over the United States is that it has vast expanses of unlogged forest Canadians are less ambivalent than Americans about logging. What we think obviously matters less than what the international tribunals governing world and North American trade under various treaties think. As it turns out, they think pretty much what we do. They've consistently ruled against the United States on most key aspects of this dispute. The Bush administration had enraged Canadians by initially refusing to abide by the conclusion of the dispute-resolution panel established under NAFTA. That response had every possibility of widening the trade dispute to affect other industrial sectors. That would be unfortunate. Bad treaties deserve to be torn up and thrown away; good treaties should be honored. Honoring a treaty is like standing behind your promises. Americans have successfully promoted freer trade around the world, and the United States and global economy have prospered. The adoption of protectionist trade policies in defiance of NAFTA did nothing for American credibility in the advancement of freer trade. http://www.missoulian.com/articles/2005/12/05/opinion/opinion2.txt

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