the softwood lumber dispute
DESCRIPTION
The Softwood Lumber Dispute. agenda. Evolution of softwood lumber dispute Underlying causes BC reforms to avoid Forest Revitalization Plan 2006 agreement themes. Modern History of Dispute. Lumber I : early 80s - increased US countervailing duty pressures - PowerPoint PPT PresentationTRANSCRIPT
The Softwood Lumber Dispute
agenda
Evolution of softwood lumber dispute
Underlying causes BC reforms to
avoid Forest Revitalization
Plan 2006 agreement themes
Modern History of Dispute
Lumber I: early 80s - increased US countervailing duty pressures
Lumber II: 1986 – MOU - export tax Lumber III: 1992 US countervailing duties (6.5%) 1994 - Canadian victory in binational panel
US changes law to undermine basis for ruling 1996-2001 – softwood lumber agreement
Certain amount tax free Substantial export fees above that level
Lumber IV: April 2002 – US DOC final determinations: 27.2% duties Canada won every major case October 2006 – new Softwood Lumber Agreement
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US arguments
Stumpage system - prices timber at less than market value
Cut controls – flood market at low point of cycle
Log exports – increase supply of domestic logs, depressing price
Direct grants/loans
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BC Policy Reforms
How US trade pressures influenced BC forest policy - 2003 Market-based pricing Tenure takeback Economic deregulation
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Stumpage Defined
Stumpage is the price paid by a licensed forest company for a publicly-owned tree
October 10, 2013 FRST 415 7
BC’s Stumpage System (until 2004)
Comparative Value Pricing (>90%) Product prices – logging
costs, adjusted to account for gov target revenue
auction-based market pricing (<10%) small business sales
BC policy reforms announced as response to US softwood lumber challenge
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Agenda 2
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BC Proposal in Softwood Lumber Dispute
institute market-based pricing eliminate below-cost sales eliminate “blending” of blocks with significantly
different stumpage values to reduce “cross-subsidies” award new timber rights competitively, by awarding
them to the highest bidder allow Forest Licences and Tree Farm Licences to be
subdivided reduce restrictions on the transfer of tenures, including
eliminating the 5% AAC takeback eliminate “cut control” requirements that require a
minimum amount of timber be harvested regardless of market conditions
eliminate utilization requirements; eliminate appurtenancy provisions that tie harvesting
rights to requirements to process the timber in company-owned mills
Agenda 2
Decision: Forest Revitalization Plan
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Forest Revitalization Plan“biggest change in 50 years”
Takeback and Redistribtion 20% taken back from long
term replaceable licences first 200K m3 exempt
10% to auctions 10% redistributed to
First Nations (8%) Woodlots Community Forests
Compensation: $200 million
October 10, 2013 FRST 415 12
Forest Revitalization Plan“biggest change in 50 years”
Changes in economic regulations allow subdivision and transfer without
penalty eliminate appurtenancy eliminate minimum cut control
requirements
Canada-US Softwood Lumber Agreement of 2006 7 year term, with option to renew for 2 end to litigation, US pledges to dismiss
new actions Canada to receive $4 billion US receives $1 billion
$500 million to US companies $450 million to “meritorious initiatives” $50 million to create a “North American
Lumber Council”
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Softwood Lumber Agreement of 2006 – managed trade
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Price per thousand board feet
Option A –Export Charge (%)
Option B – Export Charge plus Volume Restraint**
Over US$355 0 0
US$336-355 52.5% + regional share of 34% of U.S. Consumption
US$316-335 103% + regional share of 32% of U.S. Consumption
US$315 or under 155% + regional share of 30% of U.S. Consumption
Lumber prices – 2001-13
http://cfs.nrcan.gc.ca/selective-cuttings/43
International Context: Summary International Forces: Contribute to crisis,
constrain reform environmental agreements world market trends
▪ push prices down green markets - certification, boycotts
▪ push costs up, threaten demand US trade pressures
▪ push costs up▪ Force difficult policy reforms▪ major challenge to sovereignty
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Themes
US trade pressures have pushed costs up and constrained BC’s policy sovereignty.
BC’s market-oriented forest policy reforms were strongly influenced by trade pressures by the United States