U.S., Canada extend lumber trade pact, but dispute continues

Published: Monday, January 23, 2012, 6:26 PM     Updated: Monday, January 23, 2012, 7:05 PM

By Richard Read, The Oregonian

 

View full sizeJAMIE FRANCIS/THE OREGONIAN

Logs head for the Warm Springs Forest Products mill in Central Oregon.

 

The United States and Canada have decided to extend a lumber trade agreement for two years, but a dispute continues over Canadian exports that U.S. mill managers consider unfair.

U.S. lumber industry leaders still contend that British Columbia misgrades and
underprices timber, enabling Canadian mills to undercut competitors in the
United States and abroad. That perception and other disputes over the years
explain the lukewarm reaction Monday from Oregon industry leader Steve Swanson,
chairman of the U.S. Lumber Coalition.

"We are supportive of the extension, but compliance with the existing Softwood
Lumber Agreement is imperative," Swanson said. "If Canada continues to violate
it, then we need to make sure that our government continues to pursue those
violations."

The 2006 agreement will remain in effect through Oct. 12, 2015, U.S. Trade
Representative Ron Kirk said Monday. Canadian news reports described the
extension, closely following President Barack Obama's rejection of the Keystone
XL pipeline from Alberta to the U.S. Gulf Coast, as an olive branch from the
United States.

Swanson, president of the Swanson Group based in Glendale, Ore., described the
agreement as a compromise that is "not ideal." He cited the current dispute,
which is undergoing arbitration expected to wind up later this year.

Canadian exports to the United States have fallen, along with the collapsed
housing sector, to account for about a quarter of the U.S. market, said John
Allan, president of the BC Lumber Trade Council in Vancouver, British Columbia.
Exports to China have boosted Canada's mills.

Sales to China helped prevent closure of Swanson's Glendale mill, which now runs
at three-quarters capacity serving the U.S. market. With two sawmills, two
plywood mills and an aviation division, Swanson Group has about 750 employees,
down from more than 1,200 at its peak in 2007.
-- Richard Read, twitter.com: ReadOregonian
 

United States picks international trade fight with Canada over softwood lumber

Published: Tuesday, January 18, 2011, 8:11 PM     Updated: Tuesday, January 18, 2011, 8:11 PM

 By Richard Read, The Oregonian 

Randy L. Rasmussen, The OregonianThe United States contends Canadian timber policies violate a 2006 agreement and harm Pacific Northwest mills like Seneca Sawmill Co. in Eugene, which processes Douglas fir into lumber.

 The United States aims to take Canada to the woodshed over what trade officials contend is under-priced British Columbia timber that unfairly competes with U.S. lumber companies and workers. 

U.S. Trade Representative Ron Kirksaid Tuesday the Justice Department would file for arbitration under a softwood lumber agreement signed in 2006 after years of disputes. Kirk said British Columbia was selling timber harvested from public lands for prices below amounts set by the agreement, undercutting mills in the Pacific Northwest and other regions. 

"This type of benefit harms U.S. workers and firms in the lumber industry and is inconsistent with Canada's obligations," Kirk said. "Canada is in breach of its commitments." 

Canadian government and industry officials rebutted the claims. 

"There's no substance to this," said Pat Bell, British Columbia's minister of forests, mines and lands. "We should be working on developing other markets together, like Korea, like China, like India." 

Disputes over U.S.-Canadian lumber trade are as old as the hills. But in this round, the United States contends British Columbia resorts to a new tactic, improperly grading timber as beetle-killed salvage material and selling it for pennies per cubic meter to Canadian mills. The mills turn the timber into lumber sold cheap in America, hurting U.S. businesses and workers, said Steve Swanson, an Oregon lumber producer who chairs the U.S. Coalition for Fair Lumber Imports. 

Swanson, chief executive of Glendale-based Swanson Group, said British Columbia should reverse its practices, charge proper timber fees and levy export taxes to even the playing field. 

"North American lumber producers have curtailed production, closed mills and been forced to let go thousands of workers," Swanson said. 

The Justice Department is requesting a judgment by a tribunal of the London Court of International Arbitration. 

John Allan, president of the BC Lumber Trade Council, said U.S. officials brought the latest action in response to political pressure. 

"It seems to be an attack on how we manage our forests with respect to the mountain pine beetle," Allan said. "They're basically saying, 'You should have left those trees to die on the stump.'" 

Bell, the forests minister, said British Columbia grades timber just as it did before the 2006 agreement. Lumber prices are higher than expected, proving the agreement works, he said. China is also buying lumber, he said, due in part to Canadian marketing. 

Chinese purchases also helped sustain a Swanson mill in Glendale that would have closed as unfair Canadian competition intensified, said Zoltan van Heyningen, the U.S. lumber coalition's executive director in Washington, D.C. 

"Hopefully this case will help enable it to keep open," van Heyningen said. 

--Richard Read

Bob Ragon Op-Ed for the Roseburg News Review 2010

2010 began with most economic forecasters optimistically predicting a 35 % improvement in housing starts. Unfortunately new home construction results were disappointing and dominated by foreclosures and challenging credit markets.

Several world events significantly impacted our timber industry. First was the massive earthquake in February crippling Chile's plywood exports to the United States. As a result panel prices in the US skyrocketed from an average price of $260/Msf to a high of $460/Msf in early May. The beneficiaries were our plywood mills, principally Roseburg Forest Products and the Swanson Group. The run-up in prices was a temporary shot in the arm, but unfortunately the market retreated quickly when Chile resumed exporting plywood in late May.

The second major world event affecting our industry was the entry of China into our forest products market this summer. Russia imposed a 25% tariff on logs exported from Siberia to Chinese sawmills and now lumber and logs from the northwest are in high demand to satisfy China's expanding economy. This is a two edged sword for our industry by improving the overall lumber market but also driving up log costs to our local mills.

Finally Douglas County is now on the Secretary of Interior's radar screen for relief from the gridlock that has brought timber sales from the BLM in southwest Oregon to a virtual standstill. Secretary Salazar convened a one day roundtable discussion in Roseburg in October with a followup meeting in Washington DC in December. Several of our industry leaders including Allyn Ford and Steve Swanson participated as well as County Commissioner Doug Robertson. The lack of federal timber availability remains a key impediment to jobs and county revenues in Douglas County and all of rural Oregon.