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TUESDAY, MAY 9, 2017
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here for last Friday's NAFTA quote from Linda Dempsey.
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ENVIRONMENTAL NGOs AND THE SOFTWOOD LUMBER DISPUTE
"When the environmental NGOs sued and settled, endlessly, to stop the cutting of U.S. government timber on federal lands...the U.S. lost the ability to manufacture lumber out of trees that were precluded from being exported, with their purpose to cut lumber for U.S. housing."
John Thomas Jr.
May 4, 2017 (publications date)
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We don't know much about Mr. Thomas other than that he is from Independence, Oregon, which is about sixty miles south of Portland. Today's quote is from his letter to the The Wall Street Journal, which was published on May 4. Mr. Thomas was responding to an April 24 Wall Street Journal editorial that was unsparing in its criticism of the U.S. Commerce Department's decision to impose countervailing duties on Canadian softwood lumber.
The easiest way to explain that decision is to return to the interview with Commerce Secretary Wilbur Ross which we highlighted in the last entry. Andy Serwer of Yahoo asked the Secretary how he knew that Canada was subsidizing its softwood lumber industry. Mr. Ross explained:
Well, it's very simple. There are a couple of components to the cost of softwood lumber. That's what you're really talking about. First component is, what does it cost you to get the right to cut the tree down? They technically call that stumpage. In Canada, the trees are owned by the provinces. Most notably by British Columbia. About half of all the softwood lumber that comes into the U.S. comes in from British Columbia. They have prices for stumpage that are a tiny fraction of the free-market prices the American producers have to pay. That is a direct subsidy by the province of British Columbia of the Canadian industry. ...
We tried to negotiate a peaceful settlement. We were unable to do that, and therefore we did what was required. Namely, we made a preliminary finding of a 20 percent tariff. So, that's about a billion dollars a year, and under the rules, it will be applied retroactively for 90 days. So, there'll be $250 million in front and then a billion dollars a year going forward. ...
It would be hard to find a more straightforward explanation of the Commerce Department's recent actions in this case than that presented by Secretary Ross. The reason we have chosen to highlight Mr. Thomas's letter to The Wall Street Journal, however, is because it is a reminder that America's timber policy is an onion with many layers. Part of Mr. Thomas's argument is that the larger timber operators cut their logs from private property, not federal lands, and so were never precluded from exporting their logs, "and U.S. mills and workers were out of luck and out of jobs."
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It is at least worth asking the question, what role has U.S. environmental policy played in the long running U.S.-Canada dispute over trade in softwood lumber? We don't know the answer to that, but our guess is that it is not trivial. Presumably, it was America's intention to ensure an economic supply of logs to American mills when Congress enacted the ban on the export of logs from federal lands. And by the way, many countries, including Canada, have such limitations. The difference seems to be that, increasingly, America has acted on the premise that economic activity, namely, logging, is not how we want to use our federal lands.
And it has been that way for a while. For us the issue was crystalized back in 2010 by an exchange between Senator
Ron Wyden, then running for re-election, and his Republican opponent at the time,
Jim Huffman, a former dean of the Lewis and Clark Law School in Portland. On October 22, 2010, there was a debate at Portland's City Club with Senator Wyden and the Mr. Huffman. The moderator asked this question:
Oregon's rural counties long relied on sales of timber on federal lands to fund public services. When Clinton Administration policies set some new limits on logging, Congress chose to compensate these communities for lost revenues. These federal payments, worth more than $230 million dollars are due to expire shortly. If these payments are not extended, what would you do for these timber dependent rural communities?
The answers of the candidates set out two very different approaches to the issue. Senator Wyden said:
I'm going to get those payments extended.
Mr. Huffman said:
I would do everything I could to revive the timber industry in this state. It's been devastated over the last 20 years. We've gone from 8 billion board feet of harvesting in the state to under 800 million board feet.
Interestingly, neither Candidate said anything about trade in that exchange. Also, interestingly, America does export a lot of logs, mainly to China, which, one would assume, feeds into those differences in stumpage fees.
Today's entry is neither an essay nor an argument, and it does not have a conclusion. It does, however, suggest a question. Specifically, is America punishing Canada simply because we in the United States changed our mind about how we want to use public lands?
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Senator Ron Wyden, a Democrat, is a popular senator in a solidly Democratic state. He won his 2010 election against Jim Huffman with a commanding 57 percent majority and his last election, 2016, by almost the same margin (56.6 percent). His opponent then was Mark Callahan, an information technology consultant. As for the issue of federal payments, it is an ongoing battle with different elements.
Hardly a Housing Tax is a link to the letters The Wall Street Journal received in response to the papers April 24 editorial in opposition to the new countervailing duties on Canadian softwood lumber. The letter from Mr. Thomas was the source for today's featured quote.
Trump's New Housing Tax takes you to The Wall Street Journal editorial to which Mr. Thomas responding in his subsequent letter to the Journal.
Logging and Export Bans is a link to list of these restrictions as published by the Forest Legality Initiative.
Wyden-Huffman Debate is a link to the Youtube video of the recording of the 2010 debate between Senator Wyden and challenger Jim Huffman, which is held at the Portland City Club on October 22, 2010. The exchange quoted above begins short after the 32-minute mark.
Money Does Grow on Trees is a Foreign Agricultural Service report on U.S. forest products exports, including logs.
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R. K. Morris, Editor
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