BC LUMBER COMPETES FAIRLY, NEW STUDIES SAY
VICTORIA – There is no basis to complaints that British Columbia lumber is subsidized, according to three independent studies conducted by respected forestry consultants and two leading U.S. academics.
The studies, which were filed July 20-23 with the U.S. Department of Commerce, provide further evidence that Canadian lumber is not subsidized, contrary to persistent allegations by the American Coalition for Fair Lumber Imports.
The federal government, provincial governments and the Canadian forest industry are battling U.S. threats of countervailing duties on Canadian lumber for the fourth time in 20 years. The U.S. Commerce department is investigating a complaint from the coalition, a major U.S. industry lobby group, that Canada subsidizes its lumber largely through low stumpage rates and log export restrictions.
The British Columbia Ministry of Forests and the BC Lumber Trade Council commissioned two of the studies. The governments of Canada, British Columbia, Alberta, Ontario and Quebec and Canadian industry funded the third study, a 216-page analysis of Canadian and U.S. lumber and stumpage issues. The Commerce department is currently slated to release its decision on subsidy on August 9.
In one study, noted natural resources economist Dr. William Nordhaus of Yale University concludes that British Columbia’s stumpage charges do not confer a subsidy on softwood lumber. The British Columbia stumpage system generates more than $500 million a year for the provincial government beyond what the forest management system costs.
Dr. Edward Leamer, an economist and respected international trade expert at UCLA, concluded that Canadian log export restrictions do not act as a subsidy for Canadian lumber production. British Columbia’s restrictions on the export of logs are more than a century old and those restrictions have long ceased to have an effect. Further, export-domestic price gaps are normal for most commodities and cannot simply be attributed to export controls. A price difference between logs for export and logs used domestically occurs even in countries such as Chile and New Zealand, which have no log export restriction, he said.
The third study, compiled by Quebec City-based DGR Inc., H&W Saunders Associates of Vancouver and Wesley Rickard Inc. of Gig Harbor, Washington, found that the coalition’s so-called apples-to-apples comparisons of Canadian and U.S. stumpage rates are fundamentally flawed. The report reinforces the Canadian position, and the Commerce department’s conclusion in three previous lumber cases, that cross-border comparisons are legally impermissible and capricious.
The study notes that a comparison of stumpage rates between any two areas, even adjacent areas, must take into account all the factors that affect those rates. Those include timber size and quality, terrain and growing conditions, other responsibilities of the harvester, regulatory climates, tax burden, capital and labour costs and exchange rates.
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Reference # 2001:081 *
Released on Jul 25, 2001 *
Region Province Wide *
Category General
Contact
Dan Evans
Economics and Trade Branch, Ministry of Forests
Phone (250) 356-7669
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