U.S. mills fall under Canadian ax

Flood of Canadian timber hurts U.S. markets and the earth

 

Gary Draper has worked in the timber industry for 25 years, and in that time he's lived through a string of mill closures.

Now he's living through one again. Last month, Boise Cascade announced that both Draper's mill in Emmett, Idaho, and another in Cascade will close this June. About 375 people will lose their jobs in the two towns.

The loss of the mills will cut deeply into these small rural communities where "everybody knows everybody else," Draper says. And it will add to an already remarkable number of mill closures in the state. Over the past decade, 33 sawmills have closed and 1,911 timber workers have lost their jobs, according to the Idaho Department of Commerce. Once the Boise Cascade mill in Emmett closes, only one large sawmill will remain in southern Idaho.

The announcement has started an all-too-familiar blame game in Idaho. Boise Cascade points its finger at the environmental community for pushing the U.S. Forest Service to dramatically reduce the amount of federal timber made available to mills; environmentalists have responded by saying that Boise Cascade is finally paying the price for years of overcutting.

But unlike past debates, this time everyone agrees on one point: The lumber market stinks. Industry analysts say a five-year-old trade agreement with Canada has allowed a flood of Canadian timber to depress lumber prices in the U.S. While no one claims that the agreement is the direct cause of the Emmett and Cascade closures, no one denies that it has had a dramatic impact on the U.S. timber industry. More than 100 U.S. mills have closed in the past six months.

The loss of sawmills has attracted the concern of environmentalists, who recognize that less cutting in the U.S. means more cutting in Canada, where environmental regulations are looser. They have joined the timber industry in calling for a renegotiated agreement that will keep U.S. workers and Canadian forests whole. But time is running out. The trade agreement is due to expire on March 31, and it is unclear whether the Bush administration will renegotiate.

Welcome to the New World Order

The center of controversy is the 1996 U.S.-Canada Softwood Lumber Agreement, which sets a 14.7 billion board-feet limit on the amount of lumber Canada can export duty-free to the U.S. That has turned out to be a high limit.

"We're awash in wood," says Scott Shotwell, executive director of the Coalition for Fair Lumber Imports.

Canadian lumber is also cheap, because the Canadian government grants substantial subsidies to its timber industry in order to maintain high employment levels.

"Canadian companies can buy trees on the stump for far less than American companies and without competition," says Potlatch Corporation's Frank Carroll. "It's hard for American companies to compete with the Canadian government."

The result has been plummeting lumber prices. Since last year, lumber prices have dropped 33 percent, according to the Coalition for Fair Lumber Imports. Bad as the agreement has been, the industry experts warn that the market for U.S. mills will get even worse if the agreement is allowed to expire. So-called "free trade" will allow even more Canadian lumber to flood the market, further depressing prices.

Strange alliances

The U.S. timber industry would like to see a value-based tax on Canadian lumber. To this end, it is aggressively lobbying the Bush administration to open negotiations for a more stringent agreement. In an unusual twist it has been joined by national environmental groups like Defenders of Wildlife and the Natural Resources Defense Council.

"You haven't seen us standing up together (with timber companies) at press conferences yet," says NRDC's Susan Casey-Lefkowitz, but she believes the stakes are sufficiently high to put aside traditional differences.

Canadian government subsidies already encourage high levels of cutting, she says, and if the agreement expires, a total absence of trade restrictions will only offer more incentive for logging - and more environmental devastation - in Canada.

Strange alliances have also formed in Congress. Sen. Max Baucus, D-Mont., sent a letter to President Bush urging renegotiation of the agreement before it expires, and warning that the lack of a renewed agreement would be "devastating to our timber industry." Fifty-three senators from as disparate ends of the spectrum as Hillary Clinton, D-N.Y., and Larry Craig, R-Idaho, have signed Baucus' letter.

If a new trade agreement cannot be reached this month, the Department of Commerce could impose countervailing duties on Canadian lumber. Those would level the economic playing field for U.S. companies, and would make it less profitable for Canadian companies to carry out large-scale logging.

But a fight over duties or even a new, tougher agreement may not be easy. Cheap Canadian lumber has been a windfall for giant lumber buyers like Home Depot, and they don't want that supply restricted. "We would like to see this agreement expire," says Jenna Morgan of the National Lumber and Building Material Dealers Association. "We would like to see free trade in softwood lumber between the U.S. and Canada."

While the softwood case highlights the economic perils of the globalized economy, it also underscores an environmental paradox. Environmental protection, while successful locally, can ultimately be undermined by globalized markets.

"We're one ecosystem and the impacts are felt by everybody. We need a mindset that thinks about North American forests, not U.S. and Canadian forests," says Joe Scott, head of the Northwest Ecosystem Alliance. "I don't think we should be afraid to use trade policies to defend our shared ecosystem."

Matt Jenkins is an HCN intern.

You can contact ...

  • Joe Scott, Northwest Ecosystem Alliance 360/671-9950 ext. 11www.ecosystem.org/projects_softwoodlumber.html;
  • Deborah Regan, Coalition for Fair Lumber Imports, 202/862-3686FairLumber@cs.com.