This deal isn't bad

As I understand it, opposition to the softwood lumber agreement boils down to two points. One, the deal is, as one of the more restrained critics had it, a “total sellout,” one that gives the Americans everything they wanted and then some: export taxes, export quotas, surge mechanisms, plus they get to keep US$1-billion in “illegal” tariffs levied on Canadian softwood exports over the years.

Two, the Americans can cancel the deal in two years’ time.

Does no one else see the teensiest contradiction between the two? If the deal is such a gift to the Americans, if they took the Canadian negotiators so completely to the cleaners, why would they want to cancel it? Wouldn’t they want to lock us into it forever? Conversely, wouldn’t we be the ones who would want to invoke the same cancellation clause, as either side may on a month’s notice? In which case, shouldn’t we be glad it’s in there?

And here’s another contradiction. The objection to including the clause is that it does not assure the Canadian industry the kind of sustained freedom from legal harassment they had sought, and which the seven-year term of the agreement had seemed to guarantee. Instead, the critics would appear to prefer to have no agreement, thereby securing no period of immunity whatever.

I know, I know: the critics don't want to axe the agreement. They just want better terms. That sort of debate attends most negotiations, of course: do you settle for what you have, or hold out for more? And in most cases there’s some room for argument, because in most negotiations both sides bring something to the table, meaning both have something to lose if the deal falls through.

In the present example, we have no such leverage. We bring more or less nothing to the table. Those lawsuits we have working their way through the U.S. legal system, the ones that were going to bring to the Americans to their knees? Dream on. Several decades’ worth of legal actions, many of them Canadian victories, have not succeeded in reining in the American lumber lobby, and there’s no reason to think this was about to change.

What was being negotiated here was essentially the terms of our capitulation. That was always the issue, under the previous government as much as this one. And, as capitulations go, this one’s pretty good. The export tax, while galling, is much less severe than any previously negotiated between the two countries: ranging from 5% to 15%, depending on the price of lumber, it stops where the previous export tax started. If they prefer, producing regions can opt for quotas in place of the tax, further reducing its bite.

But that’s not the point. The real key to the agreement, though it has attracted remarkably little notice, is that it maps out an escape route by which Canadian lumber exporters can free themselves from all trade restrictions of any kind: no export taxes, no export quotas, no harassing lawsuits. True, it amounts to giving the Americans what they have always wanted, namely a market-based system of “stumpage” fees, whether by auctioning off the right to cut timber on Crown land, or by selling off the land itself.

But in this case the “concession” is something we should be doing anyway, in our own interests. It never made any sense to undercharge for stumpage rights, whether your concern is the economy or the environment: in practice, we were subsidizing overcutting, even if it did not match the technical definition of an export subsidy under international trade law. And it made even less sense to cling to this unsustainable position in the face of such unrelenting hostility from our biggest trading partner -- as some provinces have lately begun to acknowledge.

So much more attention should surely be attached to Article XII of the agreement. Entitled “Regional Exemption from Trade Measures,” it provides for a working group to meet within three months “to develop substantive criteria and procedures for establishing if and when a Region utilizes market-based pricing and management systems and therefore qualifies for exemption from the export measures” described elsewhere in the agreement. [Emphasis added.]

Within 18 months, the group is expected to report back, with the two sides agreeing to make “best efforts” to incorporate their work into the agreement. Moreover, the question of whether a given region met the criteria would be subject to a binding binational dispute panel (Article XIV), with no appeals allowed. So not only would we be doing the right thing, but having removed any possibility of hidden subsidy, we’d have assured ourselves of trade peace at last.

There’s reason to take the Americans at their word on this. As things stand, producers in the Atlantic provinces, where forest lands are held privately, are exempt from any trade limits, as are a list of producers in southern Quebec, who cut on privately-owned lots in Maine.

It would be nice if we had locked the Americans in for longer than two years. But with any luck in 18 months the whole issue will be moot in any event.