SitNews - Stories in the News - Ketchikan, Alaska


Lumber deal built to last, Canadian minister says
Toronto Globe and Mail


July 03, 2006

OTTAWA -- Canadian officials are predicting the new softwood deal with the Americans will last seven to nine years, despite attacks from industry critics over the last-minute inclusion of a two-year termination clause.

The Canadian and U.S. governments signed the final text of the softwood-lumber agreement over the weekend, in time for Thursday's meeting between Canadian Prime Minister Stephen Harper and President Bush in Washington.




Canadian International Trade Minister David Emerson defended the termination clause, which creates uncertainty over the duration of the long-awaited deal. Industry officials are worried they have achieved only short-term "trade peace" in exchange for forfeiting 20 percent of the $5 billion in tariffs that U.S. authorities have collected since 2002.

"The so-called period of peace and stability will likely be short-lived," Carl Grenier of the Free Trade Lumber Council said in an interview.

Grenier said the deal will be costly for the industry - the $1 billion in lost tariffs is "not pocket change," he noted.

But in a conference call, Emerson said that the new deal, which builds on last April's framework agreement, should be long-lasting.

"It's a seven-year agreement with an option to extend for nine years, as was laid out in the framework agreement. This whole discussion about a termination clause came up only late in the discussions about the detail of the agreement, and that's really in relation to what I consider to be the extremely remote likelihood of one party or the other wanting to terminate the agreement for one reason or another," the minister said.

"This is a nation-to-nation agreement, it's a treaty. And the likelihood of this kind of an agreement being terminated by a country is extremely remote. It is not like any particular industry group can trigger a termination. They cannot. Only the government of Canada or the government of the United States can terminate, and for countries to terminate agreements entered into in good faith is a very, very unusual step."

Emerson said that under the deal, a country that uses the termination clause cannot launch any trade action for a year, which ensures at least three "dispute-free" years.

The framework deal reached April 27 calls for Washington to remove punitive duties on Canadian softwood in return for Ottawa imposing limits and an export tax on U.S.-bound wood. It also arranged for the return of about 80 percent of the $5 billion in tariffs that Washington has extracted from Canadian timber shippers since 2002.

"It's going to take us a little bit of time to tidy up more of the legal text and put in place some of the implementation features that will be required in any event," Emerson said.

"I think most companies will find that their financial institutions, their bankers are going to be a lot more tolerant and forgiving of their financial situation knowing that this agreement is in place and that it's going to be implemented very soon."

Emerson said that he hopes to have the agreement fully in place by Oct. 1, "with a major portion of the deposits, cash flowing, roughly six weeks after that."
Web Site

Distributed to subscribers for publication by
Scripps Howard News Service,

Publish A Letter on SitNews
        Read Letters/Opinions

Contact the Editor

Stories In The News
Ketchikan, Alaska