October 08, 2005

Does Beaver's Bark Have Bite?

Does the Beaver's bark have bite?

The other day, I read about Prime Minister Paul Martin's recent address to the Economic Club of New York. His language has become more blunt, (finally) echoing the feelings of many Canadian citizens who, since May of 2002, have been negatively affected by the imposition of $5 billion of tariffs on Canadian softwood by the U.S.

"Forgive my sudden departure from the safe language of diplomacy, but this is nonsense," said Martin. "More than that, it's a breach of faith. Countries must live up to their agreements. The duties must be refunded. Free trade must be fair trade."

"It's not because Canada wants it. It's because there's a small group of [people with] narrow interests in the United States, who essentially want to keep the lumber out to keep the prices up..."

The "small group of narrow interests" to which Mr. Martin refers are U.S. lumber lobbyists.

The statement from this address that stood out for me (and apparently had an impact on Martin's conservative audiences in New York) went as follows:
"He later noted in his speech that removing the tariffs on Canadian lumber would lower the cost of each new American home by $1,000 on average -- and make about 300,000 more Americans eligible for mortgages."

Full story here...

On CNN, Mr. Martin said:
"The American people who have got to pay $1,000 more per home or the American people who can't get a mortgage because their home prices are up, obviously are suffering from lumber costs which are artificial."

Full transcript here...

Martin sent a similar message in an interview for The Wall Street Journal.

In the wake of Hurricanes Katrina and Rita, the idea of getting more lumber into the American market to benefit construction efforts and lower material costs takes on serious significance. The idea of rescinding the tariffs to ease domestic reconstruction efforts is now beginning to stick with some American officials,

"Officials say the notion of lowering duties on softwood to increase the flows for reconstruction following the devastation from hurricane Katrina is being seriously discussed in Washington.

Not only would that help in the shorter-term crisis but could move along stalled talks to resolve the softwood lumber trade dispute that threatens to poison relations between the two countries, says U.S. Ambassador David Wilkins.

"Obviously, that's an idea that's being considered," he said in an interview Thursday.

"If this would help bring a resolution, I want to help bring a solution" to the long-running battle that threatens a $10-billion annual industry.

Mr. Wilkins said he's been working hard to keep top White House officials informed of Canada's position.

For three years, duties averaging more than 20 per cent on Canadian softwood exports have been collected by Washington, totaling more than $5 billion -- money the industry wants back.

The two countries have been battling at various trade tribunals over the penalties on Canadian softwood, which is used mainly in home construction.

Negotiations were going on at the same time, but broke down in early August after Washington shrugged off a major Canadian win under the North American Free Trade Agreement.

"I understand Canada's frustration on this," said Mr. Wilkins, who has been Washington's envoy to Ottawa for just a few months."

Full story here...

So is progress being made? It seems so, but while Canada may take some hope that progress is being made in the softwood lumber dispute (with some opinions from Washington beginning to sound more moderate and open-minded), it's probably because the Eagle now needs to find a compromise with that pissed off Beaver up north, to avoid doing more damage to it's own nest.

Related Articles:

A History of Canada-U.S. Lumber Disputes (from CBC)
Should Canada Get Out of NAFTA? (The Blog of Love, Sept. 24. 2005)

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