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B.C. shifts towards market-based forestry system

Canada and the United States are the world's largest trading partners, but there's one thing they've never agreed on: softwood lumber. The dispute dates back hundreds of years, but in the 1980s it turned nasty. The U.S. has slapped billions of dollars of fines on Canadian wood, jeopardizing thousands of jobs. The dispute raises serious questions about trade, sovereignty, and the real nature of Canada-U.S. relations.

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Until Canada's trees are sold at a perceived "market value", the softwood war will never end. That's a lesson learned the hard way in British Columbia, which today announces a radical overhaul of the forest industry. The province is stripping its biggest companies of some of their timber rights. Some will be transferred to First Nations organizations; half will be sold in auctions that will set stumpage prices at true market rates.

Changes like this may ultimately end the lumber war with the United States. As we see in this clip from Canada Now, it may also lead to huge layoffs, the closure of small operations and legal action from all sides.
• The B.C. Forestry Revitalization Plan was announced on Vancouver Island by B.C. forests minister Mike de Jong. "Big change in thinking," de Jong said of the program. "It scares a lot of people. It is a seminal departure from the policies that have been in place for a long, long time.... The decline in this industry can't be allowed to continue."

• Following the implementation of this plan, British Columbia tried to negotiate directly with the United States, without success.

• In 2003 British Columbia exported $2.3 billion in softwood to the United States. That's 23 per cent less than the previous year, when the anti-dumping and countervailing duties were imposed.

• In May 2003 Canada rejected a U.S. proposal that would resolve the softwood lumber dispute. According to Canadian Alliance MP Reed Elley, American producers wanted Canada to impose an export tax as high as 33 per cent.

• In August 2003 a NAFTA panel ruled that the Canadian lumber industry gets a financial contribution from the government, but the tariffs imposed by the United States are too high. The 92-page report said the U.S. made a mistake in calculating its duties based on U.S. prices, and by not taking Canadian market conditions into consideration. The legally-binding decision gave the U.S. commerce department 60 days to review its import duties.

• On Aug. 29, 2003 the World Trade Organization released its final report on the U.S. countervailing duties. It said provincial systems may benefit Canadian lumber producers, but the U.S. had not proved its case for the duties it charges. Both sides claimed victory.

• On April 29, 2004, a NAFTA panel reported that U.S. lumber producers had not been hurt by imports of softwood from Canada. The binding ruling was expected to push the two countries back to the bargaining table.
Medium: Television
Program: Canada Now
Broadcast Date: March 26, 2003
Guests: Mike de Jong, Jake Kerr, Ron MacDonald, Chief Stewart Phillip
Reporter: Justine Hunter
Duration: 3:17

Last updated: September 19, 2013

Page consulted on September 10, 2014

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