March 10, 2012 - No. 10


Live Report from Gaza During Latest Israeli Attack

Live Report from Gaza During Latest Israeli Attack

Hollywood Churns Out More Pro-Imperialist Propaganda
Spielberg's "Tintin" and Jolie's "In the Land of Blood and Honey" - Dougal MacDonald

Sell-Out of Canada's Forestry Industry

Canada and the United States Renew Softwood Lumber Agreement - K.C. Adams
Reference Material on the Softwood Lumber Industry


Live Report from Gaza During Latest Israeli Attack

Note: These are a series of brief on-the-spot updates from a Gaza correspondent, spread out over a period of about four hours during the latest Israeli state terrorist attacks on the people of Gaza. The earliest update is at the top and the latest at the bottom.


March 9, 2012

Good Morning From Palestine.

Israeli army attacks Gaza with aircraft and artillery by sea and [we] hope for the safety of all citizens and children.

Now hear a loud explosion in the city of Khan Younis.

Now hear the sound of several explosions in the western areas of Khan Younis.

Ministry of Health calls on the Arab states and institutions to support hospitals with medicines.

Israeli artillery shell fired are now in this moment.

Bodies of victims of the Israeli attacks are carried
away, March 9, 2012. (

Martyr now now ... From the east of Gaza. Martyr.

Airlines flying helicopters at sea town of Rafah now.

Supreme Committee for ambulance and emergency preparedness and raise the degree of preparedness of ambulance crews in the Gaza Strip because of the dangerous escalation of the Israeli sector.

3 martyrs now in Gaza by the Israeli shelling violent ... Bombardment continued until this moment.

Now to find the martyr seventh was the last Zionist shelling of the Gaza Strip.

Helicopters fired missiles east of the Zionist Shijaia shortly before.

1 injured at least in the bombing helicopters to target near the Yarmouk Street in Gaza City.

New target region of Tal al-Hawa in Gaza City right now.

Bombing in the north to a house belonging to the family of Abu Samra and reports of injuries. Aim for a household in the area of Beit Lahiya.

Targeting the house of Adnan Abu Samra in the area of Beit Lahiya and news of the existence of two martyrs.

Martyr now in Beit Lahia in a street bombing.

4, including a child injured in the bombing, which targeted a house in Gaza City neighborhood of Yarmouk.

Series of explosions heard in Gaza. At least 11 reported dead, including an infant not yet 1 year old.

Heavy fire from watchtowers Zionism east of Rafah towards the houses.

Police inspect the wreckage or a car destroyed by an Israeli air strike, March 9, 2012. (PressTV)

Bombing continues in the Gaza Strip and the fall of another martyr in the area of Beit Lahiya.

Occupation began targeting houses with missiles.

Nine people have been slaughtered in cold blood today, and the number seems to be increasing. God's mercy on Shadi El Seikaly, Obaid Gharably, Mohammed Harara, Hazem Qraqe, Zuhair Qaisyi, Mahmoud Hanani, Mahmoud Nejem and Mohamed Al Mughar.

Good Night for now ... from Palestine from under fire and attacks ... with love.

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Hollywood Churns Out More Pro-Imperialist Propaganda

Spielberg's "Tintin" and Jolie's
"In the Land of Blood and Honey"

Hollywood's movie-making industry often jumps to the defence of the U.S. imperialists' criminal activities at home and all over the world. Many examples can be given of such imperialist propaganda churned out over the years: The Red Menace (1949), The Manchurian Candidate (1962), the Rambo series (1982-), Black Hawk Down (2001) and so on. Two recent examples from 2011 are Stephen Spielberg's The Adventures of Tintin, and Angelina Jolie's In the Land of Blood and Honey.

"The Adventures of Tintin"

The book "Tintin My Friend" by the Belgian Nazi Léon Degrelle, a colleague of Georges Remi at Le XXe Siècle and for whom Remi worked as an illustrator. In the book Degrelle claimed to be the inspiration for the character Tintin.

Georges Remi, who authored the Tintin series of books under the pen name Hergé, worked as an illustrator at Le XXe Siècle (The 20th Century), a right-wing Catholic Belgian newspaper in Brussels. In 1940, the Nazis closed the paper and Hergé began working for Le Soir, a pro-Nazi newspaper that insisted on its front page: "National Socialism can bring us closer to God." Leon Degrelle, founder of the Belgian Fascist party and the leader of its SS division, declared "Tintin, c'est moi."

Hergé was accused of being a Nazi collaborator and was imprisoned and interrogated after the war. He admitted: "I recognize that I myself believed that the future of the West could depend on the New Order. For many, democracy had proved a disappointment, and the New Order brought new hope. In light of everything which has happened, it is of course a huge error to have believed for an instant in the New Order."

Hergé began the Tintin series in 1929 with Tintin in the Land of the Soviet, a direct attack against the Soviet Union. The book is an endless stream of anti-Soviet disinformation: Tintin's train is blown up by the secret police, he is held prisoner several times, he finds that Soviet factories are not even operational, Moscow is a "stinking slum" where only children who are Marxists get fed, all Soviet grain is exported abroad for propaganda purposes, and a Soviet agent intends to blow up all European capitals with dynamite. One typical anti-communist quote from the dialogue is, "You're in the hideout where Lenin ... and Stalin have collected together wealth stolen from the people!"

Tintin in the Congo, Hergé's second book released a year later, is openly racist and colonialist, portraying the Congolese as infantile and stupid and needing guidance from their white Belgian masters. In the scene where Tintin teaches Congolese school children about geography, he states: "My dear friends, today I'm going to talk to you about your country: Belgium!" The book has been the subject of many human rights complaints and English publishers refused to publish it until 1991. In 2004, when Congolese Information Minister Henri Mova Sakanyi described remarks by the Belgian foreign minister as "racism and nostalgia for colonialism," he commented that it was like "Tintin in the Congo all over again."

Twenty-one more Tintin books appeared before Hergé's death in 1983. During the Nazi Occupation of Belgium, while he worked at Le Soir, Hergé decided it was safer to write about "non-political" subjects. In fact, under the Nazi regime he abandoned his story Land of Black Gold because it depicted political conflicts in the British Mandate of Palestine. The Crab with the Golden Claws (1941), The Secret of the Unicorn (1943) and Red Rackham's Treasure (1944) are three of the books Hergé wrote at this time. The first is about drug smuggling and the other two focus on a treasure hunt. Certainly, none of the three is anti-Nazi, anti-fascist or even remotely progressive. For example, the villain in The Crab with the Golden Claws is an Arab named Omar Ben Salaad, several of whose minions are black Africans.

Spielberg's movie Tintin is based on these three books, with the plot focusing on the treasure hunt. Spielberg alters and integrates the original stories to suit his purposes. One major change is that he turns the harmless Russian ship collector from the two later books, Ivan Ivanovitch Sakharine, into his film's diabolical villain. (Ivan Ivanovitch is the name used in fiction for the "typical" Russian.) Spielberg's resurrection of Tintin and its anti-Soviet origins follows his 2008 movie, Indiana Jones and the Kingdom of the Crystal Skull where the Russians are also the main enemy in keeping with the outlook of U.S. imperialism. Even with the Cold War supposedly over, the U.S. imperialists still see Russia as their main rival and are seeking every opportunity to discredit her, encircle her and foment internal disruptions.

"In the Land of Blood and Honey"

U.S. celebrity actress and UN Goodwill Ambassador Angelina Jolie, promoted her new film and directorial debut about the 1992-1995 Bosnian War, In the Land of Blood and Honey, in a February 18 interview with Al Jazeera's Balkans' branch. Set in Sarajevo, Jolie graphically and falsely portrays the Serbs as unrepentant murderers and mass rapists while whitewashing all other participants. Jolie's pro-imperialist propaganda film aims to justify the U.S.-NATO intervention in Bosnia in the early 1990s and, overall, promotes the U.S.-NATO's genocidal 'humanitarian intervention' war doctrine. Writing in the Washington Post, columnist Richard Cohen praised the movie, seeing it as an endorsement of American-led foreign interventionism such as the invasion of Libya.

There is no doubt Jolie's movie has a political aim. While writing the screenplay, she consulted CIA agent Richard Holbrooke, who died in December 2010. Holbrooke was a ruthless cold warrior who spent his entire 48-year political career implementing and backing U.S. interventions -- covert and overt -- in Vietnam, East Timor, the Balkans, the Congo, Iraq, Afghanistan, and Pakistan, causing the deaths of hundreds of thousands of people (see TML Daily, December 17, 2010 - No. 217). Jolie also consulted with U.S. General Wesley Clark, who was director for strategic plans and policy of the U.S. Department of Defense's Joint Chiefs of Staff during the war against Bosnia. Her reliance on such criminal elements really exposes the fraud of her so-called humanitarianism.

Since 2007, Jolie has been a member of the 90-year-old U.S. Council on Foreign Relations (CFR), the main breeding ground for U.S. imperialist foreign policy. CFR members have included major monopoly capitalists such as David Rockefeller, senior serving politicians, over a dozen U.S. Secretaries of State, bankers, former CIA agents and senior monopoly media figures. A most notorious member is former U.S. President Bill Clinton, the main instigator behind the 1995 U.S.-NATO bombings of the Serbs. Like Jolie today, in the 1990s Clinton talked about the "moral imperative" of the United States to prevent gross human rights abuses, even though at the time Colombia, the leading recipient of U.S. aid in Latin America, was murdering thousands of peasants, unionists, politicians, and human rights activists, without a word of opposition from the U.S.

During her notorious visit to Libya in October 2011, Jolie exposed her political aims by praising the U.S.-NATO supported rebels to the skies for their commitment to "human rights." Her propaganda visit was widely showcased by the international monopoly media. Not surprisingly, during her February 18 Al Jazeera interview, Jolie specifically advocated for imperialist intervention in Syria, shedding crocodile tears for the Syrian people: "I think Syria has gotten to a point, sadly, where some form of intervention is absolutely necessary... at this time we just must stop the civilians being slaughtered." Jolie, of course, did not say one word about the ongoing U.S.-supported genocide against the Palestinian people.

In her February 18 interview, Jolie attacked Russia and China for using their United Nations veto powers to block foreign intervention against Syria, which she said was against the will of the "international community", i.e., all those who support U.S. imperialism: "There are these countries that are choosing not to intervene and I feel very strongly that the use of a veto when you have financial interests in a country should be questioned, and the use of a veto against a humanitarian intervention should be questioned." Jolie neglected to mention how for decades the U.S. imperialists have cast vetoes in support of their financial interests and criminal interventions all over the world. This began in 1970 when UN Ambassador Charles Yost cast the first U.S. veto, rejecting an African-Asian demand for the complete isolation of Ian Smith's racist Rhodesian regime.

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Sell-Out of Canada's Forestry Industry

Canada and the United States Renew
Softwood Lumber Agreement

Signed September 12, 2006 the Softwood Lumber Agreement was set to expire in October 2013. January 23 of this year, the executive leadership of the U.S. and Canada agreed to its renewal extending the agreement to October 2015. The renewal still requires approval from the Canadian Parliament and U.S. Congress.

The renewal of this agreement raises serious questions over the direction of the Canadian economy and whether the federal and provincial governments are capable of defending the interests of Canadians. Those directly connected with the forest economy and its many communities express doubt that the federal and provincial governments are concerned with the people's well-being and development of their local economies. Observers of the forest industry especially from the Canadian side assumed that the agreement would be allowed to lapse, as it has done nothing in practice to ease the crisis. Growing forestry trade with Asia has brought some relief while the regressive trade agreement with the U.S. is a continuing irritant and block to solving problems.

The feature of maintaining a floor price for softwood lumber at the expense of Canadian producers is unjust and serves the interests of the North American forest monopolies that seem to want to maintain the agreement for that purpose and to keep pressure on small and medium-sized companies and force them into bankruptcy. The manipulation of market prices is accomplished by restricting access to the U.S. market for many small and medium-sized lumber companies in Canada. Apparently, the 15 per cent export tax on Canadian softwood lumber and regional quotas on Canadian lumber exports to the U.S., although despised by the small and medium-sized Canadian companies as contrary to open access to the U.S. market under NAFTA and unfriendly to say the least, is welcomed by the big forest monopolies that operate on both sides of the border as a means to control the U.S. market in their favour and manipulate lumber prices and access to the U.S. market. For the larger companies that log and mill in both countries, the regional quotas are easy to bypass by moving logging and milling to their U.S. operations when necessary and the 15 per cent export tax paid by their Canadian operations only is considered a small amount to pay to keep lumber prices from falling even further.

Trans-Pacific Partnership

Beyond the transparently self-serving private reason to manipulate U.S. lumber prices by making small and medium-sized Canadian suppliers suffer a loss of markets, there appears to be a federal Harper trade-off for another issue. This most probably is the upcoming negotiations for a U.S.-led anti-China economic, diplomatic and military front in Asia called the Trans-Pacific Partnership (TPP). Prime Minister Harper has expressed a wish to be included but needs U.S. approval.

U.S. imperialism, in addition to maintaining military bases throughout East and Central Asia and waging ongoing wars of aggression in Afghanistan, Pakistan, Iraq and Syria while threatening other wars against Iran and the DPRK, is putting together an axis of smaller and medium-sized powers to isolate and encircle China. The TPP forms part of this anti-China axis, which also targets Russia.

What Changed in the Forest Industry During the Last Six Years?

The forest industry of today has changed from that of six years ago when the softwood lumber agreement was originally signed. The situation of today has been marked by the following:

- the 2008 economic crisis, especially in the U.S. housing market and subsequent collapse of U.S. lumber demand and downward pressure on the market price;

- the rapid rise in the relative value of the Canadian dollar in comparison with the U.S. dollar from a low of 62 cents to above par making Canadian lumber more expensive in U.S. dollars;

- the bankruptcies and consolidation of forest companies into North American monopolies with ten monopolies dominating the Canadian wood industry, all of which have ownership and other links with U.S. monopoly capital;

- the pine beetle infestation in BC and a subsequent massive cutting of the worst hit regions, which put further downward pressure on lumber prices;

- the rapid rise of exports of softwood lumber, mostly raw logs, to Asia from both Canada and the U.S. (Gross lumber sales last year to China from Canada, mostly BC, exceeded sales to the U.S. for the first time in history) putting some upward pressure on prices.

The Forest Industry in Canada

The 2006 agreement marked another step in the annexation of the Canadian forest industry into the United States of North American Monopolies. It further signaled an end to the former period of nation-building in the forest industry based on Canada's natural and human strengths bound up with its colonial ties with Britain. Those strengths for more than 200 years propelled the Canadian industry forward producing a skilled working class, forest communities and modern means of production and technique. The five main strengths of the industry overall put the Canadian softwood sector in a very competitive position versus the U.S. industry in the U.S. home market aided greatly by the fact that during periods of non-crisis and a growing U.S. population, U.S. lumber supply alone cannot meet U.S. demand.

The great weakness of the Canadian industry arose from its colonial ties and capital-centred control. This created a short-sighted dependence on lumber and other basic forestry exports that inhibited the development of value-added uses of wood fibre and other products rather than mainly basic lumber and pulp and paper. The colonial capital-centred control from outside the forest regions meant value created from workers transforming the forests into use-value was mostly drained away from their communities and not reinvested in the development of an all-sided diverse economy in the forest regions, and investments in social programs and public services for the well-being of all and the general interests of society. The forest regions and communities became and remain very vulnerable to general crises and particular forestry-related crises such as the pine beetle infestation. Besides those weaknesses, the lack of economic diversity and local control over decisions that affected their lives made workers and their communities victims of industrial productivity in the sector, which on a recurring basis has devastated livelihoods and weakened the forest regions' population and communities forcing workers, who were replaced with machines, to leave in search of employment in the larger urban centres. The issue of control centred on the question of Whose economy? has emerged as key to solving problems in the forest industry and building vibrant communities with diverse manufacturing. Whose economy? Our economy! has become a dominant theme of economic renewal and a new human-centred direction for the forest industry in both Canada and the United States.

The colonial capital-centred control also blocked the forestry working class from developing modern arrangements with the First Nations that recognize their hereditary rights.

Five Strengths of Canada's Wood Products Industry

What are the five strengths of the Canadian wood products industry? Each factor has played a role in furnishing a price of production for softwood lumber lower than in the U.S. When Canadian lumber is needed in the U.S., the market price tends to fall closer to Canadian prices of production. This lowers the rate of return on forestry investment in the U.S. The lower market price pleases the U.S. construction industry but annoys lumber monopolies that want to manipulate the price to their advantage. Within this situation, it must be noted that many of the lumber monopolies have operations in both the U.S. and Canada. Also, stock ownership of companies in Canada tends to gravitate towards the greatest mass of investors, which is in the U.S. The trend towards consolidation and concentration of ownership in the forestry sector has accelerated since the economic crisis of 2008.

The following five strengths in Canada tend towards a lower price of production of wood products in Canada compared with the U.S., which generates downward pressure on market prices in both Canada and the U.S. However, the influence of these five factors pale in comparison with the downward pressure on prices of production and rates of return on investment that come from industrial productivity, mainly the increased use of machinery in logging and milling both in Canada and the U.S.

1. British colonialism illegally declared much of Canada terra nullius or otherwise imposed unequal treaties effectively stealing the land from First Nations. Unlike land in Europe, Asia and eventually in the U.S., which is almost all privately owned, British colonialism retained forest lands in Canada mostly as public Crown land from which forest companies pay a small royalty or stumpage fee for the right to harvest timber. Almost all the forest regions of BC are unceded territory yet considered Crown land by colonial governments.

Ground rent paid by forest companies is greatly restricted in Canada compared with the U.S. Instead, provincial governments claim a portion of added-value through stumpage fees generally far less than ground rent claimed in the U.S. resulting in a lower price of production in Canada. In some cases, forest companies have purchased forest land from the provinces at very low cost eliminating the stumpage fee and costing only the amortized original purchase price for the land but this practice ties up capital in land lowering the rate of return.

2. The overall forest mass in Canada is huge and spreads from coast to coast compared with the proximity of population centres and urban development. This means an almost inexhaustible supply of raw renewable forests. A mitigating factor is the necessity to transport cut logs to mills and the long distances to markets. This problem was first overcome using rivers as transportation routes. As cutting moved farther away from rivers, public infrastructure such as logging roads have been built from which private companies benefit.

3. The availability of hydro-electricity to power mills in almost all forest regions of Canada. Private forest companies have greatly benefitted from the use of water power at costs near or below the price of production of relatively inexpensive hydro-electricity.

4. For much of the time, the value of Canada's currency has been lower than the U.S. dollar. This means lumber or pulp and paper sales into the U.S. for U.S. dollars generate a higher return in Canadian dollars. With the recent lowering of the value of the U.S. dollar relative to the Canadian dollar this advantage is lost.

5. The U.S.-based softwood lumber industry during periods of non-crisis in the construction industry cannot meet the apparent demand requiring imports mainly from Canada.

A mitigating factor in the price of production for Canadian production compared with U.S. production is the extra value created while transporting wood products to markets in the U.S. The greater the distance to markets, the greater the price of production putting upward pressure on the market price of Canadian wood products in the U.S.

The 2006 Softwood Lumber Agreement and Its Extension

The original agreement and its extension are a direct interference in the sovereign affairs of Canada. It dictates how Canadians must organize their lumber industry fashioning penalties for non-compliance. The agreement violates a modern definition of trade, which should establish equilibrium in trading relations between sovereign nations based on mutual benefit and non-interference in the sovereign affairs of both countries. The agreement exposes NAFTA as a farce and tool of the most powerful North American monopolies. NAFTA is deemed to be in effect when it serves the most powerful monopolies and not to be in effect when it does not serve the most powerful monopolies directly concerned.

The agreement and its extension is essentially one amongst the largest lumber monopolies in the U.S. and Canada and their respective political representatives. It protects their private interests, and in this sense as a political agreement, politicizes private interests and depoliticizes public interests in both the U.S. and Canada.

The forces of monopoly right in the U.S. that organized to impose the agreement and its extension present small and medium-sized U.S. companies and forest workers as the victim of "unfair" Canadian competition. The monopolies consistently frame most trade problems in this way as a fight between competing peoples and the mostly private interests of different countries. By doing so, the monopolies hope to blind the working class to the necessity for economic renewal and a new human-centred direction for the economy based on the recognition of its rights. Such is the case in the steel industry where the steel monopolies and their allies have made Chinese steel imports the main problem in the steel industry rather than the necessity of its renewal and new direction. The monopolies divert attention away from the reality of economic problems arising from the system itself, for example, as the forest, steel and other industries become more mechanized and require fewer workers but more capital investment, a falling rate of return on invested capital is inevitable. The Workers' Opposition must force the monopolies to accept a falling rate of return as normal under the capitalist system and deal with it through economic renewal and a new human-centred direction for the economy rather than attacking the claims of the working class and other destructive practices such as manipulating prices.

The agreement has not solved the crisis in the forest industry, far from it. The situation has become much worse since 2006 in both Canada and the U.S. The extent of the crisis in Canada is expressed in statistics, which are found in the reference material. The number of livelihoods and gross output of manufactured lumber in both Canada and the U.S. are severely depressed. The only rebound has been in sales to Asia but this consists mainly of raw logs, which denies the work-time and added-value of transforming the raw logs into more advanced use-value.

Stumpage Fees or Ground Rent

The 2006 agreement attempts to put an end to lumber from Canada being sold in the U.S. for market prices below those demanded by the largest forest monopolies many of which operate both in the U.S. and Canada. The lower comparative price of production for Canadian softwood lumber arises from those five factors discussed above minus the issue of a lower valued Canadian dollar and transportation.

The vast forests in Canada are not privately owned but mostly under the control of the Crown. It has not been in the interests of Canadian capitalism to have forest land owned privately. Private ownership of the vast forest regions would tie up too much capital and lower the rate of return on investment. Resolute Forest Products (formerly AbitibiBowater) recently sold back to the Nova Scotia provincial government its private ownership of large tracts of land to free up capital for other use. The sheer size of Canada compared with the population dictates public ownership of land as a necessity even under capitalism. Private ownership of land has long been argued even by capital-centred economists as a negative parasitic factor in development, as it siphons off added-value as ground rent rather than leaving it as industrial capital or government revenue.

The situation in the U.S. is different in that most forest lands are privately owned and controlled, and forest companies must hand over a claim for ground rent to landlords thus reducing the return on invested forest industrial capital. In Canada, the right to cut trees on Crown land is bought with a stumpage fee paid to the provincial government. In the U.S., the right to cut trees is mostly bought through an auction run by landowners who sell the cutting rights to the highest bidder. Canadian provincial stumpage fees are traditionally far less than U.S. private cutting rights. Because of the lower provincial claim on lumber added-value compared with the ground rent demanded by U.S. private landowners, this becomes a factor in Canadian lumber having a lower price of production and the possibility of a lower market price than U.S. lumber (or higher rate of return if the U.S. market price remains nearer its price of production). Although the U.S.-owned forest monopolies operating in Canada enjoy the lower government claim on added-value, they do not want this lower claim reducing the market price in the U.S. Many small and medium-sized Canadian lumber companies used to sell a significant amount of softwood lumber in the U.S. either at a lower market price than U.S. companies or at a similar price resulting in a better rate of return on investment because of the generally lower price of production in Canada. (Of course, this broad generalization does not take into account differences in production technique and other factors that exist among Canadian logging operations and mills that would affect individual prices of production.)

The Scourge of Ground Rent

A solution to this problem of ground rent on U.S. forest lands would be to nationalize the land in the public interest. A public forest management body could be organized to oversee the well-being of the forest ecology and collect stumpage fees that could be reinvested back into the forest land and local economies. Unlike ground rent that landlords seize for their private interests, stumpage fees are government claims on added-value created by forest workers logging and milling trees. These claims can be used for the public good funding social programs and investments in social programs, public services, infrastructure and even public enterprise such as public or cooperative mills or others to diversify the local economies. In sharp contrast, ground rent is extremely parasitic. Ground rent represents absolute monopoly right over a portion of Mother Earth, i.e., no one has the right to use this portion of earth unless ground rent is handed over to the owner. (This does not refer to land used for the personal use of the owner.) Pay the landlord or this part of earth lies out of bounds. In most cases, especially when large investors are concerned, such as the owners of forest tracts in the U.S., the ground rent is taken out of the region and economy, especially the local economy. Ground rent for centuries in most countries has been a drag on development in particular in the modernization and application of science to agriculture and the assuring of food security. In developed capitalist economies, ground rent blocks industrial development and progress by siphoning away revenue. For example, if tenant farmers make improvements to the land through clearing, soil improvement or constructing buildings, the landlord, upon expiry of the lease can raise the rent reflecting the improved value of the land and property on it thus depriving the tenant farmer of income and incentive to make improvements.

Another solution could be through direct public trade negotiations to buy a certain amount of Canadian lumber at an agreed price that generates a mutual benefit for both countries but the forest monopolies want everything decided in their private interests and manipulate the situation in their favour on a North American wide basis.

The lumber monopolies spent millions of dollars lobbying Congress and financing legal challenges to Canadian softwood lumber sales in the U.S. to politicize their private interests. The Canadian government backgrounder to the new extension says, "The months and years before the [2006] agreement were marked by long and costly legal disputes between Canadian companies and the U.S. government -- over 25 separate cases that took a devastating financial toll on Canada's lumber industry."

Even though the sale of Canadian lumber at lower prices, a result of lower stumpage fees and other factors, is legal under existing trade agreements, the U.S. government unilaterally declared it was "unfair" and tacked huge punitive penalties on Canadian lumber entering the U.S. The U.S. government would then distribute these fines to various U.S. forest monopolies supposedly to cover their legal bills. At the time of the 2006 agreement, over $5 billion in fines were in play. The U.S. government in the fashion of a bribe agreed to return most of the money to Canada with the approval of the deal. This return of money, some of which went to U.S.-owned and controlled lumber companies operating in Canada, was indeed a bribe of sorts to Canadian companies so they would not object too strongly to the lumber agreement and content themselves with the prospect of an end to costly litigation, fines and limited access to the U.S. market.

A key in the agreement for the monopolies is the floor price for softwood lumber and Canadian regional export quotas. If the market price in the U.S. falls below the floor price, Canadian companies must pay an export tax. Since 2006, Canadian exporters have paid over $1.3 billion in export charges because the market price has consistently been below the agreed floor price. The tacked on 15 per cent is an example of monopoly manipulation of prices using the U.S. and Canadian states as enforcers. If exports from a designated Canadian region exceed the quota, then the region is forced to reduce its flow of product.

This agreement and its extension have not solved the economic crisis in the forest softwood lumber sector nor has it established any sort of equilibrium in U.S./Canada trade of wood commodities based on mutual benefit. Instead, it has established a direct dictatorship of the largest North American forest monopolies over forestry workers and their communities in the U.S. and Canada, blocking them from using forest added-value to solve problems, overcome the crisis and develop an all-sided diverse socialized economy let alone sort out difficulties in international trade.

The monopolies are using the agreement and economic crisis to consolidate and expand their empires as they gobble up distressed smaller companies or stand by and watch them go bankrupt and close. The monopolies have also used the crisis as a means to extort concessions from both the working class and governments. They are awaiting a rebound in U.S. construction whereupon the forest monopolies will enrich themselves even more from a position of dominance.

More on the TPP

For over a year, the Canadian mass media have speculated that the softwood lumber agreement was becoming irrelevant because of the large increase of Canadian (and U.S.) softwood lumber sales to China and other Asian destinations. The increased sales have buoyed the price somewhat and given forest producers an alternative to the U.S. market. Many commentators were saying that the best policy would be to let the protectionist agreement die in 2013 and revert to NAFTA as they see growth ahead in the Asian market and an eventual rebound in the U.S. housing market as the country's population continues to increase. The U.S. softwood lumber sector would not be able to meet demand coming from a growing Asian market and a more stable U.S. construction sector.

The announcement of the extension leads some to believe that another element must be involved. Could it be a U.S. promise to support the Harper government's wish to join the U.S.-led discussions surrounding the TPP that is aimed at isolating China economically, diplomatically and militarily?

In announcing the extension, Canadian trade minister Ed Fast spoke of the Harper government's "willing[ness] to include softwood lumber in the Trans-Pacific Partnership negotiations."

At the press conference iPolitics reports, "Fast was asked about a recent letter sent by the U.S. Lumber Coalition to the Office of the United States Trade Representative. In that letter, the coalition suggested Canadian participation in the [TPP] negotiations could present a great opportunity to address the [softwood lumber] dispute's remaining irritants."

Fast replied, "The Trans-Pacific Partnership negotiations are exactly the table at which these kinds of issues can and should be discussed. We've made that point with current TPP partners. Canada would bring a very high level of ambition to the negotiating table."

If Fast truly believed the "TPP negotiations are exactly the table at which these kinds of issues can and should be discussed," why the rush to extend the softwood lumber agreement?

iPolitics says, "Fast sought to highlight the support Canada's participation in the [TPP] talks found amongst groups ranging from industry lobbyists to environmental groups during U.S. consultations on the trade negotiations.

"'Now that the consultation process in the United States has closed, the submissions that were actually made, well over 90 per cent of those submissions, supported Canada being in the Trans-Pacific Partnership,' Fast said."

So, to gain entry into the anti-China TPP axis, which Harper deems important even though it may mean sacrificing Canada's chicken, egg and dairy farmers, the government first had to agree to extend the softwood lumber agreement, is that it Mr. Fast?

U.S. Lumber Coalition

The U.S. Lumber Coalition of forest monopolies in assessing the extension of the softwood lumber agreement expressed U.S. imperialist arrogance towards Canada. The coalition admonished Canada that it had only "one last chance to shape up" and follow President Obama's demand to "play by the rules" set by U.S. imperialism.

In a press release the coalition says, "The Softwood Lumber Agreement is a compromise agreement that is not ideal from the U.S. industry's perspective. Nevertheless, we support extension of this agreement with the expectation that Canada will improve its record of compliance."

Steve Swanson, Chairman of the Coalition said, "If the U.S. industry continues to find itself having to seek multiple arbitrations to address Canada's unwillingness to adhere to its commitments under this trade agreement, then U.S. industry has to seriously consider whether it would not be better off exercising its rights under U.S. trade laws."

Imperialist arrogance is not the way to approach international trade. Equilibrium can be established even by opposing parties when negotiations are held recognizing the rights of both parties to mutual benefit and the principal of non-interference in each other's sovereign affairs. The major obstacle is the politicizing of private interests, in this case represented by the U.S. Lumber Coalition of monopolies. The forest monopolies on both sides of the border dictate trading relations with the most powerful deciding the issue. Without restricting this politicization of private interests and in opposition politicizing public interests little headway can be made in sorting out trading relations. For Canadians this begins at home with a direct demand that trading relations be state to state and governed in the public interest, upholding the principal of mutual benefit and respect and non-interference in the internal affairs of the trading partners.

New Direction for the Economy

The issue of the softwood lumber agreement and its renewal is bound up with who controls the forest industry. The actual producers of wood products must be in the forefront of controlling and deciding the direction of the forest industry. Forest workers must have a deciding say and influence over economic renewal and a new direction for the forest economy. The industry cannot be dependent on trade with the United States where private forest interests are politicized and imperialist. Unless workers and their communities in the Canadian forest industry, including softwood lumber, pulp and paper and other sectors present a united public front no headway can be made with the forest monopolies in Canada, Harper and the Quebec and provincial governments, and the U.S. politicized private interests such as the Lumber Coalition.

For Canadians, this situation points out the importance of a new human-centred direction for the economy including public control of wholesale trade in forest products such as a Wood Products Marketing Board (WPMB) that would handle all sales, exports and imports of wood commodities, except those from First Nations who want to control directly their own trading relations. The WPMB could have authority to investigate and determine prices of production and a suitable market price for all wood products. With this information, the WPMB would present an equitable transparent arrangement of mutual benefit with those countries that want to buy Canadian wood products.

On the important front of the viability of forest communities, the government must claim a sufficient portion of forest added-value to be reinvested back into the forest communities as productive investment in enterprise to diversify the economic base especially manufacturing, and as investment in social programs and public services to enrich the lives of those in the forest communities, guarantee their rights and meet the general interests of society.

The government must claim a sufficient portion of forest added-value to develop and sustain a University of Forest Management, Wood Fibre and Safe Practices with campuses in all major forest regions in particular encouraging forest workers and others in the forest regions to become students to advance science in the forest sector and other fields, and train a new generation of workers with a grasp of the highest technique and science and their application in the forest industry for the betterment of all.

The government must immediately reach agreements with all First Nations in the forest regions that satisfy their hereditary rights.

The Workers' Opposition has the social responsibility to hold all governments to account to renew the economy and chart a new human-centred direction for the forest economy. The Workers' Opposition holds high the banner of a diverse human-centred economy with manufacturing as the base.

Whose Economy? Our Economy!
Who Controls? We Control!
Who Decides? We Decide!

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Reference Material on the Softwood Lumber Industry

Information from Industry Canada and Statistics Canada

Comparison of U.S. softwood lumber consumption and price at the beginning of the lumber agreement 2006 and following the economic crisis beginning in 2008. Note that consumption has fallen almost by half while price has dropped by much less from $299 to $259 per thousand board feet:

* Calculated in accordance with the provisions of Annex 7A of the Softwood Lumber Agreement. The Prevailing Monthly Price is the most recent 4 week average of the weekly Framing Lumber Composite Price published by Random Lengths Publications Inc, Oregon, U.S.A, available 21 days before the beginning of the month to which it applies. Other conditions that apply can be found in the relevant section of the Agreement.

** Calculated in accordance with the provisions of Annex 7D of the Softwood Lumber Agreement. Expected U.S. Consumption is the average monthly apparent U.S. consumption calculated over a 12 month period ending three months prior to the month in which Expected U.S. Consumption applies, multiplied by a seasonal adjustment factor. Other conditions that apply can be found in the relevant section of the Agreement.

SLA Article VII, Detailing Floor Prices,
Below Which Punitive Export Duties Are Applied

"Export charge and export charge plus volume restraint

1. By the Effective Date, each Region shall elect to have Canada apply the measures in either Option A or Option B to exports of Softwood Lumber Products to the United States from the Region. Option A is an Export Charge collected by Canada, the rate of which varies based on the Prevailing Monthly Price, as provided in the table in paragraph

2. Option B is an Export Charge with a volume restraint, where both the rate of the Export Charge and the applicable volume restraint vary based on the Prevailing Monthly Price, also as provided in the table in paragraph 2. The Export Charge shall be levied on the Export Price. The Prevailing Monthly Price is defined in Annex 7A.

2. Subject to paragraphs 3 through 9, the Export Measures that Canada applies under
Option A and Option B shall be based on the following table:

Prevailing Monthly
Option A — Export Charge
(Expressed as a % of
Export Price)
Option B — Export Charge
(Expressed as a % of Export
Price) with Volume Restraint 
Over $US 355
No Export Charge
No Export Charge and no volume restraint
$US 336-355
2.5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 34% of Expected U.S. Consumption for the month
$US 316-335
3% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 32% of Expected U.S. Consumption for the month
$US 315 or under
5% Export Charge + maximum volume that can be exported to the United States cannot exceed the Region's share of 30% of Expected U.S. Consumption for the month


SLA Clauses Permitting Interference in Canadian Political Affairs and
Economic Management

"2. If a Region satisfies the substantive criteria and procedures for exemption developed and set forth in an addendum referred to in paragraph 1, Softwood Lumber Products from that Region shall be exempted from the Export Measures in Articles VII through IX and Article X(2) and thereafter subparagraphs (a) and (b) shall apply with respect to that Region.

(a) No public authority of Canada shall:

(i) modify the provincial timber pricing or forest management system as it existed on the date of the exemption. or change its administration in a manner that decreases the extent to which the system is market-determined. For purposes of this Article, a provincial timber pricing or forest management system includes, without limitation. the data. variables, and procedures that it employs, or

(ii) provide any grants or other benefits that offset, in whole or in part, the basis for the exemption under an addendum pursuant to paragraph 1. A grant or benefit shall be considered to offset. in whole or in part, the basis for the exemption. if it is provided, de facto or de jure, to producers or exporters of Softwood Lumber Products in the Region. This clause shall not apply to grants or benefits that satisfy the criteria in Article XVII(2)(a), (b), (c), (d) or (e). For purposes of determining whether a grant or benefit meets the criteria of Article XVII(2)(a), a measure shall not be considered to offset the basis for the exemption if it existed on the date on which the Region was exempted from the Export Measures pursuant to paragraph 1;


(i) If, in any Quarter, exports of Softwood Lumber Products from the Region to the United States exceed the sum of: (I) the total Regional production of those products during the Quarter; and (2) the total Regional inventory of those products during the Quarter. Canada shall impose retroactively on the exporters responsible for any such excess a charge equal to SC X, where X is determined according to the following formula:

X (SC 200 multiplied by MBE export volume in excess of the sum of the exporter's total Regional production during the Quarter and the exporter's total Regional inventory during the Quarter),

(ii) Canada shall provide to the United States within 75 days after the end of each Quarter data on: (1) the total Regional production of Softwood Lumber Products during the Quarter; (2) the total Regional inventory of Softwood Lumber Products produced from timber originating in the Region during the Quarter; and (3) the volume of Softwood lumber Products exported from the Region to the United States during the Quarter, and [...]"

Softwood Lumber Exports to the U.S. (Industry Canada 2005)

Softwood lumber is one of Canada's largest exports to the United States, with 21.5 billion board feet of lumber shipped in 2005 alone. Those exports were worth $8.5 billion and they continue to comprise an important element of the largest trading relationship in the world.

This trade matters to both Canadians and Americans. Canada's forestry sector employs approximately 280,000 Canadians, and roughly 300 communities are dependent upon the forestry sector. U.S. lumber producers cannot meet domestic demand for softwood lumber: consequently, Canada now supplies over a third of the United States' consumption of this product. The U.S. housing and other industries, which employ over 7 million American workers, have come to rely upon unfettered access to this quality product.

Softwood Lumber Exports to the U.S. (Industry Canada 2012)

Softwood lumber exports to the U.S. totalled $2.6 billion in the first 11 months of 2011. Exports from B.C. accounted for almost 58 percent of that total; from Quebec, 16 percent; from New Brunswick and Alberta, 9 percent each; and from Ontario almost 6 percent. The Canadian wood products industry and its supporting industries employed 164,000 people in 2010; 33 percent of these were in BC, and 28 percent in Quebec. Canadian production in the first 10 months of 2011 was an estimated 19 billion board feet.

Data from Forest Industry Crisis in 2000 Compared to 2009

Employment by Type of Employee: 2000-2009*
Wood Product Manufacturing (NAICS 321)

Type of Employee

Number of

% of Total


% Change





*Prior to 2004, data covers incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000.

**Compound Annual Growth Rate

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 1998 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2008.

























The total number of employees in the Wood Product Manufacturing subsector decreased from 133,788 workers in 2000 to 86,211 workers in 2009, an average annual decrease of 4.3% over this time span. There was a decrease of 14.3% in employment between 2008 and 2009.

By comparison, total employment in the Manufacturing sector showed a decrease of 2.8% per year over the 2000-2009 period and a decrease of 9.7% between 2008 and 2009.

Breaking employment into its two principal components, the number of production employees in the Wood Product Manufacturing subsector fell from 117,974 workers in 2000 to 71,103 in 2009, a decrease of 4.9% per year on average. There was a decrease of 14.4% [between 2008 and 2009].

The number of administrative employees in the Wood Product Manufacturing subsector decreased from 15,814 workers in 2000 to 15,108 in 2009, an average decrease of 0.5% per year. There was a decrease of 13.7% over the course of [2008 to 2009].

Average Annual Salaries by Type of Employee: 2000-2009*
Wood Product Manufacturing (NAICS 321)

Type of Employee

Value in $


% Change





*Prior to 2004, data covers incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000.

**Compound Annual Growth Rate

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 2000 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2009.














All Employees






The average annual salaries for employees of the Wood Product Manufacturing subsector rose from $38,203 in 2000 to $43,050 in 2009, or at an average rate of 1.2% per year. There was a decrease of 0.6% over the 2008-2009 period.

(Divides the total wages paid by the number of employees, includes overtime)

Total Salaries and Wages Paid by Type of Employee

In the Wood Product Manufacturing subsector, total salaries and wages paid to employees have decreased from $5.1 billion in 2000 to $3.7 billion in 2009, an average annual decrease of 3.1%.

Between 2008 and 2009, salaries and wages decreased by 14.8%.

Initially we examine the total salaries and wages paid, including a breakdown of the amounts paid to production workers and administrative workers.

Wages and Salaries Paid by Type of Employee: 2000-2009*
Wood Product Manufacturing (NAICS 321)

Type of Employee

Value in
$ billions

% of Total


% Change





*Prior to 2004, data covers incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000.

**Compound Annual Growth Rate.

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 2000 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2009.























When broken down by type of employee, in the Wood Product Manufacturing subsector production worker wages decreased from $4.2 billion in 2000 to $2.8 billion in 2009 or at an average rate of 4.0% per year.

Between 2008 and 2009 production worker wages decreased by 15.3%.

The salaries and wages of administrative workers, on the other hand, grew from $878.2 million to $908.6 million over the 2000-2009 period, yielding an average annual increase of 0.3%.

Between 2008 and 2009, these salaries and wages decreased by 13.1%.

In comparison, when looking at the Manufacturing sector (as a whole) over the years since 2000, salaries and wages paid to production workers decreased by an average of 2.1% per year, whereas those paid to administrative workers increased by 1.9%.

Over the course of the most recent year compensation for production workers decreased by 10.9% while salaries and wages for administrative workers decreased by 8.7%.

Manufacturing Revenues

Initially we examine production in Canada as measured by the total value of manufacturing revenues of the industry, which is the value of goods produced by its establishments, including custom and repair work, as well as goods made under contract. They are valued in current Canadian dollars.

Value of Production: 2000-2009

Manufacturing Revenues and Manufacturing Value-Added
Wood Product Manufacturing

Manufacturing revenues for this subsector decreased from $31.7 billion in 2000 to $18.3 billion in 2009, or at an average compound annual rate of 5.3% per year.

Between 2008 and 2009, manufacturing revenues decreased by 18.6%.

Manufacturing value-added for the subsector decreased from $12.5 billion in 2000 to $6.8 billion in 2009, or at an average annual rate of 5.8%.

Between 2008 and 2009, value-added decreased by 16.3%.

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 2000 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2009.

 Value of Manufacturing Production: 2000-2009*
Manufacturing Revenues and Manufacturing Value-Added
Wood Product Manufacturing (NAICS 321)

Measure of Production

Value in
$ billions


% Change





*Prior to 2004, data covers incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000.

**Compound Annual Growth Rate

Source: Statistics Canada, special tabulation, unpublished data, Annual Survey of Manufactures, 2000 to 2003; Annual Survey of Manufactures and Logging, 2004 to 2009.


Manufacturing Shipments






Manufacturing Value-Added






Crisis in Quebec Forest Industry (Le Devoir, Excerpt)

Since 2005, more than 21,000 jobs have been lost, 15,000 of these permanently. While the annoucements of factory closures and job losses continue practically every week, it is the duty of government to support the some 250 communities whose economies rely solely on exploiting the forestry resources.

There are some 100,000 jobs [in forestry]. As you know, it makes up 12 per cent of the gross domestic product in the manufacturing sector and more than 10 per cent of exports.

(Translated from original French by TML)

Harper Government Secures Access to
U.S. Market for Softwood Lumber Until 2015

- Government of Canada Website, January 23, 2012 (Excerpts) -

"The extension of the Softwood Lumber Agreement is great news for Canadian lumber workers and their families," said Minister [of International Trade and Minister for the Asia-Pacific Gateway Ed] Fast. "This extension agreement will bring much-needed stability and predictability to the lumber industry. By extending the agreement, we are sending a clear message that our government is committed to securing predictable access to the U.S. market and strengthening the financial security of Canadians."

Canada and the United States have negotiated an agreement to extend it without modification and will consult on whether a further extension would be appropriate before the new expiration date in 2015. Canada has consulted widely with provincial and industry stakeholders, and they strongly support the extension to 2015.

"With one in five Canadian jobs generated by trade, our government is strongly committed to helping the forestry sector, and other sectors of our economy, expand and succeed in markets around the world," said Minister Fast. "That's why we'll continue standing up for our exporters in markets around the world, including the United States -- fighting for their interests and opening doors to new opportunities that will create jobs and prosperity in communities across Canada."

The agreement to extend the Softwood Lumber Agreement constitutes a treaty under international law. Consistent with Government of Canada policy, the treaty will be tabled in the House of Commons for a period of 21 sitting days. It will come into force once Canada and the United States have notified each other that their respective ratification processes have been completed.

Conservative Government's Extension of
Softwood Lumber Agreement Adds Insult to Injury
United Steelworkers, Press Release, January 24, 2012 -

The Conservative government's extension of the Canada-US Softwood Lumber Agreement is the latest betrayal in a long list of actions that have damaged the Canadian forest industry says United Steelworkers (USW) Canadian Director Ken Neumann.

"Extending the softwood lumber agreement, while failing to even attempt to address many of the problems it has worsened, or even consult with forestry workers who have been impacted by job loss in the sector, adds insult to injury to an industry that has been hard hit in recent years," says Neumann.

"According to the Forest Sector Council, the Canadian Forest Industry has lost about 100,000 jobs between 2004 and 2010. Already faced with a lack of capital investment in operations, sawmills in British Columbia and across Canada have seen their competitive advantage chipped away by the government's softwood lumber agreement," added Steve Hunt, USW District Director for Western Canada.

Since being signed in 2006, the agreement has imposed a 15% border tax on Canadian companies exporting lumber to the United States. In addition, the agreement's so-called "surge mechanism" discourages operational investment by penalizing all lumber producers in a region that exceeds its U.S. bound lumber quota, thereby encouraging productivity-enhancing investment in non-Canadian sawmills.

"The decline of the forest industry across this country has devastated communities, hurt families and led to thousands of job losses. By extending an agreement that makes an already challenging situation even worse, the Conservative government has demonstrated where their priorities lie - and it's not with Canadian workers or communities," Neumann says.

Obama Ready to Sign Extension on Softwood
- John Ibbitson, Globe and Mail, January 22, 2012
(Excerpts highlighting connection with TPP) -

[...R]elations between the two countries will face a bigger test in the months to come, as Canada looks to the United States for help in getting this country a seat at what has turned into the world's most important trade table: the Trans-Pacific Partnership (TPP).

Before the year is out, nine Pacific countries -- including the United States, Chile, Australia and Malaysia -- are expected to conclude a sweeping free-trade agreement that will open the economies of all to all. Negotiations have gone so well, and the implications for the agreement are so far-reaching, that Japan and Mexico now also want in.

So does Canada, but the Harper government foolishly missed an earlier opportunity to join the discussions by insisting that supply management, which protects Canadian dairy and poultry, be kept off the table. The other countries showed us the door.

Now, belatedly, Canada had decided it is willing to join the talks without preconditions. The feeling in Ottawa is that the final agreement will no doubt protect American and Japanese (if they join) farmers, and Canadian farmers will get an exemption too.

Capital-Centred Reaction in the U.S. to Extension

Timber Industry Welcomes Trade Extension, With a Disclaimer
- Flathead Beacon (Montana), February 1, 2012 -

After Canada and the United States announced a two-year extension to their Softwood Lumber Agreement last week, the news was greeted warmly by U.S. lawmakers and lumber officials who consider the accord vital to the health of the country's timber industry.

U.S. politicians and lumber industry representatives have long complained that Canadian provincial governments in effect subsidize their lumber companies by charging low fees for the right to harvest timber -- also called stumpage fees -- on public land, while American producers must competitively bid on the open market and pay far higher prices. Timber market woes in recent years have added another wrinkle to the long-standing dispute.

The U.S. Lumber Coalition claims that Canada's "unfair trade practices" have led to hundreds of American lumber mill closures, thousands of job losses and suppressed markets in the past. Numerous disputes have landed in court.

The agreement, originally enacted in 2006 and now extended until 2015, seeks to address those concerns and foster stable markets for both Canada and the U.S. The agreement was set to expire in October 2013.

U.S. Trade Representative Ron Kirk and Canadian International Trade Minister Ed Fast announced the extension on Jan. 23.

Chuck Roady, general manager at F.H. Stoltze Land and Lumber Co. in Columbia Falls, called the extension "extremely important," explaining that the two countries have "totally different systems" and the agreement helps to ensure that producers and markets are dealing with "apples to apples instead of apples to oranges."

"Canadians don't bid on stumpage fees, so they can sell into markets for dramatically less money," Roady said. "With this (agreement), the tariffs kick in and it levels the playing field."

But Roady offered an often-repeated caveat: "It works as long as both sides follow it and as long as it's enforced. Any of these agreements are only as good as the people living up to them and the people enforcing them. All those concerns are still there."

After the extension was announced, Montana Democratic Sen. Max Baucus hailed the accord as "an effective tool in our fight to make sure Montana lumber workers can compete on a level playing field with Canada," but also called for strict administration of the rules.

"That's why I've pushed our U.S. Trade Representative to aggressively go after violations -- and we've gotten some good results for Montana timber workers so far," Baucus said last week. "I'll keep fighting to make sure the extended Softwood Lumber Agreement is strongly enforced."

Roady and Tom Ray, vice president of northwest resource and manufacturing for Plum Creek Timber Co., both said Baucus and fellow Democrat Sen. Jon Tester, along with Republican Rep. Denny Rehberg, have been important advocates of the trade agreement. Like Baucus, Tester and Rehberg released statements last week praising the extension.

"While I join Montana's struggling timber industry in celebrating the extension of this agreement with Canada, I'm also hopeful that everyone will start living up to their end of the bargain in good faith," Rehberg said, adding: "The agreement is a good one, as it is currently written. We just need to do a better job with enforcement."

The U.S. Lumber Coalition, an alliance of large and small lumber producers from around the country, maintains that Canadian companies have skirted the agreement's provisions in the past, to the detriment of American producers. Coalition officials released a statement following President Obama's state of the union address, commending the president for his commitment to trade rules enforcement.

The alliance highlighted Obama's statements that he "would not stand by when our competitors don't play by the rules" and that it's "not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidized."

"The U.S. lumber industry proves every day that what President Obama said is true -- that America's hardworking men and women are among the most productive on the planet," said Steve Swanson, the coalition's chairman and president of the Oregon-based Swanson Group.

"The U.S. lumber industry can compete against any foreign industry on a level playing field," Swanson added. "But we cannot compete against massive foreign subsidies that are distorting open and competitive markets."

In an interview, U.S. Lumber Coalition Executive Director Zoltan van Heyningen said an improved housing market would help alleviate some compliance concerns, because he believes Canadian provinces "feel pressured" to help local timber companies in times of economic uncertainty and are in the position to do so, given the nature of the government-influenced Canadian system compared to the U.S. open bidding system.

"It's not that someone sits down and says, 'Let's see how we can violate it today,'" van Heyningen said. "Our hope is that as the market recovers there will be fewer incidences where the provinces feel the need to run amuck of the agreement."

Van Heyningen said with the agreement, if properly followed and enforced, his coalition can spend time advocating on behalf of the U.S. lumber industry outside of the courtroom, though it must always be prepared for the possibility of litigation.

"As long as the agreement is in place, no, we're not actively litigating," he said, "although we spend a fair amount of time making sure we can pull that trigger when we need to."

In one ongoing dispute, the U.S. is alleging that British Columbia violated the agreement by under-pricing pine beetle-damaged timber and is seeking damages worth nearly $500 million. The case is expected to be heard in an international arbitration court soon.

It remains to be seen what will happen when the agreement again approaches expiration in 2015, but until then Montana lumber officials are relieved to have the accord in place during a time of continued market woes. Dean Sturz, sales manager at Stoltze Land and Lumber Co., said not having the Softwood Lumber Agreement "would kill us."

"There would be way more mills in the U.S. closed if there wasn't that agreement," he said.

Wikipedia: "Canada-United States Softwood Lumber Dispute" (Excerpts)

The Canada-United States softwood lumber dispute is one of the most significant and enduring trade disputes in modern history. The dispute has had its biggest effect on British Columbia, the major Canadian exporter of softwood lumber to the United States.

The heart of the dispute is the claim that the Canadian lumber industry is unfairly subsidized by the federal and provincial governments. Specifically, most timber in Canada is owned by provincial governments. The price charged to harvest the timber (the "stumpage fee") is set administratively rather than through a competitive auction, as is often the practice in the United States. The United States claims that the provision of government timber at below market prices constitutes an unfair subsidy.

In April 2006, the United States and Canada announced that they had reached a tentative settlement to end the current dispute. Under the preliminary terms, the United States would lift duties provided lumber prices continue to stay above a certain range. Below the specified range, a mixed export tax/quota regime would be implemented on imports of Canadian lumber.

Historical facts of the dispute: U.S. refuses to abide by NAFTA ruling
(2003-05 period just prior to the softwood lumber agreement)

Another NAFTA Chapter 19 panel reviewed the determination made by the [U.S.] International Trade Commission that the U.S. lumber industry was under a threat of injury because of Canadian imports.... The NAFTA Chapter 19 panel found the International Trade Commission's determination invalid. In addition, the panel took the controversial decision of refusing to allow the International Trade Commission to reopen the administrative record and in fact ordered the International Trade Commission to issue a negative determination after it reached another affirmative determination based on the existing record. Unlike the Lumber III panel, however, this panel's decision was unanimous. However, the U.S. government challenged its decision before an extraordinary challenge committee.

In the meantime, because of an adverse WTO decision, the international trade commission reopened the administrative record pursuant to a special provision in U.S. law, the so-called Section 129 provision, and issued a new affirmative threat of injury determination in December 2004. This new determination allowed the countervailing and antidumping duty tariffs to remain in place.

On August 10, 2005, the NAFTA extraordinary challenge committee unanimously held against the United States finding that NAFTA panel's decision were not sufficiently invalid to require vacatur or remand under the standards of NAFTA.

On August 15, 2005, the U.S. said it would not abide by the NAFTA decision because the Section 129 determination superseded the decision being reviewed by the NAFTA panel. This announcement prompted former Finance Minister Ralph Goodale to say that [International Trade Minister Jim] Peterson is considering Canada's options, which could include litigation or trade sanctions....

On August 26, 2005, Canadian federal cabinet ministers remained defiant and unwavered in response to remarks by U.S. Ambassador David Wilkins comments to stop the "emotional tirades" in the softwood lumber dispute. Canadian International Trade Minister Jim Peterson said Washington should not confuse emotion with commitment and determination by Canadians to ensure the NAFTA is respected. Prime Minister Paul Martin used strong rhetoric that the dispute was undermining NAFTA and hinted that Canada can explore trade alternatives such as China. "Friends live up to their agreements", Martin said in calling on the United States to respect a ruling under the North American Free Trade Agreement on Canadian exports of softwood lumber.

In September 2005, a U.S. lumber industry association filed suit in the D.C. Court of Appeals challenging the constitutionality of the NAFTA Chapter 19 dispute settlement system....

In March 2006, a NAFTA panel ruled in Canada's favour, finding that the subsidy to the Canadian lumber industry was de minimis, i.e., a subsidy of less than one percent. Under U.S. trade remedy law, countervailing duty tariffs are not imposed for de minimis subsidies.

A tentative deal was reached in July, in which Canada got $4 billion of the $5.3 billion it lost because of the penalties with no additional tariffs to be imposed. Initially, there was a large opposition by several lumber companies from several provinces. However, during the following weeks the support, due to the possibility of no better scenarios, had increased and the Harper government was confident that there would be enough support for the deal so it would not be jeopardized. The government did not specify how many companies endorsed the deal nor did they implement a minimum for the deal to be salvaged.

Elliott Feldman, an international and economic law specialist from the firm Baker & Hostetler in Washington, D.C. and a former director of the Canadian-American Business Council, criticized the deal as "one-sided" and a "bad deal for Canada".

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