Value subtracted

The Tyee discusses the effect of the softwood lumber capitulation on Canada's attempts to add value to its lumber before exporting:

Russ Cameron, president of the Independent Lumber Remanufacturers Association, said that of the 120 member companies in his association, 76 filed legal cases at the Court of International Trade. Of them, 24 have withdrawn, while 52 had not.

"And of those 24, there's probably about a dozen that have done that willingly," said Cameron, who claimed the government put pressure on firms to get on board. "The other guys [withdrew legal claims] because they were a little worried with all these phone calls from government."

Cameron said the duties have been especially hard on Canadian makers of products such as heavy timbers, flooring, shakes and shingles.

Because such value-added products are more labour-intensive and expensive to create, they sell at a higher price. A higher price meant higher duties at the border, and after years of trade wrangling, many remanufacturers are in financial dire straits.

Cameron doesn't see value-added producers faring much better under the Softwood Lumber Agreement.

"This deal basically institutionalizes this tax on us," he said...

"The more value you add in Canada, the higher the penalty for doing so," said Cameron...

How those business models will adjust to the new rules is anybody's guess, but Tate of the United Steelworkers said that the bigger companies are "looking to recoup [the costs of the Softwood Lumber Agreement] on the backs of the workers and the communities."

"We've already had meetings with employers, who are telling us that when this tax comes in...we're going to have to tighten our belts," he said.

He's concerned the deal could clear the way for a lot more exporting of raw logs instead of processing the wood in Canadian factories, which creates more jobs on this side of the border.

"Mark me, I know it's coming; [the mills] are going to ask for an exemption to export either [rough lumber] or raw logs in order to subsidize their manufacturing plants."

And of course, the recent job losses can only make matters all the worse for workers, communities, and anybody else who would like to see Canada do more than just cut down raw trees to be processed elsewhere.

While there's a tiny bit of good news in the surprising conclusion that the "good cause fund" may actually have ended up going to good causes after all, the long-term effects of the capitulation on Canada look to be even worse than the immediate ones. And if the Cons are willing to throw away Canada's role in adding product value to lumber in the name of avoiding conflict with the U.S., there's plenty of reason for many other Canadian industries to fear the same result going forward.