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Jimmy Carter: Trump is right. Canada’s lumber trade practices are unfair.

May 10, 2017

I agree with the recent decision of the White House and the Commerce Department to impose anti-subsidy duties against Canada’s unfairly traded softwood lumber imports.

 

[Jimmy Carter] May 9th, 2017 [The Washington Post]

This belated enforcement of U.S. trade laws will help millions of private timberland owners, American forestry workers and members of their local communities by leveling the playing field in the timber industry.

Timber sales are a major source of income for my own family, and we have suffered financially for many years from an unfair advantage enjoyed by our major competitor in this vital market.

With moderate adjustments in management, there is enough timberland in the United States to supply the total American market with lumber. Without adjusting any U.S. timber policies, and if we are able to compete on a level playing field against Canada, our production of lumber could satisfy more than 84 percent of total U.S. demand, according to Western Woods Products Association data. This would leave the remaining 16 percent to be supplied by imports, but now about 32 percent of our lumber is being imported from Canada.

Canada enjoys an inherent advantage in that the vast majority of its standing timber is owned by provincial governments, which are free to dump their timber at practically no cost in order to stimulate their forest industry. At the same time, most of America’s timber is privately owned, and market forces impose a minimum price at which farm owners can continue in business.

There has been a long-lasting dispute about importing Canadian softwood, which has gone through an increasingly crucial phase during the past 35 years. About 70 percent of Canada’s softwood lumber exports came to the United States in 2015. One indication of the recent changes in market forces is that the number of Canadian-owned sawmills in our country has exploded to more than 40 in the past decade — partially because of lower labor costs in the United States.

The latest Softwood Lumber Agreement expired on Oct. 12, 2015, and Canadian producers now have almost unrestricted access to the U.S. softwood lumber market. Last month, the Trump administration announced plans to impose average duties of 20 percent on most Canadian lumber, charging that these lumber companies are subsidized by the government. To remain in effect, however, the duties need to befinalized by our Commerce Department and then confirmed by the U.S. International Trade Commission after an investigation that includes testimony from both sides. This enforcement of U.S. trade laws is consistent with our international commitments.

The members of my family own about 1,800 acres of timberland, and the softwood (pine) tracts are mostly planted as seedlings (from 550 to 900 per acre) that even in our warm climate need to grow for at least 25 years before becoming large enough to sell for lumber. Unless in urgent need of cash income, we usually wait at least 10 additional years before harvesting and replanting. After this 35-year period, we sell our softwood timber — usually less than 100 acres a year — in a competitive and open process to Canadian sawmills to make lumber.

With logs selling at the present price of $25 per ton, we can expect to realize a net income of about $875 per acre, or just $25 a year over 35 years, plus some secondary income for pulp wood and other products. Largely because of Canada’s unfair trade, the prices we receive today are the same as when I was in office over 35 years ago, although expenses from planting seedlings, thinning, removing unmarketable trees, periodic controlled burning and timber severance taxes are much greater.

While there are many benefits to harmonious bilateral relationship between the United States and Canada, our neighbor to the north must still play by the rules and stop engaging in its unfair trade practices. We must either enforce U.S. trade laws with tariffs or insist on an effective and lasting bilateral softwood trade agreement that allows our industry to survive, provide jobs for workers and sustain vibrant forestry communities across our country.

 


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  • In my home state of Pennsylvania during the nineteenth and early 20th century the forestry industry clear-cut almost all of the state’s virgin timber lands. And throughout the United States industries extracted natural resources without any regard for the ecological consequences of doing so. All of these industries effectively used the concept of Free-Market capitalism ideologically as a weapon to shout down their critics and prevent the mechanism of democratic governance from interfering in their affairs.

    Fortunately, their critics preserved and we have our national parks, the Sierra Club, the EPA and improved public health as a consequence. Unfortunately, we also have the excuse for scholarship that is mainstream American economics, which purged from its ranks long ago anyone with the courage to speak truth to power.

    Today, as President Carter’s essay reveals, the domestic lumber products industry would now like to avail itself of the mechanisms of democracy to prevent Free Markets on a global scale from wiping them out. And in Pennsylvania this is accomplished in our Northern Tier by the state selling timber from our state forests to regional mills as cheaply as possible.

    Organizations like the CPA are controlled by people drawn from the ranks of industry and economics who retain their allegiance to Free Markets ideologically, which limits the range of their ability to think critically about Trade policy. They always seek to criticize one tenet of the faith or another, but then try to dart back into the fold. Two current examples of this phenomenon are John Hansen’s work on the MAC and Daniel Alpert’s theory that all was well with the ideology until China showed up. It is possible to like both of these men and their ideas very much, but still look at their work as well as the CPA critically, of which I am guilty as charged.

    Not long ago Michael Stumo had the pleasure of discussing trade policy on a panel that included the Sierra Club’s trade policy advisor, Ben Beachy. No trace of this encounter, however, is apparent in the subsequent development of either organization, and I suspect their is no active interest in collaborating whatsoever.

    There is a need for a new organization that critiques trade policy that bridges these two world views. Fortunately it already has a name and the consent of the Constitution to enact: industrial policy formulated through democratic processes in Congress, wherein the critics of Free-Markets and their advocates are forced to reach compromises.

    Since Mr. Lightzinger is familiar with the steel industry one might ask, what would such a compromise look like? And the answer is very simple: the steel industry enthusiastically embraces environmental regulation and invests in the latest technology in exchange for a guaranteed percentage of the domestic market. Or, the timber industry embraces sustainable forestry practices in exchange for quotas on imported wood.

    Such an organization would have a far broader political base of support and produce trade policies more likely to stand the test of time.