It is called softwood, but these days it is producing nothing but hard feelings. Softwood is used to build houses stuff that in skilled hands changes from a pile of wood into a recognizable home in mere days. In the United States, about 10% of such softwood comes from Canada. But on March 2rid the Department of Commerce announced that it would slap a tariff of around 9% on Canadian softwood. The Americans contend that Canada is subsidizing its timer industry, and dumping wood on to its neighbor for sale at prices that do not cover its production cost.
The Canadians hotly deny this, and the two sides are volleying expertise at each other." They’ve hired their experts and we’ve hired ours." says John Allan, president of the British Columbia Lumber Trade council. In Canada the provincial governments own forests, and each province is given considerable in pricing its "stumpage", as standing trees are oddly called. American critics say the Canadians all but give away those uncut trees. John Perez-Garcia, a professor of forestry at the University of Washington in Seattle, estimates that Canadian logging companies pay as much as 40 % less for standing trees than they would if the market set the price.
Not so, retort the Canadians. Dan Evans, manager of log exports for British Columbia’s government, points out that stumpage fees cover only a small portion of what it costs a Canadian company to send lumber across the border. These companies, he says, have to build their own roads, reforest logged lands, and pay the cost of planning their sales. "We feel we price our timber competitively." It is worth noting that for years American companies were themselves accused of receiving subsidies; stumpage prices for trees cut down on federal land were long criticized as too low. Then they were quiet on the subject. But now that most American produced lumber comes from private forests, government subsidies are anathema.
In Seattle, Robb Dunn, president of a chain of ten lumber stores, says his customers will just have to put up with higher prices. Some reckon the tariff will increase new-home prices by as much as $13, 000. That may be a bit high, although lumber prices have gone up lately, they are still below the peak reached last summer. And rising interest rates may slow the American housing market, cutting demand.
The two sides hope to continue talks. One way out might be an agreement under which Canada taxes its lumber companies until it reforms its pricing policies to American’s satisfaction. But Mr. Allan, for one, is not optimistic. The United states, he says, has not negotiated in good faith: "Its government just can’t get a grip in its timber industry, which is too powerful.\
Hard feelings produced by softwood results in