Softwood sellout slams U.S. market shut for value-added manufacturer

We’ve heard lots of talk about how the softwood lumber “agreement” the Harper Conservatives “negotiated” with the U.S. is a sellout, and it is. We’ve heard how the big forest companies have been bullied into surrendering over $1 billion in illegally collected tariffs in extortion to their U.S. bullies, with a good portion of it going into a fund directly controlled in part by the Bush White House, and that’s a travesty. But what we haven’t heard much about is it’s impact on our forest dependant communities, and the small forestry related businesses across Canada. That’s an even sadder story.

The background

Back in March I blogged about the story of Woodland Flooring, an 11-person floor manufacturer in Comox, B.C. Using wood from independent lots that aren’t impacted by stumpage fees, as well as beetle-kill sales and windfall reclamation, owner Steve Roscoe manufacturers wide plank wood floors. Theirs is exactly the kind of business we need to be encouraging in Canada: community owned, environmentally minded, creating jobs in Canada by adding value to our natural resources.

After years of work and investment Roscoe had penetrated the U.S. market, with exports accounting for 30 per cent of his business. A real success story. But then along came Emerson, Harper, and the U.S. government. As I blogged, back in March the Bush White House decided to extend its illegal anti-dumping and countervailing to items that had not previously been covered, and Woodland’s wide plank wood flooring business was suddenly slapped with a duty.

Even though, since their wood comes from independent lots not impacted by the disputed stumpage fees, they shouldn’t have. And to make it doubly worse, the duty was calculated not on the value of the wood they use, but on the value of the product AFTER its processed and manufactured into flooring for sale.

Overnight, their product became 25 per cent more expensive to 30 per cent of their customer base. And the Conservative government elected on a platform of standing up for Canadians? They wouldn’t return his phone calls. I bet Emerson returns Canfor's calls pretty quick.

Today

But now there’s a “deal” in place, so surely, after this period of discomfort, there’s light at the end of the tunnel for Woodland Flooring, right? Wrong. Under the terms of the Harper softwood sellout, the U.S. market is now firmly slammed shut to Roscoe. Here’s what he told the Comox Valley Record recently:

For Steve Roscoe, owner/manager of Comox’s Woodland Flooring Co., it still leaves too much unknown for them to be able to maintain their American business connections.

“We’re a casualty of war here in the softwood lumber dispute,” said Roscoe — whose value-added softwood flooring product is subject to tariffs despite the source of his wood being private lots not qualified for the subsidizing that American lumber producers call unfair. Tariffs for Woodland’s products are also charged on the finished item, not on the raw timber alone that they start off with.

For Roscoe, the biggest problem with the new deal is the use of a quota system — meaning that the export charges (now to be collected by the Canadian government) will largely depend on how much softwood is sent south during a certain time period.

There’s no way of knowing how much duty they will pay until it’s already sent, he said, which means there’s no way to charge for it.

“We don’t know — we can’t tell our customers how much. It could be small, it could be high. It could be triple if the majors (producers) are gluttons,” said Roscoe.

It’s come to a simple solution for them, he added. After working hard advocating for his business — even making contacts with the U.S. Consulate office in Vancouver, whose representatives tried to help — Woodland Flooring has officially had to stop shipping to the States.

“The door’s firmly slammed in our face right now,” he said.

Before Woodland was subject to the 21.24 per cent tariffs, around 30 per cent of his business was for American customers. That’s since dropped to less than 10, he said — and will effectively be zero now that Roscoe anticipates this deal to go through.
…
For Roscoe though, this agreement is a frustrating example of the country’s politicians not sticking up for their own people.

“We’ve made huge concessions and now we have Washington making policy for B.C. forestry — that’s pretty sad.”

So, while Harper had to bully the forest giants into submission at least they’ll be able to do business with the U.S. again. Well, at least until the protectionist American lumber lobby gets a burr in its saddle again, having modernized its plants with our money. But while they’re getting screwed, it’s the little guys that the Conservatives are supposed to be all about fighting for that are getting doubly screwed.

We’re supposed to be encouraging our small businesses to become exporters, but I’ve talked with Roscoe and he says he's done with foreign markets. As he put it, he doesn’t trust our government enough anymore to risk his business on the politicians. He’s been lucky that the loss of the American market has coincided with a building boom in B.C., so he hasn’t had to lay off any employees. From now on, Woodland will be focusing on the Canadian market. They’re done with “free trade.”

“The fact is, we have thrown away 5 years of money , time and energy marketing to our neighbors to the south when we had a rock solid free trade agreement,” said Roscoe in an e-mail. “Both the US and Canada are to blame for our problems. We had no duty applied to our flooring a year ago, it was only implemented at the time of the settlement! What the HELL is going on here???”

That’s a very good question, and I wish I had a very good answer for him. I know Stephen Harper and David Emerson don’t. Could this agreements defenders explain why the U.S. market should be shut to value-added manufacturers like Woodland Flooring?

Vote it down

This isn’t about picking up votes for a majority, or playing confidence games in the house and trying to look decisive. It’s not about politics. It’s about forest dependant communities in British Columbia, in Ontario and in Quebec. It’s not just about forest giants like Canfor. It’s about small, value-added manufacturers like Woodland Flooring.

I ask every Member of Parliament, and especially Stephen Harper and David Emerson, to look themselves in the mirror and, putting politics aside, ask themselves not just if this is the best deal we can get, but if this is the deal the people of Canada deserve. Can they go into communities like Comox and look the people in the eyes?

The evidence is mounting. Mr. Harper, put this deal where it belongs: in the chipper. Then get back to work getting Canadians a fair and honourable deal. This is a difficult issue. It may mean long, costly court challenges. It may mean a nasty trade war. But no one ever said governing was easy. Nothing worth doing ever is.

Recommend this Post on Progressive Bloggers