Charlotte, Florida - Bill Murray starred in a 1993 movie called "Groundhog Day." In the movie, each day when he woke up, Murray repeated the same basic story as the prior day. Only when he learned his life lessons did Bill Murray escape his purgatory.
"Groundhog Day" best describes our history with trade tariffs on Canadian lumber and newsprint.
This is the fifth time since 1982 we’ve seen trade tariffs applied to Canadian lumber and newsprint. We would think by now our two countries would have figured this out. Maybe, like Bill Murray, our timber trade war with Canada will need to be repeated many more times before we learn our lesson.
Readers asked why a timber trade dispute with Canada occurs so regularly. Because of space, I know my answer is oversimplified, but I want to help readers understand how trade wars start.
At the heart of the dispute is a difference in philosophy of government. About 54 percent of Canada’s land below the arctic tree line is protected as forests. Ninety percent of all the trees harvested come off Canadian government-owned property.
In the U.S., the majority of forest land used for paper and lumber is privately owned. Canadian public ownership of the forest and USA private ownership of the forest means the harvesting of trees is managed in different ways.
In Canada, they think in 50-year time horizons for the management of their forests. This 50-year planning cycle means the harvesting of lumber is done consistently from year to year, to be proper stewards of the forest. The goal is maintaining the right ecological balance of the overall forest ecosystem. Profit from timber sales is secondary.
In the U.S., because it is warmer, timber can be harvested in 15-year cycles. The primary goal is profit. Part of making a long-term profit is good stewardship of the land, but profit, not land stewardship, is the primary goal.
In the U.S., a private enterprise might put off harvesting if timber prices drop too low. But when prices are low and American’s don’t want to harvest, the Canadians still harvest the same amount of timber and sell it to U.S. customers, further depressing market prices. American producers believe Canadians are "dumping" product into the U.S.
In the U.S., we might accelerate harvest of timber if the prices are sky high. In Canada, they don’t change production, which means prices increase too far to the upside. The accentuated boom-bust caused by Canada makes U.S. producers upset.
The first big timber dumping dispute occurred in 1982 under the Republican Reagan administration. The second dispute occurred in 1986, again under Reagan. The third dispute occurred under Democrat Bill Clinton.
In 2001, under Republican President George W. Bush, round four of the timber trade dispute occurred. The last agreement expired in 2015. The Democrat Obama administration started the fifth round by balking at renewing the agreement. Then 2016 arrived, just in time to see President Trump elect to aggressively create round five of the timber trade war.
Are the Canadians dumping product into the U.S.? When the trade dispute goes to world trade court, the U.S. loses the dumping argument. But Canada does impact the U.S. lumber and newsprint business because of the Canadian philosophy on how they manage their forests.
How many more times do we need to repeat Groundhog Day? We have the smartest readers in America. What is fair to all concerned including U.S. consumers?
Share your thoughts.
David is CEO of the family- and employee-owned Sun Coast Media Group which owns this newspaper. You can contact David at email@example.com.
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