Lumber deal in troublehttps://www.globeinvestor.com/servlet/story/RTGAM.20060801.wxsoftwood01/GIStory/
STEVEN CHASE AND PETER KENNEDY
Tuesday, August 01, 2006
OTTAWA and VANCOUVER — Scrambling to salvage the controversial Canada-U.S. softwood truce, International Trade Minister David Emerson warned the agreement could end up "dead before arrival" unless support for the deal grows within this country's forest industry.
His blunt words came as the head of Canfor Corp., Canada's largest lumber producer, predicted the deal is doomed unless it can be amended to assuage critics.
Industry unrest has continued unabated since July 1, when Ottawa and Washington initialled the deal that the minority Conservative government has celebrated as one of its major achievements to date.
Mr. Emerson, who began a public-relations counteroffensive yesterday to sell the deal, said there's no point in bringing an agreement before Parliament this fall -- as the Tories had planned -- unless industry support firms up.
"I think it is fair to say that if we do not have sufficient buy-in from industry there really isn't an agreement to bring before Parliament," he said.
"And so the first bridge we have to cross is to get the agreement supported by the appropriate number of players in the industry. Otherwise you're dead before arrival."
Separately, Canfor chief executive officer Jim Shepherd said he doubts the July 1 softwood lumber deal will be implemented unless it is reopened and amended to address industry concerns -- even though his company is prepared to live with the current agreement.
"Common sense would say that if there are no changes to the deal, it is highly problematic that this deal will go ahead," Mr. Shepherd said during a conference call that was made to discuss the firm's second-quarter results.
"I think an awful lot of work will be done to see if we can salvage this thing, but at this point it seems very discouraging that this will happen."
Canadian softwood producers have what amounts to a veto over the deal.
It can't proceed unless this country's companies withdraw about 30 lawsuits filed against the U.S. government in connection with the five-year-old dispute.
Mr. Shepherd's comments were the latest in a series of predictions by industry and provincial players who warned the deal could die if it's not sweetened.
But Mr. Emerson rejected calls to amend the deal, repeating the Tory government's month-old position that "negotiations have ended."
Asked whether he believes the balance of opinion in Canada backs the deal, the trade minister said it was "too soon to say." That's different from early July when Mr. Emerson said he believed most producers endorsed the agreement. "I think that probably the majority of companies are supportive," he said on July 5.
(By comparison, provinces and lumber-association heads have warned that a majority of softwood producers oppose the deal.)
Appearing before a House of Commons committee, Mr. Emerson warned that things would turn "ugly" if Canada rejected the softwood deal, because the U.S. timber lobby would launch fresh trade campaigns against this country and drive up timber-duty rates.
"I am here to tell you I think the litigation cycle would be coming our way, and it would be ugly, there would be job losses, there would be company failures, communities would be in very difficult situations," he told MPs.
Mr. Emerson also warned that negotiations would be "gone as an option for a minimum of three years" if the industry rejects the present deal.
"Don't think for a second that we can walk away from this agreement and, when we feel like it, go and negotiate another one. That is not going to happen, I can assure you," he said, adding that the White House has no more appetite left for further negotiations.
"If anyone thinks that the president is going to come back and negotiate softwood lumber after the prime minister and the president have put so much capital on the table to deal with this issue in his time in office, I suggest you give your head a shake."
Responding to questions from financial analysts, Mr. Shepherd reiterated his well-known position that Canfor is prepared to accept the risks in the July 1 deal -- in return for the certainty that it would bring to Canadian industry.
Mr. Shepherd is not alone among major softwood producers in expressing reservations about whether the deal will proceed.
Last Friday, similar sentiments were expressed by CEOs of other large Canadian lumber companies.
© The Globe and Mail