Emerson out to salvage softwood dealhttps://www.globeinvestor.com/servlet/story/RTGAM.20060802.wsoftwoodd0802/GIStory/
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Emerson out to salvage softwood deal
STEVEN CHASE
Wednesday, August 02, 2006
Ottawa — Federal Trade Minister David Emerson is calling a meeting of two dozen forestry CEOs in Toronto next Wednesday in an attempt to salvage the controversial Canada-U.S. softwood truce.
The hard sell comes with a warning from senior government officials that the Conservatives will not offer further help for the softwood sector if industry rejects the deal.
“Those who can't recognize that this deal is a far better alternative to uncertainty and economic instability and the endless litigation should prepare themselves for the consequences of rejecting it and they might want to start contemplating a world where Ottawa is no longer in the business of subsidizing softwood disputes,” a senior government official said, speaking anonymously.
Ottawa has invited chief executive officers from major forestry companies to the Aug. 9 meeting, such as Canfor Corp, Domtar Inc. and Tembec Inc., as well as smaller players.
“The minister feels it's time for a frank decision with actual decision makers,” Emerson spokesman Robert Klager said.
“He wants to know that CEOs have a very clear understanding and fully acknowledge the consequences of rejecting this deal.”
Industry opposition has mounted 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. Both politicians and industry officials have said a most in the industry oppose the deal.
Canadian softwood producers have what amounts to a veto over the deal because of stipulations in Article 2 and Annex 10 of the text.
It can't enter into force unless this country's companies withdraw about 30 lawsuits filed against the U.S. government in connection with the five-year-old dispute.
The Tories, however, say that public debate has been dominated by self-interested naysayers, and Mr. Emerson wants to talk directly to the companies affected by softwood negotiations.
“Public debate on this agreement has to this point been consumed by rhetoric, driven largely by opposition critics, lawyers and associations whose sole motivation is either political or self interest,” Mr. Klager said.
“The benefits of this deal demand an honest assessment by CEOs because they will be accountable to their shareholders and their employees and the hundreds of communities and thousands of Canadians who rely on the stable, prosperous softwood industry.”
Separately, the Canadian industry had planned to hold a national teleconference on Thursday to try to hammer out a consensus on changes they seek to the deal, as well as plot strategy.
But the Canadian Lumber Trade Alliance — the umbrella group of regional timber coalitions — cancelled that meeting late Wednesday.
Industry players say they expect the Tory government is setting up an exit strategy — in case the deal flops — that entails blaming Canadian timber companies for rejecting the deal, which the Conservatives have argued is the best agreement possible.
The July 1 deal was meant to flesh out an April 27 framework agreement that calls for Washington to remove punitive duties on Canadian softwood in return for Ottawa imposing limits and an export tax on U.S.-bound wood. It also allows the Americans to keep about $1-billion (U.S.) of the $5-billion in tariffs that Washington has extracted from Canadian firms since 2002.
But Canadian industry has called for better terms for the deal including changes to a so-called anti-circumvention clause that they say could give Washington a veto over changes to provincial forestry policies and impinge on this country's sovereignty. They decried the fact that the deal can be cancelled after two years as well as the fact that logs harvested from private land in British Columbia will not be given levy-free access to the U.S. market.
But Mr. Emerson has rejected calls to amend the deal, repeating that negotiations have ended.
Despite the agreement's stipulation that Canadians companies must drop softwood-related lawsuits, the Tories insist that the deal will not be held hostage by a minority of companies.
“We are into the end game. We need a clear majority of the industry in order to proceed but no individual firm or minority of the industry will hold this up,” a senior government said, warning that the timber sector can expect no support if the deal collapses.
“If industry rejects this deal, everyone walks away and absolutely nothing about previous Liberal government's costly stopgap approach to the deal is guaranteed.”
The former Liberal government spent tens of millions of dollars each year in legal fees fighting the softwood dispute in international courts and doled out several aid packages worth hundreds of millions of dollars to help the lumber sector.
Mr. Klager said the government is confident the deal will ultimately proceed.
Some industry players however believe that there is still an opportunity to amend the deal, if only through “side letters” clarifying the agreement instead of reopening the main text.
One official said he thought Mr. Emerson's warnings the deal was in trouble may goad the Americans into offering more.
“Headlines in the Canadian media that industry is adamantly opposed and the deal won't go through ... is not necessarily a bad thing if you want to get them [the Americans] to budge.”
Mr. Emerson put Canadian industry on alert Monday when he 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 the same day the head of Canfor, Canada's largest lumber producer, predicted the deal is doomed unless it can be amended to assuage critics.
Mr. Emerson, who began a public-relations counteroffensive Monday 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.”
Appearing before a House of Commons committee Monday, Mr. Emerson cautioned 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 [U.S. President George W. Bush] 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.
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