WHEN the United States and Canada first began arguing about lumber, Ronald Reagan had just taken office in Washington, DC, and Pierre Trudeau was prime minister in Ottawa. Three decades later the two countries are still at it. In January American trade officials asked a London arbitration court to penalise exports from British Columbia, Canada’s main source of lumber, for subsidies stemming from the underpricing of timber harvested from public lands.
This is an old—and unproven—claim, and such filings have sometimes led to the United States imposing countervailing duties. This time the huffing and puffing was met by a nonchalant shrug. What has changed is that for British Columbian lumbermen the United States is no longer the only game in town. Asia has become an alternative.
Last year British Columbia’s timber exports to China totalled C$687m ($667m), a tenfold increase from 2003. Over the past three months total sales to Japan and China exceeded those to the United States. Whereas five years ago more than two-thirds of shipments went across the border, now barely more than a third do. The industry forecasts that by 2013 China will be its biggest market.
That is just as well. Protectionist measures and the collapse of the American housing market have ravaged what used to be British Columbia’s biggest employer and export earner. With sales to the United States dropping by 58% from their peak, mills have closed, thousands of workers have been laid off and companies have bled money. “It was the worst and longest…period of decline our industry has ever experienced,” according to John Allan, an industry leader.
But over the past two years 24 mills have reopened and 10,000 workers have been rehired to fill orders from China. That is the pay-off for a marketing effort involving the industry and government: Canada has helped to revise China’s building codes, set up colleges there to train workers in timber-frame construction, and forged ties with distributors.
So British Columbians have greeted the latest American complaint with insouciance. American officials grumble about a big increase in timber classified as “salvage grade”, which attracts minimal cutting fees. The Canadians retort that much of the increased harvesting of timber is a result of the havoc wrought by the mountain pine beetle, which has infested and killed about half British Columbia’s commercial pine forests. Furthermore, the system for grading timber was agreed on by the two countries in 2006, when they settled their previous spat over softwood lumber.
Although the American market will one day regain importance for British Columbia, “the time is past when we pretty well had to take what the Americans offered,” says Pat Bell, the province’s forests minister. Deep in the woods, a new world order has emerged.
Canada's lumber industry: If you go down to the woods || The Economist