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Controversy brewing over B.C. log export policy

The U.S. Lumber Coalition is raising concerns about the recent announcement of log export policy changes in British Columbia, particularly an increase in the "fee in lieu of domestic manufacturing" applied to many log exports that will take effect on March 1.


February 26, 2013
By CNW

According to a press release from the organization, export restrictions will have the effect of insulating B.C. lumber mills from world market prices for logs, which have increased significantly in recent years as China and other countries have increased their demand for North American logs. The recent announcement of measures to tighten log export restrictions on the B.C. Coast will allow B.C. lumber producers to pay even further below-market prices for their log inputs, says the Coalition.

“In effect, B.C. has increased the implicit subsidy from log export restrictions for B.C. Coast lumber mills,” said Luke Brochu, chair of the Coalition and President of the family-run Pleasant River Lumber Company in Maine. “This gives B.C. Coast lumber mills a greater advantage in the U.S. market, at the expense of U.S. mills that pay full market price for their inputs,” he explained.

“Logs harvested from public or private lands in B.C. must be advertised to local mills before they can be exported. If a local mill offers to pay the prevailing domestic log price – which can be much lower than the export price – for a particular log sort, export of that sort is prohibited,” stated the release. “Further, even when permission to export is granted, a “fee in lieu of domestic manufacture” is assessed on logs harvested from public and some private land. This fee is often much greater than the price that B.C. charges to harvest standing timber on public land. Effective March 1, the “fee in lieu” on the B.C. Coast will be increased by 20 percent.”

According to the Coalition, a key provision of the 2006 U.S.-Canada Softwood Lumber Agreement is that Canadian provinces may not modify their timber pricing systems in ways that move them further away from market conditions. The increase in the “fee in lieu” would appear to be inconsistent with this requirement of the trade agreement, it says.

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“The Coalition has brought this matter to the attention of the United States government,” Brochu stated. “We have asked them to raise this issue urgently with their Canadian counterparts, and we urge our government not to hesitate to defend U.S. rights under our trade agreement with Canada.”