Why Can't Softwoods Be Resolved ?

[Armymatters]

correct me if I'm wrong but, wasn't the intent of the tarifs to raise the price of lumber going into the US so that US consumers would have to pay more for the lumber that was already going into the US.  The coin collected was supposed to go to lumber company owners weren't prepared to sell to US consumers at the same price the Cdn producers were......
So it's the US Consumer who gets it in the neck here - right?

Pretty much. The American consumer has to pay more for lumber, and they also have to pay more money for new houses. In the end, the end consumer gets shafted. And besides, American softwood ain't as great as Canadian softwood; the grains in Canadian softwood tend to be longer and stronger, resulting in superior wood. And in a free market, the superior good is prefered over an inferior product at the same price level, which is what the lumber market is: a free market with the market setting the prices. And since Canadian softwood lumber is usually sold at the same price as American lumber, consumers will prefer the superior good over an inferior product, in this case, Canadian softwood lumber. Basic Economics 101 for ya.

 

[geo]

was reading up some more on this softwood thing.
would appear that the US will keep some of the 20% of the tarif $ that has been collected over the years. Then Canada would agree to cap its share of the U.S. lumber market at one third, which is roughly the current level in a complex arrangement that would include both a quota and an export tax.

correct me if I've missed something here but isn't this what the government rejected as capitulation last year?

 

[Brad Sallows]

>So it's the US Consumer who gets it in the neck here - right?

Exactly.  All that collected money originally came from US customers.  Any part of it that Canadian producers obtain, whether they would've done so in a free market or do so now by agreement, is (or should be) profit.  As I wrote in the other thread, we should've imposed our own penalties long ago so that we could "import" a share of those penalties into Canada.

 

[DJ]

  No American is killing any CDN farm, the CDN government and it's taxes are what is killing the CDN farm.  The U.S. does not stop Canada from selling its commodities on markets in the world, move into the 21st century,

 

Not necessarily true.  Farmers aren't able to sell on the international markets because excess subsidies from the U.S. and Europe create incentives for their farmers to overproduce.  For all of the lovers of supply and demand economics on this board it should be easy to see that with an excess world supply comes a decrease in world price, eliminating the possibility for other countries to compete without subsidies.  All agriculture subsidies should be eradicated in all countries.  Do a Wiki search on Cairns Group.

 

[Gunner]

Canada doesn't subsidize Farmers.....Right.....

Not to the same extent as US and European governments. 

 

[Kirkhill]

One man's social programme is another man's subsidy.

I can't speak to the farming industry in the US but I do know that the US fishing industry complained bitterly about EI payments to Canadian Fishers (10-12 weeks work got you 40 weeks of EI).  In the US fishermen fished when there was fish and did something else when there was none.  This being not the most attractive proposition it meant that as the industry played out in the North East it meant more and more unskilled "first timers"  and poorer returns.  To keep a seasoned force such as could supply FPI and NatSea by paying their employees year round just wasn't possible.

In both the fishing and farming industries in the US health care is the individual's responsibility.

Both of these social programmes can be seen as subsidies.

The Europeans now......they are another kettle of fish.  They have both social programmes and subsidies.  Of course they are also going broke.

 

[DJ]

Canada doesn't subsidize Farmers.....Right.....

 

I never said that they didn't.  However, I did say that this country is at least advocating for less subsidies. 

Not to the same extent as US and European governments. 

Exactly.

 

[Gunner]

  And your proof is?  Please don't tell me you believe the Former PM Martin and Chretien.  They only tell CDNs what they want to hear, for instance.  Canada won all of the NAFTA tribunals about Softwood lumber, wrong.  What Canada did get from the tribunal was a ruling that said the tariffs were too high, the tribunal also said Canada subsidized the industry (because they did, and do).  Furthermore, the WTO, which Canada asked to mediate (not the US) said that there was a subsidy and that the US did indeed correctly estimate the tariffs on softwood lumber.  So again, what is it that we can't agree on?  The fact is, Canada does have a lot of archaic wheat control boards, milk, egg producers, etc that in effect subsidize farmers.  I was wondering how many of you say that Canada does not subsidize its farmers have actually been a farmer (besides me)?

The bottom line, if the Canadian government axed the stumpage fee and sold the rights to harvest the timber at market rates there would be no tariff.  You see when market forces are equal the most efficient businesses  win and so do the consumers.

Sherwood, your "beef" against Canada continues to cloud your rationality.   ;D

The OECD doesn't agree with your wide spread generalizations on the Canadian economy. 

http://www.oecd.org/dataoecd/63/54/32034202.pdf

Any facts to back up your ascertations?

 

[TCBF]

Also, this dispute only covers the stuff that gets milled by Canadians, we ship VAST amounts of our logs to the USA (a lot by tug and boom from BC) to be sawn up by the same lumber barons who don't wan't our finished product.  It is the 'value added' - milling - that makes the big bucks.  They certainly don't complain about stumpage fees keeping the price of our raw logs low, do they?

Tom

 

[Brad Sallows]

>the tribunal also said Canada subsidized the industry

Just out of curiosity, how did that ruling come about?  We don't, AFAIK, charge industries for consuming air or water, or charge farmers for the use of nutrients in soil, or fishermen for the fish they pull, so why would it make any difference how we choose to allocate timber or any other natural resource, renewable or otherwise?

 

[Bruce Monkhouse]

Good point, Brad.
So therefore by having lower taxes on their properties all American saw mills are subsidized and we should be collecting a tariff?

 

[geo]

Gotta love CDN logic....Unfortunately a large number of CDN businesses feel that they need a lower CDN dollar and subsidies to compete, I doubt that will change much. 

Uhhh..... Cdn$ valuation is 100% a question of supply and demand.

 

[Brad Sallows]

Has anyone analyzed the history of actual Canadian softwood exports to the US over the past couple of decades to estimate what the profit might have been in the absence of the US-imposed duties?  What is the evidence that the $4B is not _more_ than would have been charged in a freer, competitive market?

 

[Brad Sallows]

I think you missed my point.  Amidst all the allegations that Canadian lumber companies "lost" 1$B of profit, no-one has bothered to analyze the historical trading patterns to estimate whether the duties were greater than what would have been shown as profit if no duties were levied.  It would be the finest sort of irony if the $4B "returned" turned out to be larger than estimates of the additional profits in the absence of duties, which would in turn bolster a hypothesis that the US government gouged its own consumers and turned the extra profits over to Canadian and US producers.  Canadian lumber producers would, after all, have continued to price competitively, whereas the duties presumably were charged at a level calculated to satisfy the less competitive US producers.

 

[GO!!!]

Brad you commission a study on the softwood lumber, I'll do one on the costs the United States would have saved if it had minded its own business in WWI and WWII, then lets compare notes.

Especially if you calculated in the interest earned on the billions of dollars in "reconstruction aid" supplied to all sides, the supplying of raw materials and finished goods to all sides prior to Pearl Harbour being attacked, the wartime loans (and more interest) granted, and the immeasureable worth of a worldwide network of military ports, airfields and bases supplied by defeated nations and defenceless allies, yes, those would be interesting notes indeed.

 

[Kat Stevens]

Brad you commission a study on the softwood lumber, I'll do one on the costs the United States would have saved if it had minded its own business in WWI and WWII, then lets compare notes.

You forgot to add that we'd all be speaking German if it weren't for you.... :

 

[Brad Sallows]

I'm not suggesting the US government intended it to work out that way.  Where I see the potential for irony is in comparing the complaints from Canadian producers that part of the withheld duties will be retained in the US, to the possibility that the duties which will not be withheld in the US actually will result in a greater net profit than might have been otherwise achieved.

I believe that each nation should be free to deal with its externalities as it pleases.  If we wanted to give away timber or allow companies to expel any pollutants they please, that should be our concern and only our concern.