Imagine having to compete against a company that is getting its raw material for little or nothing.
In fact, that is the situation faced by one of the largest industries in Mississippi, forest products. Cheap imports from Canada, which heavily subsidizes its forestry industry, mean that currently 38% of the lumber consumed in the U.S. comes from Canada.
The unlevel playing field has greatly damaged the U.S. industry, says Charles Thomas, co-chair of Coalition for Fair Lumber Imports and vice president of Shuqualak Lumber Company.
“Canada subsidizes their lumber that comes into the U.S. by almost giving the timber to the producers in Canada that they use to make lumber,” Thomas said. “They allocate vast acreages of timber to certain companies, and arbitrarily set low price on timber and allow them to cut at will. We can compete with any Canadian mill. But we can’t compete with the Canadian government.”
Cheap Canadian imports of lumber have put 12 mills out of business in Mississippi in just the past year. The most recent closure was a mill in Philadelphia. Thomas said there have also been 26 mill closures in Georgia, and over 200 mill closures across the U.S. caused by Canadian imports.
The issue is particularly important to Mississippi because the timber industry directly employs approximately 66,000 people, about 10% of all jobs in Mississippi. Total payroll is estimated at $1.6 billion annually with an average wage of $25,686, about $5,000 more than the average annual wage in Mississippi. The 1998 harvest in Mississippi was estimated at $1.36 billion.
“This is what Canadian subsidies threaten to destroy,” Thomas said.
The problem is aggravated by Canada’s full employment policy that results in the government requiring timber companies to cut the same amount of timber each year whether there is a slump in the market or not.
“So when we go in a slump, the Canadians just accelerate the slump by putting more lumber on the market,” Thomas said. “We’re concerned about the U.S. economy not only in light of what happened September 11, but what happened before then. We are in a recession now. I think this has just started. If President Bush and U.S. government are concerned about the U.S. economy, they certainly should stop Canada from subsidizing timber coming into the U.S.”
It is against the law for a foreign country to subsidize an industry to the detriment of the U.S. industry. Canada claims they don’t subsidize, but the U.S Commerce Department recently ruled that Canada is subsidizing its timber industry. The Commerce Department put a 19.3% duty on all Canadian lumber coming into the U.S. in August. But Thomas said that isn’t enough.
The problem with Canadian imports doesn’t just hurt mills, but timberland owners because they have to take lower prices for their timber.
Thomas said in general the U.S. has given up too much of our manufacturing capabilities to other countries.
“We don’t need to do that,” he said. “The main point is it is against U.S. law for a foreign government to subsidize exports to the U.S., and that’s exactly what the Commerce Department has said the Canadians are doing. We have President Bush and the Commerce Department behind us. But we need further encouragement of Congress and the Trade Department to not fall short on this. They are always scared they are going to tee off our trading partner. Well, they need teeing off. I think we are more important to Canada than they are to us.”
Contact MBJ staff writer Becky Gillette at email@example.com or (228) 872-3457.