Lumber mills across the U.S are facing curtailed production or even being put out of business by the failure of the Canadian government to abide by an landmark agreement a year ago that was supposed to end the Canadian subsidization of lumber sold in the U.S., said Charles H. Thomas, vice president of Shuqualak Lumber and the co-chairman of the Coalition for Fair Lumber Imports.
“The Canadian government has refused to enforce the agreement on their lumber manufacturers,” Thomas said. “Because of that, they are shipping lumber into the U.S. that is subsidized by the Canadian government. Today, our lumber prices are at a 25-year low. They are going to put a lot of U.S. lumber mills out of business. They are also vastly affecting timber growers because they aren’t going to have a place to sell their timber.”
Thomas said if something isn’t done, there are going to be a lot of unemployed people in the U.S in the lumber industry. Every day mills are curtailing production or closing down.
“If mills curtail and close down, there is no where to sell timber,” Thomas said. “We have a lot of timberland growers in Mississippi, and a lot all over the U.S.”
The agreement signed a year ago was a result of long and hard negotiations. The intent was to end litigation over subsidized lumber from Canada, which currently exports to the U.S. approximately 90% of the lumber manufactured there. The Canadian government owns approximately 93% of the timberland in that country. Thomas said the government sells logs to Canadian mills at approximately one-tenth of the cost of what U.S. mills have to pay.
“It is a totally unlevel playing field and has been for years,” Thomas said. “The thing that has really bothered us is the Canadian government agreed that as consumption went down in U.S., they would lower their shipments to the U.S. So far, they have not done so.
“Our U.S. government and the Canadian government entered into an agreement that both signed. It really makes you wonder if our government signs an agreement with another government, the other government doesn’t enforce it and our government doesn’t require them to enforce it, what is it worth? Is any agreement our government signs with another country worth the paper it is written on? There are measures our government could take now to cause Canada to enforce this agreement. But so far, they have not chosen to do so. It is frustrating to say the least.”
Sub-prime mortgage lending woes have caused a decline in new home construction. That makes it even more important the Canadian imports be curtailed.
Currently Canadian imports represent approximately 38% of the U.S. market for softwood.
Thomas said what Canada is doing is exporting its employment to the U.S.
“They are socialistic,” he said. “I don’t dislike Canada. I dislike what they are doing. I would ask our government to take whatever action is necessary to immediately enforce the agreement on Canada.”
Over a number of years, Canada has had to pay to the U.S. duties on lumber shipped into the U.S. because the industry was subsidized. It is against the law for a foreign government to subsidize an industry to the detriment of the U.S. industry. Over the years there was approximately $5 billion collected in duties. By signing this agreement, Canada got back $4 billion of what they paid in duties.
“That is one of the main reasons they signed it,” Thomas said. “The U.S. industry that was hurt so bad by the subsidization of lumber got to keep $1 billion.”
The Canadians no longer had to pay any duties. But if prices stall below a certain level, the Canadian lumber industry is supposed to pay a 15% duty.
“But they aren’t abiding by that and aren’t paying the full duty,” Thomas said. “The Canadian government can’t force them to do it, evidently.”
In the agreement, either side could call for arbitration. The U.S. government has called for arbitration, which takes approximately a year to complete. But the U.S. lumber industry doesn’t have the leisure to wait that long.
“During that year the U.S. lumber industry is suffering so much, I don’t know if it will survive,” Thomas said. “A lot of it will not. The U.S. government has action it could take today to eliminate this situation if they so chose. But so far, they have refused to do so.”
Shuqualak Lumber, which is one of the Southeast’s largest privately-owned independent producers of Southern yellow pine, normally has produced approximately 130 million board feet of dimension lumber annually. Thomas said because of the problems with cheap Canadian imports, it has curtailed back to approximately 95 million board feet.
“We are losing money every single month we operate as is every mill in the U.S.,” Thomas said. “And the answer would be for the Canadian government to enforce the agreement they have signed.”
Shuqualak Lumber has been in operation since 1948. The mill is located approximately a mile from Shuqualak, which is 50 miles north of Meridian and 40 miles south of Columbus. Shuqualak Lumber purchases approximately 65 truckloads of quality pine saw logs per day from a geographic area encompassing eastern Mississippi, western Alabama and southern Tennessee.
For more information, visit www.shuqualak.com.
Contact MBJ contributing writer Becky Gillette at email@example.com.