Last week I attended the annual convention of the Council of Forest Industries. Along with the TLA convention in Vancouver, this is the second of two industry conventions I typically attend each year. In accordance with the every-other-year rotation that COFI has established between Prince George and Kelowna for this event, this year’s convention was held at the Civic Centre in PG.
The Ice Breaker
On Thursday evening I attended the networking reception formerly referred to as the "Ice Breaker" in the old NFPA days. There was good food and beverage, and they appeared to have plenty of everything. I remember a few years back at an ILMA convention in Kelowna when the caterer ran out of ribs before everyone had their fill. A riot nearly ensued--rule No.1 when working with the forest industry is that you don’t leave a bunch of loggers hungry! This year the event had a martis gras theme to it with numerous Cajun food stations (as well as a good variety of other food options). As usual, this event made for a pleasant evening with all the usual faces in attendance. The one comment I kept hearing was that the organizers should have pulled the pirate ship and dry-ice used at the last NFPA Ice breaker out of storage—it would have fit right into the martis gras theme!
Softwood Lumber and Log Exports
I thought the Friday morning program was excellent. It began with a discussion of the “Softwood Lumber Agreement 2006: Six Months In”. For me, the most thought-provoking presentation in this particular session came from Don Wright, the former Deputy Minister of Forests who now operates his own consulting firm, Analytica Consulting. Mr. Wright asked the question: “Is there an appetite for fair trade in the log and lumber industry?” Mr. Wright has had (and continues to have) extensive involvement with both the log exports and softwood lumber files, and is uniquely situated to consider this question. By “fair trade”, Mr. Wright means a “level playing field”.
Mr. Wright’s question was largely the result of an analysis of log export restrictions on both sides of the border. At its core, the American position with respect to Canadian softwood lumber is based upon the allegation of subsidization. Exempting lumber from private land timber under Article X.4 of the SLA is, therefore, a no-brainer except for the export restrictions on private land logs. Mr. Wright suggests that to level the playing field for private log exports, Canada could eliminate the Notice 102 surplus test in exchange for the elimination of America’s “substitution rule” that restricts US private log exports from the US north of the border. Softwood lumber from private lands on both sides of the border would then compete on a level playing field, and no justification would exist to deny BC an exemption under Article X.4 for softwood lumber from private land timber sources.
But Mr. Wright goes further and suggests that BC could eliminate the export restrictions that currently exist on timber from provincial Crown lands in exchange for the elimination of the export restrictions that exist on logs from state and federal lands in the US. BC softwood lumber from public land timber sources would then become eligible for an exemption under Article XII.4 of the SLA. Mr. Wright suggested that changes to BC forest policy over the last few years (market-based stumpage, elimination of appurtenancey, and so on), have otherwise eliminated any other basis for the US to claim a subsidy against softwood lumber from public land timber in BC.
Consequently, the existence of a clear path towards a level playing field between the US and BC in the log and lumber industries leads Mr. Wright to ask whether there is an appetite for fair trade between the parties. The other side of the question that is left unstated, of course, is that if an appetite for fair trade really exists, then why don’t we have it?
Mr. Wright is obviously very expert in this particular field of public policy. The one comment I would offer is that recent changes in BC’s forest policy may not necessarily eliminate American accusations of subsidy with respect to BC’s public land timber supply. The BC forest industry is still highly regulated and, undoubtedly, there is plenty of ammunition in those regulations to allow creative American protectionists to assert claims of subsidy (the validity of these claims does not seem to matter particularly, so long as there is at least a pretext). More importantly, while the Province as moved towards “market-based” stumpage, MPS is still a complex administrative pricing system. So long as we have administrative pricing, we are exposed to accusations of subsidy. And the elimination of administrative pricing is probably a tougher nut to crack then log export restrictions.
Lobbying the Minister
Another highlight of the morning program for me was the Minister’s speech. Minister Rich Coleman filled his speech with humour, both of the self-effacing and pointed varieties. The Minister touched on a number of policy areas, offered a defence of the SLA, and made it perfectly clear that if any group wanted him obtain government funding for any kind of construction project, then that project better have a sizable component of wood in it. He also indicated that he would make a significant policy announcement with respect to log export policy in the next few weeks after he receives an experts report from Don Wright and Bill Dumont.
What I found particularly interesting was the view the Minister takes towards his meetings with representatives of the forest industry. Paraphrasing the Minister, he stated that, inevitably, every issue that anyone from industry brings to him in a meeting seems to boil down to the following: “I want wood for free ... When are you going to get me wood for free? ... I want all obstacles between me and my free wood removed for free”. He went on to explain how this approach could really put him in trouble with the Minister of Finance who expects the Province’s forests to generate a billion dollars of revenue annually for her coffers. He then went on to recall a specific meeting he had with a group of industry leaders, and how he started out the meeting by asking: “So ... what do you guys want?”
While the Minister was going for humourous effect, I wonder if his humour revealed a shortcoming in how the forest industry in this province relates to government. The most effective government relations do not come from self-centred demands made of government that appear to benefit only the person making the demand. Yet, judging by the somewhat cynical view the Minister appears to take towards his meetings with industry, I wonder if this is too often industry's approach. In my view, a far more effective approach towards government relations is to emphasize the benefits of your proposal from a public policy perspective: don’t tell government what it can (must) do for you; rather, tell government what you can do for it.
Next Year
So I’m already looking forward to next year’s convention April 16 – 18 at the Grand Okanagan in Kelowna. While I always enjoy my visits to PG, the Kelowna conventions have a great Texas Scramble golf event at Kelowna Springs Golf Club that really adds to the value of the convention from my perspective. If you are planning to stay at the Grand, don’t delay – I made my reservation yesterday, and space was already getting tight.
The commentary in this blog is general in nature and does not constitute legal advice. Persons requiring further information or advice should contact Jeff Waatainen at 250.758.9485 or jeff@bcforestrylaw.com
