Those who advocate for even further restrictions on log exports from BC (and who aren't otherwise inherently opposed to logging in the first place) would take us in exactly the opposite direction that we need to pursue. Aside from the fact that forest economists such as Dr. Peter Pearse argue that log export restrictions are a wash in terms of net gain or loss of jobs if both logging and sawmilling jobs are considered in the equation, and aside from the principle that people should have the freedom to trade their goods and services where ever they can obtain the highest economic return, the absence of free trade in logs on both sides of the border is a cancer on our ability to maintain both a healthy logging industry and a healthy sawmilling industry.
Restrictions on exports of unmanufactured timber are a subsidy to the domestic sawmilling industry. Period. There is simply no other reasonable view the matter: they serve to reduce the cost of fibre for domestic sawmillers by insulating that fibre from the demands of the larger international and national markets. That's why they were imposed in the first place: to ensure a cheap source of fibre to encourage people to invest their capital in timber manufacturing facilities in BC.
But we are now a century past the time when log export restrictions were imposed. We have an over-abundance of manufacturing capacity. What we lack is free access to our biggest market--the United States. While we should pursue the potential rejuvenation of our Japanese markets, and continue to invest in the development of Chinese markets, for now and the foreseeable future the health of both our logging and timber manufacturing industries is tied to the American market.
Yet, so long as we do not have free trade of logs, we will not have free trade of lumber. And this, I would suggest, hurts both the logging and manufacturing sectors of our forest industry. The effect on the logging industry is straight-forward enough: as noted, export restrictions limit the demand for logs and, therefore, the value the logger is able to receive for its logs, and its ability to grow its business (or even survive). However, given that export restrictions are a subsidy, they harm the manufacturing sector due to the fact that they restrict the access of BC softwood lumber to the US. It's a lose-lose for BC.
Elimination of log exports would allow us to obtain exemptions to the penalties imposed on exports of lumber under the current Softwood Lumber Agreement between Canada and the US, and make future protectionist actions from the US Department of Trade and Commerce difficult to justify. In terms of logs from private lands, the federal export restriction on unmanufactured timber (the so-call "Notice 102") is the only possible subsidy to domestic lumber production. In terms of logs from public lands, the export restriction under Part 10 of BC's Forest Act is the only provincial subsidy of consequence left standing in BC--we have already delinked public tenures from manufacturing facilities, eliminated cut control requirements, and have implemented market-based stumpage.
One important difficulty is the fact that exports of American logs north of the border are also subject to restrictions. Logs from private lands in the US are subject to the so-called "substitution rule" whereby those who export private land logs across the border are not entitled to acquire public land logs for their own use. Exports of logs from US federal and state public lands are prohibited. The elimination of log export restrictions south of the border needs to accompany the elimination of Notice 102 and Part 10 of the Forest Act. The goal is the free flow of logs and lumber in both directions across the border, not a one-way street headed south.
While the contemporaneous elimination of log export restrictions on both sides of the border is not necessarily a simple matter, the answer is surely not to adopt a policy that takes us in the exact opposite direction and increases the restrictions on our own exports of unmanufactured timber. Once thing is certain: we will not get the Americans to eliminate their log export restrictions if we do not eliminate ours; almost equally as certain, until this happens we will not obtain the free access to the American softwood lumber market that our manufacturing sector truly depends upon.
A level playing field requires the elimination of log export restrictions on both sides of the border, and the elimination of restrictions on Canadian softwood lumber south of the border. We cannot expect to have one without the other. Only when all these restrictions are removed will the BC timber manufacturing industry have the opportunity to compete on a level playing field in the US market. And only then will it have the potential to pay our loggers what BC logs are actually worth in the absence of artificial market restrictions on domestic logs. This is a path that will benefit both sides of our forest industry - the logging and manufacturing sectors. Those in the BC forest industry who advocate for log export restrictions should abandon the short-term and superficial appeal of their position, and advocate for policies that are less antiquated and in the long-term interests of the entire forest industry--specifically, the unrestricted flow of logs and lumber in both directions across the border.
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
