Canada Is a Nation Sparsely Inhabited by People but Densely Populated with Trees

BUSINESS
Friendly competition ; Canadian ambassador Michael Kergin took issue with President Bush's proposal for lumber tariffs during a Twin Cities visit.
Mike Meyers; Staff Writer
04/11/2002
Star-Tribune Newspaper of the Twin Cities Mpls.-St. Paul
METRO
01D
(Copyright 2002)

Canada is a nation sparsely inhabited by people but densely populated with trees.

The United States is a nation crowded with people and comparatively fewer trees.

That's why Canadian lumber prices are low - abundant supply and efficient, automated sawmills to cut the wood, Canadian Ambassador to the United States Michael Kergin said on a visit to the Twin Cities this week.

It's also the reason the Bush administration did U.S. consumers no favors when the White House proposed slapping stiff tariffs on "dimension lumber" imported from Canada, a move that Kergin said will cost jobs on both sides of the border.

So goes a message Kergin will spread on a U.S. tour, timed at a moment of disputes and cooperation between Canada and the United States. The disputes center on tariffs. The cooperation involves securing against terrorism the 5,500-mile border between the two nations.

The United States may lead the world in technology, but in lumber, Canada has the cutting edge, Kergin said.

Bush administration officials have accused Canadian lumber mills of selling in the United States at less than the cost of production. But Kergin said Canada has a comparative advantage thanks to a supply of lumber that is far more plentiful and sawmills that are far more efficient than those found south of its border.

U.S. lumber mills in the Southeast, which have lobbied for trade sanctions against Canada, are too small to win the kind of long- term contracts from timber companies that Canadians enjoy, Kergin said.

It's a gospel that Kergin preached before more than 100 business executives attending a Wednesday luncheon sponsored by the Minnesota International Center and the Canadian Consulate General in Minneapolis.

Home builders have estimated the "anti-dumping" penalties will add an average of $1,500 to the price of a new home. The Wall Street Journal, Kergin told Star Tribune editorial writers on Wednesday, estimates that lumber prices will put a new house out of reach for 300,000 would-be home buyers.

"Housing and auto sales were the things that kept the wolf from the door" in the latest recession, Kergin said. Yet the Bush administration will raise the price of both - and risk hampering sales - with new lumber and steel tariffs, he said.

Canada is appealing to the World Trade Organization to stop the "protectionist" tariffs before they're implemented in May. Thanks to the North American Free Trade Agreement, Canada is exempt from new tariffs on steel pushed by the White House last month. But the lumber tariffs are being called "anti-dumping" measures targeted at Canada.

The White House is making a mistake "by adding this tax, which is what we consider it to be, for a fairly narrow group of producers," Kergin said.

Paradoxically, some of the largest wood producers in the United States - once champions of higher lumber tariffs - have switched sides, Kergin said. The reason: U.S. multinational wood producers lately have merged with Canadian mills in a global consolidation of the industry.

"As U.S. industry invests in Canadian operations, we're partners in competing globally," Kergin said.

Canadian-U.S. cooperation on domestic security has intensified since the terrorist attacks on New York City and Washington, D.C., on Sept. 11, the ambassador said.

The Canadians, he said, have pledged to spend billions of dollars on security systems designed to link U.S. and Canadian government computers to compare information on the backgrounds of visitors from other nations or known criminals and terrorists.

What's more, Kergin said, Canada and the United States - which do $1.3 billion in business with one another each day - are talking about setting up high-tech monitoring procedures to ensure that truck cargo is certified as secure and drivers' backgrounds are checked before crossing the U.S.-Canadian border.

The two nations have a special relationship that should not be spoiled by squabbling over trade, Kergin said.

"Canada and the U.S. are longstanding partners in security and in prosperity," he said. "Since Sept. 11, they underpin our mutual confidence and safeguarding against criminal or terrorist events."

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