In Alabama, support for U.S. softwood stand has deep roots

Share

Alabama timberland owner Hayes Brown has seen the enemy in the softwood-lumber dispute, and it is Canada.

His extended family members have emotional and financial ties to the forest industry dating back to the 1950s, when his father and uncle first acquired land. The woods carry deep significance for Mr. Brown, 57, who inherited his one-sixth stake in the properties in the 1990s.

He argues that under the U.S. system of soliciting bids, private-timber rights are sold based on market forces, which means lumber goes for competitive prices from buyers seeking to chop down trees on his family's properties.

In much of Canada, the forests are on Crown land, with buyers paying "stumpage fees" to provincial governments for the right to log. The core of the U.S. complaint about Canadian lumber exports is that the wood is sold far too cheaply, then dumped into the U.S. market.

"You distort market prices if you own a large part of the market," as the provinces do, Mr. Brown said in an interview from Birmingham, the largest city in Alabama.

His argument underscores why the softwood fight persists. The United States and Canada have different systems for charging producers to chop down trees – and the two countries vehemently disagree on the impact of those differing pricing structures. The U.S. position is supported not only by lumber producers but by private-forest owners such as Mr. Brown.

Canada has repeatedly won cross-border trade arguments on appeal in the long-running softwood battle dating back to 1982. Canada argues that provincial stumpage fees are fair and do not amount to subsidies, but the Trump administration – like previous administrations – has refused to accept that argument.

Crown timber accounts for 95 per cent of British Columbia's forested lands; it's roughly 48 per cent in New Brunswick. The influential role of provincial governments in Canada's softwood sector is evidence of subsidies, according to the U.S. Forest Landowners Association and the U.S. Lumber Coalition.

Mr. Brown is a member of the landowners association and also works full-time as a lawyer in Birmingham. He holds timberland parcels with his co-owners – two sisters and three cousins.

"I still have a day job, but the timber sales helped send the kids to college," he said, with his one-sixth portion bringing in about $7,500 (U.S.) a year from timber sales.

Mr. Brown's wife, Carrie, works as a nurse. Their 30-year-old daughter teaches French in Tennessee. The rest live in the Birmingham region: a 27-year-old daughter who works in the insurance industry; a 24-year-old daughter who is a graduate student at the University of Alabama's Birmingham campus; a 22-year-old daughter who works in the food sector; and an 18-year-old son who has started university.

"Canada has only a small percentage of forests that are private," Mr. Brown explained. "In Alabama, where I live, it's just the reverse – individuals and companies own 95 per cent of the forested lands."

He isn't swayed by the fact New Brunswick has slightly more private timberland than Crown-owned forest land. "There is no halfway," he said. "The people who get punished when it comes to Canadian stumpage are the U.S. owners of the timber. It can take two lifetimes for some trees to grow."

The 2006 Canada-U.S. softwood-lumber agreement expired in October, 2015. The pact covered British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec.

Newfoundland and Labrador, Nova Scotia and Prince Edward Island remain exempt from countervailing and anti-dumping duties imposed by the United States. But in 2017, the Trump administration added New Brunswick to the list of provinces where producers are now subject to tariffs.

U.S. landowners big and small support the powerful U.S. lumber lobby's aggressive campaign to blame Canada.

"We cannot compete against Canadian governments. We can't beat them," U.S. Lumber Coalition co-chairman Joe Patton said from Tuscaloosa, Ala.

Mr. Patton is also vice-president of wood products at privately owned Westervelt Co., which has almost 500,000 acres of timberland in the southeastern United States. Westervelt's Alabama lumber mill in Moundville employs about 320 workers.

"Our mill touches a lot of people – all the families, the restaurants and gas stations. I feel my mill and my people can compete with anyone, as long as we're all on a level playing field," Mr. Patton said. "I would like to have everybody working in a free market. If something happens to our mill, it would be a huge setback to the community and the people in the area."

In the minds of Mr. Brown, Mr. Patton and other players in the U.S. forestry sector, governments in Canada are undercharging for the right to clear forests, thereby subsidizing Canadian firms that turn timber into products such as two-by-fours.

In 2017, the U.S. Department of Commerce imposed final countervailing and anti-dumping tariffs averaging 20.23 per cent against most Canadian producers. Lumber prices have climbed to near-record highs as Canadian exporters pass along most of the tariffs to buyers.

But Canadian mill operators say their communities will face tough times if the softwood lumber fight lingers through 2018.

Duane Woods, president of Chaleur Sawmills in New Brunswick, said the stakes are high, with Chaleur employing 200 people at the mill and another 100 logging contractors. Kilmer Group, the private holding company of construction and sports magnate Larry Tanenbaum, owns Chaleur.

Mr. Woods said the Commerce Department accepts the vast majority of the arguments put forth by American timberland owners and lumber producers: "The Americans pick whatever fits to suit them."

The Canadian system of stumpage fees has no advantage over the United States, he said. And there are variations in the way the fees are established. New Brunswick, British Columbia and Quebec, in particular, have auction-based pricing systems that are intended to mimic the free market, forestry observers in Canada say.

"The U.S. needs Canadian lumber," Mr. Woods said. "If you cut off supplies from Canada, all that does is put prices up for houses in the U.S. because lumber prices go up further."