Canadians study U.S. proposals to end lumber war

Canadian forestry officials say they need more time to study U.S. proposals that aim to resolve the softwood lumber dispute by forcing some provinces to dramatically reform their timber management practices. For decades, Canadian forest companies have operated under a government-administered system that requires them to operate sawmills and create employment in return for the right to harvest timber on Crown land. But that system will be changed dramatically if provinces such as British Columbia and Quebec agree to adopt a series of proposals by Grant Aldonas, the U.S. Commerce Department's undersecretary for international trade. That is why Canadian lumber officials who attended meetings with Mr. Aldonas in Washington last week are happy that the industry has been granted more time to mull revisions to the complex plan before talks resume.

A key element of the Aldonas plan would see provinces replace an existing government adminstered system with market-based practices, such as open auctions for pricing Crown timber. However, Canadian lumber officials say any move to create an auction-based system would be a huge challenge because the majority of the Crown timber has already been allocated under long-term and binding contracts known as tenure. "One could still have Crown-ownership of lands and still be consistent with the Aldonas proposals," said George Hoberg, a professor of forestry at the University of British Columbia. But he said it would involve a substantial redistribution of existing tenures to make more timber available for auctioning. Major lumber companies that control most of the tenure in British Columbia would seek compensation in the form of greater flexibility from the provincial government in the way they run their operations, or money, or both, said Jake Kerr, chief executive officer of Lignum Ltd., one of B.C.'s largest privately owned lumber companies.

Meanwhile, there is a concern about the cost to government. If provinces were to take back tenure to create an auctioning system for pricing timber, provincial governments would have to take over planning, laying out cut blocks, building roads, and reforestation, a B.C. Forests Ministry official said. Forestry officials in Quebec are opposed to the idea of auctions even though about 20 per cent of the province's timber production volume comes from privately owed lots located along the St. Lawrence River. "We don't need to implement an auction system in Quebec because the starting point of our stumpage approach is based on a competitive and representative private market," said Jean-Pierre Adam, head of stumpage operations at the Quebec Ministry of Natural Resources. He said private lot sales are the main determinant of what the industry pays for Crown timber in Quebec. In some of the more remote regions of Canada, provincial stumpage revenues would likely fall because of the lack of available bidders for auctioned timber, provincial forestry officials say.