Letter to The Honorable Barrack Obama, President of the United States

Letter

Snowe Stands Up for American Workers & Urges President to Increase Pressure on Canada to Abide by International Trade Laws

U.S. Senator Olympia J. Snowe (R-Maine) today led none of her Senate colleagues in a letter to President Barack Obama urging him to raise Canada's failure to comply with the terms of the 2006 Softwood Lumber Agreement when he meets with Canadian Prime Minister Stephen Harper in Ottawa next week. In an already difficult market for softwood lumber, U.S. producers, including many in Maine, face continuing unfair competition from Canadian lumber cut from timber that is provided to Canadian producers by provincial governments at an artificially low "stumpage fee".

"The Canadian Government has spent a great deal of time talking about the U.S.-Canada trade relationship in recent weeks, yet has declined to explain its continuing-- and indeed worsening-- non-compliance with the Softwood Lumber Agreement," said Senator Snowe, a senior member of the Senate Finance Committee, which has jurisdiction over trade issues. "It is imperative to ensure that Canadian officials do not try to gloss over their failure to meet their obligations under this agreement when our President travels to Ottawa next week."

The letter was also signed by Senators Jon Tester (D-MT), Mike Crapo (R-ID), Ron Wyden (D-OR), Saxby Chambliss (R-GA), Debbie Stabenow (D-MI), James E. Risch (R-ID), Lindsey Graham (R-SC), Jeff Merkley (D-OR) and Susan M. Collins (R-Maine). The text of the letter is as follows:

February 12, 2009

The President
The White House
Washington, DC 20500

Dear Mr. President:

Representing the United States' largest commercial relationship, trade with Canada is certain to feature prominently in your discussions with Prime Minister Harper in Ottawa later this month. The preservation of this economic partnership requires that both sides live up to their obligations under existing agreements, which is why we urge you to object forcefully to Canada's repeated and worsening violations of the Softwood Lumber Agreement (SLA) in this meeting. The livelihoods of working men and women and their communities in the states we represent depend on their government ensuring Canadian compliance with this agreement.

Each of the last four U.S. administrations has found that Canada unfairly subsidizes its lumber industry. The trade-distorting practice of primary concern has been the provinces' provision of government-owned timber to Canadian lumber companies at an artificially low "stumpage fee," which represents a fraction of its market value. After nearly a quarter century of litigation and intermittent negotiations, the United States and Canada entered into the SLA three years ago to offset existing Canadian lumber subsidies and impose a moratorium on new ones. Unfortunately, Canada has violated this agreement repeatedly to the detriment of U.S. companies, workers, and their communities.

The most egregious agreement violation to-date is occurring in British Columbia (BC), where the provincial government has dramatically reduced public timber prices in order to further subsidize the production costs of BC lumber manufacturers. Over the course of the last year, BC reduced its already artificially low stumpage fee on coastal lumber-grade logs by 70% to $5 per cubic meter. Moreover, a nearly three-fold spike over two years in the proportion of timber from BC's interior being sold by the province for 25 cents per cubic meter as low-grade "pulplogs"-- which are nonetheless turned into building-grade lumber by Canadian manufacturers-- has resulted in over 40 percent of government-owned timber in the BC interior region being provided to Canadian producers essentially free of charge in the second half of 2008 (equivalent quality logs cost an estimated $20 per cubic meter in the open U.S. market).

Such unfair— and under the SLA, impermissible-- practices have exacerbated a lumber market collapse of historic proportions. The U.S. lumber industry has never had the levels of production curtailments and layoffs that it is experiencing now. The impact on closely related industries such as family tree farming is likewise catastrophic.

In your meetings in Ottawa, we anticipate that Canadian officials will repeat recent public criticisms of supposedly "protectionist" U.S. legislative proposals, seeking to divert attention from its unfair lumber trade practices. It must therefore not go unrecognized that much of the Canadian lumber industry is enabled by its government's ongoing violations of the SLA. We hope that you will keep the discussion focused on the real, existing protectionism of Canada's expanded lumber subsidies, and urge Canadian leaders in the strongest possible terms to abide by international agreements currently in force.

Sincerely,