Softwood deal looks a bad bargain

VICTORIA - It sounded like big news, an end to the costly softwood dispute.
The first reports said Canada and the U.S. had hammered out a framework deal to end the trade battle, news that offered hope for a more secure future for B.C. forest communities.
And then it all started unravelling as forest companies and provinces picked at the deal reached by the new federal government.
Rightly, based on the sketchy details available. After almost five years of duties and legal battles Ottawa appears to have reached an agreement that looks much like capitulation.
Start with one big issue, the $5 billion in duties collected by the U.S. since 2001. Canada’s position has been that the duties are illegal. The federal government has claimed success in a series of legal skirmishes, even winning a NAFTA ruling that the money should be returned.
But the draft agreement would see the U.S. keep 22 per cent of the money, likely to hand it over to the American companies competing with Canadian producers. Canadian companies would only get back 78 per cent of the duties they had paid.
Disappointing, but not a dealbreaker if that was the only negative aspect.
But it isn’t. Canadian companies still face duties and trade barriers under the proposed settlement.
Canada had argued for free trade, rejecting the American argument that our industry was subsidized because provinces didn’t charge enough for trees on Crown land. The NAFTA agreement means Canadian producers should be able to sell into the U.S. without restrictions or tariffs.
The proposed deal includes both.
Canadian producers would be limited to supplying 34 per cent of the American market. That’s less than Canada supplied in 1995, the year before the last softwood deal was signed. And it’s about the level Canada has captured over the last few years, even with the duty.
So much for hopes for free trade. Even if Canadian producers were more efficient, and able to offer lumber at better price, they would be limited in how much they could sell to the U.S. The quota would do the work the duties have done for the past five years.
And even if Canada’s share of the U.S. market was below the ceiling a duty would be imposed anytime lumber prices fell below $360 US. Prices were below that level for much of last year.
It doesn’t look much like a win for the Canadian side. Quotas and duties remain in place, and the industry forfeits $1 billion.
The reaction was swift, and negative.
Even if companies - and provinces - could live with the terms, there are some major problems ahead.
It sounds simple to say Canada will observe a quota limiting exports to 34 per cent of the U.S. market.
But practically it’s a nightmare. Who allocates the quota, and how much does each company get to sell? The 1996 deal allocated quota based on sales over the previous few years. Coastal companies had been selling into a hot Japanese market during those years. When that collapsed, they were left without access to the U.S.
It’s not just competition between companies. Ontario is already complaining about unfair treatment. It had a poor year for exports to the U.S. in 2005, in part because of B.C.’s ramped up logging of pine beetle wood. Ontario fears that will be used to justify a permanent smaller share of the quota.
There are solutions. The quota could be auctioned and traded among companies.
But all in all, this looks like a mediocre deal after five years of sacrifice and struggle.
While B.C. may stand to do well on quota in the short term, the agreement falls far short of what the Campbell government has been arguing for over the last four years.
It’s not the agreement anyone wanted. Now we’ll see if companies and governments are desperate enough to accept it.
Footnote: B.C. launched a major overhaul of its forest management and stumpage systems to try and demonstrate to the U.S. that producers are not subsidized. The costly, complicated restructuring will have other benefits, but it didn’t help on the softwood front.

Campbell’s evasions leave children and families’ worries

VICTORIA - I don’t understand why Premier Gordon Campbell doesn’t want to say he’s sorry the government mismanaged the children and families’ ministry.
Acknowledging error and promising to do better - sincerely - is usually well-received.
But it’s the premier’s call. If he doesn’t want to say sorry, no one can make him.
What’s worrying is that Campbell may actually believe that the government did a competent job of managing the ministry. That would mean he has misread the Ted Hughes’ report on the ministry. And worse, it would mean that he had failed to learn from five years of fumbling.
And that would be bad news for children and families who need the ministry’s help.
The legislature was back Monday after a two-week break, giving the opposition its first chance to ask about Hughes’ report. Will Campbell admit mistakes and apologize, asked NDP leader Carole James? (OK, it’s a political question.)
Here’s how Campbell responded. “What we should all learn from Mr. Hughes' report is that the government undertook initiatives which Mr. Hughes endorses,” the premier said. “He also says that we, perhaps, took on too many initiatives at once.”
That’s not really what Ted Hughes said. "The strongest impression I have gleaned from this inquiry,” he wrote, “is one of a child welfare system that has been buffeted by an unmanageable degree of change. . . Much of this has gone on against a backdrop of significant funding cuts, even though it is commonly understood that organizational change costs money."
Campbell went on to say if the government had any failing, it might be that it was trying too hard to help children. “We did not carry that out as well as we should have,” he said. “There is no question about that.”
He acknowledged problems, including budget cuts. “In fact, in December of last year we pointed out that there may well have been challenges with funding,” he said. “In this budget this year we provided an additional $100 million, which Mr. Hughes endorses, to allow us to move forward and to build on the regionalization concept which we announced in the throne speech.”
But the budget cuts started in 2002. Campbell didn’t explain why he didn’t know about the problems until last fall.
And here’s Hughes on the move to create regional authorities. "Decentralization can not be done off the side of a desk. It requires a dedicated team, and resources. It can not be accomplished in an environment of instability and ever-changing priorities.”
Campbell sees a government trying to do a little too much.
Hughes reports "a climate of instability and confusion" and a ministry "stretched far beyond its limits." Basic elements like support for children who had problems with the system and help for teens who left foster care at 18 were chopped. Things fell apart all over the place.
If Campbell doesn’t want to acknowledge the problems, that’s one thing.
But if he really doesn’t see them - as he apparently didn’t see them over the past four years - that’s another, far more serious problem.
“I can tell you this: at no time was there anything in front of this government except for what is in the best interests of young children and their families in British Columbia,” Campbell told the legislature.
Really? How was it considered in the best interests of young children to cut the budget to help them by 11 per cent?
Maybe it’s just politics. I remember Campbell in opposition, arguing passionately for more money for the ministry, pledging to work with the NDP government to help make things better.
He was rebuffed.
Now it was James, writing Campbell two weeks ago, asking for a meeting to talk about making things better.
She was ignored.
I think the government has much to apologize for.
But right now, I’d settle for a sign they had really learned from the mistakes and failures of the last four years.
Footnote: Back in December Solicitor General John Les called off an internal review of how 713 incomplete child death reviews were forgotten in a warehouse. The government had messed up, he said. Hughes would provide more answers. Hughes immediately wrote Les and said he couldn’t, a fact Les never revealed. Now he says the file is closed.