"Ed Huntress" writes:

I'm curious if you guys know the issue on which the case is being decided.
Canada hasn't denied that they subsidize lumber production via
state-determined stumpage fees (well, they *did* make that argument, but
dropped it). What's at issue is a fairly arcane question of where the cost
basis is supposed to be determined for judging relative economic harm.

To the best of my knowledge, Canada has not admitted "subsidizing" lumber
production. Most timber lands in Canada are publically owned, and the
trees are sold at stumpage fees set by contract. The contract process
is supposed to bring in enough income to pay expenses (so stuff isn't
being "sold at a loss"), and this also allows the provincial government
to control things like raw log exports - it's better for the economy if
the lumber is processed into products locally.

It seems that the US position is that if the logs aren't auctioned on
the open market, then the companies aren't paying market prices for the
logs, and this is a "subsidy". It isn't what most people would call a
subsidy, but to the US lumber lobby if it's not done the US way it's
wrong. The US seems to want open auction of logs, and also no
restrictions on raw log exports.

Basically, there is a different system in Canada, at least supposedly
managed for public benefit, but the US won't accept any other system as
being equal. Canada isn't selling the logs at a loss, or giving the
lumber companies direct monetary subsidies, or "dumping" (selling the
lumber for less in the USA than Canadian customers pay), it just isn't
charging as much as private US landowners sell their logs for. In the
US view, the US way is right and Canada's way is wrong, but that's a
pretty biased view.

I can't help thinking that if the shoe was on the other foot, and the US
public was providing a resource to producers at less than open-market
prices, the US attitude would be that this was wonderful and entirely
fair, or at least allowed. For example, how much do the farmers in
California's central valley pay for water? Does is pay for the dams and
the network of canals that distribute it? Isn't this a much larger
subsidy of farmers by the public? Doesn't this give California farmers
an unfair advantage in producing and exporting food?

From this side of the border, it looks like US policies are based
entirely on self-interest, not principles. Protectionism is either "good"
or "bad", depending on who benefits and who loses.

In the case of lumber, it's actually in the self-interest of only a
small number of people in the USA, while the general public gets to pay
higher prices.

Dave