Timber truce ultimatum draws fire

OTTAWA and VANCOUVER -- Softwood producers reacted angrily yesterday to Ottawa's threat that it will offer them no further help if they reject the Canada-U.S. timber truce, with one person warning that some CEOs might boycott next week's summit with International Trade Minister David Emerson.

The Conservative government delivered its hardball warning Wednesday even as Mr. Emerson invited two dozen forestry chief executive officers to Toronto Aug. 9 in an attempt to salvage the controversial deal.

"I am not sure CEOs are going to feel like it's a good use of their time to fly to Toronto just to have the riot act read to them," said Jamie Lim, president of the Ontario Forest Industries Association.

An irate British Columbia lumber industry executive warned that some CEOs might skip next Wednesday's meeting if Ottawa doesn't abandon its hardball tone.

"I wouldn't be surprised: It all depends on the next few days if the party line [from Ottawa] remains hard, fast and firm.

"If it does, I can see them boycotting or sending a junior person," said the executive who did not want to be named.

In a stern warning Wednesday to the industry, a senior Conservative government official cautioned deal opponents they "should prepare themselves for the consequences of rejecting it and . . . might want to start contemplating a world where Ottawa is no longer in the business of subsidizing softwood disputes."

The former Liberal government spent tens of millions of dollars a year in legal fees fighting the dispute in international courts and doled out hundreds of millions of dollars in aid to the sector -- help the Tory official warned is at risk: "If industry rejects this deal, everyone walks away and absolutely nothing about the previous Liberal government's costly stopgap approach to the deal is guaranteed."

The threat drew a sarcastic response from a Manitoba forestry executive who says the five-year-old dispute has forced him to lay off one-third of his employees.

"I think that's a fantastic idea," said Brock Cordes, the chief executive officer of North of Fifty, a Winnipeg-based lumber remanufacturer. "You wash your hands of Canada's second-largest industry, at a time when it is being devastated by the actions of a U.S. lumber [lobby]," he said, referring to the hard-line Coalition for Fair Lumber Imports that triggered the trade battle with Canada.

Yesterday, Mr. Emerson's office played down the threats made by unidentified senior federal officials, saying the minister himself has not personally spelled out what Ottawa would do if the deal died.

"The minister has said there are significant implications if this deal doesn't move forward. He hasn't articulated anything specifically," spokesman Robert Klager said.

He said Mr. Emerson wants to sell CEOs on the benefits of the deal when he meets them next week.

Canadian softwood producers have what amounts to a veto over the deal. It can't enter into force unless this country's companies withdraw about 30 lawsuits filed against the U.S. government in connection with the five-year-old dispute.

Carl Grenier, Free Trade Lumber Council executive vice-president, said the meeting next week sounds like it's shaping up to be an "arm-twisting session instead of a meeting of minds." For their part, the Tories say criticism of the deal is getting all the media attention while supporters of the agreement are keeping quiet. "The criticisms are coming from predictable sources," Mr. Klager said.

The July 1 deal would replace punitive U.S. timber duties with a Canadian-collected export tax and shipment restrictions. It would also let the Americans keep about $1-billion (U.S.) of the $5-billion in tariffs that Washington collected.

Canadian industry has called for better terms including changes to a so-called anti-circumvention clause they say gives Washington a veto over changes to provincial forestry policies. They decry a clause allowing the deal to be cancelled after two years and want logs harvested from private land in Western Canada to get unrestricted access to the U.S. market.