NCPA - National Center for Policy Analysis

British Columbia Suggests Market-Pricing of Lumber

April 1, 2003

For decades, United States and Canadian lumber interests have engaged in a feud over the setting of lumber prices. Now officials in the Canadian west coast province of British Columbia have come up with a novel proposal to move away from complex formulas to establish prices and toward market-set prices for Canadian exports to the America.

U.S. timber groups, however, are said to be wary of such a radical step.

  • British Columbia accounts for about half of the roughly $6 billion a year in softwood lumber that Canadian producers sell to the United States.
  • Pricing disputes arise from the fact that more forest land in Canada is owned by the provinces, while most timber land in the United States is privately owned -- which means that provincial governments by and large set Canadian timber prices, which the United States believes are set so low as to amount to dumping on U.S. markets.
  • The proposed remedy is for the British Columbia Forest Ministry to sell about 20 percent of public timber to the highest bidder and use those auction prices as benchmarks to set harvesting fees for all public lands.
  • The Canadians believe that approach would replace the complex calculations now used and result in a pricing system that reflects market forces.

Executives of groups lobbying for U.S. timber interests say the proposal may be a good step, but expressed doubt that it would generate market-consistent results.

The U.S. government imposed countervailing and antidumping duties last year averaging 27 percent on Canadian shipments into the United States of softwood lumber.

Source: Lynne Olver and Christopher J. Chipello, "British Columbia Acts to Inject Market Forces into Lumber Prices," March 27, 2003, Wall Street Journal.

 

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