LETTER: B.C. electricity to U.S. should be at production cost

To the editor,

Since 1982, Canada’s softwood-lumber exports have been subject to five separate rounds of U.S. trade litigation.

In January, 2016, with the expiration of the Softwood lumber agreement of 2006, the American government said it was launching investigations to determine whether softwood lumber imports from Canada were hurting American producers. The U.S. Commerce Department said that it will work with the U.S. International Trade Commission to examine allegations that wood was being dumped at less than its fair value and that Canadian firms received unfair financial assistance from governments. The Trade Commission found that there was a reasonable claim that softwood-lumber products from Canada have injured domestic lumber producers, setting the stage for the imposition of preliminary duties.

The B.C. Lumber Trade council rebutted the claims levelled by the U.S. lumber lobby, claiming that U.S. arguments were based on unsubstantiated allegations that were previously rejected by an independent panel. In 2017, the forestry sector employed 60,000 persons and exported $4-billion worth of softwood to the U.S.

According to B.C’s softwood-lumber envoy, attached to the Washington embassy in 2017, it’s the smaller lumber producers that will be devastated financially if the negotiations and litigation are allowed to drag on, as they have been since April of 2017.

On April 22, 2017, it was reported that U.S. President Donald Trump included softwood-lumber when he described NAFTA as a “disaster” that allowed Canada to “take advantage” of the United States. He said he was particularly concerned by Ottawa’s trade practices on lumber, dairy and energy. In one of the following talks, it was mentioned that there was a possibility that a “border adjustment tax” could be levied. Pushing his “America First” agenda, President Donald Trump slapped tariffs averaging 20 per cent on Canadian lumber exports on 26 April, 2017.

By November of 2019, when Trump was commenting on a trade deal with China, he said that China would have to make a deal “that he liked”, and if there was no deal made with China, he’d “just raise the tariffs even higher.”

As Softwood is not covered by NAFTA, the federal government filed a complaint with the World Trade Organi-zation (WTO), not realizing that Trump already had a strategy that blocked such an appeal. It seems that the WTO cannot consider Softwood-lumber adjudication against the U.S. because the president, who makes the U.S. appointments to that body, did not replace the two missing American members, and he appears not to be in a hurry to do so.

This U.S. tariff was imposed when British Columbia was right in the middle of the provincial election campaign, which allowed the two major incumbents to safely address their plan to defuse the current softwood-lumber debacle.

Liberal leader Christy Clark claimed NDP leader John Horgan “turtled’ in the fight over softwood-lumber trade with the United States. This had been her theme since the day the U.S. Commerce Department announced preliminary duties of about 20 per cent, stressing that she was the only one capable of defending the forest industry. In addition, she threatened to choke off exports of U.S. thermal coal from the Fraser-Surrey docks by imposing an onerous levy.

NDP leader John Horgan held that he had prospects of getting a new deal despite the harsh protectionist mood of U.S. President Donald Trump. He suggested that B.C. could retaliate by applying a “border adjustment tax” on its natural gas exports, or by playing hard-ball in the Columbia River Treaty renewal. This treaty regulates flood control and electricity production in Washington State, with a negotiated amount of that electricity credited to the province.

Imposing a “border adjustment tax” that would increase the rate charged for exported electricity from British Columbia into the U.S. from the current charge of about three cents per kWh to the aggregate production cost of 8.5 cents should persuade the Americans to appoint their two members, and that would bring the WTO back into operation.

Given BC Hydro’s massive debts, exports of electricity into the United States from British Columbia should be set at whatever aggregate rate it costs to produce it. That way, the B.C. government could not be accused of subsidizing our American neighbours at the expense of its own citizens.

Abe Bourdon


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