Letters by a modern St. Ferdinand III about cults

Canada illegally subsidizes its softwood lumber industry.In fact about $4 billion per annum in various taxpayer funded transfers are given to the unionized lumber industry.This is not a surprise. Canadian trade policy has always been ‘managed’ trade.Outside of the key auto and auto parts sectors, very little in Canada is subject to ‘free trade’ with the USA.Yet Canadian media and politicians want the public to believe that in softwood lumber – an industry with 300.000 jobs and worth $70 billion per annum – there is a free and fair trade with the USA.This is laughable.

Okay so let’s see.Canada subsidizes and protects the following sectors:fishing, transport, banking, dairy, beef cattle, wheat, eggs, poultry, communications, culture, media, water, power, and health care - to name a notable few with price boards, supply boards and regulatory agencies.Yet the gullible public is supposed to believe, thanks to media dis-information and political ‘national socialism’ ravings by lying politicians, that softwood lumber is a free trade product – outside of the usual Canadian protectionism?How logical.

Any independent study of Canada’s softwood lumber industry reveals the following.Canadian governments do not set market prices for timber land;there are numerous kick backs and subsidies to Canadian lumber firms from governments;export log quotas and production/processing requirements are protectionist;and the granting of licenses to cut timber is highly regulated and discriminatory.The entire Canadian lumber sector is therefore non transparent, government controlled and regulated.This is not to say that the US is a nirvana of free markets in lumber – but the overt control by government is largely non-existent and the US does have first and foremost market based timber pricing.Canada does not.

The problem for Canadians is two fold.First anti-US politics, not supporting the Iraq war, free riding off the US military, anti-US media nonsense, and successive left wing governments have left US-Canada relations in tatters.Second, softwood lumber does not fall under NAFTA. The last agreement on softwood lumber expired in 2001.Upon that expiry the US levied duties amounting to over C$4 billion per annum – the subsidized annual sum that Canadian taxpayers hand over to unionized lumber firms.Once political relations sour, then trade disputes will surely arise.Yet the moralizing Canadians are surprised and express outrage.How quaint.

So the real question is this – why is Canada largely anti-US in its politics and market manipulations?Canada has always been left wing – the very idea of US Conservatism has no pedigree in Canada – and Canadian politicians are socialist demagogues, quite good at using the media to blast out anti-American claptrap.Managed trade in Canada and quiet protectionism has a long history as well.Michael Hart’s excellent book on Canadian trade history makes this clear.Contrary to their propaganda Canadians are not free-traders - agricultural barriers against third world poor is a simple example of such hypocrisy.As Herbert Gruel, a professor emeritus of economics at Simon Fraser University, and a senior Fellow at the Fraser Institute, states:

"[T]he existing system was created to help the development of the province's vast timber resources. The industry got used to the benefits the system provided and removing them would impose substantial hardships. Many sawmill workers would have to accept lower wages or even lose their jobs. Much investment would have to be written off."

In other words, artificially-low stumpage fees are a make-work system benefiting Canadian loggers and sawmill operators.A United States industry group, the Coalition for Fair Lumber Imports, claims these Canadian subsidies have almost ruined the United States softwood industry. "Despite a strong home building market, U.S. lumber prices are touching new lows, bankruptcies and mill shutdowns are high and climbing higher, while Canada's share of the U.S. market approaches 35 percent, a near record high."

Canada does illegally subsidize its lumber industry and the WTO rightfully acknowledges this.However the Canadian reaction to the dispute is perhaps more revealing, than the dispute itself.Canadian politicians and the Canadian Prime Minister have taken to threatening, lecturing and hectoring the Americans.This demagoguery is much easier, and increases poll numbers, than actually reforming the system.

In fact a long list of Canadian industry needs reform and free trade.Softwood lumber is really just an example of Canadian hypocrisy and political double talk.So we have the media, their political allies, and the whole nexus of anti-US, anti-trade, and anti-corporate groups using the softwood lumber dispute to criticize the US, and cover up egregious subsidization and the waste of taxpayer money.

Even more perversely an extra $1 billion is now being given to the softwood lumber industry to help cover the loss of market share and the costs of the US tariffs.Yet all the while Canadians are being told that they are wonderful free traders as they pour more money into unionized shops with anti-American gift tags attached.Then again what do expect from a country that will re-elect a corrupt Federal party to power, that is managed by a French-Canadian mafia.It all ties into together so wonderfully.