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Globalization and the Timber Industry
by Matthew Koehler, Native Forest Network
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Because the timber industry continues to blame all mill shutdowns and
slowdowns on environmentalists, the time has come to shed some light on
the global economic forces responsible for the downturn in the timber
industry.
One of the biggest problems currently facing the timber
industry is near record low lumber prices. The reason: a glut of timber
on the world's markets coupled with a slowdown in the U.S. economy,
which has reduced the demand for new housing construction. Of course,
this situation has been further compounded by similar economic problems
that have plagued Asia for the past five years. The reality is that in
an increasingly global marketplace, what happens halfway around the
world can cause a mill Montana to shut its doors.
This should
come as no surprise. For years, the environmental community has warned
of the dire consequences that increased globalization, corporate mergers
and the subsequent "race to the bottom" would bring to workers and
ecosystems throughout the world. In 1999 environmentalists stood arm in
arm with organized labor to educate the world about the threats posed by
the World Trade Organization and their undemocratic policies which
undermine environmental laws and worker's rights.
Back in 1994 we
warned that the North American Free Trade Agreement (NAFTA) between
Canada, Mexico and the U.S. would cost U.S. jobs while causing economic
and environmental harm in Canada and Mexico. Current estimates are that
NAFTA's passage has resulted in "pink slips" for 395,000 U.S. workers
while deforestation in Canada and pollution levels in Mexico have
increased exponentially.
The severity of the situation facing
U.S. timber companies was highlighted by 53 Republican and Democratic
Senators in a letter to President Bush on March 1, "The U.S. lumber
industry faces a continued crisis with lumber prices collapsing nearly
33% and shipments from Canada growing to record levels. In the past six
months, such conditions caused approximately one hundred mills across
the U.S. to close with attendant losses in employment."
Pyramid
Lumber in Seeley Lake represents a case study of the impacts of NAFTA
and increased globalization. In fact, the U.S. Department of Labor has
certified that NAFTA and increased imports of Canadian timber have been
responsible for Pyramid's woes. The Department of Labor found that,
"increases of imports from Canada of articles like or directly
competitive with lumber contributed importantly to the declines in sales
or production and to the total or partial separation of workers at the
subject firm [Pyramid]."
The future for mid-sized timber
companies like Pyramid Lumber is not likely to get any brighter. With
the expiration of the U.S./Canada Softwood Lumber Agreement on March 31,
imports of Canadian timber into the U.S. will skyrocket from their
regulated level of nearly 15 billion board feet.
While the U.S.
will attempt to place a tariff on Canada timber coming into the U.S.,
Canada has already petitioned the World Trade Organization (WT0) about
the legality of such a tariff. Since a tariff on Canadian timber
represents a barrier to free trade, the WTO will likely rule in Canada's
favor allowing a dramatic increase of Canadian timber to be dumped in
the U.S.
Perhaps an even bigger threat to the U.S. timber
industry is the expansion of NAFTA to include the entire western
hemisphere under the proposed Free Trade Area of the Americas (FTAA).
Trade negotiators will be holding closed-door meetings in Quebec City,
Canada from April 20-22 to help make the FTAA a reality and the "race to
the bottom" a few steps closer to completion.
If NAFTA has
caused so much grief for mid-sized timber companies, imagine the impact
of adding the entire western hemisphere to the mix. Countries such as
Chile, Argentina and Brazil have vast reserves of native old-growth
forests that the big players in the timber industry are eagerly waiting
to exploit once the FTAA is enacted and trade barriers are eliminated.
Companies such as Boise Cascade and Weyerhaeuser-who coincidentally own
some of the largest logging companies in Canada and have benefited
tremendously from the dumping of Canadian timber into the U.S.-will
again position themselves to reap the rewards of the FTAA.
Over
the past century, the one constant within the "boom and bust" nature of
the timber industry is that the industry has always moved to new
frontiers with cheap access to big timber. This is as true today as it
was in the late 1890's when the timber industry picked up its stakes in
the Great Lakes and settled in the Pacific Northwest.
Unfortunately,
unless our society begins to address the negative impacts of
globalization we will continue to see more of world's timber supply
being controlled by a few multinational corporations that have the
resources and the power to move from continent to continent. This is the
reality of increased globalization on the timber industry.
Matthew
Koehler is with the Native Forest Network, a non-profit international environmental organization.
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