By JAMES RONALD SKAINS
Journal Correspondent

• Washington, D.C.
"Unfortunately, the odds are that the Canadian lumber industry will survive but the U.S. lumber industry won't survive in any profitable fashion," John Rogasta told the Piney Woods Journal in his Washington, D.C. office on Monday, March 30. "We have negotiated in good faith with the Canadians putting some fair compromises on the table. However, each proposal has been rejected by the Canadian federal government. The countervailing duties that have been imposed on Canadian lumber have not slowed down Canadian imports," Rogasta explained. "When the duties went into place, the Canadians just increased production. Plus, the Canadian federal government began rebating part of the 27% duties back to the mills."

"What most people don't understand is the fact that, if the U.S. loses on the lumber issue before the World Trade Organization, the duties collected over the last two and half years will go back to the Canadians plus accumulated interest," Rogasta pointed out. "The Canadian government rejects every compromise trade proposal we make because they are betting that the WTO will rule in their favor."

Rogasta works with the worldwide law firm of Dewey Ballantine which was founded by former New York governor and 1948 Presidential contender, Thomas Dewey. Rogasta has been in the thick of negotiating lumber trade agreements with the Canadians for the last fifteen years, including the Canadian softwood agreement that expired in March of 2001, leading to the current lumber market crisis.

"One of the major problems the U.S. lumber industry has is that no one in Washington, D.C. knows much about business in general and the lumber industry in particular," Rogasta noted. "When the government economists studied the Canadian lumber import business, their proposed solution was for the U.S. companies to build sawmills in Canada."

"What we now is a situation whereby both the Canadian and U.S. lumber industries are losing money," Rogasta emphasized. "The question is, who can last the longest. The U.S. is still losing two major sawmills each month whereas the Canadians are not having sawmills go out of business."

"The largest of the pure Canadian lumber companies has said publicly that they will be last one standing," Rogasta pointed out. "The Canadian federal government recently launched an all-out effort to lobby the U.S. Congress. They took out full page ads in the Washington papers and other major papers around the country plus hired lobbyists to directly lobby Congress."

"These ads hit upon the concept that any restrictions on Canadian lumber imports would devastate the U.S. home building industry with exorbitant increases in lumber cost," Rogasta explained. "The truth is that the lumber cost in a house at the sawmill level is only two percent of the cost of a house. The cost of carpet and floor covering in a U.S. home is more than the cost of lumber in a house at the sawmill level."

"Not only did the Canadians lobby Congress not to negotiate any new Softwood Lumber Agreement with Canada, but the government of Canada provided monies for Canadian Mayors to visit U.S. Mayors and Governors to lobby against the U.S. negotiating a new lumber agreement," Rogasta emphasized. The Canadians want to leave the NAFTA agreement in place which puts no restrictions on the importation into the U.S. of cheap subsidized Canadian lumber."

"The Canadian federal government or the "Crown" as it is known in Canada, owns over ninety percent of the timber lands in Canada," Rogasta said. "The object of the socialistic 'Crown' government is to keep people working in the sawmills and timber industry. Therefore, the Crown charges little if nothing to the timber companies for the timber or stumpage as we call it here in the States."

"This government subsidy allows the Canadian lumber industry to send lumber into the U.S. at costs considerably less than U.S. lumber companies can produce lumber from trees grown on privately owned land," Rogasta stated. "When lumber prices are low at the mill level as they are now, the losses for both the Canadians and U.S. lumber industry are greater than when prices rise at the mill level."

"What we have proposed is a sliding scale on imported Canadian lumber," Rogasta explained. "When prices of manufactured lumber at the mill level are in the $300 a thousand board foot level, then a 25% duty is imposed on imported Canadian lumber. However, as lumber prices at the mill level increase, the duties would decrease until at the $400 level of mill lumber prices, duties would almost disappear."

"The Canadian lumber industry as well as the Provincial governments approved our proposal," Rogasta pointed out. "However, the Canadian federal government turned down our proposal. We even offered to split the difference in the duties at different prices but the Crown turned us down and negotiations broke off."

"They then launched a massive lobby effort with Congress and other government officials all across the country," Rogasta noted. "This seems unethical if not illegal for a foreign government to lobby our Congressmen and government officials."

Unless negotiations resume and a new trade agreement is put into place, the WTO will make a final decision under the terms of NAFTA later this summer, which could spell more hard times for an already beleaugured U.S. lumber industry.

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