Derek Alger

Chopping Down Canadian Lumber Industry

When one thinks of Canada and the United States, the image of friendly neighbors usually comes to mind, close allies sharing a common border, with tourists from both countries easily traveling back and forth. Bad blood, hardly, except maybe a friendly rivalry when the Toronto Blue Jays are playing the New York Yankees.

But that peaceful camraderie may be weakening under strain from a trade dispute over American imports of Canadian softwood lumber. What started as a little-known lumber industry issue has escalated into a national uproar in Canada, with many calling on the government in Ottawa to get tough with the Bush administration.

The rumblings started in August when the U.S. Commerce Department slapped a 19.3 percent anti-subsidy duty on Canadian softwood lumber, retroactive to March. At the end of October, tension heightened when the U.S. added an anti-dumping duty of 12.57 percent. The combined 31.9 percent penalties may cripple the softwood industry, a major employer in Canada, and force large scale layoffs across the country.

Ongoing talks to resolve the dispute broke down in mid-December after U.S. lumber envoy Marc Racicot, the former Governor of Montana, met in early November with Prime Minister Jean Chrétien and International Trade Minister Pierre Pettigrew in hopes of settling the impasse by Christmas. Such optimism was dashed when talks between the two parties abruptly broke off on Dec. 19, as U.S. lumber industry representatives dismissed a series of Canadian proposals as not going far enough.

The dispute has grown out of claims that the Canadian lumber industry is subsidized by the government which sets artificially low prices for logging on Crown land. The provincial governments, however, have adamantly dismissed such charges.

Racicot issued an ultimatum that the U.S. lumber industry come up with a way to resolve the long-running battle by Monday, January 14th, but the deadline passed with no proposal forthcoming. A second deadline came and went, and now, though a new U.S. proposal is still expected any day now, there's no guarantee, or even likelihood, that representatives of the Canadian lumber industry will consider it acceptable or fair.

Members of the Washington-based Coalition for Fair Lumber Imports, which is preparing the plan to resolve the dispute, huddled in Dallas last week reportedly putting final touches on its proposal, expected to be based on a market-based pricing system. Meanwhile, British Columbia softwood producers are meeting with provincial officials to reconsider its proposal of selling 13 percent of its timber on the open market, which was recently rejected.

It has been reported that the Coalition of Fair Lumber Imports is considering such ideas as imposing export taxes, duties or pricing Canadian timber using U.S. benchmarks.

"We live with this every day and its crippling the industry, especially in B.C.," said one Canadian softwood purchaser based in Toronto. "We have no idea what the U.S. proposal will be, or even if there will be one. It's a different world now in the lumber industry."   

According to the Toronto purchaser, the Coalition for Fair Lumber Imports may just decide to wait until March 21st when the final anti-dumping and countervailing duties are announced. One ray of hope in Canada's bargaining position is the fact that the 19.3 percent countervailing duty on Canadian softwood expired on Dec. 15th and cannot be legally reapplied for two months, though the 12.6 percent anti-dumping duty remains in place.

Still, even with the slight reprieve, few in the industry can predict what will happen regarding ultimate resolution of the current softwood dispute, and at what cost.

Since August, British Columbia, which produces about half the $10 billion of exports of Canadian softwood lumber to the United States, has suffered about 18,000 layoffs. There is fear that if the dispute is not resolved soon that another 12,000 will lose jobs in British Columbia, resulting in about half the province's work force in the softwood industry.

With hopes of a settlement, and the expiration of the countervailing duty, at least for now, some B.C. lumber producers have started calling employees back to work, but several companies are operating with about half the work force they had prior to November before the 32 percent in duties and penalties hit the industry.

The U.S. penalties are based on claims that forest companies have been subsidized by Canadian provincial governments due to low timber-cutting fees on Crown land, known as stumpage.

British Columbia Forest Minister Mike de Jong has described the duty as "a kick in the teeth" and was quoted in the Toronto Star, stating, "Someone should tell the American people that while their attention is understandably focused elsewhere in the world, there's a small group of bureaucrats and politicians and a few industrialists who are doing a hatchet job on their closest ally."

The British Columbia Chamber of Commerce fired off a letter last fall to 7,000 U.S. chambers charging that penalties imposed on Canadian softwood lumber was a "lose-lose" situation in both countries.

The letter maintained that the duty won't be of any benefit to the U.S. lumber industry in the long run because the industry's problems are based on an inadequate supply of timber, and not because of Canadian exports. The Chamber letter labeled the combined duty as "crushing" and "unfair, possibly unlawful."

Appealing to the U.S. chambers in the letter, John Winter, president of the B.C.Chamber, stated, "In these tough economic times, it is in your best interests to overturn this ruling and preserve the value trading relationship between our two nations."

The duties were applied after U.S. lumber producers complained that Canadian softwood was unfairly subsidized. As a result of the penalties, Canadian saw mills have been forced to lay off thousands and as Canadian lumber becomes much more expensive, giant hardware retailers, like Home Depot, may turn to European producers.

Adamantly rejecting U.S. claims that the Canadian softwood industry is unfairly subsidized and has dumped their product at below cost prices south of the border, Ottawa has announced that it will appeal the 19.3 percent duty to the World Trade Organization, though a decision may not be coming for at least two years.

Last week, Pettigrew took steps to ensure that the decision would not take that long, asking the the WTO's director general to appoint a panel to hear Canada's case. Once a panel is appointed, proceedings can be completed in six months.

Prime Minister Chretian has noted that Canada wants free trade in lumber, just as it has free trade in oil and natural gas under the North American Free Trade Agreement. He stated that the free trade agreement Canada signed with the United States was not only about oil and gas, it was also about wood.

It is estimated that the anti-dumping duty will net the U.S. Treasury between $68 and $70 million US dollars a month, with the proceeds of both finalized duties slated to go to U.S. companies who claimed that they were harmed by Canadian exports.

Several members of Congress, and some Canadian lumber producers, have called on Ottawa to voluntarily impose an export tax on Canadian lumber to resolve the dispute, a suggestion that was curtly rejected with the Canadian government accusing the United States of breaking the spirit and the law of the North American Free Trade Agreement.

For its part, the United States, according to a spokesperson for the U.S. Coalition for Fair Lumber Imports, which filed the original trade complaint, is "enforcing the law consistent with our international obligations."

As parties on both sides wait and hope for a solution, it is still uncertain whether a friendly atmosphere will return by spring when the Blue Jays once again take the field against the Yankees during the new baseball season.

Bush Budget Leaves Kids Behind

President Bush may pride himself on claiming that he's a compassionate conservative -- one who pledged during his campaign to leave no child behind -- but Alan Brenner doesn't see it that way, especially when it comes to providing adequate funding to investigate child abuse.

Brenner, 57, is a former detective with the Bronx District Attorney's office who specialized in child abuse cases. He was amazed to learn that Bush has proposed significant cuts to child aid programs as part of his upcoming budget, including an 18 percent reduction in programs dealing with child abuse.

"Society has always had its head in the sand when it comes to child abuse," said Brenner. "The attitude was always 'just take care of it, we don't want to hear about it. Lock the bad guys up and make it all go away.'" But, he points out, child abuse is not a problem that will go away by itself.

According to Robert Pear of the New York Times, spending for programs to investigate and prevent child abuse are slated to be reduced by $15.7 million under the Bush administration. On April 2, the Department of Health and Human Services reported that "child protective service agencies received approximately 2,974,000 referrals of possible maltreatment in 1999. Of the 60.4 percent of these reports that were investigated, states found that there were an estimated 826,000 children who were victims of abuse and/or neglect."

Brenner's front-line experience leads him to believe that more resources are necessary to combat child abuse. Although Brenner has left the Bronx for Pennsylvania, he still investigates child abuse. Today he works with the Lehigh County Children and Youth Services, where he does initial child abuse interviews for case workers. Each case worker for Lehigh County handles about 45 cases, but can only reasonably handle 30 at a time.

Brenner recently investigated a complaint and was responsible for removing a two-year-old child from a home with a 21 year-old single mother who was a drug addict. When he entered the apartment, it was in shambles, and the child was sleeping on a mattress on the floor. The child was burned severely in three places, as if struck with a hot poker, and only a band-aid was on the oozing wounds. It was obvious that no attempt had been made to provide the child with immediate care.

"I see this kind of thing all the time," Brenner said. "Whether it's in the big city or the rural countryside, child abuse is still widespread, and it's more hard core than the public can imagine."

President Bush made much of his concern for children during the campaign. His budget proposals, however, don't match his electioneering rhetoric. Last year Congress provided $2 billion for the Child Care and Development Block Grant to enable states to provide day care for 241,000 additional children. Evidence suggests that stable child care for low income families has proven successful in helping individuals move from welfare dependence to work.

Does Bush propose maintaining or increasing day care subsidies? Not at all. In fact, Bush plans to cut child care grants by $200 million. Furthermore, the budget proposal eliminates all the money -- $20 million -- that Congress provided for an "early learning fund" to improve the quality of child care and education for children under the age of five.

Brenner knows firsthand the importance of quality child care. He was a driving force in the investigations that rocked New York City in 1984 with the arrests of several workers at two day care centers in the Bronx. The joint investigation between the District Attorney's office and the FBI gained national media attention after it was determined that a total of 39 children may have been abused at the day care centers.

As a result of the high profile investigation, New York required all potential day care workers to be checked against a state register of child abusers, and permitted background checks for other criminal offenses. At the same time, legislation was enacted that allows children to testify about sex cases via video tape rather than in person before a grand jury.

Brenner says for anyone who "has ever been involved with interacting and questioning a young child who has been abused, the idea of cutting funds for preventive programs would never come up. You'd look at those kids and wonder how anyone could take advantage of someone so vulnerable and defenseless."

The Republican administration has defended the budget's cuts by pointing to an increase in education spending. When President Bush addressed Congress on February 27, he stated, "Education is my top priority and, by supporting this budget, you'll make it yours."

But his budget proposals slow growth in education spending. Although the budget requests more money for education, the increase is only 3 percent over the inflation rate. And, according to the Center on Budget and Policy Priorities, Bush's proposal is "one-third the average rate of increase in education spending over the past four years, after adjusting for inflation. Thus, the area the president has identified as his highest priority -- education -- would have its recent rate of growth reduced by two-thirds."

Budget cuts in these areas -- at a time when resources and staff are already strained -- seem inconceivable to Brenner. But, then again, Brenner doesn't claim to be a compassionate conservative.

Game Show Darwinism

Times change, and also undeniably, not always for the better, though often the shift in values and the collective psyche of the populace is almost imperceptible.  How else does one explain the phenomenon of a television show like Survivor, and its sequel in the Australian outback?

So, once again, off we go, four down, twelve to go, for those who care, to see who will be the winner that walks away with a prize of a million dollars.  A headline in the New York Post tellingly read, just before last season's final episode, "Survivor Mania Grips the Nation."  

Game show Darwinism has definitely hit the mainstream, as evidenced by NBC expanding its hit show Friends to 40 minutes, with a special segment of Saturday Night Live thrown in, to go head to head with Survivor II on CBS.  Yes, the preoccupation and obsession with winner takes all apparently has superseded everything else.  But on a deeper level, one can't help wondering if anyone is better off.  Is it fantasy, harmless entertainment, or reality, conveying a not too subtle message about what it takes to come out on top?

Just as the nature of Presidential conventions, not to mention campaigns, has changed over the past 30 years, with messages and images replacing substance and fact as the electronic age zips information willy-nilly from screen to screen, so, too, have the underlying values of network television shows.  Not that anyone should raise questions of censorship, but we may very well have met the enemy, and the enemy is indeed us.

Survivor has permeated pop culture, and whether it's transient, a blip signifying 15 minutes of fame for a chosen few, the message is still there: Greed pays. Money counts, individuals are secondary, if not superfluous, and one has to do whatever it takes to survive, which, ultimately, means winning.  It's simple, really, everyday life reduced to a zero sum game.

One can't help contrasting Survivor with another popular television show about an island of castaways, Gilligan's Island, which aired from 1964 to 1967. Although Gilligan's Island may not have been so popular when it first hit network television, over the years and decades, it has retained a loyal, devoted following.  It would seem that Gilligan, the Skipper, Ginger and Mr. Howell will be remembered long after the momentary pseudo celebrities on Survivor II, including the final winner, won't even qualify as answers to a question in the board game Trivial Pursuit.

But what would happen if Gilligan's Island had accepted the premise of Survivor?  It may not have depicted harsh reality but Gilligan's Island represented the nuclear family long before the term dysfunctional became popular.  Family members might fight and bicker, but it was still family, and in most cases there wasn't a weekly meeting around the dinner table to systematically vote a member out of the family.

The primary goal of Gilligan's Island, although unobtainable because the show would end, was for the castaways to be rescued, not to receive immunity from being voted off at the weekly tribal council or having a slice of pizza delivered by helicopter as a special treat.

Survivor, on the other hand, allows the viewing audience to vicariously cheer the subterfuge, manipulation, lying and betrayal that whittles the original contestants on the island down to one.  Which island, or world, would one really want to live in if there was a choice?  The answer should be Gilligan's Island, unless, of course, one thought there was a good chance of walking away with the one million dollar prize by competing on Survivor.

Gilligan's Island was played for laughs, maybe hokey, maybe with stereotypical characters representing segments of society, but in the end, petty jealousies and squabbles never gave way to ruthless attempts at elimination.  Gilligan's Island was a family in a sometimes hostile world.  Survivor is each of us in a hostile world surrounded by everyone as a potential enemy.

One picks up the newspaper these days and each previous Survivor episode is given weekly in-depth analysis as if one were following coverage of a NFL team during the regular season.  Who did what, who should have done what, was that a successful strategy, who's aligned with whom, and who will remained aligned with whom, and actually when you get down to it, who cares?

Survivor represents a return to the old pre-World War One balance of power system with all the treachery and secret deals beneath the surface leading to a cataclysmic explosion when truth is finally revealed and everyone is too hopelessly caught up within the complicated labyrinth that negates rational behavior.

The winner of Survivor II, just like Richard Hatch before, the winner of the first Survivor, will be praised for deviousness and the monomaniacal attributes that allow one to have a good chance of consolidating power in a totalitarian state.  The consummate power politician, the end justifies the means, at the expense of the individual, of those less fortunate.  If, for whatever reason, one can't pull his or her weight, oblivion is the inevitable answer.

And what would happen on Gilligan's Island if the show had ever adapted Survivor's format?  Contrary to possible viewer popularity, it seems likely that Gilligan would be the first to go.  Nothing personal, everyone liked him, it's just that he stood in the way of the prize, and who cares about expendable Gilligan when there might be a million dollar payoff.

So, while many tune into Survivor on Thursday evenings, those who don't, preferring Friends or the talking heads on cable news networks, or maybe even reading a book, won't miss a thing, the results will be spread out across papers in the land as if the outcome, which contestant was the latest voted out, was a major news event worthy of such extended coverage.

Electricity Cooperatives Foil Greedy Utilities

While Cassandra-like headlines about soaring electricity prices and rolling blackouts in California bombard the public, a group of leaders in the New York City housing cooperative movement has quietly, but effectively, been pooling its collective resources to enter the energy field.

1st Rochdale Cooperative, the country's first urban electric cooperative, began laying the groundwork three years ago. The electric cooperative prepared for energy deregulation by organizing housing cooperatives in New York City to purchase their own electricity.

Allen Thurgood, a leader in the cooperative movement for the last thirty years, founded 1st Rochdale. He envisioned it as lowering members' energy bills through comprehensive energy management, while also developing conservation strategies and renewable energy sources. He noted that it was created to protect the interests of residential consumers in light of federal and state mandates to restructure the electric utility industry.

The move seems to be paying off. The consumer-owned electric co-op is one of about nine companies in New York City currently supplying electricity to residential customers. It was singled out by the New York Post last summer as providing the lowest kilowatt price per hour of all the energy services companies certified with the Public Service Commission.

At the same time, 1st Rochdale has launched a pilot program with the help of the U.S. Department of Energy and the New York State Energy Research Development Authority. The program will install solar energy panels at two housing cooperatives with more than 2,500 families. 1st Rochdale also has plans to introduce localized, on-site generation from fuel cells and microturbines in New York City.

Conceiving a Cooperative

1st Rochdale was created to take advantage of the real opportunity to cut energy costs. Like California, New York State is moving toward energy deregulation. Customers of Con Edison -- the investor-owned utility with a long-time monopoly on New York City's electric service -- can now choose a new electricity provider.

The concept of 1st Rochdale, according to Thurgood, was based on his experience in the cooperative movement. Co-op members can purchase more collectively than they can individually, so why shouldn't this apply to energy as well? And, of course, he recognized that there are an estimated 1.5 million people living in housing cooperatives in New York City.

Thurgood's idea of an electric co-op was first greeted with skepticism and even ridicule. He pressed on. Eventually, he successfully presented his plan to the Coordinated Council of Cooperatives and other New York cooperatives.

But what to do next? Thurgood conceded that he didn't know the energy business, but he knew where to go to get advice and direction from the experts. So, members of 1st Rochdale approached the National Rural Electric Cooperative Association (NRECA) to learn the business. NRECA not only responded to the call, but also accepted 1st Rochdale in 1998 as the first urban co-op among its membership.

NRECA and its member cooperatives are actively involved in promoting national energy and environmental research. Statewide associations of the NRECA also provide a unified voice when addressing the general public, regulatory bodies and state legislators on behalf of its membership. NRECA represents almost 1,000 rural electric cooperatives and serves more than 30 million people in forty-six states. (In fact, the NRECA reports, close to half of all electric power lines in the United States are owned by electric cooperatives.)

Cooperatives at Home and Abroad

1st Rochdale is named after the town of Rochdale, England, near Manchester, where the roots of the modern cooperative movement can be traced. In 1844, a group of twenty-eight factory workers living in Rochdale sought to gain control over their economic destiny by forming a cooperative called the Rochdale Equitable Pioneers Society.

The cooperative in Rochdale was a success. In addition to opening a cooperative general goods store, members were able to buy in quantity and sell at low prices, thus, establishing the fundamental principles of modern cooperatives.

Cooperative businesses have been part of the American experience since at least 1752, thanks to Benjamin Franklin. Franklin, after living in Great Britain and seeing the growing role of "mutual" or cooperative societies there, helped create the first mutual insurance company, the "Philadelphia Contributorship for the Insurance of Houses from Losses by Fire."

Although Franklin is known as the father of American cooperatives, it was farmers who were largely responsible for the early development of cooperatives in the United States. The first farmer marketing cooperative was formed in 1804 by dairymen in the Connecticut River Valley, and by 1857, New York and Ohio both had enacted laws enabling cooperative (mutual) insurance companies to operate.

The ethical tradition of the Rochdale pioneers and their American counterparts was based on honesty, openness, social responsibility, and caring for others -- principles at which the contemporary cynic would probably sneer and say, "Give me a break."

But, as 1st Rochdale's founder Allen Thurgood argues, cooperatives are created in response to the needs of their members and operate solely for the benefit of their member-owners. As a result, co-ops provide goods and services to their members at reasonable and fair prices, and not to maximize profits, which is exactly what 1st Rochdale is trying to do on behalf of its customer-members in the electricity market.

While it appears, at least for the moment, that most New York consumers plan to stay with the giant Con Edison, 1st Rochdale is making inroads and optimistically hopes to capture 10 percent of the New York City market by the year 2005. Initially drawing on its base of housing cooperatives, 1st Rochdale is now signing up small and large apartment buildings, as well as businesses as customers.

Recently, 1st Rochdale also hooked up as a partner with the Touchstone Energy Alliance, the country's largest affiliated utility network serving families and businesses through member-owned cooperatives across the United States. There are currently over 560 Touchstone Energy Cooperatives in thirty-eight states, delivering energy and energy solutions to over 15 million customers everyday.

As New Yorkers settled down to cheer the Giants on against the Baltimore Ravens in the Superbowl in Tampa, Forida, power officials advised residents of California who planned to watch the game on television to do it with friends to ease the power burden and avoid a potential blackout. Most football fans, not to mention other people, never envisioned such a problem. 1st Rochdale did, and that's why it hopes to expand its membership. It aspires to have more clout to provide essential electricity service, which too many, for too long, have taken for granted.


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