Friday, October 13, 2006

Forest industry in crisis

Our sanctimony about the Americans telling us what to do with our forests during the softwood lumber dispute seems to have been misplaced. In our pique with the Americans, we missed the opportunity to reform the way we allocate timber on public lands. As it turns out, the Americans were right. Our timber allocation system is dysfunctional. Eastern Canadian forest workers are now paying the price.

The biggest reason Eastern Canada's forest industry has lost almost every comparative advantage it ever enjoyed -- and there used to be many -- is politics. Governments have managed our forests to maximize jobs and minimize efficiency. The inherent risk of such a strategy is that eventually there are almost no jobs left to maximize.

With a softwood lumber agreement now in place, it is time to focus on developing a timber allocation system that responds to market signals rather than defies them. It might not be enough to head off future trade disputes with the United States, but it might help save some of the jobs we have left in the sector.