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Time for a competitive forestry sector

Some recent developments on the forestry file are presenting challenges and opportunities for the sector in Canada.

Some recent developments on the forestry file are presenting challenges and opportunities for the sector in Canada.

Unfortunately, the Conservative government’s abandonment of the forestry sector continues, which means threats to the sector will continue to damage our competitiveness. Also, opportunities to move ahead are unlikely to be seized.

While demand and prices start to recover for forestry and paper products, the most significant challenge to Canadian mills today is the ongoing implementation of unfair government subsidies that prop up U.S.-based operators.

Thankfully, the Black Liquor regime for U.S. pulp and paper mills expired at the end of last year, but the new Biomass Crop Assistance Plan (BCAP) has taken its place. The Black Liquor regime paid out more than US$8 billion to American mills in two years, and Natural Resources Canada estimates the BCAP will pay subsidies of $3–10 billion over the next three years.

Canadian mills will continue to operate at a competitive disadvantage as a result.

Despite the challenges of unfair foreign subsidies, there are new opportunities for growth in the sector, which should be encouraging news for Northwestern Ontario. Earlier this month the Forestry Products Association of Canada (FPAC) presented findings of a large study it sponsored, which found bio-fuels are likely the most profitable way forward for the sector.

In a press release, FPAC said "[The report] places traditional products, especially lumber and pulp, at the heart of a new, green business model that has the potential to make the forest products industry a pivotal force in Canada’s effort to become a clean energy super-power. If we follow this new model we will be able to produce power on the scale of nine nuclear reactors, enough to meet the energy needs of 2.5 million homes."

Good news indeed, but this potential growth can only be realized if the sector is supported by an active federal government.

In facing the challenge of eliminating threats and seizing opportunities in the forestry sector, I am not optimistic that we will see leadership from this government. I say this because recently, MP Greg Rickford (Con., Kenora) stated, "I think we are doing enough" for the forestry sector. This is a shocking claim given that Natural Resources Canada estimates that 50,000 forestry jobs have been lost across the country - 18,000 in northern Ontario - since the Harper government came to power.

New Democrats believe the forestry sector requires active and strong federal leadership to ensure that it remains competitive. We believe the problem with the Conservative approach to the forestry sector, and the Liberal approach before it, is that they have never put forth a comprehensive long-term strategy.

If such a strategy were in place today, the government would take action on a number of fronts: eliminating or countering US subsidies, providing emergency loan guarantees for struggling companies, extending EI benefits and establishing new tax credits for research and commercialization of bio-fuels.

New Democrats continue to encourage the federal government to adopt such strategies because we believe it is the only effective way to save and add to the 250,000 jobs that exist in the forestry sector.

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