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Winnipeg Free Press - PRINT EDITION

$1B for pulp firms threatens trade fight

By: Julian Beltrame

18/06/2009 1:00 AM | Comments: 2

OTTAWA -- The federal government has extended a $1-billion lifeline to Canada's struggling pulp and paper industry in an effort to match billions of dollars in subsidies available to U.S. rivals.

But the irony is that the effort may have the effect of touching off another costly and protracted trade fight with the United States over whether Canada is unfairly subsidizing its forestry industry.

The government's announcement Wednesday was quickly followed by a release from the notoriously litigious U.S. Coalition for Fair Lumber Imports, which labelled the program an unfair subsidy.

'To the extent that the subsidy goes to corporate groups that produce softwood lumber, this likely constitutes a violation of the U.S.-Canada Softwood Lumber Agreement," said the group's chairman Steve Swanson in a release.

Trade Minister Stockwell Day said the Canadian program is designed to level the playing field with the U.S., adding that the government has sought legal advice to ensure it does not contravene the agreement.

"I would suggest anyone on the U.S. side who thinks this is not compliant with (the softwood agreement) needs to look in the mirror," he told reporters late Wednesday.

Day said he talked to the U.S. Trade Representative Ron Kirk, and said "he was sympathetic to our position." But Day said he did not get any assurance from the top U.S. trade official that the program would not be challenged.

Ottawa and industry groups led by the Forest Products Association of Canada have been working for months on a program that could both match a U.S. subsidy valued at up to US$8 billion and still remain compliant with the lumber agreement.

Natural Resources Minister Lisa Raitt said she believes the program does that both in terms of the spirit of the agreement and the letter of the law.

In fact, the program matches closely a key element of what the U.S. has been doing by paying its pulp mills 16 cents a litre for the production of so-called black liquor, a liquid byproduct of the chemical pulping process used as an alternative fuel.

Under the terms, mills that produce black liquor between Jan. 1 and Dec. 31 of this year qualify for the grant on the condition they use the tax money on capital improvements within a three-year period.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition June 18, 2009 B8

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2 Comments

Posted by: gopher7

June 18, 2009 at 10:30 AM

Its the small family/ cottage/ community businesses that create the most jobs in Canada. These are also the most secure jobs and one tends to look after one's own local environment : not like the big corporation that take and "RUN" leaving a wrecked environment in its wake!

This industry can also diversify greatly. The trouble is that there are way to many rules, regulation, policies, loops to jump through and LAWS that make it very very difficult. Time to get politicans that are for the people NOT THE CORPORATES - who when the bottom line is not to their liking, they lay off, shut down and put out of move their operations off shore creating jobs elsewhere.

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Posted by: gopher7

June 18, 2009 at 7:23 AM

Bail out 101 says that one does not throw money at retail/final stage corporate business . Helping raw material, economic base operation like forestry, agriculture, fishing, ecology based activities is a priority. You know, Harper might yet become a good leader. Better than that guy who keeps wanting to call an election of EI rather than creating work for people and removing all the rules, regulation, policies, (LOOPS), and LAWS that are preventing Canadians from doing their thing.

The way it is now starting small does not work as the above crap kills you before one can crawl. $1 billion for the guts of Canada: $10 billion for foreign companies!??