Ottawa boost for forestry
Ottawa is stitching together a $1-billion lifeline for the forest industry designed to rescue pulp producers from the devastating effect of billions of dollars in subsidies from Washington to their U.S. rivals.
The details of the Canadian aid package are still being worked out, but the direction is clear: to offset the impact of up to $8-billion (U.S.) in “black liquor” subsidies to U.S. pulp producers. It will also attempt to prevent blowback from the hard-line U.S. softwood lumber lobby, which is quick to press Washington for trade action against anything that resembles government subsidies for Canadian forest companies.
To prevent retaliatory trade action, Ottawa will focus on ways to help forest companies become more environmentally efficient, including green power projects and cogeneration plants that produce both heat and electricity. In theory, such a package would be in keeping with the 2006 Canada-U.S. softwood lumber agreement’s “safe harbour clause,” which allows government assistance to forest firms for “forest or environmental management, protection [and] conservation” if it does not affect timber prices. The thinking in Ottawa is that it would be a stretch for the Americans to argue that environmental spending at a pulp mill significantly affects the price of lumber.
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