March 14, 2015

Telegraph Journal 
John Chilibeck
March 14, 2015

As a trade dispute threatens to break out between American and Canadian paper companies, a Tory critic says the New Brunswick government should use the same strategy that won protection for the local softwood lumber industry.


Kirk MacDonald says the softwood lumber agreement signed between Canada and the United States in 2006 that applied financial penalties to Canadian wood products excluded the Atlantic provinces for good reason – this region doesn't provide as many government subsidies to private forestry companies. "When the discussions took place around the softwood lumber issue many years ago, one of the reasons that New Brunswick and the Maritimes were treated differently than other regions is our land ownership" said the Tory's economic development critic, pointing out that in New Brunswick a significant portion of the forests is privately owned, roughly half, either by small woodlot owners or big industry. The other half is Crown, or public lands. "When you move westward, like in British Columbia, it's more like 90 to 95 per cent Crown land and the balance is inprivate ownership. So if I was to make a respectful suggestion to the New Brunswick government, it would be to reinforce the difference in land ownership that makes us unique" Two American paper-making companies – Verso Corporation and Madison Paper Industries – launched a petition with the United States federal government Feb. 26 asking it to slap countervailing duties on Canadian companies that export glossy, or supercalendered paper, into the U.S. The four Canadian companies being targeted include Irving Paper of Saint John, which employs more than 300 people. J.D. Irving, Limited, the mill's owner, has already stated the petition is in the wrong and will challenge it before the U.S. Department of Commerce and the U.S. International Trade Commission. JDI is a privately owned company headquartered in Saint John. Its activities include forestry, paper products, agriculture, food processing, transportation and shipbuilding. Brunswick News is a separate company owned by J.K. Irving. Mark Mosher, a company vice-president, said he would not comment any further publicly other than during the formal process that will roll out between the two agencies over the coming weeks. Likewise, New Brunswick's Liberal government says it will defend the province's interests if the two U.S. agencies decide the matter should be investigated further and the petition goes beyond the preliminary stage. Such petitions can take more than a year to resolve. Over the last three decades, the U.S. lumber industry has applied similar pressure, fighting for the same countervailing duty and anti-dumping laws as the U.S. paper industry just did – laws that impose import duties, or a financial penalty, when a U.S. industry is supposedly harmed by subsidies in the exporting country or when those imported products are sold at a price lower than the cost of production, commonly referred to as dumping. Canada won the softwood lumber battles under the dispute resolution provisions of the World Trade Organization and the North American Free Trade Agreement, but it decided to sign the special agreement with the United States in 2006 to avoid fighting the issue over and over again each time the American lumber industry filed a grievance with its government and countervailing duties were imposed. Ottawa says the harm caused while the challenges were underway, as well as the time and cost involved in such challenges, forced its hand. The agreement slaps an export penalty on most companies in B.C., Alberta, Saskatchewan, Manitoba, Ontario and Quebec that sell softwood lumber to the United States at a price deemed too low. Exemptions are in place for softwood produced in the Atlantic provinces from logs harvested in New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland or the state of Maine; from logs harvested and produced in the Yukon, Northwest Territories or Nunavut; and from 32 Ontario and Quebec companies previously found by U.S. authorities not to benefit from alleged subsidies. The controversial softwood agreement was for a seven-year period and then extended two years. It's set to expire this October, with industry experts predicting it will again be a source of contention between the two countries. On Friday, Rick Doucet, the province's economic development minister, declined an interview request. However, he talked about the paper dispute in the legislature when Green party Leader David Coon raised the issue in question period. "The forestry industry is the pillar of our economy, it's been around for a long time and it's gone through a lot of very difficult times" the minister said. "This is just one of those little hiccups we are going through" The Green party leader is opposed to the new forestry agreement the previous Tory government signed with forestrycompanies such as J.D. Irving, Limited, which will allow them to cut more wood on Crown land in exchange for mill upgrades that will better safeguard the industry and local jobs. Coon said with the softwood lumber agreement expiring, it was important for New Brunswick to ensure it wasn't providing subsidies that could hurt local industry in any trade disputes.

"It's a critical time for New Brunswick to be squeaky clean when it comes to any support it provides to the forestry sector" he said, adding the province should examine the prices it offers on Crown land, electrical rates and biomass fuel, to ensure they are offered at fair market rates.

Doucet repeated that he and his staff were working on the issue. "We're very well aware that the province has been identified in this petition and at this point in time we're going to continue our discussions on it, get a better understanding of what's taking place, and we're going to do our best to defend the interests of the province" Coon pressed for the minister to report back on any findings to the house, but Doucet simply replied he would, "be happy to follow up with him at any point this develops"