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Spotlight

Cost Squeeze 

Quebec's forest industry is facing additional costs-when it can least afford them-with changes to the province's Forest Law. 

By Tony Kryzanowski 

With revisions to Quebec's Forest Law soon to be enacted by the National Assembly, forest companies in that province say they can't help but identify with that old country and western song that went "she got the gold mine and I got the shaft." When all was said and done, it seems that just about everyone got some of what they wanted, but the forest companies themselves got very little-and will end up paying considerably more to do business in Quebec, according to the Quebec Lumber Manufacturers'Association (QLMA). 

The burden of added industry costs couldn't have come at a worse time for some communities, who face the prospect of sawmills shutting down because of a dwindling forest resource. The process has already started with recent announcements by Alliance Forest Products that it will be shutting down a number of its sawmills. Industry presented two main issues to the Quebec government during public hearings. 

The first was the need to deal with the negative public perception concerning the credibility of forest management data. The second was the need for a clear method on how data will be collected in future and how other stakeholders will participate in the forest management input process. When asked how seriously the government took its concerns, the QLMA has put forth the best face possible given what the government is now proposing. "I should say that we have had a mixed reaction up to now," says Jacques Robitaille, president and executive director of the QLMA. 

The association represents 127 companies who own 175 mills in the province. He says the association supports the need for revisions to the Forest Act, and is satisfied with the government's objective to attempt to achieve more forest management transparency. Further, the QLMA agrees that there should be more involvement by local communities, and supports collection of more and better data. "But we are not sure that the government has made the effort to see the big picture of what is challenging the industry," says Robitaille. 

"Our biggest concern is what will be the impact of the cost to industry because of the means the government chooses to achieve its goals. We agree with the goals, but do not necessarily agree with the tools that the government is trying to use to achieve those goals. We believe that some of those tools will significantly increase the cost to industry. That's the big preoccupation for us."

 

Forest companies in Quebec are looking at increased costs in areas such as supplying more forestry-related data to the provincial government and for increased forestry checking by government civil servants. 

 

Americans Quick to Act Following SLA Expiry 
 

There's still a long ways to go and some very strategic hands to play, but the Americans were quick to act following the March 31 expiry of the Canada/US Softwood Lumber Agreement. Within days, the US lumber industry asked President George W Bush to hit Canadian softwood lumber with duties as high as 76 per cent, or a stunning $8 billion a year. 

The US Coalition for Fair Lumber Imports filed petitions with the US Commerce Department in Washington, DC that-if carried out with the punishing duties cited-could send Canada's softwood lumber companies reeling (see column on page 46). As with previous efforts over the last two decades, the US industry says Canada is subsidizing its forest industry. It's seeking an average 40 per cent countervailing duty plus antidumping duties ranging from 28 to 36 per cent. 

The highest duties would apply to British Columbia. The Canadian government has not hit the panic button, however. International Trade Minister Pierre Pettigrew said it would take 90 days before the US could impose the countervailing duty on Canadian lumber. Despite the fears of many in the forest industry about US protectionism, Pettigrew expressed confidence that Canada will prevail under the rules of the North American Free Trade Agreement. 

The Free Trade Lumber Council, a Canadian-based industry group, said the US industry has failed to make duties stick in the past and will end up with "zero" duties at the end of an investigation. The Canadian industry's case, unlike previous filings, is supported this time around by a strong group of US lumber consumers. This group includes home builders and retailers, such as the huge Home Depot chain. 

However, there are very real fears among some Canadian forest companies that any US decision will be based more on the political clout of American lumber producers, than the facts of the case. Canada has proposed that the two countries appoint special envoys to tackle the softwood lumber dispute. Pettigrew has discussed the idea with US Trade Representative Robert Zoellick and the two were expected to explore this proposal further.

 A major issue with forest management in the province of Quebec, says Robitaille, is the public perception of what is actually occurring. "We have some groups who have tried to dismiss what the government and industry have done toward sustainability," says Robitaille. "Public opinion polls indicate that neither industry nor government have a good perception in public opinion." With that in mind, industry suggested during recent hearings that the government appoint an independent inspector to review the quality of government inspections and collected data, thereby verifying that Quebec forest management practices are sustainable. Minister of Natural Resources Jacques Brassard rejected that suggestion outright. 

What the government has decided to do instead is turn this whole issue of credibility into a make-work project, as far as industry is concerned. "The government has chosen to do more checking of what is happening in the forest to make sure that they will be able to report to the population accurately," says Robitaille. "We agree with that. But what they chose to do was to increase the number of civil servants, and they decided to extend the scope of the Forestry Fund, which is paid half by the industry and half by the government. So industry will have to pay for these new civil servants." 

While Quebec's lumber producers believe that current forest management practices are sustainable, published comments attributed to Tembec president Frank Dottori during recent public hearings on the Forest Law revisions created quite a stir. According to newspaper reports, he said that the forest was overharvested everywhere in Quebec. Tembec is a large lumber manufacturer in Quebec, with six sawmills and a total of 2000 employees within its forestry operations. Dottori didn't stop there. 

He accused the government of not spending enough money to obtain reliable inventories that provide for accurate allowable cuts, putting the onus on private industry to determine its own allowable cuts. His comments were widely published in the province's largest French language newspaper, Le Devoir, and raised the question of how current forest management practices could be sustainable in the face of such a damning revelation from an industry source. In a follow up interview with Logging and Sawmilling Journal, Dottori said he can understand how his comments could be misinterpreted when applied to current practices. 

He says he was referring to forest management in Quebec in the historical context, reaffirming his company's belief that the SPF forest has been over exploited. Dottori says prior to the mid-1980s the government did not insist on reforestation. "In the past, the forests in Quebec have been over-exploited because of the focus on economic development by the government. They did not insist on reforestation until 1988 or thereabouts. So, we are now paying the consequences in this business of not practising sustainable yield from the 1950s to the 1980s. 

Today, we are experiencing quite a significant decline." He agrees with the QLMA's assertion that current forest management practices in the province are sustainable. "I think that industry practices are sustainable today, I would say absolutely," says Dottori. "There is a little bit here where the industry is trying to protect its bottom because today, as an industry, we get blamed for the sins of the past." Among the most vocal critics during public hearings were environmental and aboriginal groups. That comes as no real surprise, says Robitaille, adding that environmental groups and aboriginal people is a lot better than it used to be. 

"If we go back to the 1980s, those relationships didn't exist." Relations have improved substantially where they matter the most-at the local level. "If you go to the local community, generally speaking the relationship between the industry and local groups, including native people, are very good," says Robitaille. "They have learned to work together." He says industry and local groups meet regularly, and this has defused most potential problems, although there is still conflict on occasion. 

However, Robitaille acknowledges that its relationships with provincial and national environmental and aboriginal organizations are more strained. "Sometimes, some of those groups have a political agenda that is a lot different than the local agenda," he says. That is quite evident in some of the news reports during public hearings. For example, Quebec's most important assembly of associations and individuals in the areas of environmental and earth sciences, the Quebec Union for the Conservation of Nature, implied that war was imminent on public lands between forest companies and other stakeholders such as outfitters. 

They were not entirely pleased with the recommended revisions to the Forest Law either, calling for an entirely new methodology for the construction of forest management plans. They called the government's proposals a missed opportunity, and suggested that Quebec's forests need their own quiet revolution. A spokesman for the three native Atikamekw communities in Quebec requested a special consultation process in planning forest management activities in regions that involve them. 

They want the social and environmental implications to be studied before planning of harvesting activities. Robitaille says industry recognizes that there will be opportunity for more public and stakeholder input in future. They also realize that the amount of available merchantable wood will also likely drop with more protected areas designated by the provincial government. It's the uncertainty of industry's requirements to appease public concern that has Quebec forest executives uneasy. 

For example, the Minister has extended his discretion significantly in terms of the amount of forest management data that a company will be required to provide. "We don't see any room to discuss with government the accuracy of that data, who is going to gather that data and, of course, who will have to pay for it," says Robitaille. "Another thing is, yes, there will be more opportunity for the public and other stakeholders to participate in forest management. But all the burden will be on the shoulders of the forest industry. There is no mechanism to make sure that we will have a way to better share the cost of those new requirements." 

He adds that these are just two examples of the extra costs Quebec's forest industry now faces. "There are many, many other examples like that." The government is expected to fully implement the new regulations by early 2002. According to Robitaille, the revisions will require updates to related bylaws and decrees. So industry is hopeful it will have an opportunity for more input once those updates occur and implementation guidelines are drafted. 


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