$1B for Pulp Firms Threatens Trade Fight

(Winnipeg Free Press – Julian Beltrame, The Canadian Press)

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. Read more here.