world news - 11.11.2002
B.C. forest policy reforms likely to be tabled next spring, sources say
VANCOUVER (CP) — After applauding B.C. government reforms streamlining environmental rules for logging, the province's forest industry can't wait for policy changes affecting what it pays for timber, how much is cut and where it's milled.
But it will have to wait, probably until next spring, industry and government officials say.
Forests Minister Mike de Jong introduced changes to the Forest Practices Code last week, giving logging companies a freer hand in the woods but warning environmental damage would be punished.
Though it will take until April to implement the changes the industry now wants de Jong to introduce promised reforms to the stumpage and timber-licensing system, sooner rather than later.
"There's a lot of urgency," says Jake Kerr, chairman of Lignum Ltd. "You just read the quarterly results. The boys didn't do too well."
The reforms, promised by the B.C. Liberals during their May 2001 election campaign, are crucial to the industry for several reasons.
First, changes are key to resolving Canada's long-standing softwood lumber dispute with the United States, since B.C. softwood accounts for half the contentious exports.
But even without the trade issue, the B.C. forest sector wants the promise of increased operating-flexibility reforms, especially for the costly, moribund coastal logging operations.
"I don't think softwood should be used as an excuse not to do something any more," says Ric Slaco, vice-president and chief forester at Interfor, one of the province's biggest producers.
Many Canadian forest companies, especially on the B.C. coast and in Quebec, have been hit hard financially by countervailing and anti-dumping duties, averaging 27 per cent, levied by the U.S. Department of Commerce.
They were imposed last spring after American producers complained Canadian lumber sold in the United States — worth about $10 billion a year — was subsidized through favourable provincial forest policies. Canada rejects the allegations and has appealed.
Looking for a negotiated settlement, the B.C. government proposed policy changes last December aimed at making Crown timber harvesting more market-oriented.
They included putting more trees up for auction-type sales — the way most U.S. wood is sold — and using those prices to help set stumpage fees on other Crown timber.
The package included removing a licensee's requirement to process logs at its local B.C. mills and ending the obligation to harvest a minimum amount of timber annually, regardless of market demand.
But negotiations broke down, final duties were imposed in May and the reforms appeared to go on the shelf.
They didn't really. Low-level talks continued between U.S. and Canadian trade officials and provincial forestry bureaucrats.
U.S. Commerce undersecretary Grant Aldonas began a fact-finding exercise last fall to prepare a draft policy bulletin on softwood, due by end of this month.
The bulletin is expected to lay out conditions under which the United States would remove the duties.
"I think this is a background paper that is going to give some indication of what type of forest policy changes might be an acceptable way out of the dispute," says Kerr.
"All of us have believed nothing was going to happen until the (U.S.) mid-term elections were over. They are over and I think you're going to see considerably more activity on the file now."
The most likely scenario is for Canadian and U.S. negotiators to agree on an interim export tax levied at the Canadian border in place of the duties while the provinces amend their forest policies.
"There'll have to be a duty, a tax or some combination thereof until this is all completed," says John Allen, president of the B.C. Lumber Trade Council.
The border tax for each province would be lifted once U.S. authorities determine whether reforms jibe with their idea of market-based forest policies — a process that could take a year.
Aldonas's final report probably won't be filed for several months, about the time B.C. policy reforms might be ready to table at the spring sitting of the legislature, which begins in February.
"We're talking about potentially some pretty significant changes to the way we do business in the B.C. forest sector," says Don Wright, B.C. deputy forests minister.
"There are lots of stakeholders that are going to be impacted by this. The government's going to want to make sure that it's got it as right as it possibly can."
Industry executives say some changes could be made without amending the Forest Act.
"We can make changes in the stumpage system without legislation," Wright agrees. "But most of the other stuff that has been discussed would require legislative changes."
And although the basic concepts remain, the ministry's December policy paper, issued in the midst of negotiations with the Americans, should not be seen as a blueprint for upcoming reforms, adds Wright.
What will the package contain?
Sources indicate while overarching principles will govern the reforms, the rules take into account different economics and operating conditions within regions and even operations.
The ministry could also increase the amount of Crown timber sold under an auction-type system. Its December proposal increased it to 13 per cent from six per cent, which was not enough for the Americans.
The government will have to make important decisions over the next couple of months.
And, as one source familiar with the process notes, in May the B.C. Liberals will be midway through their mandate, when most governments angling for re-election become more cautious.
"For a whole host of reasons the window for change is now. It's not clear the window will be there a year for now." )
See also:
- — West Fraser announces the proposed sale of its interest in Alberta Newsprint's mill to a new
- — Chinese Lumber Carrier Sinks Off Okinawa — 2 Injured-Kyodo
- — Rangers injured confiscating illegal timber
- — Weak newsprint, lumber markets blamed for loss
- — The Finnish company International Paper considers placement of timber processing capacities
