Forestry sector awaits provincial aid

Keith Leslie / Canadian Press / Wednesday, September 28, 2005

TORONTO -- Ontario's forestry sector is hoping a provincial aid package to be unveiled Thursday will equal the government's $500-million incentive plan for the auto industry.

"We would hope so," Jamie Lim, president of the Ontario Forest Industries Association, said Wednesday. "When you contribute over $1 billion in tax revenues annually, when you have annual wages that are $4.8 billion, that's a considerable amount of revenue that we're contributing to the prosperity of the province."

Natural Resources Minister David Ramsay declined to provide details of the aid package, but said it would be similar to the auto sector plan that encourages companies to invest and expand in Ontario.

"The framework is similar in that we're looking at a program that would incent investments," Ramsay said. "That's what the auto sector does, and we need to do the same thing to help the industry get into the 21st century and modernize."

The government has not yet spent the entire $500 million in the auto sector package, but has successfully used it to gain major expansions in Ontario from General Motors and Ford.

Premier Dalton McGuinty has said any government support for the forestry sector "would act not as a bailout," but would rather provide incentive for new investment.

The industry says Ontario is quickly losing its competitive edge in the global forestry market after being hit hard by rising fuel and electricity costs, a higher Canadian dollar, and increased competition from low-cost countries such as Russia, China and South Korea.

To underline the crisis, the industry points to recent decisions by Abitibi-Consolidated to idle its newsprint plant in Kenora, Ont., pending government aid, and by Toronto-based Grant Forest Products to invest $400 million in two plants in South Carolina.

Ramsay agreed the forestry industry is in trouble, and said the province would not wait for a promised aid package from the federal government before going ahead with its own plan.

In addition to the fund, Lim said mill owners want a 50 per cent fuel tax credit for hauling wood from forests to mills, and they want the province to resume paying for the construction and maintenance of logging roads.

"We don't see that road recommendation as looking for help because those roads are public roads," Lim said. "The government should be in the business of constructing and maintaining public roads."

The province is also expected to suggest ways of helping mills with energy costs by helping them build co-generation facilities to produce their own electricity from waste steam.

Lim said the forestry crisis should not be considered a problem exclusive to northern Ontario. She said there are mills in urban areas in the south of the province -- and an estimated 13,000 jobs -- that are also in jeopardy.

"This is a problem for Ontario and for Ontario's prosperity," she said. "When a mill closes in the north, it stops buying goods and services in southern Ontario." (*)

Forestry worker dragged from tent by bear

A forestry company employee is recovering in a Winnipeg hospital following a vicious attack from a black bear in Northwestern Ontario.

By Mike Aiken / Miner and News / Thursday September 22, 2005

A forestry company employee is recovering in a Winnipeg hospital following a vicious attack from a black bear in Northwestern Ontario. About 4 a.m. Wednesday, employees of Moose Creek Reforestation working in the Pakwash Forest between Ear Falls and Red Lake -- about 150 km northeast of Kenora -- were asleep when one of them was dragged from their tent into the woods.

“This bear meant business. He wasn’t going to back off,” Bill Skene, an Abitibi-Consolidated contractor, said.
While the others tried to beat away the predator from their colleague, the animal reared and threatened to swat his tormentors, before dragging the man further from his tent. The employees were eventually successful in saving the man, who was rushed to an ambulance for medical attention.

Medical staff at the Red Lake hospital transferred him to Health Sciences Centre in Winnipeg, where the victim was reported to be in stable condition, with puncture wounds and abrasions to his back, upper arm, head and shoulder.
“This is terrible. Something has to be done. There’s too many bears out there,” said Skene in calling for better controls on aggressive bears.

Skene, a veteran of the logging business, said he’s seen more nuisance bears this year than any other in his 20-year career. Although equipped with pepper spray in case of an attack, the employee never had a chance to use it, Skene said, adding the man had been working in the bush for much of the past eight years.

Poor berry crops

“There’s a bear problem in Ontario and the government has to deal with it,” Skene said.

The attack is likely related to poor berry crops and a lack of food in the woods this summer, causing the bear to do unusual things in search of food, said Norm Hissop, Kenora spokesman for the Ontario Ministry of Natural Resources.
It has nothing to do with the demise of the spring bear hunt in Ontario, he said. “That’s the knee-jerk reaction,” said Hissop.

While Hissop reported only one incident in Kenora last year and six across his MNR territory, his statistics are already well above those levels for this year, he said. However, Hissop noted there are similar problems in Manitoba -- even though the province has a spring and fall bear hunt in place.

The attack is the latest in a number of reports from across the country, including attacks on farm animals in the Kenora area earlier in the month and on Sept. 6, a Cambridge, Ont. woman was killed and her husband mauled by a black bear in Missinaibi Lake Provincial Park, about 80 kms north of Chapleau.

In Manitoba, Harvey Robinson, 68, was killed Aug. 26 after encountering a black bear near his home in the Rural Municipality of St. Clements. Earlier this month, Lac du Bonnet farmer Dennis Heckert and his dog were also attacked but lived to tell the tale. (*)

Speakers outline woes facing forest industry

September 14, 2005 / By Melanie Béchard / Fort Frances Times

Politicians, industry leaders, and private citizens expressed their desire to work together to solve the problems facing the forest industry in Ontario during a public meeting here last night.

Six speakers addressed a crowd of nearly 150 people in the auditorium at the Memorial Sports Centre to discuss the past, present, and future of the forestry sector, and why it is asking for help from the provincial government.

Coun. Tannis Drysdale, who helped organize the meeting, opened it by outlining the major events in the forest industry over the last year, including the creation of the Minister of Natural Resources Council on Forest Sector Competitiveness last November, the release of that council’s report back in June, and the government’s proposed course of action.

“For the last 20 years, the forestry sector has demonstrated its ability to create jobs and prosperity throughout Ontario,” Coun. Drysdale said.

When the industry began to cry for help last year, the Minister’s Council set to work and came up with a report containing 26 recommendations to ensure a secure future for it.

The government’s response was to offer $350 million in loan guarantees.

“Loan guarantees are what the government gives you when the banks won’t give you any money,” explained John Harrison, manager of the Abitibi-Consolidated mill here and one of the speakers at last night’s meeting.

“The last thing we need right now is more debt, believe me.”

“The offer will not resolve the problems facing the industry,” Coun. Drysdale noted.

As a result of government inaction, the Ontario Forestry Coalition was formed, including the Northwestern Ontario Municipal Association, the Ontario Lumber Manufacturers’ Association, the Ontario Forest Industries Association, and the Nishnawbe-Aski Development Fund.

The coalition is focusing on four main issues it wants the province to address:

•a 50 percent fuel tax credit on the provincial portion of the tax when hauling fibre from the forest to the mills;

•a reliable supply of energy at reasonable prices;

•that the government assume 100 percent of the construction and maintenance costs of primary logging roads, and 50 percent of the costs of secondary forestry roads; and

•a business climate competitiveness fund similar to the one offered to the automotive sector.

The coalition made its demands heard at the recent Association of Municipalities of Ontario meeting in Toronto last month, Coun. Drysdale noted.

After meeting with NOMA representatives and other coalition members, Premier Dalton McGuinty agreed to put a package together for the forest industry in Ontario.

“Since our meeting in August, we have heard nothing from the government,” Coun. Drysdale said.

For this reason, she stressed it is important that the community mobilizes to make sure the issue isn’t forgotten.

Postcards addressed to the premier, demanding the government take action, were made available to those on hand at the meeting. The signed cards were collected at the end of the evening to be sent to Queen’s Park.

The speakers, meanwhile, discussed various aspects of the forest industry.

Harrison talked about the industry on a global level. While many mills in Ontario ship their product to the United States, so do companies in China, Brazil, and Sweden—meaning local mills must compete on a global scale.

In addition, there has been a downward trend in consumption of newsprint and uncoated free sheet since about 2000. More recently, the weak U.S. dollar has cut into profits, as well.

“Ontario wood prices are among the highest in the world,” Harrison said. While the world average cost for a cubic metre of wood is $35, that same amount costs $55 in Ontario.

All this, coupled with the rising costs of energy, fuel, and chemicals, means it is becoming increasingly difficult for mills to stay in business.

“The historic profitability of the mill [here] is steadily declining,” Harrison warned. “We expect to be unprofitable in our kraft mill here this year.”

But this does not spell doom for the local mill.

“There is a road map for recovery,” Harrison said, citing the Minister’s Council report. “It contains key recommendations that could put us back on the road to profitability.

“But the government is not going to take action unless they hear support from the public,” he stressed. “We need your help to get the right business climate in Ontario to be sure we can be prosperous in the future.”

Former mayor Glenn Witherspoon then said a few words on behalf of the Town of Fort Frances as Mayor Dan Onichuk was not in attendance at last night’s meeting.

Thunder Bay-Rainy River MP Ken Boshcoff also was unable to attend last night. He is in Indonesia this week with Fisheries and Oceans minister Geoff Regan at the APEC Ocean Ministers’ Meeting.

“When the auto industry coughs, every premier brings a Kleenex. They certainly don’t do that for this industry,” Witherspoon noted.

Gary Rogozinski, president of the Fort Frances Chamber of Commerce, presented a picture of what would happen to the town should the mill here close.

The mill employs about 700 people directly, he noted. If the average household is made up of three people (according to the 2001 census), then the closure would affect 2,100 people directly, or about 25 percent of the town’s population.

The mill employs another 100 wood-processing contractors as well as other staff, including security personnel, which would drive that percentage up to 30.

In terms of dollars, the mill pays out $56 million every year in wages and benefits. Assuming 50 percent of those wages are spent in the community, that’s an infusion of more than $27 million into the local economy annually.

About 60 percent of mill employees have spouses who work, earning an average of $35,000/year, and a total of $7,350,000 spent in the community.

In addition, the mill pays about $4.5 million a year to local vendors, $2.9 million on taxes, sewer, and water, a $1.5 million subsidy for three megawatts of power, and $800,000 for gas and diesel.

Rogozinski pointed out since the mill maintains the local logging roads, which often are used by tourist outfitters, hunters, and others, those roads would become unusable after five-10 years if the mill were to close.

Abitibi-Consolidated alone maintains 1,100 km of road.

It is difficult to estimate the financial impact the loss of those roads would have, but it could cause a drop in tourism, Rogozinski warned.

Altogether, if the Fort Frances mill were to close tomorrow, and assuming all its employees and their families would leave the area to find work elsewhere, it would amount to an annual loss of more than $71 million for the town’s economy.

“That’s a conservative number,” Rogozinski said, noting it likely would be closer to $100 million in a more detailed analysis.

Mark Alderson, manager of the Ainsworth OSB mill in Barwick, said he wanted to be present at last night’s meeting here to point out that the problems in the forestry sector affect the oriented strand board industry as well as pulp and paper mills.

“We’ve been drastically affected by wood costs in the last year-and-a-half,” he said. “It’s very important to the whole area.”

The final speaker of the evening was Ontario NDP leader and local MPP Howard Hampton. He brought along a handout for those on hand outlining the hydro costs for mills in different provinces across Canada.

A paper mill in Ontario using 30 million kWh/month will pay about $2.2 million in hydro—almost double what a mill in Quebec would pay for the same amount of hydro and more than double what one in British Columbia or Manitoba would pay.

As a result, many companies have stopped making investments in their mills in Ontario because they are less profitable while they make investments in their ones in Quebec, B.C., and Manitoba.

That will have dire consequences for Ontario mills in the long-term, Hampton warned.

“You may not be shut down today or next year, but you become less and less competitive over a four- or five-year period,” he said. “That’s where virtually every paper mill in Ontario is now.”

A less competitive mill also is more likely to see layoffs and shutdowns.

“When the market is down, mills in Ontario will take the down time,” Hampton said, noting the mill in Kenora has been shut down for six weeks or two months at a time during periods of low profitability.

He also suggested the mill in Fort Frances could begin to see similar “down time” if the province’s policies don’t change soon.

While the forest industry struggles, the provincial and federal governments have been providing investment packages to the auto, film and television, casino, and aerospace sectors, Hampton said.

“The government can’t come to Northern Ontario and say, ‘Not for you.’ That’s not fair,” he argued.

Following the speakers, the floor was opened to comments and questions from the audience. A few people came forward, including some current and retired mill employees.

Most were in agreement with the panel of speakers, and expressed hope that they could successfully lobby the provincial government together for a positive outcome. (*)

Aging urban forests under threat

Source: CBC August 9, 2005

Cities across Canada are in danger of losing their mature trees and urban forestry experts say we need to develop strategies now to stem the loss.

In many older neighbourhoods, trees were planted when subdivisions were first built. That means these urban forests are around the same age and will likely die around the same time.

"We have an age-class imbalance," says Peter Duinker, professor of resource and environmental studies at Dalhousie University in Halifax.

"There was a huge expansion of urban residential areas at the turn of the century and after the Second World War …. In the next 50 years, we're going to see a lot of these trees keel over and that's not a very happy thing."

Urban foresters say that unless we begin to plant saplings soon, some of our leafy neighbourhoods are in danger of looking like clearcut zones.

While Canada has an international reputation as a country of majestic forests, the reality is that about 80 per cent of us live in urban centres. So it's the trees that line our streets and grow in our ravines and parks that provide most of us with our greenery.

Yet it's not just esthetics at stake here.

According to a recent study by University of Toronto forestry professor Andy Kenney, every year, Toronto's seven million trees absorb about 28,000 tonnes of carbon. That cuts back on the amount of greenhouse gas carbon dioxide in the atmosphere.

Toronto's urban forest also stores in its branches, roots and leaf litter nearly a million tonnes of carbon and about 1,500 tonnes of other pollutants, such as nitrogen oxides, sulphur dioxides and particulates, which, when inhaled, aggravate breathing problems.

And urban forests everywhere are energy-savers. They give cooling shade in the summer and cut down on frigid winds in the winter, lessening the need for air conditioning and heating.

"They also have an amenity value," says Duinker. "Who doesn't like driving down a city street where the tree crowns touch?"

Yet despite the significant benefits of city forests, Michel Rheame, urban forestry co-ordinator with the National Forest Strategy Coalition, worries that no one government body is responsible for them.

He says there is too much bickering among the three levels of government over whose job it is to maintain city forests.

"It's a very big concern. We're not receiving the necessary resources to go toward urban forestry," says Rheame.

The coalition, an Ottawa-based non-governmental organization, is working on an inventory of the state of Canada's municipal forests. It hopes to have it completed by the fall of 2005 so it can use it to convince authorities of the need for action.

"The situation is desperate in cities that have a lot of same-age, same-species planting. Fredericton is one. Halifax is not quite that bad," says Duinker. "And some individual streets are going to have a crisis – like mine."

In Vancouver, most of the broadleaf deciduous trees favoured by urban planners after the Second World War will soon need to be replaced.

"The broadleaf trees will be getting close to their lifespan in a lot of places," says Lori Daniels, a professor at the University of British Columbia with an expertise in forest dynamics.

"Out west, we often planted cityscapes with trees like horse chestnuts. These broadleaf trees have a shorter lifespan than our red cedars and Douglas firs."

While deciduous trees grow faster, Daniels says the trade off is that they live only 100 to 120 years. Red cedars, on the other hand, can live to be 1,000 years old.

In Thunder Bay, city forester Shelley Vescio worries that most trees are 40 to 60 years old.

"We probably have 20 years or so left for these trees," predicts Vescio.

"As we start losing the 60-year-old ones, the ones we've been planting will begin to take over. But we've not been planting enough.

"I could line the streets, but there's no point in planting them if someone doesn't water them, especially with global warming. I don't have the [watering] infrastructure for it. It comes down to a lack of resources," she says.

Many foresters are now arguing for a planting strategy that takes into account both public and private land and engages the public in the trees' upkeep. Once we plant trees, they say, we have to safeguard them from modern urban threats, such as road salt and trenching for street construction.

There's nothing like city living for stressing trees.

In fact, look along any tree-lined street and you're likely to see at least one tree with a huge V-shape cut out of its centre.

Hydro workers often prune them back from overhead wires to avoid power outages. Urban foresters say it's an unnatural shape that weakens the tree and makes it more susceptible to broken branches.

And they say that not only must we avoid this kind of damage, we must also ensure we don't repeat the mistakes of the past when replacing urban forests.

"The worst thing we could do is what we did 100 years ago in places like Fredericton and Truro. We planted just American elm and then along came a disease and wiped them out," says Duinker. "It's really important to have a wide variety of trees planted in urban areas." (*)

Ontario to promote clean power

Aug. 22, 2005. 07:15 AM
Incentives would encourage green producers to feed the grid
Plan to push province to forefront in wind, solar, renewables

TYLER HAMILTON / TECHNOLOGY REPORTER / TORONTO STAR

The Ontario government is preparing to unveil a program next month that would encourage homeowners, farmers, schools and community co-ops to set up renewable energy systems by letting them sell "clean" power to the grid at a fixed premium.

Energy Minister Dwight Duncan, in an interview with the Star, said the program would be limited to smaller projects, typically less than 10 megawatts, but over time could add thousands of megawatts of renewable power to a strained provincial grid being weaned from coal.

"We support it entirely . . . It encourages small businesses, farms, individual households and others to come to the table," said Duncan. "I would anticipate an announcement, probably in September."

He has instructed the Ontario Power Authority to investigate a workable pricing scheme and the Ontario Energy Board to look at necessary connection-policy changes that would ensure non-discriminatory access to the grid.

Ontario would become the first province in Canada, and possibly the largest jurisdiction in North America, to open its electricity system to small suppliers of renewable energy and pay a premium on each kilowatt of clean electricity it purchases.

In a letter sent last Thursday to both regulatory authorities, Duncan urged that work begin "immediately" with the goal of having an implementation plan before year's end.

Duncan said the program would be open to solar, wind, biomass and micro-hydro projects. It's largely expected to mirror a proposal submitted to the energy ministry in May by the Ontario Sustainable Energy Association (OSEA).

At its heart is a so-called feed-in tariff or "standard offer contract" that provides attractive fixed-price contracts, typically for a period of 20 years, and offers a right to interconnect with the grid. The idea is to price high enough to encourage production and have the premium spread across all ratepayers.

"I think people are prepared to pay a higher price for cleaner energy," said Duncan.

Paul Gipe, a U.S.-based wind-energy expert who recently served as acting executive director of the energy association, said it would be the most extensive policy of its kind on the continent, going beyond what California did during the 1980s.

"Ontario would be far ahead of any jurisdiction in North America, assuming it gets the prices right," said Gipe, who was lead author of the proposal.

The approach has been implemented successfully in Europe, allowing countries such as Germany and Spain to add a significant portion of renewable energy to their overall power mix while capturing early solar and wind manufacturing opportunities.

For example, most of the 16,600 megawatts of wind energy in Germany comes from small projects built since 1991. The wind industry is now the second-largest consumer of steel in Germany and is expected to employ 110,000 people by 2010, up from 45,000 today.

"There's no question if the Ontario ministry of energy puts in feed-in laws, that puts out a powerful signal saying we're in this for the long haul," said Sean Whittaker, policy director for the Canadian Wind Energy Association. "We're very much in support of it."

Rob McMonagle, executive director of the Canadian Solar Industries Association, said he's pleased the province is looking beyond wind and including other options such as solar.

`We support it entirely . . . It encourages small businesses, farms, individual households and others to come to the table. I would anticipate an announcement, probably in September.'

Ontario energy minister Dwight Duncan

"We just need some government to take the lead. Once you get that first major program announced, it opens up the floodgate for other programs to follow," he said.

Prince Edward Island has embraced feed-in tariffs, and Oregon, Minnesota and Washington states are moving in that direction. But experts say Ontario, if it can move fast on its program, can blaze a trail and capture the investment and industrial opportunities that come with it.

"This makes enormous sense," said Duncan, pointing out that it serves the dual purpose of meeting clean energy demands and sparking economic development.

"Somebody has to build the windmills. Somebody has to build the solar panels. Somebody has to build the anaerobic digesters. Right now Ontario is ideally positioned, not only to serve our own market, but to also serve the North American market."

Industry experts say many foreign manufacturers of wind turbines, eager to tap North American demand, are scouting out places to set up manufacturing and assembly facilities.

"What these manufacturers are looking for is a strong, stable policy message," said Whittaker.

Spain's Ecotecnia, Denmark's Vestas and Enercon of Germany are considered three of the most likely wind-turbine manufacturers to consider operations in Canada. Gipe said Ontario would be wise to court Enercon, which has labour-intensive technology that would make the biggest impact in terms of job creation.

Duncan said he's had "fairly advanced" negotiations with wind turbine manufacturers, and while he wouldn't say which ones, he said stimulating small renewable energy projects in Ontario makes the province more attractive.

"We shouldn't miss that boat," he said.

The government has committed to closing down by 2009 four coal-burning power plants representing 6,400 megawatts of generating capacity. It plans to replace that power with a mix of renewable energy, nuclear and natural gas facilities as part of a more distributed electricity system.

To date the province has been focused on large-scale renewable energy projects, such as wind farms, which are selected after a formal request for proposals. Last November, the government announced 10 projects that would provide 395 megawatts of clean power, and it's closing a second round of requests for up to 1,000 megawatts for projects of 20 megawatts or higher.

A third round announced in July for up to 200 megawatts is seeking small to medium-sized projects of less than 20 megawatts. The target is to generate 5 per cent of Ontario's energy capacity from renewable resources by 2007, rising to 10 per cent by 2010.

In its proposal, OSEA said using such a costly tendering process makes it difficult for smaller projects to participate, even though many of these projects taken together can make a significant contribution to the province's energy needs. Establishing a feed-in tariff would create a more inclusive environment, making it easier for any Ontarian to play a role in the province's energy future.

"European experience indicates that small, distributed projects with community or local participation result in more renewable energy developed more quickly and increases the public's acceptance of the technology," according to the association, adding that increased distribution of generation typically results in increased system reliability and reduced line losses.

Gipe, who consulted with farmers on the program, said he expects to see increased investment in rural Ontario, where wind turbines, biogas facilities and even solar photovoltaic systems would be ideally located.

"The farmers, they understand markets. Every place we went their question was, when do we start?" he said.

"I think farmers are not only a natural constituency for doing this, but they're also a natural constituency for making this happen."

Cascades shutting down paper machine at Thunder Bay, cutting 150 jobs

09:48 PM EDT Aug 23
ANDREW DAVIDSON / CBC

TORONTO (CP) - Cascades Inc. is shutting down a fine-papers machine at its Thunder Bay, Ont., operations and cutting about 150 jobs in the latest blow to Canada's beleaguered pulp and paper industry.

Some of the work will be transferred to other plants within the firm's fine-papers group, Kingsey Falls, Que.-based Cascades (TSX:CAS) said Tuesday. "In spite of sustained efforts over the past few years to improve profitability, this plant has continued to incur major financial losses," the company said.

"Non-competitive operating costs, high energy costs in Ontario and the appreciation of the Canadian dollar versus the U.S dollar are the main factors which have adversely affected the performance of the Thunder Bay operations."

The firm also cited "unfavourable market conditions prevailing in the pulp and paper industry."

Observers say Cascade's streamlining move will not be the last in the industry as mills across Ontario and Eastern Canada feel the brunt of escalating input costs, including energy.

"Unfortunately, it's my sense that more closures are going to come," forest products analyst Frederic Beausoleil of National Bank (TSX:NA) said in an interview.

"Ontario is somewhat more current because energy prices are very high. You're going to see some closures in Quebec, where fibre costs are quite high as well, but northern Ontario is where it's most critical in the near term."

Last week, Ontario Premier Dalton McGuinty said the province is considering creating a special fund to help the forestry sector in northern Ontario to attract new investment and reduce energy costs, which analyst Beausoleil sees as a sign of hope for mills potentially slated for closure.

"If I were operating a pulp and paper mill in Ontario today and it was just on the verge of being profitable in the longer term, I would probably hold off on a decision to close it today just to wait to see what the government will be telling me," he said.

In the streamlining effort, Cascades said it expects to take a pre-tax charge of about $9 million during the second half of 2005, nearly $2 million of which is non-cash.

"What they're doing today is likely to make the mill at least cash-flow positive next year," Beausoleil said.

The high Canadian dollar has forced pulp and paper companies to pay more to produce, while receiving less for finished products. High energy costs, which have increased 10-fold in recent years, have crippled pulp and paper producers feeling the impact of shrinking demand, overcapacity and a shortage of wood.

Abitibi-Consolidated Inc. (TSX:A) announced last month it will close one paper machine in Kenora, Ont., and indefinitely idle a second one Oct. 22.

Between 150 and 200 of the current 350 employees at the Kenora site are expected to lose their jobs permanently, with most of the remaining 150 facing unemployment if the second machine is idled as planned. The company closed its Port Alfred, Ont., mill in January.

Tembec Inc. (TSX:TBC) has said it will close four paper and lumber mills in Quebec and Ontario, in addition to three mills already mothballed this year. Earlier this month, Smurfit-Stone Container Corp. said it will close three North American containerboard mills. (*)

It's time to stop playing softwood charades

By JEFFREY SIMPSON
Tuesday, August 23, 2005 Page A13 / GLOBE AND MAIL

Canada has no serious option but trade retaliation against the United States.

The Americans have acted outrageously and illegally in the softwood lumber file. They have harried Canadian exports, imposed illegal tariffs, and announced their intention to disregard a NAFTA panel ruling that called their actions to account. This insolence is really the last straw.

Doubt it? Then read the 68-page ruling of the so-called extraordinary challenge panel. It's dry, technical and devastating to the United States. It shows how spurious were the American complaints against the original NAFTA panel that ruled in Canada's favour.

What did it mean, that the panel ruled in Canada's favour? Quite simply, it meant that the U.S. had interpreted its own trade laws wrongly, and unfairly, in asserting that Canadian softwood lumber exports were causing "material injury" to U.S. interests.

So specious was the U.S. lumber interests' claim, and so gimpy was the U.S. International Trade Commission's reasoning in support of that claim, that the issue before the panel wasn't about actual "material injury."

Rather, the issue was whether injury might be done once the export restrictions that had been negotiated in a previous Canada-U.S. deal were lifted. It was a bit like saying someone might commit a crime because the beholder thought he looked suspicious.

David Wilkins, the new U.S. ambassador, counsels resumption of negotiations and lowering of rhetoric. U.S. ambassadors always say something similar: calm down, you Canadians, and let the law and cool heads prevail. After all, we're friends, and friends work these things out.

Except things don't work out this way. If an agreement is reached, it always mocks free trade in softwood lumber. It always tilts toward the U.S. lumber interests.

The U.S. interests have enough federal legislators in their pockets that they successfully twist U.S. policy. Legislators from states that don't produce much lumber couldn't care less.

The congressional system operates, in part, on log-rolling -- that is, a legislator remains silent or gives support for an issue of little concern in exchange for votes on issues of importance to his or her state.

The senators and members of the House of Representatives from Idaho, Montana, Georgia and a handful of other states run U.S. softwood lumber policy, or rather manipulate it to protect their lumber interests. Their decisive power is part of the increasingly obvious congressional influence over all aspects of U.S. trade policy.

No president will expend an iota of political capital to twist these legislators' arms over softwood lumber. He needs their votes on much more important national issues. And Canada just doesn't count. From Canada's perspective, the announced U.S. intention to disregard the NAFTA panel ruling strikes at the heart of the original bargain over bilateral free trade. The Canadian negotiators didn't get the binational panels they wanted, ones that could over-rule national decisions. They settled for second best: panels that could review if each country had correctly administered and interpreted its own trade laws.

It was all that the Canadians could extract from the Americans, but the modest agreement was sufficient enough for Brian Mulroney to sign off on the negotiations. The panels' purpose was precisely to stop U.S. political interests from perverting U.S. trade laws, as has happened repeatedly in the softwood lumber file.

The lumber interests have used every weapon in the traditional arsenal, but they are not finished yet. They are now arguing that elements of NAFTA are unconstitutional because they empower a panel other than an agency of the U.S. government to review American action.

These are the instincts of the heartland that reject supra-nationalism in all its forms, be it the United Nations, the International Criminal Court, Kyoto.

The lumber interests will make this legal argument before the appropriate U.S. courts, and they will continue to immobilize U.S. trade policy.

The best way for Canada to awaken at least a few U.S. legislators that their country is defying NAFTA and hurting another country is to draw up a list of selected U.S. exports that will be hit with retaliatory tariffs within a fixed period of time unless the U.S. changes its attitude.

Don't worry about Canadian consumers. Big tariffs on California wine, for example, will just shift our preference to domestic or other imported wines. The same goes for other kinds of products where alternatives are easily available.

The softwood charade has gone on long enough. Talk is fine, but it's also cheap when one side ignores the law.

jsimpson@globeandmail.ca

Value-added efforts should be focus of forestry: Green Party

Ontario Green Party leader Frank de Jong believes the province should be encouraging more value-added forestry practices rather than trying to prop up money losing primary mills.

By Peter James / Miner and News / Friday August 19, 2005

Ontario Green Party leader Frank de Jong believes the province should be encouraging more value-added forestry practices rather than trying to prop up money losing primary mills.

“Subsidies are not a good idea because it will encourage companies to continue non-economical and non-ecologically sustainable activity,” de Jong said.

He pointed to the mechanization of the forest sector and the years of job cuts in the industry as proof that the future of Northern Ontario doesn’t lie in the traditional primary production like newsprint and two by fours.

“Business as usual has to change,” he said.

De Jong said the benefits of labour intensive value-added production are two-fold. He said less trees will be used in the production of the finished products while jobs will stay in the north.

“I’d like to see more forest left alone and set aside from clearcutting,” de Jong said.

The Greens propose a radical tax-shifting strategy to encourage companies to use less natural resources, while employing more people in their processes. The Greens would increase stumpage fees and other charges to use trees and natural resources while at the same time lowering or eliminating personal and corporate income taxes.

“We want companies to be successful so we shouldn’t tax their profits,” he said.

By making it more advantageous for the forest companies to employ people rather than use a lot of fibre, de Jong said it would help stem the youth out-migration which is causing many communities in the north to see population declines.
It would take the tax-shifting strategies a number of years to become effective as existing companies and newcomers adjust to the market conditions. Money would have to be spent building new plants or retrofitting old ones.

In the meantime de Jong noted the government must take steps to help people affected by the spectre of large scale mill closures.

“There are short-term issues and there are long-term issues and you have to be sensitive to that,” he said.
De Jong said the province should focus any money it spends on forestry in helping companies become more innovative and to develop new technology for value-added production.

At the same time the Green Party said the government should encourage companies to build environmentally friendly power production facilities. De Jong said in some parts of the province that means more investment in wind power, while in Northern Ontario it can include more biomass co-generation plants. He said the power plants could be built off the grid to service the forest industry.

“It increases local reliability,” de Jong said.

Forests' Recreational Value Is Scaled Back

U.S. Lowers Estimate of GDP Contribution
By Juliet Eilperin / Washington Post Staff Writer / Monday, August 15, 2005; A03

Forest Service officials have scaled back their assessment of how much recreation on national forest land contributes to the American economy, concluding that these activities generate just a tenth of what the Clinton administration estimated.

Under President Clinton, the Forest Service projected that by 2000, recreation in U.S. forests would contribute nearly $111 billion to the nation's annual gross domestic product, or GDP. Bush administration officials, by contrast, have determined that in 2002 these activities generated about $11 billion.

Joel Holtrop, deputy chief of the National Forest System, said the revised numbers may spur the administration to shift some of its recreation dollars within the system but will not prompt it to downgrade activities such as hunting, fishing and wildlife-watching.

"It's just as valuable to us today as it was 10 years ago; we just have a better way of calculating it," Holtrop said in an interview. "We recognize recreation activity is an important program to the American people."

But critics of the administration said they fear that the new numbers, which were obtained from the nonprofit Natural Resources News Service, will be used to justify more logging and mining on national forests. Under the old estimates, recreation accounted for 85 percent of the system's contribution to the GDP, compared with extraction's 11 percent; under the new formula, recreation represents 59 percent.

"Would I expect anything different from the Bush administration? No," said Michael Francis, who directs the national forest program at the Wilderness Society, an advocacy group. "They will cook the books for whatever they want."

According to Forest Service strategic planner Ross Arnold, who developed the most recent estimates, earlier studies inflated the number of people visiting national forests and how much money they spent while they toured the area. In 1995, Clinton administration officials assumed there would be 800 million visits each year to national forests by 2000; current officials have determined that there were just over 200 million visits in 2002.

The Forest Service obtained the lower visitor numbers through its National Visitor Use Monitoring Program, which surveyed tourists in every national forest between 2000 and 2004, Arnold said. The agency also decided to peg spending associated with such visits at $46 a person, by basing it on how much visitors spent within 50 miles of a forest on a single day.

Greg Alward, another Forest Service planning staffer, said officials did not purposely inflate the earlier recreation numbers but were simply relying on rougher estimates. "They were the best available data at the time," he said.

American Forest Resource Council Vice President Christopher West, who represents Western sawmill operators and forest landowners, hailed the new estimates as a better assessment of the national forests' true economic worth.

"The bottom line for us is: There's value to all these resource uses," West said. "And as long as we compare them apples to apples, we can have responsible discussions about the national treasures."

The revised numbers come as an array of groups, including outdoor equipment and clothing suppliers and wildlife advocates, are touting the financial benefits that come from preserving recreation areas within the forest system.

Watchable Wildlife President James Mallman, whose nonprofit represents state and federal wildlife agencies, noted that in 2001 the Fish and Wildlife Service estimated that birders and wildlife watchers spend $38 billion a year on equipment and travel. Last year, Fish and Wildlife officials concluded that wildlife and nature viewing had surpassed hunting and fishing in terms of the nation's top recreation activity.

"Often not developing an area is where the best economic gain can be, because that is what people want," Mallman said. He added that he was surprised by the Forest Service's new numbers, because "more people are going to national forests than ever before."

Holtrop said he did not question that forests are seeing an upsurge in visitors. "Empirically, we know that recreation use on national forests continues to rise," he said.

© 2005 The Washington Post Company

Another pest threatens Ontario's trees

By Paul Choi / Canadian Press / Sunday, August 14, 2005

TORONTO -- As forest officials slowly manage to contain one invasive beetle species, another pesky bug continues to run roughshod over Ontario's trees.

The Canadian Food Inspection Agency says the Asian long-horned beetle, a shiny black bug that feeds on hardwood trees, has been contained.

"The population hasn't grown over the year,'' says food agency spokesman Howard Stanley.

"In fact, these may be the remains of the original 2003 population.''

About 7,000 infected trees will be cut down in the Toronto area in an attempt to contain and eliminate the last remaining insects, a group of which was first found burrowing into area trees two years ago.

Stanley said he was optimistic the species could be eradicated from the province within the next several years.

But even as federal officials gain the upper hand on the Asian long-horned beetle, another beetle infestation threatens to spread out of the province.

"The ash borer has been more problematic,'' said Barry Lyons, a research scientist with the Canadian Forest Service.

"It's over a much wider area so we're really battling it on a number of fronts.''

Unlike the Asian long-horned beetle, which is localized in and around the Toronto area, the emerald ash borer has been spotted all over southwestern Ontario -- mainly around wooded areas in Windsor and Chatham.

The tiny green bug, which is originally from eastern Asia, is also threatening trees south of the border in Michigan, Ohio, and Indiana.

"In Ontario and areas in the (United States) the ash borer has probably killed millions of trees,'' said Lyons, who estimates about 12 million trees have been downed by the pest since its introduction to North America in 2002.

While there is no accurate monetary value attached to the loss, Lyons said the impact on the forestry industry and the environment has been huge.

"This particular insect is just an incredibly aggressive tree killer,'' he said.

According to the CFIA website, the ash borer does its main damage by burrowing into the trunks of ash trees, which are found in wooded areas and re-planted in cities for their aesthetic and environmental qualities.

After burrowing, the insect lays eggs in the bark which spawn larvae that eats away at the bark, disrupts movement of water and nutrients, and ultimately kills the tree.

Over the past year, the Canadian Forest Service and the food agency have been taking the same steps they've taken against the Asian long-horned beetle in the hopes of understanding the ash borer and slowing its spread, Lyons said.

"We're trying the whole arsenal of things that we've used on other insects and finding the most effective ones we'd use against the emerald ash borer,'' he said.

Introducing natural predators and removing infected trees are all solutions officials have tried with some success.

"Part of the problem with the emerald ash borer is that we don't have good detection tools,'' Lyons said.

"We don't have a lure that will attract it to a trap, so it's very difficult to know where exactly the insects are. And if you don't know where they are, it is very difficult to regulate the areas.''

Adding to the problem is the fact that the insect doesn't travel in large swarms, which makes them even harder to detect, Lyons said.

The good news, however, is that there have been no substantiated reports of either the Asian long-horned beetle or the emerald ash borer in the rest of Canada, he said.

But the potential that these two species could spread outside Ontario is definitely there.

"It has the potential to be a huge national problem,'' Lyons said. "If we don't do something now, then the problem will be out of hand and we'll lose some very valuable natural resources.''

To prevent further spreading of both insects, the CFIA has set up several regulated areas in affected zones to prevent people from transporting wood infected by the dangerous beetles, Stanley said.

Doing this is key, Lyons said, as both the ash borer and the long-horned beetle were likely first transported to North America after they burrowed into wooden shipping crates and packaging materials.

"The biggest problem with some of these wood-boring insects is that once they've become established some place, people inadvertently move wood material around, like firewood,'' he said. "This is how much of the spread occurs.'' (*)