Prime Minister Stephen Harper's announcement of a $1-billion fund to aid struggling Canadian communities and unemployed workers in industries such as forestry, fishing and manufacturing has an American lumber industry group crying foul.
The U.S. Coalition for Fair Lumber Imports, which has been a leading critic of Canada's softwood lumber policies, said in a statement Sunday it is "closely scrutinizing" the federal government's proposed national community development trust fund.
The Washington-based coalition, which represents small and large American lumber producers, although it refused to reveal how many, said it is "deeply concerned" that Canadian authorities will use the fund "to provide relief to the forestry sector during these difficult market conditions."
"When a billion dollars is dispersed through to a sector it obviously raises some concerns," coalition executive director Zoltan van Heyningen told The Canadian Press in an interview Sunday from Washington.
"We would just want to make sure that it's not a way of ultimately absolving the financial liabilities or responsibilities of companies which essentially would be a subsidy."
In the group's statement, coalition chairman Steve Swanson said: "We strongly suspect money ostensibly earmarked for workers will be used to reduce liabilities of Canadian lumber companies, which would violate the Softwood Lumber Agreement."
The group said the 2006 Canada-U.S. Softwood Lumber Agreement prohibits new government subsidies to the Canadian lumber industry.
Van Heyningen said the coalition's lawyers are examining the announcement, but he wasn't ready to directly accuse the Canadian government of violating the softwood lumber deal.
"We have very serious concerns and we're going to look at it very closely," he said. "But before we would actually come out and say 'You are violating X, Y or Z,' we would want to have a chance to review it very closely," said van Heyningen.
"Lumber industries on both sides of the border are going through difficult circumstances, but now is not the time for the Canadian government to step in with new subsidy schemes to give its industry unfair advantages in the U.S. market," said Swanson.
But in making his announcement Friday at a lumber mill near Fredericton, the prime minister clearly said the program is aimed at helping one-industry towns facing major downturns, communities plagued by chronic high unemployment, or regions hit by layoffs across a variety of sectors - not just forestry.
A one-time allocation from Ottawa's budgetary surplus would be used to create the fund, which would not survive unless Opposition parties agree to pass the next budget.
The money would mostly be used to retrain laid-off workers for new jobs and be spent on community infrastructure projects. Plans call for each province to get $10 million in base funding and each territory to receive $3 million. The rest of the fund would be handed out on a per capita basis.
Export-driven businesses have been financially squeezed by the strong Canadian dollar, which soared past parity with the greenback last fall and briefly hit an all-time high of 110.3 cents US on Nov. 7 before slipping back to around parity. It closed Friday at 98.07 cents US.
Rising fuel prices and the slumping U.S. market have also cost export-driven companies, and the Conservative government has been accused by some premiers and unions of not doing enough to help them. Voracious pine beetles have eaten away at forestry companies' profits in British Columbia.
The Forest Products Association of Canada said its industry partners employ about 300,000 in 300 communities across Canada.
Natural Resources Canada said the forest industry lost 22,000 jobs through temporary and permanent layoffs at 184 mills between January 2003 and April 2007. Since then, more workers have been laid off and experts aren't forecasting an improving picture for this year.
Statistics Canada reported Friday the national unemployment rate held steady at 5.9 per cent in December. However, the agency said that 18,700 jobs were lost - the biggest monthly loss in more than three years.
The export-driven manufacturing sector was hardest hit, shedding 33,000 jobs last month. For the year, factory employment slumped 6.2 per cent after falling 2.4 per cent in 2006, Statistics Canada said.