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Quebec’s forestry industry says Ottawa is putting the province at a “serious competitive disadvantage” ahead of the deadline to extend Canada-U.S. softwood lumber agreement.Jacques Boissinot/The Canadian Press

Quebec's forestry industry says Ottawa is putting the province at a "serious competitive disadvantage" as the deadline approaches for an extension of the 2006 Canada-U.S. Softwood Lumber Agreement.

In an open letter to certain media outlets, the lobby group representing Quebec's forestry companies says the Canadian government has failed to respond to repeated requests it live up to the spirit of the agreement by pushing the United States to agree to a bilateral review of the province's stumpage system.

The Conseil dè l'industrie forestiere du Québec says the province "revised radically" its stumpage system last year to make it more market-oriented and satisfy the U.S. that its sawmills are not benefiting from illegal subsidies.

A provision of the lumber agreement provides for the provinces to have their stumpage systems examined with a view to excluding them from export taxes on shipments of lumber to the U.S. if their stumpage systems are shown to be "market-determined."

Stumpage refers to the means by which the provinces sell rights to cut standing timber on provincial Crown lands.

The Conseil argues that Quebec's system is more market-oriented than what exists in the Atlantic provinces and yet the latter are excluded from export taxes and other restrictions but not Quebec.

"Maybe Ottawa has its reasons for favouring the Atlantic Provinces over Quebec, but Ottawa's policy has put Quebec's forest industries at a serious competitive disadvantage compared to the Atlantic Provinces," it says.

"The Softwood Lumber Agreement has contributed to the loss of thousands of jobs in Quebec. Its extension, without recognition of the changes in Quebec's stumpage system, is likely to cost thousands more."

"There have been important changes made in Quebec and we have been asking Ottawa since last July for an examination of those changes by a Canada-U.S. committee, but there has been no movement," said André Tremblay, president of the Conseil.

Foreign Affairs and International Trade Canada responded to the letter in an e-mail statement:

"The agreement reflects a negotiated agreement to a complex trade dispute that does not discriminate against any province or region," says the statement.

"The Softwood Lumber Agreement continues to enjoy strong support from industry and all provincial governments for the stability and predictability it provides. At current market prices, all Canadian exports of softwood lumber have duty free and quota free access to the U.S. market as a result of the agreement."

The 2006 Softwood Lumber Agreement is set to expire in October of 2015 and the federal government wants to extend it beyond that for another five years or more.