FPAC calls on Bank of Canada to revise rate
July 10, 2007 By Pulp & Paper Canada
The Forest Products Association of Canada is calling on the Bank of Canada to consider the economic and regional im…
The Forest Products Association of Canada is calling on the Bank of Canada to consider the economic and regional implications of its decision to increase its overnight interest rate.
Those that say Canadas manufacturers are suffering because they hid behind a weak dollar are simply wrong. For example, Canadas wood products sector has been a Canadian productivity leader, recording a rate of labour productivity growth double that of its U.S. counterpart since 1997. Add to this the fact that Canada is the most successful forest products exporting nation in the world, and we can confidently say that we have been striving to succeed in global markets, said Avrim Lazar, FPAC president and CEO. But, as in other trade exposed sectors of our economy, even world-class mills in the forest products industry are struggling to remain economically viable due to the dollar rising 45% over five years.
The Bank of Canada must act in the interests of the Canadian economy more broadly and expand its focus to more fully consider other economic and regional factors, Lazar continued. With the Canada-U.S. exchange rate already at a generational high, we believe that the Bank is not giving adequate consideration to the economic well-being of hundreds of communities across large regions of Canada.”
Lazar also took aim at federal and provincial governments, emphasizing a need for policy reform at all levels of government to make Canada more competitive in global markets. Governments in Canada have been slow to adjust economic policies to take into account the rising dollar and increased global competition. It is industrys job to adjust so that we can compete with low cost countries, but government must move much more quickly to create world class competitiveness conditions. Taxes that penalize investment, out of date mergers policies and uncompetitive transportation, fibre and energy policies which were simply disadvantageous when the dollar was lower have become damaging to Canadian jobs with the high dollar. The result is severe and potentially irreversible damage to Canadas economic base.
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