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FPAC calls on government


January 25, 2005
By Pulp & Paper Canada

The Forest Products Association of Canada (FPAC) is urging the government to take immediate steps to address the ra…

The Forest Products Association of Canada (FPAC) is urging the government to take immediate steps to address the rapid rise of the Canadian dollar especially with respect to its impact on export-oriented industries. Over the last two years the Canadian dollar has appreciated at an unprecedented pace, recently peaking at a 12-year high. Such appreciation presents real challenges for industry, the entire Canadian economy and governments.

“The industry recognizes that the rapid appreciation of the dollar is largely the result of external economic forces. However, the Government of Canada needs to acknowledge publicly the effect that it is having on Canadian industry and take action to mitigate its impact. The rise in the value of the dollar makes action to improve the business climate increasingly urgent. The Government needs to acknowledge that a 30% rise in value over only 24 months is a serious issue for the Canadian economy and Canadians more broadly”, said FPAC’s President and C.E.O., Avrim Lazar.

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Canada’s forest products industry annually exports nearly $40 billion worth of products to external markets. With about 80% of the industry’s products being sold outside of the country and primarily in the United States, Canada’s forest products industry is under constant pressure to reduce costs and increase efficiencies in order to compete in an increasingly global market against lower cost competitors and where prices are set in U.S. dollars. Sustained and successful initiatives to improve productivity and reduce costs can be easily wiped out by such rapid increases in the value of the dollar.

“We are urging the government to develop a strategy to improve Canada’s business climate, beginning with measures in the upcoming Budget to encourage capital investment, such as the immediate elimination of the Large Corporation Tax and the corporate surtax. Other improvements to Canada’s tax and regulatory policy, such as accelerated capital cost allowances and more efficient regulations, would also facilitate investment, particularly in the area of low-impact renewable energy technologies. While these measures will not off-set entirely the impact of the rising dollar, they will help industry to continue to improve productivity and competitiveness.”, continued Lazar.

FPAC also called on the Bank of Canada to acknowledge the impact the rapid rise in the Canadian dollar is having on Canada’s export industries and take into account the implications for economic growth in setting its future monetary course.


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