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• Ministry staff have been working with Skeena

regarding the OICs and are in ongoing discussions


to reach a common understanding of the impacts
that Skeena considers to be a result of the policy
changes.
• We have shared with Skeena that the numbers as
presented in their letter do not accurately portray
the impact of the OICs. In particular, the map shows
the changes in OIC as a straight change in OIC
percentage, when in fact the original OIC was a
percentage of the total harvest that could be
exported, whereas the new OICs specify the
percentage of harvest excluding the harvest of
cedar and cypress. This makes a significant
difference in most of the OIC areas.
• Exports from crown land in 2018 were down 30% in
2018 relative to 2017. So far in 2019, we are again
down in export volume relative to where we were
this time in 2018.

Response to the letter’s recommendations:


1. Commit to an annual review of the log exports for the
area. Ensure log exports are carefully monitored and if
the stated government objective of a 15 % reduction is
not met; change the OIC’s before the five year expiration
period.We have committed verbally and in writing to
Skeena that we are monitoring the impact of the OICs
and that if the objectives government outlined are not
being achieved, we will revisit the policies. The
Minister and Premier have both stated that we will be
monitoring the effects of the policy changes and if there
are unforeseen impacts we will take another look.

2. Commit to prioritizing BCTS volumes for domestic


use. There are several viable approaches to this
including excluding BCTS sales from the OIC’s,
establishing a category of sale exclusively for domestic
users or allowing tenure holders to exchange volumes
without loss of bidding status.BCTS was established to
provide a market based pricing system (MPS) to set
stumpage rates for crown timber in the province. MPS
is the cornerstone in the Province’s defense against the
US allegations that we subsidize the forest industry
through stumpage. Maintaining the integrity of MPS at
this juncture in the litigation with the U.S. is critical to
our defence. Creating criteria that restrict what can be
done with BCTS volume (i.e. prioritize for domestic use)
would negate the ability to use that volume as part of
MPS and erode its credibility.

We have an existing limited pool of BCTS volume that is


allocated in a category (Category 3 sale) that is
restricted to those that hold less than 10,000 m3 in
annual allowable cut. As a requirement of acquiring a
sale under Category 3, the Timber Sale Manager
specifies a percentage of volume from that sale that has
to be processed in a domestic mill (or an equivalent
volume).

For regular BCTS sales, anyone can bid and we note that
Skeena has been successful in obtaining several BCTS
sales over the past few years. Companies are also free
to purchase any volume that comes from a BCTS sale
and it is for the market to determine when/where those
transactions occur.

3. Provide security for domestic manufacturers to


access capital for modernization. This can be done by
declaring the area a special economic zone, a
designation certainly supported by the governments own
analysis that claims 40 % of the harvest is uneconomic
without log exports. This would help motivate companies
to invest in manufacturing facilities in the area and can
be done through existing agencies like BDC.
As Skeena indicates, the EDC/BDC have programs
specifically tailored to companies wanting to make
capital investments, expand market opportunities and
diversify into new markets. These programs were
further supported by the Federal Government with
additional funding under the Softwood Lumber Action
Plan and we encourage companies to make use of these
programs. (https://www.nrcan.gc.ca/19703)

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