Special tax breaks are gradually being phased out. Many paper pulp plants are located in Quebec, a situation that might generate problems if Quebec became independent. Also, the French language is inconvenient. Forest Products Destabilizing factors in the trade environment Each of the US states has its own import quotas for Canadian forest products. Changes in those quotas result in changes in the amount and price of Canadian forest products exported to Japan.
Environmental groups obstruct logging operations and exert strong pressure on lumber companies.
In July 1998, the Japanese government demanded that the WTO discuss this matter. A panel was accordingly established in February 1999, with an interim report issued in October and a final report issued on December 22. The report ruled completely in favor of the Japanese government. The Canadian government has appealed the decision, and further deliberations are scheduled by a higher WTO panel committee. To maintain and expand the Canadian export shares to Japan, further efforts are required in rationalizing the cost, increasing competitive strengths, and pushing the shift to coals which are expected to enjoy higher demand in future, such as steaming coal and semi-soft coking coal are needed.