QUEBEC CITY – The Quebec government is proposing an overhaul of the forestry industry that would end quotas for cutting rights in favor of a market-oriented system.

Quebec Natural Resources Minister Claude Bechard presented a discussion paper in Quebec City on Thursday that would end guaranteed cutting volumes for big forestry companies. Companies would compete by bidding on cutting rights if the proposed reform is adopted.

The planned system would be similar in part to one used in Atlantic Canada, as well as the United States, which has long complained that Canadian companies benefit from provincial forestry policies.

Under the Quebec proposal, forestry companies with current quotas would have the right to buy up to 75 percent of their current holdings at market prices. The companies would have to surrender the other 25 percent to the open market and uncut quotas would be turned back to open bidding each year.

The proposal would maintain the old system of quotas for small independent companies.

“Our objective is also to protect small companies,” Bechard said. “These objectives [in the discussion paper] will be aimed at larger companies.”

The task of managing forests would be taken away from forestry companies and turned over to locally controlled certified businesses under the proposal.

“We will fix objectives, but the regions will make the decisions,” Bechard said.

The proposed changes contained in Bechard’s discussion paper received mixed reviews Thursday.

One of the province’s most militant labor groups welcomed a suggested increase of the area of protected forests to 8 percent by the end of the year.

The Confederation des syndicats nationaux said it also supported the government’s plan to intensify reforestation efforts, but called for more to be done to improve conditions for workers.

Greenpeace was more skeptical about Quebec City’s efforts to preserve old-growth forests.

“By adopting such a policy of liquidation of old-growth forests, Mr. Bechard didn’t waste time reigniting debate,” said Melissa Fillion, spokeswoman for the group’s Boreal forest campaign.

The proposed changes come as the Quebec forestry sector is in crisis, with thousands of job cuts and a major battle brewing between sawmill workers and AbitibiBowater Inc., a major lumber and newsprint company.

About 2,000 sawmill workers recently rejected a proposal by the company that would have chopped their salaries and tied wage recoveries to the market price of wood and the currency exchange.

AbitibiBowater, a company formed last year by the merger of Montreal-based Abitibi Consolidated and Bowater Inc. of South Carolina, said it is studying its next steps.

Abitibi announced in November the first of two possible rounds of plant closures that would force more than 1,600 workers in Quebec, Ontario, New Brunswick, British Columbia and Texas out of work. They would join 1,000 already idled.

The cuts are part of a wave of streamlining that has afflicted the Canadian forestry sector in the last year or so, particularly lumber mills across Canada.

In recent months Vancouver-based Canfor Corp., Montreal’s Tembec Inc. and Domtar, as well as others, have cut jobs and reduced production because of slumping demand from the U.S. housing industry.

U.S. housing starts dropped by a third after the subprime mortgage mess last summer reduced demand for housing in many parts of the country as riskier borrowers couldn’t get financing for home purchases.

Major defaults are expected this year as U.S. homeowners refinance their purchases at higher interest rates, and many experts don’t see a recovery in U.S. housing until 2009.