For the better part of 37 years, millwright Tom Long watched fleets of trucks and rail cars leave the Neenah Paper mill on the outskirts of this remote northern Ontario town, carting processed pulp and paper to buyers as far away as Oklahoma and Alabama.

Long would often watch the daily procession and wonder why the payloads weren't shipped beyond North America.

"The only thing you hear about nowadays is how much building China is doing," said Long, who retired last year. "They've got a billion people in China and we're making fibre for Kleenex," the 56-year-old said. "All you have to do is get them to blow their nose with our stuff and we'd do great."

Long has just summed up an issue that has stumped Canada's forest-industry leaders and politicians alike: Why has Canada failed to develop an overseas market for lumber and pulp and paper?

One problem is extreme transportation costs, said Don Campbell, vice-president and resident manager of Bowater Canadian Forest Product Inc.'s Thunder Bay, Ont., operations.

Shipping to some of Bowater's customers in Korea - by rail to Vancouver and then by boat - can cost more than twice as much as getting the product to North American buyers.

But the benefits of increased overseas sales are obvious.

By selling more forestry products to countries such as China, India and Korea, Canada would be less dependent on the giant U.S. market. That might ease any ill effects of the newly signed Canada-U.S. softwood-lumber agreement.

Under the terms of the new agreement, Canadians will face quotas on U.S. sales when prices are low, although not when prices are high.

Ontario Minister of Natural Resources David Ramsay pointed out that, unlike Canada's previous softwood-lumber situation, the new agreement allows room for Canadian exports to grow in lockstep with U.S. demand for timber.

British Columbia has been the most proactive province in pursuing markets beyond the United States, forest industry experts said.

Last month, B.C. Premier Gordon Campbell announced the province would spend $10.5 million to promote the province's wood around the world.

"We have to reduce our dependency on the American marketplace," Campbell said at the time. "If we don't reach to China, Korea and India, I can tell you, Russia and South America will be going there, and we'll have all sorts of competitors."

Industry Canada statistics suggest that Campbell's marketing dollars are well spent - at least in parts of the world.

While the value of softwood lumber Canada has exported to its three biggest customers - the U.S., Japan and the U.K. - has dropped in each case over the past four years, lesser-known markets showed strong gains over the same period.

For instance, Canada in 2005 exported $8.6 billion worth of softwood timber to the U.S., which marked a nine-per-cent decline from 2001.

The $1 billion in lumber sold to Japan was down 30 per cent over the same period, while sales to the U.K. slipped eight per cent to $64 million.

China, the fourth-biggest purchaser, bought $55 million worth of lumber from Canada last year, nearly double the 2001 figure. Other countries that have bought much more Canadian softwood in recent years include the Philippines ($40 million), South Korea ($27 million) and Mexico ($8 million).