Andrew Barnetson, CPI's corrugated sector manager, said a stronger manufacturing base would make the UK more self-sufficient in goods.
He said: "It will also have the same effect on recycling as more of the UK's recovered paper stream could be absorbed.
"There are clear environmental benefits to recycling recovered paper into new paper products, rather than disposing of it through landfill and incineration."
According to the CPI, a build-up problem only arises with a small percentage of poor quality paper.
It said that the recycling of paper in the UK continued to be a major success story, despite a flurry of negative media reports recently.
The UK's paper manufacturing industry consumes more than 4m tonnes per year of all types of recovered paper.
Facilities such as DS Smith, Palm Paper and SAICA are expected to add a further 1.2m tonnes of domestic paper recycling capacity in the next two years.
CPI defends UK recycling and calls for more investment
The Confederation of Paper Industries (CPI) has urged the government to encourage more investment in UK manufacturing, despite reports of an apparent build-up of recovered paper due to declining overseas demand.
