International Trade Committee on Oct. 7th, 2014

[Blake Richards, Conservative, Wild Rose, AB]

Thank you, Mr. Chair.

I appreciate you all being here today.

I will focus my questions mostly on you, Mr. Lindsay.

I was intrigued by some of your earlier comments about some of the opportunities you see in terms of some of the wood products and how much use we're getting out of a lot of the products, and that's great. I want to get a sense of the $500 million worth that you exported to South Korea last year. I'd like a breakdown in terms of the raw timber and the value-added products. What percentages are those exports in each of those areas?

[David Lindsay]

I do have some of those statistics. Roughly 56% of it is pulp products and there's a whole range of pulp products. About 42% is wood products and there's a whole range of wood products. To get the value added of each product you'd have to look at it on a product-by-product basis. As you can imagine, pulp goes into everything from Kleenex, and tissues, and health care products like surgical masks—those are higher end—to cardboard and packing material. Depending on which customer is buying what, the breakdown is according to the type of pulp they're using.

On the wood side, we're constantly trying to encourage the greater use of wood. Again, it's a cultural thing. Some people don't like to use wood. China is much more of a concrete.... The hutongs and the construction in China are much more concrete-based. Japan likes to use wood. South Korea is in the middle. They like to use wood, but we want to encourage higher value and higher agricultural use of that wood.

[Blake Richards, Conservative, Wild Rose, AB]

Where do you see the best opportunity for growth with the free trade agreement coming on stream?

[The Chair, Conservative, Randy Hoback]

Just a second here, Mr. Richards.

We have bells here now. What I would like to do with your consent is continue on and let Mr. Richards finish his round of questioning. He's got roughly four and a half minutes left. Then we all would have equally had a chance to present. I would probably adjourn the meeting at that point in time. I seek consent from this room to keep going, otherwise it's by the rules that I would have to adjourn.

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Chairman, you have our consent. I would even suggest that if we could do a second round of five and five that would still give us about 20 minutes to get over to the House for a vote.

[The Chair, Conservative, Randy Hoback]

It would be pushing it. We'd be going into the second—

[Erin O'Toole, Conservative, Durham, ON]

It's 11:10 now.

[The Chair, Conservative, Randy Hoback]

I would suggest we finish the first round.

Mr. Pacetti, are you okay with this?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Sure.

[The Chair, Conservative, Randy Hoback]

Mr. Richards, please continue.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you. I appreciate my colleagues allowing that.

I'm going to ask Mr. Lindsay where you see the best opportunities for growth with the free trade agreement coming on stream. Would it be across the board or do you see specific opportunities there?

[David Lindsay]

We have a good mix of products that we sell now so we want to augment all of those. Each company in Canada has a different specialty and different types of materials it sells. It's a function of individual companies deciding where they want to spend their time and effort, but if we're in a competitive no-tariff environment that creates opportunity. We haven't had tariffs on the pulp side, this is on the lumber side, so the best opportunity is taking the tariffs off the lumber side.

[Blake Richards, Conservative, Wild Rose, AB]

Okay, understood.

You also mentioned that Korea was your fourth largest market with China and Japan being number two and number three, and I think you had said there was $4 billion in sales to China last year if I'm not mistaken. Obviously Asian markets in general are a pretty significant part of the Canadian export business for the forest products industry. I'm curious as to your thoughts on this deal and it paving the way for future opportunities in Asia and what that might mean for your industry as well.

[David Lindsay]

The Korean free trade agreement is important to us specifically because of the Korea market—I can give you some numbers on that—but also because the Trans-Pacific Partnership and continuing to expand trade opportunities is something that our members are supportive of. We have a green renewable resource here in Canada. It's well managed, and it's seen as quality lumber. We want the opportunity to compete. There are some other countries that don't have the same forestry standards and forestry practices as we do. So we need to make sure we're explaining that we have good environmental practices and we're very competitive in a commodity industry even though we have higher environmental standards than some of our competition.

I'll give you just some of the stats. In 2013, as I mentioned in my comments, we were at about $4.5 billion to China, $1.5 billion to Japan, roughly half a billion to South Korea. You can see there's a step down from China to Japan to South Korea, but then the individual European countries are far behind that. The Pacific Rim is a growth opportunity for us.

[Blake Richards, Conservative, Wild Rose, AB]

You mentioned that one of the keys to seeing that growth is educating consumers in those countries on just how strong our environmental practices are and things like that. I'm just wondering if you can give me a bit of a sense as to what you're doing now to try to prepare the ground on that front with consumers in those places.

[David Lindsay]

There are a number of initiatives this month. The British Columbia government and the Quebec and Ontario governments all have trade missions going across the Pacific. They're not going to Korea, but they're going to Japan and China. The British Columbia government, with the support of the federal government, has something called Forestry Innovation Investment, FII. It has in-market offices to explain to architects and builders how to use wood. We'd like to expand into India as well. They're looking at opening an office in India. The education of the engineering and the architectural community on how to use wood and the new engineered wood products that are coming on market is part of that educational process. Once people understand that, then the sales forces of the individual companies try to negotiate their deal. That's why government support is quite important to open those doors and get that preliminary conversation going about how you can use wood.

[Blake Richards, Conservative, Wild Rose, AB]

Good. I thank you very much for your answers, and it sounds like you're well-positioned to take advantage of the opportunities before you.

[David Lindsay]

We're excited. Thank you.

[Blake Richards, Conservative, Wild Rose, AB]

I thank all three of you for appearing.

[The Chair, Conservative, Randy Hoback]

Thank you, witnesses, for being here this morning. I apologize for us ending early, but with votes we have no choice.

Colleagues, I just want to remind you that today's the last day to get any amendments into the clerk, and on Thursday we'll start clause-by-clause.

The meeting is adjourned.