International Trade Committee on June 12th, 2023

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'll leave my questions there. Thanks, everybody.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Seeback, you have five minutes, please.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I'm going to ask my questions, and then Mr. Kennedy, followed by Mr. Krips, can respond.

If I look at this, I see that we have administrative review one and then administrative review two, where we've requested a panel. Then we have the third administrative review, where we've requested a panel, and we're probably going to request a panel on the fourth administrative review. They will not allow these to be decided concurrently. They're going to be decided consecutively.

What I keep hearing from the government is that we always win and that once we win, they'll come to the table to resolve. However, the fact that these are now going to be staggered—and who knows how long.... If it's taken five years to get a panel on one, will it take five years to get a panel on the second administrative review?

Doesn't it make it crystal clear that the only way that this is going to be resolved with is a direct, government-to-government, negotiated solution?

I want your thoughts on that, and Mr. Krips's thoughts as well.

[Trevor Kennedy]

Absolutely. We agree that the only sustainable, long-term solution is a new softwood lumber agreement. Even if the dispute settlement system was operating as intended and with shorter time frames, we would expect that we'd continue to experience this cycle, so we do think that. This is where it's in the best interests of the United States, as well. We need to have a long-term, durable solution for both countries.

The question is how you get the other party to the table. That's the real challenge here. We can appreciate that it's a significant challenge, but it's one that, perhaps, we can make some real progress toward in the months ahead. We certainly hope we can.

[Jason Krips]

I would echo that and also add that having the panel decisions gives us more quivers in our bow to actually come to the table with wins. If you look at Softwood Lumber IV, the panel processes stacked up a number of wins for Canada again and again, so it gave us a strong negotiating position to operate from. That's why it's so important that these panel processes get going in good faith and get decisions, so that they strengthen...put us in a good position at the negotiating table.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I'm going to suggest to you that the panels aren't being put together in good faith, that the panels are deliberately taking a long time to form. They won't run consecutively, so the old strategy—which was to wait until we win and then they'll come to the table—is, I'm suggesting, a strategy that's going to cause further damage to the softwood lumber industry. We can't wait for all of these administrative review panels to be decided.

I think it's more urgent than ever that we have a focused government trying to resolve it, not waiting for the wins. The wins will be great. However, we could get one now, another one in two, three or four years, and we're already at $8 billion in duties.

I guess I'm going to go back to this: Would you agree with me that the critical thing is for the current government to find a way, come hell or high water, to get this resolved, instead of waiting for the panels to make their decisions?

[Jason Krips]

I would add the caveat that it has to be the right deal. We cannot enter a deal that is a bad deal. Again, I'm speaking only on behalf of the Alberta Forest Products Association and, by extension, the Alberta Softwood Lumber Trade Council, but no deal is better than a bad deal, because the last thing you want to do is lock yourself in for five or 10 years of a bad deal.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Mr. Kennedy, did you want to respond to that as well?

[Trevor Kennedy]

I think the industry—especially the other witnesses—would be better prepared to speak about the specific industry dynamics. Absolutely, if we negotiate a deal, it has to be a good deal for Canada. Given the different dynamics across this country, I think it would be important to get voices from those folks about what that could look like.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

If there are another five years without a deal, what damage will that do to the softwood lumber industry in Canada? Do any of the softwood lumber folks want to respond to that?

[The Chair, Liberal, Judy Sgro]

Give brief answers, if you can, whoever wants to respond.

Does anyone want to respond to—

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Does no one want to comment on what the damage to the industry will be if there are another five years without resolution?

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Seeback. I don't see responses coming.

I'm going on to Mr. Miao for five minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair, and thank you to all the witnesses for being here today.

I'll go first to Mr. Kennedy. Our committee is in the midst of studying non-tariff trade barriers, and I was wondering if you could point out any specific NTBs that haven arisen specifically in light of the Canada-U.S. softwood lumber issue.

[Trevor Kennedy]

Maybe to answer the question in a different way, we can appreciate how complex this disagreement is between the U.S. and Canada. To flag for the committee's awareness, we are approaching the third Free Trade Commission meeting among the three parties for USMCA—the halfway point before our mandatory review of USMCA. We signed a good agreement for all three countries, and we think it's very important that all parties prioritize implementing and enforcing the agreement as negotiated. We have some occasions coming up in the near future to drive some attention toward that, and we hope we'll have a smooth renewal process in 2026.

[Wilson Miao, Liberal, Richmond Centre, BC]

My next question is addressed to Mr. Arkle. I understand Gorman Bros. has been around for a very long time. I'm curious as to whether you can share with the committee some insight into how the previous softwood lumber agreement worked for a company like yours, and if you think Canada can learn any lessons from it while negotiating future agreements.

[Nick Arkle]

Thank you.

As I mentioned in my opening comments, we're what we would call a small to mid-sized company. We don't have the ability to go to the public markets to raise financing. I think of various operations that we've purchased, where we as a family have had to put our houses up for security—the total disclosure on the part of the family, the ownership of the company. We've had to put up that kind of security.

Back in 2006-07, when we received a duty return, we were right on the verge of losing one of our companies in a community of 8,000, where we have 350 employees. If you look at all the dependents and the spinoff benefits of that company, you see that it would have been devastating to that community. We were within an inch, if I can put it into a distance, of losing that operation due to the pressures we'd been experiencing through that particular softwood dispute.

It drains the financial capabilities you have for investing. Earlier on, people were using the term “certainty”, and I would say, well, my experience is that there's no such thing as certainty, but we do need predictability, and the dispute takes away predictability. We need to be able to plan for investments into the operations that support the families we have operating with us. The dispute just adds to the lack of predictability.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you very much for sharing that with us.

Next, I'd like to go to Mr. Krips. I'd like to get your thoughts on the national supply chain strategy, as earlier this year your association was advocating for better rail freight service for the region. How would you see a national supply chain strategy work to alleviate some of the pressure faced by our industry right now?

[Jason Krips]

It's something we've been advocating quite strongly for.

In essence, we're seeing an increased growth of natural resource products coming from the north—Alberta in particular. Having a national supply chain strategy would certainly help us look to increase investment within all of Canada with respect to rail, roads and ports. In particular, in the north, we're beholden to one rail service provider. A national supply chain strategy would ensure that investment into northern communities across Canada increases, so that we can get our products to market. It's extremely important.

It's not just rail. It's roads and it's ports. It really needs to be a combined systemic approach as we continue. We're an export-dependent nation. We need to make sure we have the infrastructure to support export industries.

[Wilson Miao, Liberal, Richmond Centre, BC]

That's great. Thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Thank you to all of our witnesses. We appreciate the valuable information.

We will suspend while we go in camera for committee business.

Thank you.

[Proceedings continue in camera]