Natural Resources Committee on Feb. 19th, 2015

[The Chair, Conservative, Leon Benoit]

Mr. Leef, unfortunately you are out of time, so we'll have to take that as a comment and food for thought. If that could be fit in to a later answer, that would be great.

Ms. Perkins, go ahead, please, for up to five minutes.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Thank you all for your comments today and your input. I found it fascinating.

Mr. Jeffery, we were listening to you talk about the focus being offshore and the two big points being access and promotion. I'd like to understand a little more about what the challenges are on the access side, because that sounds like where the big challenge is.

You spoke a little about codes and those sorts of things, but what are the major access issues?

[Rick Jeffery]

Access issues take their form in regulatory issues, market acceptance issues, in a commercial sense, and then there are trade issues, to give you three main groups.

In the market access issues, we focus a lot on codes and standards: fire codes, lumber properties, strength values, and those kinds of things.

It is an art to take the science and research that we have here in Canada and get it accepted and used in foreign jurisdictions. For instance, we got the Shanghai government to adopt a wood building code. We had to work with them to do research and development that was acceptable to the Chinese and Shanghai governments. We couldn't just say, “Here's our code; use it”. We have the same thing going on in Korea right now, where we have lumber properties and grading systems for our lumber. It's talking about wanting to create its own grading systems. We have to take all of this research that we have here and put it in a form that's useable by a foreign government. At that level, that's one thing.

In commercial acceptance, you have to go to the specifiers—the architects, the engineers, the developers, and the builders—and convince them that wood is a cost-effective, environmentally preferred building system, and then teach them how to use it, if they don't. The Chinese don't build non-residential multi-storey buildings out of wood. They don't know how to do it. We have a Canada Wood College there. We're training carpenters on how to build with wood.

There are a bunch of things that you have to do in a commercial sense to get people to say, “Hey, I want to use wood”.

On the trade side, there are all manner of things that go on. We have phyto issues. For instance, in China, they're worried about pests coming in on our lumber and in our logs. We've had technical issues in India around phyto stuff. The European Union introduces all manner of regulation around construction products, dry grade marketing, and these kinds of issues that are essentially non-tariff trade barriers. Generally what happens is our trade posts alert us that something's coming down the pike. We work very closely with the consulates, embassies, high commissions, DFATD, and NRCan to head those things off at the pass, to make sure jurisdictions aren't introducing regulations that will prohibit the use of our products in those jurisdictions.

Those are the three big buckets of things that we are focusing on in a market acceptance role.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Thank you so very much for that.

Taking some of what Mr. Jeffery has said over to Mr. Giroux, you had indicated that research and development were going to be key issues that had to be dealt with for the building sciences, that this is a piece that was deficient, and you thought that needed to be bolstered in some fashion.

Do you see the research and development piece that we were just talking about here having any benefit to the industry that you're talking about, in trying to expand the wood use outside of just the residential use? If they've done all this research and development, and they're selling the whole concept to foreign governments, how does that assist you? Is there a piece in it for you?

[Michael Giroux]

I think we always can learn, in a sense, from the innovation that happens in other countries, and bring it here, and we—

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

No, but I'm talking about what we are taking to other countries.

[Michael Giroux]

Oh, well, in that case, what we need to do is demonstrate here in order to accelerate there. That's what this is about.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

I've been getting a really good education on all of this over the last few meetings. I do understand that there is a move to change from the four-storey maximum on our buildings, and that there have been some precedents now and some great innovation. What I'm hearing is that there has been a tremendous amount of success in taking the methods that we're proposing offshore over to Asia, and that they're accepting them. Where are our barriers to seeing that transformation here?

[Michael Giroux]

We have a long way to go in terms of the fair recognition of wood products in building codes. If I understand your question correctly, what that really means is that we need to take our game to the next level here. That's why I was mentioning performance-based codes as an example.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Perkins. Your time is up.

We go now to Monsieur Caron. You have up to five minutes, please.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chair.

I would first like to touch on what I spoke about two days ago.

Mr. Gorman, you spoke briefly about the Softwood Lumber Agreement between Canada and the United States, which is set to expire in 2015. The agreement provides for a one-year standstill on any actions the U.S. could launch in Canada.

You are in favour of this agreement, and you hope that it will be renewed. We want that too, but what do the Americans want? Do you know if they would like to water down the agreement, change it or make it very different from what it is now?

[James Gorman]

What we're hearing from Canadian officials is that the Office of the United States Trade Representative is not in a position at the moment to formally engage Canada with respect to softwood lumber discussions. I think they have been very clear with Canada over the past many months that the priority of the Obama administration is the Trans-Pacific Partnership discussions and negotiations. They intend to focus their time and their resources on TPP, and likely, TPP will need to conclude from a U.S. perspective prior to their really engaging with Canada.

We're also to understand that they have not completed the consultation that they would do normally with stakeholders, including the U.S. Lumber Coalition, in the United States. Canada has not received an official position from the United States with respect to their view on the agreement going forward, nor do I think that we really expect to until TPP concludes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

On the other side, if the TPP negotiations get extended by two, three, or four years, we will be faced with the same situation we were in back in 2006.

Does that concern you?

[James Gorman]

I think the official position of Canada, and it's very much supported by the industry, is that the agreement should be extended in its entirety, or it should be allowed to end and there should be free trade.

Over the better part of the last two years, 16 months over the last two years, because lumber prices have been higher than the trigger points identified in the agreement, we have enjoyed free trade between Canada and the United States in softwood lumber. We would remark on the fact that during this period of time, Canada's market share has not increased in the United States owing to the reasons that I discussed in an earlier question. Were the agreement to expire and we continued in a free trade position, that's certainly what we would be prepared to live with.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Gorman.

My next question is for Mr. Matters.

I believe your position on the agreement is very different from the industry's. Whether it's Mr. Gorman or the Quebec Forest Industry Council, the opinion is that this is not necessarily the best agreement we could have, but not having this agreement would have been worse.

You still oppose this kind of agreement, and I want to know why. What solution do you think we should favour instead?

[Bob Matters]

Again, some provinces have different applications with respect to the agreement. That being said, it's somewhat ironic—and I'm not trying to take a shot at my friend Mr. Gorman—that the U.S. would prefer to deal with a trade agreement relaxing barriers and get that out of the way before it would deal with a trade barrier issue with Canada. It just doesn't make any sense. If the world is going towards freer access and freer markets for everybody with fewer barriers, then why the heck would we be signing a barrier when, theoretically, we already have free trade that imposes restrictions?

I think one of the speakers made the comment that recently we have enjoyed no tariffs. Lumber prices are, thankfully, doing reasonably well. I think they're a little bit softer than some thought they might be, but we're not very far from the thresholds that would in fact impose new barriers. With trade being the issue, somebody talked about currency and Russia. The U.S. is enacting new regulations for trade cases to go after countries that impose currency manipulations.

There are some, particularly those on the U.S. side, who would want restrictions and who would use Canada's dollar and what has happened to it to accuse Canada of currency manipulation.

Very clearly, the deal was not a good deal for Canada in the long term. It got us over a hurdle. It got us some certainty, which the industry liked. It also got the Americans $1 billion to play with. It also gave our major companies some money back, which many of them promptly invested in the U.S., which didn't do anything for Canada.

I'm very happy to see that the industry would be content if the deal just faded away. That's what should happen.

[The Chair, Conservative, Leon Benoit]

Thank you.

Merci, Monsieur Caron.

Ms. Crockatt, you have up to five minutes. Go ahead, please.

[Joan Crockatt, Conservative, Calgary Centre, AB]

This is a fascinating discussion we're having today. I want to thank the witnesses for being here.

It is hard when you're on a video conference link, but thank you, gentlemen. You've been active players in this and I appreciate it.

Michael Giroux, you talked about the excitement of the markets that can be generated as being one of the things that are going to convince people to utilize wood in more innovative ways. I just want to give you an opportunity to give us some examples of specific products which the general public might not be aware of that are really causing some excitement. I wouldn't mind if you focused on some of the things we have helped advance at a federal level so that we know the success stories and best practices, and what's working there. Could you start with that, please? Then maybe we'll go to a couple of the other gentlemen if they'd like to respond.

[Michael Giroux]

There are a lot of questions there.

In mid-rise markets—buildings of five and six storeys—the code change was championed or supported by NRCan through the National Research Council. That was absolutely critical to making that market work. That code change was promoted by British Columbia first and then dragged across the country by the Canadian Wood Council.

We're seeing significant uptake in that. In B.C. as an example, there are over 300 buildings now under construction, built, or in design. Even last week at a seminar in Ontario, there were 400 participants all trying to figure out how to build these buildings.

The federal government has invested significantly in the the tall building program. We have a demonstration project. It's a roughly $5 million initiative. The Wood Council is leading that, or at least managing that with the federal government.

We have three tall buildings on the books right now. One in Quebec City is 13 storeys. Here in Ottawa we have one coming along. The Quebec City one is residential and the Ottawa one is commercial. There's one in British Columbia at UBC that is 18 storeys. Those are a few things.

In the products area, things are going to get us fascinated and excited. We're talking about wood fibre supply, not particularly in my area, but I have examples of wood fibre insulation used for buildings. This is an innovation that comes from Europe that FPInnovations is looking at. We have some very interesting things that could excite markets.

We're looking at bridges. We have a concrete with wood fibre opportunity out of the NRC, National Research Council, that could revolutionize the way we look at bridge decks. It would provide up to 70% wood fibre and the concrete would allow for increased spans.

There are some really cool things coming that should excite people, and that's why I say that we have an opportunity to excite markets.

I'll stop there.

[Joan Crockatt, Conservative, Calgary Centre, AB]

These are all exciting projects. Are any of them going to be artistically architecturally unique? Are they going to attract a lot of attention? How can we utilize those advancements of these amazing buildings and new products to tell that story?

[Michael Giroux]

It depends on who builds them. If it's non-resin and the federal government's, there's probably going to be an artistic element to it. If it is private industry, they'll be as efficient as they want to be to get to their goal. There's no reason that they couldn't be. In fact, durability by design, by appearance, makes more sense. That's why you see a lot of pagodas in China still: because they're appealing to the eye, they're not torn down.

[Joan Crockatt, Conservative, Calgary Centre, AB]

It looks like Mr. Gorman wants to speak.

[James Gorman]

Perhaps I could jump in quickly here.

In British Columbia they adopted a build with wood strategy prior to bringing the 2010 Olympic Games to Vancouver. One of the things that the Government of British Columbia did here with support from the federal government was to develop the Olympic facilities and the various public facilities including the Vancouver Convention Centre as showcases for wood and wood products, so that we could demonstrate both what British Columbia produces and what this country is famous for, which is wood innovation and the beauty of wood.

Anyone who visits Vancouver for a conference, anyone who visits a recreational facility or any of the legacy facilities in both Whistler and Vancouver will be hit between the eyes, if you will, with some of the beauty of the wood products that we've used here. It's hard to travel around British Columbia without coming face to face with wood. That's been part of an important policy regime that's been in place in British Columbia for some years.

[Rick Jeffery]

I'd also say that Wood WORKS!, which is an offshoot of the Canadian Wood Council, runs competitions every year and a Wood WORKS! gala in B.C., Alberta, and Ontario in which they showcase buildings that have wood in them. They are the most amazing buildings, and I'm going to, as a director on Mr. Giroux's board, ask him to ensure that the committee get copies of the Wood WORKS! gala books so that you can all see the art of the possible in building with wood.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt, very much for your questions and comments.

I ask the witnesses who are here in this room to leave the table so we can get to our next segment, which will be by video conference from Quebec City with Luc Bouthillier, who we will introduce more fully later.

I want to thank all of you very much for your presentations and for your excellent answers to the questions. We will suspend and come back with our last witness.