Finance committee  Could I just make one comment there?

Finance committee  It's really important that we in Canada push for multilateral arrangements, because we're small enough and exposed enough that we will not be able to derive the great advantages from bilateral arrangements that larger economies can. And once the world breaks into a whole bunch of bilateral arrangements, in fact historically that's been highly impeding to trade and will really not benefit us.

Finance committee  It's important that our unit cost remain competitive. Some variations in the Canadian dollar's nominal exchange rate do not necessarily lead to a variation in the real exchange rate. Even though the nominal exchange rate has, overall, been higher in recent years, our unit costs haven't increased much.

Finance committee  Such adjustments are always difficult to bear when relative prices change as they have over the last three years. Canada should be proud of its economy's capacity to bear these adjustments, especially in the manufacturing regions like Montreal, Winnipeg and Southern Ontario.

Finance committee  Well, then there's more upward pressure on inflation in Canada.

Finance committee  Yes. Unfortunately, I have to answer the question by saying it depends. If all of a sudden we were to indeed see firm residential construction take off in the United States, we have the capacity to meet that. We have lots of lumber mills that are not operating at full capacity in this country.

Finance committee  Obviously, we have two interests, generally. One is the efficiency of markets. On the income trusts as a corporate form of organization, what we said, and what our analysis showed, was that it's a perfectly sensible corporate form of organization in appropriate circumstances. But second, there appears to be no valid reason to have the tax system tip the corporations or entities towards choosing that form of organization vis-à-vis another form of organization.

Finance committee  Yes.

Finance committee  First of all, we're looking for the American economy to grow relatively slowly in 2007, but to go back, roughly, to potential in 2008-09. What is the weak part of the U.S. economy? We think housing--residential investment--will continue to be weak right through 2007 and 2008. That has a big impact on us, not just for lumber but for other products.

Finance committee  First of all, you used the word “disproportionate”. We spend a lot of time worrying about the consumer price index, obviously. We are probably Statistics Canada's most avid critic--in the good sense of the word--of what they do. We think our consumer price index in Canada is certainly among the best in the world, probably better than consumer price indices almost everywhere else in terms of its representativeness.

Finance committee  I'm going to take six months off. I've worked for 40 years without a break, and my wife thinks it's time. She may regret that. Over that six months I'm going to think about what I will do next, and hopefully I'll find something useful to contribute.

Finance committee  That's an extraordinarily good question. We spend a lot of time working on this issue. First of all, think of the world as one gigantic closed economy. We don't trade with Mars yet, but we trade a lot with each other. What we are experiencing is a rather prolonged period now in which the United States has been the principal absorber of savings.

Finance committee  Well, which blade of the scissors cuts? It truly is that we have global demand. Certainly what markets think is that over the relevant time horizon, global demand is going to grow perhaps at the rate of supply or slightly faster, so you get a futures curve that has a bit of an uptick to it.

Finance committee  You're entirely right, it's always hard when there are major fluctuations in the relative prices of commodities. The manufacturing sector is indeed far more concentrated in the Montreal region, in southern Ontario and in Winnipeg. That means that when the price of manufactured goods drops, in relative terms, the situation is much worse in these regions which have to bear the burden of the adjustment.

Finance committee  We cannot do things differently. It would not be a good idea to have a regional policy because it's important that less profitable industries' and companies' resources be transferred to more profitable industries. That's how we maximize our financial well-being. Such transfers are nevertheless difficult, especially in Canada, because the industries are concentrated in certain regions.