I'm Mike Beck with Capacity Forest Management. I'm their operational planner. We have managed over 20 first nation clients in B.C. We help gather tenure through government to government as well as licencee negotiations. We've also been instrumental in two foundation agreements that have taken place in B.C. with the shíshálh Indian band as well as Lake Babine Nation.
I've been invited to discuss the impacts of the softwood lumber dispute and how it is creating issues with first nations businesses and collaborations with forestry licensees, businesses and lumber mills in B.C.
As you know, a few people have already noted that the softwood lumber agreement has basically been a long outstanding issue between Canada and the United States. Basically, this agreement that we've been sitting on has been expired since 2015. The current government hasn't seemed to place the softwood lumber agreement as a top priority to settle during the negotiation processes and ratification of NAFTA between Canada, the U.S. and Mexico. The softwood lumber issues around the competition between Canada and the United States lumber companies are a major problem resulting from differences in their respective forest management principles.
The dispute is based on the U.S. lumber industry opposing the low Canadian stumpage rates and transportation costs, perceived by the U.S. as an unfair advantage that subsidizes our lumber industry. The U.S. has been imposing duties and tariffs on Canada since the early 1900s, and the softwood lumber dispute is not going away any time soon.
Canadian forest management principles are vastly different, and to compare one against the other is very onerous and well documented. A healthy Canadian log and lumber business requires certainty and fair market pricing. In order to achieve this, the Canadian government needs to bring the softwood lumber agreement to the forefront and finalize a long-term deal that avoids protectionist measures on both sides of the border.
Canadian logs and lumber require unencumbered access to world markets in order to return the highest possible pricing. Protectionist measures in this case create an unnecessary cost to Canadian sawmillers, and these costs are passed on to the log sellers, which pushes log prices down domestically. Recent court decisions and reconciliation agreements for first nations are providing control of their timber resources within their unceded territory. The federal government needs to create forestry policies that will ensure success, sustainability and create long-term, meaningful jobs in the industry as well as first nations businesses and ventures.
Imposed U.S. countervailing duties and tariffs have denied the maximum price on logs, which has impacted profit margins for first nations businesses that sell to Canadian mills. There's a requirement for major reforms and policy to remove restrictions on log exports in order to eliminate uncertainty in the Canadian forest industry and allow the highest return and highest prices for our renewable resource.
Duties and tariffs need to be eliminated and a long-term softwood lumber agreement needs to be ratified to ensure a healthy, sustainable and stable forest industry in Canada. The impacts for first nations forestry businesses are, again, another vital component. It's impacting negatively with our first nations businesses, agreements and collaborations with Canadian forest industry partners.
Canada is required to challenge and amend the Export and Import Permits Act that would ratify the softwood lumber agreement, as there are significant impacts. The current U.S. countervailing duties and tariffs are affecting the economic success of the Canadian forest industry, including first nations businesses that are selling their logs to local Canadian lumber mills.
Some Canadian first nations bands, as part of the ongoing reconciliation process such as foundation agreements, are receiving timber rights to harvest Crown timber within their unceded territories. These first nations forestry opportunities, timber tenures and licences provide economic benefit and stability, long-term employment and training opportunities for first nations communities and future first nations business investment opportunities. The impacts of the current softwood duties and tariffs on the Canadian first nations forestry business is that Canadian local sawmills are basing their log purchase pricing on current log markets but factor in the percentage of the tariffs and duties so that the mills pay to reduce the log prices, which impacts first nations businesses and projects negatively.
As well, the U.S. countervailing duties and tariffs impact the bottom line for first nations businesses and ventures. They're looking for the highest economic benefit for their timber resources within their unceded territory.
Currently, with the economies of scale of first nation forestry businesses being upstream log sellers, they are additionally impacted financially as their businesses will not see any reimbursement of duty deposits from the United States once a dispute is settled, as these costs are typically factored into the local mill log purchase pricing agreements at the beginning of the projects.
Ultimately, I'm drawn back to the current government mandate, in which one of their top priorities is reconciliation with Canadian indigenous people, as well as wanting to implement the United Nations Declaration on the Rights of Indigenous Peoples to allow government to bring federal laws and policies for Canadian first nations to pursue economic, social and cultural development needs. Based on the government non-action to settle the long-standing softwood lumber agreement, it is not placed in value for Canadian first nation forestry businesses and the Canadian forest industry. Again, there is a requirement to ratify in NAFTA, Bill C-4, regarding the long-standing softwood lumber agreement, to remove the tariffs and duties. If that is not in place and there's no agreement, this will create considerable adverse effects and restrictions for the first nation forestry businesses.
As for some of the impacts that we're currently seeing with the softwood lumber agreement, some first nations forestry businesses are having a hard time being successful and sustainable. As well, first nation business-to-business agreements and collaborations with other Canadian forest industry partners, ultimately impacting forest economic earnings to the nations and bands, are also creating some issues. Lower lumber market pricing and duties and tariffs, creating mill closures or curtailments, are creating some issues as well around the nations and territories. We're also seeing major licensees establish more mills in the United States than Canada due to the additional duties and taxes, to ensure market competitiveness and balance their dependence on local Canadian log supply. These moves create fewer good-paying jobs for Canadians, as well as first nation band members, and limit log-pricing competition to sell logs at lower market pricing, or better, with these mill closures.
In closing, I want to ensure that the softwood lumber agreement stays at the Canadian government's top priority for settlement and is ratified in some way that will make first nation businesses stay competitive and not be penalized any longer by the unfair and unjust United States' lumber tariffs and duties.
We need our Canadian government to defend our forest management systems and challenge the subsidy, to remove the tariffs and countervailing duties, since wood is used in a wide range of industries and doesn't qualify as a subsidy under U.S. law. As well, the actions of the U.S. are driven by protectionism rather than unfair management practices and stumpage rate determination.
Again, it will be vital to have collaborative discussions and engagement between government, first nation forestry businesses, and the Canadian forest industry to ensure a fair ratification of the softwood lumber agreement to make certain first nation businesses and ventures, and the Canadian forestry industry, economically successful and sustainable in Canada.
That is all I have to say. If you have any questions, I'll look forward to responding.