Mr. Chairman, Honourable Members, good afternoon. I would like to begin by thanking you for the invitation to appear before the House Standing Committee on International Trade. Needless to say, the topic on your agenda at this time is of critical importance to Bowater, the company I represent.
I would like to begin by saying a few words about our company. The head office of Bowater is located in Greenville, South Carolina. Bowater is a North American leader in both the pulp and paper and the lumber sectors. With the exception of our Korean facilities, half our assets are located in Canada and half in the United States. Our sales exceed 3 billion dollars and we have 8 000 employees, half of whom are in Canada. Our Canadian mills are mainly located in Eastern Canada, namely in Ontario, Quebec, New Brunswick and Nova Scotia. Although we export our products world-wide, the U.S. market is by far our most important and largest outlet.
Our industry is undergoing a major structural crisis and we are operating in a very difficult climate. In addition to the ongoing trade conflict with our southern neighbours, we must contend with a dollar that has reached record values, steadily increasing energy and fibre costs, as well as rising interest rates. Despite extremely difficult years, we have nonetheless invested more than 200 million dollars U.S. in our Canadian mills since 2001. We believe that investments of this magnitude were needed to maintain our competitive position.
Having said that, I submit that success in business requires more than investments. We need a sound business environment that is more predictable that it has been over the past few years. The Canada-U.S. softwood lumber dispute has lasted long enough. We are convinced that an agreement represents the best solution to a dispute that has not only cost a lot of money, but also required significant expenditures of non-productive energy.
We are in favour of an agreement, but not at any cost. The Framework Agreement now in place, as well as the draft copies of agreement documents we have examined, appear to be a good starting point. Things are not perfect, but we believe that this Agreement will allow Canadian industry to do what we do best, that is develop our companies.
We still have problems with certain parts of the Agreement's draft text. One of the most important issues deals with the flexibility associated with Option B. Regions that choose this option, that is a quota combined with an export charge that is lower than the export charge associated with Option A, will require a minimum level of flexibility to prevent undue disruption of their trade relations.
We do not wish to shy away from any obligations under this Agreement, but for Option B to be viable and practical, it must allow companies to adequately meet their customers' requirements, an obligation that is sometimes written into long-term contracts. We have made several suggestions to the government in this regard, but we have not yet heard whether they have been adopted by the government and accepted by the Americans.
Earlier in my presentation, I referred to Bowater's investments in Canada over the past few years. In 2002, we built a sawmill incorporating state-of-the-art technology in Thunder Bay. This is probably one of the most advanced sawmills in Eastern Canada. Given that this is a brand new mill and that we are only beginning to maximize its operations, its export history is quite limited. I am sure that you can appreciate that if Ontario were to choose Option B, an export quota allocation based on export history would present a major problem.
We are therefore asking the government of Canada to insist that the government of Ontario establish a reserve for new entrants in order to account for the new mills that were built in recent years. Such a provision would strengthen our support for this Agreement.
Another solution the government might consider in order to foster greater investments by companies would be to grant an investment credit to those that apply their refund of illegally-collected duties by the Americans to investments in their operations.
In short, the Agreement is far from being perfect, but neither is the world in which we operate. The time has come for Canadian industry to show solidarity in order to finalize the Agreement in such a way that it will enhance its viability to the greatest extent.
We have scored many points before international and U.S. tribunals and we believe that this Agreement incorporates them as well as can be expected. We must now seize the opportunity. If we do not, we may have to wait a long time before a comparable one presents itself.
I thank the Committee once again for its invitation to appear and I will be happy to answer any questions.