International Trade Committee on July 31st, 2006

[Eldon Lautermilch]

We've got sawmills that are shut in partly. We've got the differential between Canadian and American dollars, which creates difficulties. We had the softwood lumber uncertainty. It's very difficult to attract investment in this kind of environment. I know what you're saying about certainty, and certainly this negotiated agreement gives certainty, but not the kind that we're looking for, because from what we see in what has been negotiated, we have about 50% of the American export market that we had in 2000.

That's our bottom line. I'm not comforted at this point. I'd like to be.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Guergis.

Now to the last questioner, Mr. Julian, for seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair, and thanks to all of you for coming today.

I'd like to start with my questions for the minister and Mr. Brander. I'm particularly interested in the fact that you mentioned there was no consultation, really, with the Saskatchewan government and the Saskatchewan industry in the days leading up to the initialling of the agreement on July 1. I just wanted you to clarify that for me. Were you approached in any way, or were you given any copies of the draft agreement that was circulated in the days prior to July 1, and were you able to provide feedback in any way?

[Eldon Lautermilch]

I think I made clear what we saw to be the process. Before July 2005, we were fully involved and we appreciated that engagement. After that we really heard nothing about the terms of settlement until federal officials indicated to us, just the day before the announcement, what was coming forward. Since then we've been involved in terms of fleshing out the terms document into legal text, and we do appreciate that.

But our main concern is that the terms document is not going to deal with our market share concerns. That's our problem, that's our concern. The legal text, and the legal agreement, is all fine, but if it's not based on fairness and fair access to the American market from a Saskatchewan perspective, then it's not a deal we can support.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, and you made that point very effectively. But I'm wondering whether you were able to provide some of your concerns in the crucial days leading up to July 1, when there was considerable opposition to where the government was headed?

[Eldon Lautermilch]

I think it's pretty obvious that our officials have been working closely over the course of years, even though we weren't party to this in the early years as a province. We were able to provide input from the Saskatchewan perspective, but after July, as this agreement was being put together, I would have to say that we didn't feel we were consulted the way we were before July 2005.

What has happened has happened. I'm more concerned about what happens from here forward. I'm concerned about Saskatchewan's ability to grow this industry in a way that we should and a way that we can. We're one of the few provinces or jurisdictions in North America that have a beautiful opportunity to build out a forest sector. We've got the opening of forest management agreements now that can allow us to do value-added, to do new sawmilling, that can fully utilize our sustainable harvest, and this agreement gives us some concern, because when you're limited to the biggest market that you have, which is the American market, and when you're constrained to 50% of what you were doing even in 2000, that's the concern for us.

So the process is important, obviously. We as a province want to be involved in the discussions, as all provinces do; federal-provincial discussions are important in terms of this country and the health of this country. We think there were some deficiencies in terms of the consultations. What we're asking for now is for our concerns with respect to the market share to be heard and to be acted upon.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, and you've been very clear on that.

I have three quick questions to you before I ask a question of Mr. Monahan.

First, you've both spoken about undercapacity. I want to know what the job loss is in that 30% to 40% undercapacity. In other words, how many jobs does it mean between having full capacity and undercapacity?

Secondly, Mr. Brander, you mentioned you didn't believe the industry could survive this proposed agreement. What would be the potential job loss there?

My final question is in terms of provincial authority. This is very clearly an agreement that impinges, as you mentioned in your opening comments, upon provincial authority. What options does the province have in the case that the federal government appears to be pushing ahead with an agreement that impinges upon provincial authority?

I also take from your comments that, faced with this agreement or finalizing those two hurdles on litigation that would take place over the next few months, your preferred option would be to clear those two hurdles of litigation and finalize that final victory for Canada.

[Alan Brander]

Can I just step back one step here and talk about the consultation? As COSFI, the Council of Saskatchewan Forest Industries, we read about it in the paper. We read in the paper that a deal has been done.

As for crippling the industry in Saskatchewan with no build-out--and again, we are only utilizing about 67% of our forest lands at this time--the industry as we know it today has laid off about 3,000 to 4,000 people. If we continue to go down the path of no quota that we are on, we feel that the total industry in Saskatchewan will be crippled. The sawmills and the investment we talked about--nobody will invest in the Weyerhaeuser pulp mill in Prince Albert. If the mill has no outlet for its chips, those mills are just not survivable at that time, either.

The only ones that might survive and may survive in Saskatchewan are the OSB plants, which aren't connected to each other.

[Eldon Lautermilch]

I'm told that the job numbers--and I'm not sure they're incremental jobs--is 10,000. I'm told that with the build-out there's an opportunity, a potential, for 10,000 new jobs.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Regarding the issue of provincial jurisdiction, you alluded in your opening comments to how the anti-circumvention clause and information-sharing are basically prescribing provincial authority, and to options the government is looking at in regard to that.

[Eldon Lautermilch]

What I'm saying is that as we put our regulatory regime and our stumpage fees.... Historically in Saskatchewan, not unlike other provinces, we've had some government initiatives to support industry, such as the building of roads tied into forest management agreements and those types of things.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian. Your time is up.

Thank you all, gentlemen. Minister Lautermilch from the Government of Saskatchewan, Mr. Brander, and Mr. Monahan, I do appreciate your coming today very much. Thank you for your input, and have a good trip home.

We will adjourn this meeting, but we will take about a three-minute break to change witnesses.