International Trade Committee on July 31st, 2006

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

This could take the form of a letter of interpretation appended to the agreement, which would not require reopening the whole agreement but would add one year to it de facto.

[Pierre Monahan]

That’s right, it would clarify that it is a true standstill. Some of the experts present here could surely supply all the legal details. Still, I want to make sure that this year cannot be used as a basis of calculation for an investigation, for example, into antidumping rights or subsidies.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I would like to make one last remark. Let us return to the issue of Thunder Bay. Who will decide whether your mill is classified among the new arrivals, the provincial government or the federal government? Will its past be taken into consideration? I think that the federal government made this type of decision the last time there was an agreement of this sort.

[Pierre Monahan]

This is what I want to make sure of. If I understand correctly, Ontario will be assigned a quota and it will decide how to distribute it.

So I am asking the government to support us, that is, to ensure that Ontario keeps a reserve for new arrivals.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

[The Chair, Conservative, Leon Benoit]

Mr. André, the floor is yours.

[Guy André, Bloc, Berthier—Maskinongé, QC]

I wish to continue in the same vein, Mr. Monahan. I suppose that you are asking this question because you have some concerns in connection with your new sawmill in Thunder Bay. I believe you have made some large investments and that your production and export possibilities may be reduced unfairly because of this quota issue.

[Pierre Monahan]

That’s right. This is because of the sawmill’s history. We opened this mill in 2002. A certain length of time is required to get things up and running smoothly. We just reached our cruising speed this year. The quota, however, will be calculated according to the previous years, that is, 2001 to 2005. This may penalize us and jeopardize our investment.

[Guy André, Bloc, Berthier—Maskinongé, QC]

So you are asking the government to pay special attention to this and to support your efforts with the Ontario government.

Do I have a little time left, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

You have two minutes.

[Guy André, Bloc, Berthier—Maskinongé, QC]

My other question is for the Hon. Eldon Lautermilch, from Saskatchewan.

You say that, under this agreement, Saskatchewan would be penalized since its exporting capacities would be reduced by nearly half. So a calculation was made that means that Saskatchewan is heavily penalized as far as its production and export capacity is concerned.

I would like to understand. How do you think these calculations were made, for the provinces of Saskatchewan and Manitoba to suffer such losses regarding their exporting capacities? How did this happen? How can this be corrected?

[Eldon Lautermilch]

I'm going to ask my colleague Mr. Brander to partially speak to this. But using Statistics Canada's figures, in 2000 we exported 451 million board feet, and the average calculation between 2001 and 2005 is 282 million. Obviously, there's an incredible decrease from what we exported in 2000—what our actual exports were—and what the calculations allow us based on this proposed agreement.

Mr. Brander is representing the industry. Perhaps he could share with you some thoughts about what has happened with the industry.

[Alan Brander]

I think that's exactly right, Minister Lautermilch. The problem is that during the period after 2000, because we are stand-alone mills we did not have the deep pockets or integrated resources to continue to ship to the United States. So we backed off and looked at the domestic markets, and that's where the calculation has been skewed.

[The Chair, Conservative, Leon Benoit]

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

Now we'll go to the Parliamentary Secretary to the Minister of International Trade, Ms. Guergis, for seven minutes.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Thank you, Mr. Chair.

Welcome to the witnesses.

My first question will be for the minister from Saskatchewan. As our minister has made very clear, the alternative to this agreement is not going to be free trade; it will be continuous litigation. We heard your views throughout the process, as we heard the views of the other provinces, in continuing dialogue and constant consultation. We did of course take your position into account—we were negotiating and we pushed very hard for it—although we may not have been successful in reaching your requests. I understand that the period of reference you're talking about is not to your liking, but do you think it is fair to use the year 2000, when the provinces of B.C., Alberta, Quebec, and Ontario were all subject to quota under the last agreement?

[Eldon Lautermilch]

There are a number of elements to this.

First of all, I think what hasn't been taken into account is our ability to build out our industry, because we have more ability to grow and build this sector. Instead, based on the methodology that was used to calculate, we are on the verge of a contraction.

However you square this, and whatever dates you use from 2000 to 2006, the fact is that we have an industry that was prepared to build out in 2000 and is still prepared to build out. We have the softwood capacity to build our industry, and we need to build this industry in terms of securing stable operations for our softwood pulp and paper industries. This agreement precludes us from doing that.

So in terms of the negotiations and discussions, we're only asking for a fair base; we're asking for a fair range of factors to be brought into account when you do your calculations. Obviously Statistics Canada's numbers show that the development of this industry in Saskatchewan will be constricted.

What we're saying is that rather than a negotiated arrangement that doesn't work for us, we would favour continuing litigation. Obviously we favour a negotiated settlement, but in order to get a fair settlement, we need to be consulted and worked with, as we were prior to July 2005, so that our position can become clear to your negotiators as you put together a package.

We don't believe that happened, and we are only asking for our national government to take another look to see if they can find a way to build some fairness into this arrangement, so that Saskatchewan can have at least the same export ability to American markets as we had in 2000.

I can't say more, other than that we very much want this committee to urge another look at the conclusion. If you look at the conclusion, then obviously you're going to have to look back at what assumptions were made, in order to find some fairness.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

I appreciate that.

I do have a couple of more comments and questions.

Has your province actually looked to other markets? The fair base you refer to really wouldn't be fair to our largest producing provinces. I want to point that out.

Also, within the agreement, the binational council I spoke with the minister about earlier today offers an opportunity for American and Canadian representatives and participants to work together to better the North American market, and even to work together on some of the provinces' concerns further down the road. As we've heard the minister say, negotiations are done now; we have completed that process. I would love to hear your comments on or questions about the binational council, regarding what opportunities you think there could be for you and your province at that table.

[Eldon Lautermilch]

My officials are telling me and I'm hearing that the negotiations are all but done.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

They are done.

[Eldon Lautermilch]

Then I'm willing to look at a vehicle to find a fair balance and a fair percentage of export markets for our province. I don't know what that vehicle is. But if you're telling me this afternoon that there is a vehicle whereby we can achieve at least the export percentage of the American markets we had in 2000, then I can tell you that our officials would be most willing to explore this.

As it stands, we have not been given comfort in any way by federal officials or by what federal ministers have said. It would be comforting at this point to believe there's a way to find the 2.5% that we had in 2000, and that we're looking for.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Can we agree that at some point negotiations have to come to an end and we have to make a deal? This has come to that point; we are finished, and negotiations are done.

As I said, there is an opportunity in the years going forward for both Canadian and American industry representatives to work together to understand that the market will be changing as time goes on, and to try to foster a better relationship that's in the best interest of the entire North American industry. Can I confirm for you specifically that you're going to be able to solve your concerns at this council? No, I can't give you that, but I can tell you that this binational council, which is set up.... I think the government should be applauded for that. They've recognized that this is something the industry needs to continue going forward. I strongly urge you and your representatives to engage in a further discussion on the possibilities of this binational council.

[Eldon Lautermilch]

Mr. Chair, from a Saskatchewan perspective, a negotiated settlement needs to be two things. It needs to be fair, first of all, and it needs to be durable.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

And we believe it is fair in the interests of the entire country.

[Eldon Lautermilch]

What has been negotiated, from our understanding, is neither, so unless we can be convinced, how could we sign on...? Obviously we're not required to sign on, but how could we offer agreement when what you have negotiated as a country doesn't support, from our perspective, either fairness or durability? It's fine to talk down the road, but we have a pulp mill right now in crisis--actually, two pulp mills in crisis--as many are around this nation.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

That's right, many around the nation.