I'm actually a forest products analyst with Jennings Capital Inc.
Thank you for the invitation to address the committee. On behalf of Jennings Capital, I specialize in the analysis of the paper and forest products sector from a Canadian as well as a global perspective. I have a total of 34 years of experience as a former lumber industry executive in Canada and a forest products analyst. I make judgments about the near- and medium-term prospects of companies in the sector in the context of the overall economy of a country or a region.
I believe in the market, full stop. In my opinion, the three most important forces shaping the market in forest products today are supply, demand, and the strength of the Canadian dollar. From the point of view of the economic future of Canadian forest companies, in particular the lumber companies, I think these three factors are much more important than the dispute with the United States over softwood lumber and the proposed settlement.
I realize that my views in this regard are quite different from those of most of the financial analysts in this sector, who have been attaching more importance to the dispute and the deal. I don't believe trade restraints are ever good, but I think it is probably better to have an agreement than to have the uncertainty of changing duty rates and regulatory interventions that distort the market. The long-running lumber dispute with the United States has produced years of upheaval, hardship, and poor stock performance for the Canadian forest industry. It has interfered with capital investment in the industry and, as such, has threatened the livelihood of thousands of Canadians. To the extent a deal can change that situation, I support it.
I have seen the statements from both sides, from the U.S. industry, from the U.S. government, and from the government here, that the negotiations are over, the deal is final and nothing can be changed. I hope this is not in fact the last word.
I realize the key elements of the deal are not to be changed. I don't like the idea of an export tax, but I don't like quotas either. The last time both systems were tried, they were not satisfactory for the Canadian lumber industry. However, maybe the combination of an export tax and quotas based on a selling price trigger will work better to satisfy both the U.S. and Canadian lumber interests than either the export tax or quota system did on its own.
I don't really know if this new combination will be successful, but I do think it is time to move forward. Having offered this qualified endorsement, I do think there are aspects of the deal, as currently written, that need to be changed. I hope that between now and September the text will be massaged and the deal will become more commercially viable.
Thank you.