Thank you very much.
Before I start my presentation, I would like to clarify my position here today. I am the current mayor of High Prairie. I am, and have been, employed in the forest industry in Alberta for 40 years. I sit on the board of directors of the Alberta Forest Products Association as an alternate on the Alberta Softwood Lumber Trade Council. My views expressed here today are my own and lean towards my concerns as mayor.
High Prairie is a northern Alberta town that relies heavily upon the forest industry in the area for its economy and, in a large sense, its survival. The area's two forest manufacturing plants employ approximately 400 area citizens, and this number balloons to 600 to 700 in the winter harvest season. These two companies account for $22 million in wages alone in our community, and another $40 million in purchases and contracts throughout the area.
Good afternoon. Thank you for asking me here today, deadline day. I am not sure who put my name forward for this presentation, but hopefully you feel the same way after my presentation. You have heard many different views on the softwood agreement that's before us today. I will rehash some of what you have heard before you from the government, lumber associations, trade councils, companies, and individuals, but I also hope to cover some new ground, if that's even possible.
First, let me say that this is not a deal that will bring peace to the Canadian industry. At this time, I would like to bring forward my concerns with the agreement.
Yes, this is a long-standing thorn in the side of the industry, and will continue to be if the two-year opt-out clause is allowed to remain in. The federal government has always maintained that they would not accept a deal at any cost. Why have they abandoned this crucial part of the negotiations at this time? A payment of a half billion dollars to the very companies that brought this action against our industry ensures that Lumber V is only an opt-out clause away.
In draft copies of the agreement circulated between April 27 and before July 1, $250 million was to go towards the joint initiatives fund benefiting the North American lumber market. In the July 1 edition of the agreement, this amount was reduced to $50 million, a very paltry sum. Also, $10 million of the $50 million of this money was to be allocated for dispute resolution, thereby leaving only $40 million to enhance the North American lumber market. In the draft copies, $250 million was to go towards meritorious initiatives in the United States identified by the U.S. government in consultation with Canada. In the July 1 agreement, this increased to $450 million. So now we are helping the coalition once again, and the very communities where they operate and live, at the expense of our own communities here in Canada.
The fact that this agreement forces a company to sell their product and then at some time in the future they will be notified if they are in surge territory and will have to pay an additional 50% levy on the whole volume shipped in that period makes gambling in Las Vegas very attractive. If this agreement were signed today, under option A the industry would give up paying 10.8% and replace that with 15%, and possibly 22.5% if the surge mechanism is triggered. In today's market, this will be the death of many companies in the industry and will bring hardship to communities such as ours. Under option B and with today's market, Canadian companies would be restricted to 30%, not 34%, of the American market. Expect to see our lumber being turned away at border crossings.
Prime Minister Harper and his Minister for International Trade rushed to get this agreement in place as a political coup, and not as a business arrangement. That's where this whole deal falls apart. It is ever so easy to get a bad deal. It takes true statesmen and strong negotiations to get a good deal. Canada is winning all the major battles in litigation, and while holding four aces, we decide to fold. We must be the worst poker players on earth. A negotiation entails give and take from all parties. In this case, we give, the Americans take.
At this time, I would like to address a few of the statements made by certain officials of our government.
Mr. Harper has stated that this deal is the best ever for Canada, and that rejection would condemn the lumber industry to perpetual trade warfare. In fact, this agreement is what will guarantee perpetual trade warfare. An American industry initiates a trade action against a Canadian industry, and the following happens: the American industry for five years enjoys unheard-of profits because of the inflated market caused by their trade action; all their legal fees are paid back to them fivefold to tenfold; the communities that they operate in are beneficiaries of a $450 million windfall for ball diamonds, soccer pitches, etc.; and their inefficient industry is guaranteed 66% to 70% of their domestic market, with no competition.
This deal in no way leads to free or fair trade. At the end of this agreement, be it two, seven, or nine years--and in my opinion it will be two years--we will be entering Lumber V. Meanwhile, don't be surprised when other American industries reach for this American dream, financed by Canadians, and start their own trade actions.
The reason this trade dispute has had such a long life is simply the fact that we have never gone that extra mile and secured a total victory, such a victory as we now have within our grasp.
As for Minister Emerson, your time spent in heavy-handed negotiation and threats to the Canadian industry to walk away from this file would have been better used to get Canada a deal that we would all readily support and sign.
I have spoken to CEOs in Ontario, British Columbia, and Alberta, and I fail to find one who likes this deal. Instead, their comments are along the following lines: “I can't fight the Americans without the federal government on my side”; “If I don't sign, what will happen the next time I submit a request for approval to Ottawa?”; and “I don't want to be the only one holding out, but I can't find out what other companies are doing”.
So even if this deal goes ahead, it should be recognized for what it is--a very hollow victory that was obtained using questionable methods. This agreement will guarantee mill closures, and towns throughout northern Quebec, Ontario, and Alberta will see their unemployment numbers rise and their economies fall like never before.
In closing, I would like to thank the committee for the invitation. Also, I hope to see a full House when this agreement comes before Parliament.
Thank you.