International Trade Committee on Aug. 21st, 2006

[Paul Perkins]

I think my answer would be that we are continually looking at the market levels; we are looking at what the shutdown position should be. We currently have a mill in Saskatchewan that is in fact down because the pulp mill is down. So the economics of the market, as I have said repeatedly here, are difficult, and we are expecting to see demand decline in the U.S.

To the best of my knowledge, we are not looking at expanding in any geography at this point in time, and I would be surprised if we were, given our view of the shrinking consumption on the U.S. side. We're certainly working very hard to expand our sales in markets other than the U.S., and we'll do everything we can to keep our employment, keep our mills operating, and be competitive.

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

I'd like to move on to this issue, which was actually raised by my colleague, around the question of litigation. He asked why the Americans would want to bring an end to the agreement after 18 months. Very clearly, the answer is that they get a billion dollars; they get to erase four years of legal victories, where we have not come yet to those two final hurdles that would install in jurisprudence the fact that Canadian lumber is not subsidized; and in a sense, they get the proceeds of trade crime. So there's lots of incentive to sign the agreement, and then after 18 months--now that we've seen the diluted version, even from July 1--move to terminate.

So we don't see any stability coming out of this agreement. However, what we do--and witness after witness has raised this issue--is erase all the legal victories that have taken hundreds of millions of dollars and four years to win.

So my question to each of you, starting with Mr. Van Bergeyk, is why would we sell out four years of legal victories and then start in Lumber V, which is inevitable--I think everyone concedes that--with $500 million going to the American coalition and with all of our legal victories eliminated, starting from scratch, having to reinvest those hundreds of millions of dollars in legal costs if we choose to defend our industry? We could just capitulate, which is apparently what the government wants to do. But why would we erase four years of legal victory when we have two hurdles to go?

I'll start with Mr. Van Bergeyk.

[William Van Bergeyk]

Thank you very much, Mr. Julian. That's exactly our question: why would we want to do that?

I think what we're going to see is capitulating to a battle or a skirmish that has arisen in the country below us, and we're simply relocating it. What we're now finding is that industry is arguing different points of view. Industry is going to be arguing over some form of allocation—quota share, if you want to call it that—some market share allocation. We're going to rush to the border. We're going to trip over one another.

We have a very unique situation here, that we should appear before this committee. Weyerhaeuser and our company have a very unique relationship. We sell them chips and they need our chips. I'm sure both parties would like to see that relationship flourish. Mr. Perkins has indicated so. They want to keep operations going. We do too. But this deal is not going to ensure that. We'd like to see a resolution by the third parties, and then I really believe, contrary to what I heard from my counterparts, that we'd see results.

[The Chair, Conservative, Leon Benoit]

I'd like to give the other two members of the panel a chance to respond to that question.

[Paul Perkins]

Mr. Chairman, my response to the honourable member is that we don't share the same vision of the future alternatives. Clearly, the precedents that he talks about we don't see as having necessarily large value.

I must repeat that for somebody who has lived through Lumber I to Lumber IV, yes, we've gone further in this case than ever before, but my understanding even of the CIT decision is that it's only binding on this particular issue. If in fact we should lose on the appeal, it would not be binding on the USTR on the next round. I guess it comes down to how you see the future, and we certainly see it based on where we've been over the last years. We are in fact looking at this as being a reasonable alternative going forward.

[Jim Shepherd]

Mr. Chair, I would like to address the issue of this particular round of litigation.

It started immediately following a five-year deal of managed trade to the SLA in which there was no chance of using that timeframe for any complaint against Canada for subsidy or threat of injury. Within a week Lumber IV is launched. Common sense says no wonder we're winning this round; how can you go in less than a week from nothing to something that is all threat of injury and subsidy? So I would say that with respect to the cases we have won—I don't know the relevance in Lumber V—the one group that has made a fortune, and continues to make a fortune, is the legal entity in this softwood lumber dispute. Let this industry move on with certainty.

[The Chair, Conservative, Leon Benoit]

Thank you.

And the final word was from the panel, from Mr. Shepherd. I want to say this was a fascinating panel. I appreciate all of you taking the time to come, and your presentations and your answers. It was much appreciated.

I would like to also thank all members of the committee for their questions throughout the day, and all of the staff—the clerks, the research staff, the interpreters—involved for making this work. Thank you very much.

This meeting is adjourned.