International Trade Committee on Oct. 24th, 2006

[Paul Robertson]

Thank you very much, Mr. André.

With respect to the first question about how much money will be designated for the administrative and legal costs, I think the administrative costs will be a relatively constant amount and that will be subject to the consultations with the provinces. Costs incurred for A, B, C, and D will be retained by the federal government.

With respect to legal costs, that's a function of the extent to which (a) there is arbitration, and (b) that we're working with the provinces to ensure that specific programs do not run afoul of the agreement. Those are the two basic legal activities that would precipitate costs by the federal government.

Those are the general dynamics with which we will be engaging provinces who recognize that the federal government will be keeping some money back because of those legitimate costs with respect to the agreement.

You've also raised questions that are best looked at in the anti-circumvention elements of the softwood lumber agreement and that provide for exceptions to prohibitions on programs, including forestry practices. I direct your attention to paragraph 17(c) of the softwood lumber agreement. I'll just read a portion of it for ease of reference: “actions or programs undertaken by a Party, including any public authority of a Party, for the purpose of forest or environmental management, protection, or conservation, including, without limitation, actions or programs to reduce wildfire risk; protect watersheds...”. A whole list of elements are excluded from the prohibitions of the anti-circumvention, and those are the ones that would be working strongly with respect to the ability of provinces to maintain forestry management practices for those purposes.

With respect to the question of how the money that had been transferred back to each province would be used, that is a function of each province's own decisions about how money would be used. All provinces are knowledgeable and understand the exceptions to the prohibitions in the agreement as they relate to forestry management. We would expect, and we are quite sure, they would be working with those parameters they had a share in negotiating during the bringing into agreement of the softwood lumber agreement.

That's the basic dynamic, both for the return of money to provinces as well as the exceptions under the softwood lumber agreement for elements you've identified in terms of forestry management, environment, things of that nature, as well as, I would expect, the parameters for provincial use of the refunds or the charge we transfer back to them, if they choose to put it in areas identified under the agreement. Any province is free to use the moneys it receives for any program within its scope.

I can't speculate any further about how money will be used by provinces.

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

The bill does not spell this out clearly. I understand the provinces will not be able to use these refunds to assist their industry. I believe that's stated in the agreement. If they were to do that, the money would be viewed as a form of subsidy.

Does the federal government plan to establish a fund to lend support to companies involved in commercial litigation over softwood lumber issues?

Will the administration of this export tax be subject to monitoring? WIll the provinces and Quebec have some control over these amounts?

I don't want to mention the $50 billion in the EI fund. I really don't want to get into a political debate. That's not what we're here for. However, how will the provinces be able to get what is rightfully theirs? That's what worries me.

[Paul Robertson]

Thank you very much.

With respect to your question about protection for individual companies, I think the protection is in following the option A or option B elements in terms of the companies' exports and the allocations. Those replace the trade remedy option that would be open to the United States were there not an agreement. So the protection for individual companies is in following either option A or option B, and all the necessary preconditions for those. That is the first point with respect to individual companies. They will not have the legal costs we have had until now, because if they work within the programs of the two, then there's no requirement for that.

I think the dispute settlement mechanism anticipates differences in terms of specific measures taken on the part of governments. Therefore, it's for the federal government to lead on any of those arbitration elements that require costs on its part; those are types of costs we will incur in those types of situations. Of course, provinces will want their own litigation teams, and they will pay for those themselves. In addition, to ensure that everyone understands and is onside with respect to what we have all agreed to, the federal government will of course be working with provinces when asked about the conformity of any new measures with the agreements. So those are other costs the federal government will be incurring in support of provincial measures in the future to abide by the parameters of the agreement, which we've all agreed is sufficient for us to implement.

[The Chair, Conservative, Leon Benoit]

Merci, monsieur André.

Mr. Cannan, and Mr. Harris. Go ahead, Mr. Cannan, to start.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you Mr. Chairman.

I'm going to pass this over to my colleagues in a minute, but I wanted to go on record to clarify the comments made around the table, specifically by Mr. Julian. I don't want to mislead Canadians. He was stating that the softwood lumber agreement has caused all kinds of disasters and layoffs.

When I heard in my riding that there were some layoffs shortly after the announcement on October 12 that the agreement had come into effect, I phoned the CEO and owner of the mill in my riding. He was adamant about the fact that this softwood lumber agreement was the best thing, in the sense that it was going to provide...not only for seven years, but he's hoping it will be extended for two years. He stated that the layoffs were a result of collateral damage from the pine beetle and had nothing whatsoever to do with the softwood lumber agreement.

So I think we have to make sure—especially in B.C., where my colleague Dick Harris is right in the thick of the pine beetle problem—we realize this agreement is something that has been negotiated, and we need to make sure it comes into effect as soon as possible for the certainty and stability of the industry.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Cannan. We're not here to debate the softwood lumber agreement.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I know, but I'd just like to clarify for my colleague, so he doesn't misinform Canadians.

[The Chair, Conservative, Leon Benoit]

I'm sure you would, and you did. Thank you.

Mr. Harris, go ahead.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chairman.

I want to go back to a question that Mr. Julian had earlier and see if we can't provide some clarification to it.

As I read subclauses 18(3), 18(4), and 18(5), am I right to understand that this applies either to companies that are going through the EDC to get their deposits back, or to those companies that have chosen not to use the EDC route and are going to go in whatever other manner they can to receive the deposits back?

Am I to assume that for those companies that chose to go with the EDC--and for round numbers let's use $100--when the government calculates the total amount of refund coming back to those companies, the government would pay them the net, which would be $82, and the $18 charge would be calculated up front?

At the same time, those companies choosing to go their own route, perhaps because of their cashflow or because they could afford to and they wanted to save some money on interest or administration fees, those companies that were going to collect the $18 themselves, notwithstanding when they actually got that money, would have to pay the $18 that was assessed in the beginning if that was the leave-behind money, if we can call it that. They would collect the balance of that, or they would then collect their total amount through their own means and they would end up basically with about the same thing as the EDC folks, except that they would be able to continue to collect some interest and they also may be able to avoid some administration charges.

Am I reading this right? If there was any up front money to be paid before they actually had the bulk of their money back, it would be by the companies that have chosen to go their own route to collect their deposits rather than by those going through the EDC program. Is that what this is referring to?

[Paul Robertson]

With respect to the EDC program, as you've identified it, the 18% does not include administrative costs. The 18% is the money used to redirect it to the U.S. interests. You'll recall that of that $1 billion we're obligated to pay to various U.S. interests, that 18% has nothing to do with administration.

With respect to the special charge, the recipient of money from Customs, other than EDC, will only pay that special charge after the receipt of the money from Customs. Therefore, it's not up front money they have to put into play. They will only pay the special charge once they received the money from the U.S. Customs, which we've been told by the United States might take up to two years.

The other point is with respect to the special charge. While everybody is eligible for the special charge, if you have participated in the EDC program and already have paid what is the equivalent of the special charge, then you'll be remitted that amount in terms of that payment, not in the legislation element but in a specific order that was identified earlier by my colleague Mr. Clifford. That is the process.

With respect to the specific clauses, John, is there anything you'd like to add to that?

[John Clifford]

No, I think you've covered it, Paul.

I'm not sure if that answers your question, sir.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I guess then at the end of the day the fear that a mill would be obligated to come up with a bunch of advance money for special charges, or whatever, is really not a scare reality the way the agreement is put and the way this is put together. The companies that didn't go the EDC route would not have to pay any special charges until they received their money. For the ones that did go the EDC route, at the time it was all calculated, whatever charge applied on their 18% would be simply deducted from the total amount they had coming to them.

[Paul Robertson]

That's correct. I would just flag that in the EDC process, when EDC buys the rights from the individual importer of record, the importer of record also authorizes EDC to pay a specific amount.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I guess what I'm saying is that the fears Mr. Julian expressed earlier are frankly not founded, because the way these clauses are written does not suggest that a company is going to suffer any undue cashflow hardship.

[Paul Robertson]

You've explained the processes under the two principal elements. Correct.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

All right. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

I have no one else on the list. I'm sorry, we have Mr. Maloney and then Monsieur Cardin.

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

Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, do you want to go?

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

Yes.

[The Chair, Conservative, Leon Benoit]

Okay. Then you are next on the list, Mr. Julian.

My apologies, Mr. Maloney.

Go ahead, Mr. Julian.

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

Thank you very much, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Should I assume you're always on the list, Mr. Julian?

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

Yes, particularly when it relates to softwood.

I appreciate following my two colleagues from British Columbia in their desperate attempts to spin this legislation. I'm sure that can be explained by the fact that their party is falling like a stone in the polls in British Columbia, in part because of the issue of softwood lumber.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

On a point of order, Mr. Chairman, is it possible that you can ask Mr. Julian to stick to the business we have rather than annoying and even boring us with his rhetorical statements?