Evidence of meeting #33 for International Trade in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A recording is available from Parliament.
9:15 a.m.
Conservative
Dick Harris Conservative Cariboo—Prince George, BC
Right, okay.
Mr. Chairman, I'll pass to my colleagues. I don't have any further questions at this time.
9:15 a.m.
Conservative
9:15 a.m.
Conservative
Ted Menzies Conservative Macleod, AB
Just one question, and I apologize that this may not be specific to a clause. I realize we're trying to do that.
Further to Mr. Harris's questions, we're certainly hearing lots about pine beetles, pine beetle damage, and the need to knock some of that lumber down and process it quickly. Probably Mr. Harris understands this better than me, living in the midst of it, but will this new entrance, the surge mechanism, cover how our lumber companies may have to react to speeded-up processing, if we will, in reaction to the pine beetle damage? Where would that fit in?
9:15 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
Perhaps I can give a general answer, and then to Dennis if there's a need for any further technical information.
Of course the surge mechanism is applicable only to the regions that have opted for option A, as Dennis has just explained. The surge option allows for exports to be in excess of 10% of the allocation before it kicks in, and then you have a 50% additional charge on whatever is being paid at the time.
The mechanism was designed primarily with respect to the beetle situation you refer to, and that was a focus of a good deal of discussion between industry and the provinces, particularly British Columbia. So that was designed with this situation in mind, and therefore I don't have the figures about what is projected, the types of cuts, and so on. But so you know, this was designed for that exact circumstance, among others, but it was a prominent one.
9:20 a.m.
Conservative
9:20 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
No.
9:20 a.m.
Conservative
Ted Menzies Conservative Macleod, AB
—impact of that is going to be, but I'm glad to see that we've recognized the potential for this.
9:20 a.m.
Conservative
The Chair Conservative Leon Benoit
Okay, we'll go back now to Mr. André. We just skipped over you, so we'll go back, and then to Mr. Julian.
Yes?
9:20 a.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Could I just clarify that? If it's over $355, does the 10% over last year's quota still take effect?
9:20 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
No, it doesn't, because the surge mechanism kicks in at 50% of the charge. So if there's no charge, then there's no additional—
9:20 a.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
I just wanted to make sure it was clarified. Thank you.
9:20 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
Yes, thank you very much.
9:20 a.m.
Conservative
The Chair Conservative Leon Benoit
Now I don't know whether it was a point of order or what.
Anyway, go ahead, Monsieur André.
9:20 a.m.
Bloc
Guy André Bloc Berthier—Maskinongé, QC
Good morning.
My question relates to proposed section 6.3. Paragraph 6.3(3) which reads as follows:
6.3(3) If the minister has determined a quantity of products under subsection (2), the minister may: (a) by order, establish a method for allocating the quantity to persons registered under section 23 of the Softwood Lumber Products Export Charge Act, 2006 who apply for an allocation;
So, the minister has that authority. In that section, there is a reference to paragraph 6.3(2), that says:
6.3(2) If any softwood lumber products have been included on the export control list for the purpose of implementing the softwood lumber agreement, the minister may determine the quantity of those products that may be exported from a region during a month, or the basis for calculating such quantities, for the purposes of subsection (3) and section 8.4.
There is no reference in that section to consultations with provinces. First of all, I would like to know if it is a voluntary or an involuntary omission, or if there are internal elements that we are not seeing presently.
My next question is about remanufacturers. Mr. Temelkovski and Mr. Harris have asked you some questions on that subject. It was very interesting, but no specific definition is given for remanufacturers. Is it intentional?
9:20 a.m.
Conservative
The Chair Conservative Leon Benoit
Just for clarity, Monsieur André, are you referring to clause 111?
9:20 a.m.
John Clifford Counsel, Trade Law Bureau, Department of Foreign Affairs and International Trade
Thank you for that question, Mr. André.
The new provision in the Export and Import Permits Act, proposed section 6.3, is actually based on existing legislation that provides for establishing quantities for import access pursuant to WTO commitments. So the cascade or the arrangement is very similar.
Proposed subsection 6.3(3), as you pointed out, provides authority for the minister to make an allocation method order. That would establish the eligibility criteria for export allocations, or quota as people have been referring to it. The section is not explicit about the consultations that would be done with the provinces. However, that consultation is ongoing, as my colleague Mr. Seebach has mentioned. I'll ask him in a minute to talk to you about those consultations.
The authority to make these allocations comes from the minister. There is no delegation to the provinces for this function. Delegating it to the provinces would have involved a structure much different from what we have here, perhaps with counterpart legislation in the provinces to establish whatever entity at the provincial end would do this. There would have been delegation from the federal government to the provinces with machinery perhaps similar to what the marketing agencies use. It was felt that that kind of arrangement was not appropriate. The provinces were amenable to the arrangement of consulting and providing recommendations on the allocation method that will be used in a region.
It is the government's position that the advice of the province in question will be taken into consideration. In fact, I would not be surprised if the elements that the provinces want were fairly well replicated in the allocation method order. However, the discretion to make that order is the minister's. It's for the minister to decide what the eligibility criteria will be, based on the consultations with the provinces.
9:25 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
Perhaps I could just add, Mr. Chair, with respect to the consultation, it was initiated some time ago. It's extensive at the technical level and moving up, as there is an understanding of various provincial views with respect to that. As my colleague Dennis Seebach has mentioned, there have been no decisions taken, but consultations are ongoing, recognizing the importance of the role of the provinces in that.
Dennis, I don't know if you want to elaborate any more on that.
9:25 a.m.
Director, Administration and Technology Services, Department of Foreign Affairs and International Trade
In the four provinces, Saskatchewan, Manitoba, Ontario, and Quebec, we've had extensive consultations and discussions with our provincial counterparts and also with industry associations, companies, and interested parties within each of those provinces.
9:25 a.m.
Bloc
Guy André Bloc Berthier—Maskinongé, QC
Could we add an element to stipulate that provinces should be consulted? In fact, it might be worrisome because the minister has many powers. He might make a decision against the interests of a province. As you know, provinces have made a choice and quotas have been allotted. This section doesn't make any reference to these consultations that are essential to the harmonious implementation of the softwood lumber agreement in Quebec and Canada as a whole.
My second question was on remanufacturers. Is it a voluntary or involuntary omission?
9:25 a.m.
Director General, North America Trade Policy, Department of Foreign Affairs and International Trade
Perhaps, Chair, before we go to the remanufacturers, I can just first of all take note of the advice received that there should be explicit reference to consultation to the provinces. I think this committee is better placed than I am to understand. Mr. Seebach mentioned that we want these regulations in place by January 1, and I don't know when this legislation will be passed, but it may be at the same time that the regulations will have to be put in place, so there is extensive consultation with the provinces now.
I think all provinces recognize their role in this and they're working very cooperatively with the federal government on this. So I haven't heard any disquiet from any of the provinces that the process that's been initiated to incorporate their views and to have consultations is not full, transparent, and in the way they want to proceed to meet the January 1 date.
I will, of course, take your advice under advisement.
With respect to the second question, relating to the definition in the legislation, I'm waiting for my legislative drafter to address that.
9:30 a.m.
Counsel, Trade Law Bureau, Department of Foreign Affairs and International Trade
Thanks for characterizing me as a drafter, but in fact we have experts who have prepared this bill and we've been advising the government with respect to instructions for drafting the legislation.
With respect to the question of independent remanufacturers, as you know, the bill has provided for authority for certification of independent remanufacturers, and CRA will be doing that. There is a possibility, an ability, an authority in this bill to make regulations in that regard. There are considerations in favour of making those regulations or pursuing another option to do it by way of policy.
CRA, as I understand it, are looking at those two options now and have had discussions with entities interested in this question. As I understand it, there may be reasons that would favour approaching this by way of policy because to do so would give the remanufacturers an opportunity to consult in a way that may not be possible with a draft regulation moving through the system.
I'm not sure if my CRA colleagues want to speak to that, to clarify. Is there something that should be added to that?
9:30 a.m.
Ron Hagmann Manager, Softwood Lumber, Canada Revenue Agency
I'll just note that we are currently administering the requirements outlined in annex 7C of the agreement.
9:30 a.m.
Counsel, Trade Law Bureau, Department of Foreign Affairs and International Trade
The intention would be to be faithful to those requirements established under the agreement.