Good afternoon, everyone. I'm very honoured to be here today on behalf of the Ontario Forest Industries Association.
You have two very full days of hearings scheduled on softwood lumber, with many witnesses. As I am one of the first, I thought it might be helpful if I defined some of the terms that may be heard frequently during these hearings.
The first term, “perfection”, has been in the press, and I suspect will be invoked often by ardent supporters of the basic terms and a deal in the making. You will likely hear it often at the end of today and Wednesday, given the lineup as I understand it.
It has been suggested that industry leaders who express concerns or doubts about the deal in the making have a vested interest in continuing the battle. We don't. I'm the president of a trade association, and trust me, with the challenges facing the Canadian forest sector, and particularly in eastern Canada right now, I have enough issues on my plate that softwood lumber is just one of them. My day goes on with or without this file and whether it's finished or not.
But the theme for the last five years during this dispute has been that we would not take a bad deal. As we have suggested, perhaps that is where we are headed, at least commercially. We are being accused of naively looking for perfection. We are being told that we are unrealistic and uncompromising, and that any good deal requires compromises that are necessarily less than perfect.
According to my Webster's New Collegiate Dictionary, perfection means “the quality...of being perfect”, and perfect means “being entirely without fault or defect”. Ladies and gentlemen, I can tell you right now with absolute confidence that I don't have one member company that is seeking perfection. Dave Milton will be here on Wednesday speaking on behalf of the Ontario Lumber Manufacturers' Association, and I've been on enough conference calls that I can say with confidence that Mr. Milton doesn't have one member company that is seeking perfection. That is not what any of our members expect from this deal.
We are certainly prepared to accept something that may have a fault or a defect. The problem arises when we consider the antonym for perfect, which an online dictionary of antonyms says would be “uselessness” or “worthlessness”. Ladies and gentlemen, the question is, between perfection and worthlessness, where is this agreement? The closer it gets to the antonym of perfection, the less acceptable it is to us.
After reviewing both the Canadian and the United States' draft legal texts, it is apparent that what we have right now is a political agreement. As an industry—as businesses dealing with over $7 billion U.S. in annual sales from Canada to the Untied States—we need more than a political agreement. Again, we are not looking for a perfect agreement, but we must have a reliable commercial agreement that protects trade and investment for the Canadian forest industries in every region of this country for the next seven years.
As a CEO of one of my member companies suggested, the April 27th framework has potential, but we have to see how the actual deal is written before we can endorse it. So far, each draft has varied the crucial details further and further away into blank annexes.
Minister Emerson stated months ago—and we applauded him for this—that the devil is in the details. The devil is still in hiding, ladies and gentlemen, even as the government thinks there are only two weeks to go to completing the deal. My members and the 270,000 families that rely on the Ontario forest industry for their well-being and livelihood—and you could say the same for everyone sitting at this table right now and for the families they represent, who are relying on the outcome of this agreement—want everyone to understand that it is our future that is bedeviled by the details. It's our future that's on the line with this agreement.
During a conference call last week, a Canadian CEO—not one of my members—explained to the federal government representatives that the complexity of the commercial implications were huge, and that all Canadians needed to understand that it is the United States industry that would benefit from a deficient agreement. As he put it, “if we get the commercial detail wrong, it will be to the detriment of the Canadian industry”. The government may insist that we are dealing with a win/win deal, but so far it's the government, not the industry, that has confidence in making this claim.
Another term that might be useful to define is “agreement”. My dictionary says that it means “harmony of opinion, action, or character”, and that “compact” or “treaty” is “a contract duly executed and legally binding”. Our concern is that we need to be entering a commercial contract, one that protects us and advances our interests commercially. Its reflection of harmony must mean that both sides agree, which Webster's says comes “after resolving points of disagreement”.
So far, we are finding that the points of disagreement and indeed the driving purpose of the deal are political, but that the commercial disagreements are not resolved. The federal government is convening conference calls once a week, and industry leaders are expressing concerns on those calls. But let's be clear: we're not at the table. We are not always seeing drafts before the United States does or, for that matter, the U.S. industry. Maybe there are drafts with the requisite commercial detail. If so, we've not seen them.
Because we are not at the table and we are not always seeing the drafts—at least, before they are shown to our adversaries—I also looked for the definition of “settlement”, which means “an agreement composing differences”. We have noticed that the United States industry has been at pains to emphasize what it is settling—what it is giving up—at pains because it is not giving up anything, which means that this agreement, as written so far, is not a settlement at all. This problem takes us back to where we are, between perfection and worthlessness.
These dictionary definitions are helpful when we make their consequences concrete. Many in the industry have calculated since April 27 that this agreement, as currently drafted, will result in at least 20% of the Canadian sawmills being put out of business in the next 12 months—and this is apart from the forces that are rationalizing and consolidating the forest industries in our country.
Now, no one thinks that their mill will be part of that 20%; everyone thinks that they can survive and that it will be others who will fail. And I'll say that no one is talking about prospering, but just talking about surviving. We are confident that at least 20% will fail because of this agreement. Moreover, for a variety of reasons, we believe these failures will be disproportionately in eastern Canada, and because of the exclusion of the Atlantic provinces, eastern Canada means Ontario and Quebec.
We therefore expect to suffer, and to suffer a lot, under the terms as they are now written. Moreover, the deal that's written now has no exits, and no hope of exits. Policy reforms are subject to U.S. judgment and to U.S. veto, and there is no termination clause. The managed trade will be permanent, and the terms of the management may devastate employment in northern Ontario, where the Ontario industry is heavily concentrated—and I would expect the same to be seen in Quebec.
We must ask ourselves about the alternatives. The United States insists that we will never get litigated results because they will neither permit nor honour them. Canadians, beaten down after five years, seem to be prepared to accept that the United States controls the market and the law and that there is nothing we can do. Perhaps that is true; perhaps there are no alternatives.