International Trade Committee on May 31st, 2006

[The Vice-Chair, Bloc, Pierre Paquette]

Pursuant to Standing Order 108(2), we will continue our study of softwood lumber. Today, as witnesses, we have the representatives of Barker & Hostetler, the Ontario Lumber Manufacturers' Association, the Quebec Forest Industry Council, the B.C. Lumber Trade Council, the Independent Lumber Remanufacturers' Association, Abitibi Consolidated, Tembec, Canfor Corporation and Weyerhaeuser Company.

The witnesses will first have seven or eight minutes to make their presentation. Then we'll move on to a question period. We shall proceed in the order I've given you. Mr. Feldman, you will begin. I will warn you one minute before the end so that you can wrap up your remarks.

Over to you, Mr. Feldman.

[Dr. Elliot Feldman, Trade Lawyer, Baker & Hostetler]

Thank you. I have prepared a 10-minute speech in accordance with Mr. Dupuis' instructions, but I'll speak quickly.

Good afternoon, honourable members. I'm honoured to appear again before this committee.

The last time I appeared you asked me to talk about the North American Free Trade Agreement, and especially chapter 19, the dispute resolution scheme for trade remedies.

I advised at the time that chapter 19 was on life support because of the concerted efforts of the United States to erode its legitimacy while undermining its supporting institutions. I based my remarks on a paper prepared for the Canadian American Business Council. I deliberately did not talk about softwood lumber.

It is altogether appropriate to return here now on this same subject as a result of the April 27 agreement on softwood lumber, and although I did not receive any specific guidance as to what you might like me to address this time, I have been devoted to the free trade agreement, and then NAFTA and chapter 19, from their beginnings. I was among the very first to litigate chapter 19 cases on behalf of Canadian interests, have litigated many since, and I suspect I have written more extensively on this subject than almost anybody else.

It is distressing to me personally and professionally to witness what is now taking place with respect to chapter 19 as a result of the apparent agreement on softwood lumber, and in my capacity as a trade lawyer I think this topic might be the most useful for me to address.

It has been reported in the press that I authored a paper analyzing the basic terms, 48 hours after they were released, on behalf of the Free Trade Lumber Council, the Ontario Forest Industries Association, and the Ontario Lumber Manufacturers' Association. I understand the paper has been acquired by the Library of Parliament, which means all of you have access to it and some of you may have seen it. I will, therefore, be happy to discuss it with you.

It contains in summary the two key points about chapter 19 that I want to address today. The first regards what is happening to the results of the legal process from the last four years, and the second involves the rule of law being enunciated now for the future.

Had there been any ambiguity in the basic terms—and I do not believe there was any on this subject—there is no ambiguity in the subsequent drafts tendered by both Canada and the United States. The agreement does not recognize any Canadian legal victories from the last four years. They are erased in their entirety. In the current American version of the agreement they are replaced by language restating the U.S. positions that Canadian softwood lumber is subsidized, dumped, and threatening injury to a U.S. industry. The facts are, however, that NAFTA panels that have completed their processes, which according to NAFTA are supposed to be final and beyond the reach of appeals, have decided that Canadian softwood lumber is not subsidized and does not threaten any industry in the United States. Those rulings should mean the end of the orders and the return of all cash deposits, 100% with interest.

The current U.S. version of the deal announces that the United States found to the contrary, makes no mention of the litigation or judicial results, and requires the dismissal of all pending cases with prejudice. The Canadian version actually goes further, securing U.S. legal positions. It is one thing to settle, and to pay $1 billion and to accept permanent managed trade. It is another again to erase legal history, and, with that stroke, to delegitimize the NAFTA panels and procedures.

What is especially frustrating to some of the lawyers who have devoted energy and ingenuity to achieving these results for Canada and Canadian interests is that we are literally within weeks of final decisions from courts, and panels, and committees that would confirm those victories. It is not, in our view, mere coincidence that the United States is also in a hurry to complete this deal before these decisions come out, or that the United States has told the Court of International Trade it would rather not have a final decision in a key case, or that the new American text specifies, first, what products it will regulate, and, second, what legal cases Canada must give up. This development alone would be enough to dissuade any private interest in Canada from relying again on NAFTA to resolve a trade dispute with the United States, but there is a second, perhaps even more serious problem.

The deal could say that the countervailing duty and anti-dumping orders are revoked ab initio and that, according to law, all cash deposits are to be returned to importers of record with interest. That's what the deal should say, because as a legal matter that is what is to happen. But the United States is resorting to an alternative theory. According to the United States, when NAFTA panels conclude that original investigations improperly led to the imposition of duties, the money collected between the time the orders were imposed and the time of the final legal decision overturning the orders stays in the United States and is not returned.

This theory is prospective, meaning that NAFTA panels are to have only prospective effects, whereas courts have retrospective effects.

In the case of softwood lumber, this theory means that something in excess of $3 billion could be lost to Canadians simply because they were proceeding under chapter 19 instead of in U.S. court. The longer a case is stalled or delayed, as when the United States does not replace a recused panellist for months—which has happened more than once—or stalls appointing judges to an extraordinary challenge that the United States has requested, which it also did, the total that the United States keeps just keeps going up.

Now, there is no doubt of any kind what happens when trade disputes are resolved in U.S. courts. All the money comes back, with interest from the beginning. But under the U.S. theory, when Canada negotiated for chapter 19, it got something less than what Canadians would get in U.S. courts. In fact, because any party, including American petitioners, can remove an appeal from a U.S. court to a NAFTA panel, Canadians according to this theory have fewer rights than any trading partner on the planet except Mexicans.

It's according to this theory that the money is to be settled in the current dispute. The United States is proposing to use section 1617 of the trade law, whereby the United States gives back only some money to Canadians because, the United States says, it is "compromising its claim" and not taking all of the money to which it is entitled.

Of course, as the legal cases stand now, the United States is entitled to none of the money. It's Canada, not the United States that is compromising a claim. Resort to section 1617, instead of relying on sections 1673 and 1671, is the U.S. way of declaring again that it won and Canada lost, and that Canadians are receiving some money out of U.S. generosity, not because the law specifies that when the ITC issues a negative final determination, which it has done in our case, the Department of Commerce must “refund any cash deposit”.

The United States thus will confirm that chapter 19 means Canadians lose money regardless whether they win their legal case, unlike any other people outside NAFTA.

An alternative in the basic terms, whereby the deal would not take sides with respect to this issue, would solve nothing, because it would leave Canadian private parties uncertain what they would get when litigating under chapter 19. The U.S. theory that NAFTA panels have only prospective authority means the end of chapter 19. No sensible private party would ever turn to it again.

I realize some have said that it is only because of the NAFTA victories that this deal has been made possible. I don't see that reasoning, because I don't see in the deal anything conserved. When the next round comes, and I believe the agreement virtually guarantees it, Canadians will be starting over, only worse off than before. This is because they will have lost chapter 19 and will have to rely on U.S. courts entirely, the avoidance of which was why chapter 19 was written in the first place. And every other industry in Canada will know, as a result of this deal, that they can no longer rely on and would be best advised not to use chapter 19.

Worse, every industry in Canada will now have to know that chapter 19 is a handicap; that they could be forced to litigate there, guaranteed that even if they win they will lose. This House may need then to abolish chapter 19—the absolute dearest wish of the U.S. Coalition for Fair Lumber Imports and other American petitioners—just to save Canadians from its ill effects.

One last word. There is in the drafting also an attack on chapter 11, the state-investor dispute mechanism. It's in the Canadian, not the American draft. It would mean a profound erosion of protection for Canadian investments in the United States.

These institutional consequences of the deal will last longer than the deal itself. They will not make for a long-term durable peace and they will make for a much weaker Canada in the future. They will be a product not merely of the U.S. assault on chapter 19 that I described when I previously appeared before you. They will be the product this time of a collaboration between the two parties, the original custodians of the free trade agreement for North America.

Thank you. I would be pleased to answer questions.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you, Mr. Feldman.

We'll now go to Mr. Milton from the Ontario Lumber Manufacturers' Association.

Mr. Milton.

[David Milton, President, Ontario Lumber Manufacturers' Association]

Good afternoon. Thank you for extending me this invitation.

I am honoured by the opportunity to share with you some of the thoughts of the Ontario Lumber Manufacturers' Association concerning the possible settlement of the long-running softwood lumber dispute with the United States.

I note that there are no similar hearings in the United States Congress, for at least three reasons. First, the United States has no intention of introducing any legislation to execute or implement this or any other agreement, so Congress need not trouble itself. Second, this deal is much more important to us than to the United States. And third, the current configuration of an agreement appears to be uncontroversial in the United States and very controversial here, for several additional reasons.

Let me take each of those three points.

It has always been the position of the United States that Canada is guilty as charged of subsidizing softwood lumber exports to the United States. The United States has always argued that Canada, including the provinces, must change its forest policies, change the way it does things, and change its laws, because there is nothing wrong in the United States and everything is wrong in Canada. Open subsidies to their own lumber industry have never mattered, nor have even been admitted, such as the most recent tax arrangements announced in the last four weeks, which are designed specifically to assist timberland owners in the United States

It has not mattered that subsidies are a legal question and that the United States brought legal cases against Canadian softwood lumber exports in 1982, 1986, 1991, and 2001, yet has never proven its legal case—let me underline that: and has never proven its legal case—but has forced settlement twice, and is now about to force a third settlement.

The United States position has always been that it should change nothing, but that we in Canada must change. We have, but to no avail. Congress, on such understandings, doesn't need do to anything.

In the late 1980s Ontario and Quebec completely overhauled their stumpage systems to make them market-based, but the United States still alleged subsidies in 1991. British Columbia is overhauling its whole system now to make it more market-based, yet so far the United States refuses to accept that any of the changes in any of these provinces solve the alleged problem of subsidies.

In between, the Department of Commerce in 1982 and the free trade agreement and the NAFTA panels have subsequently concluded, according to the law, that there are no subsidies. But the allegations continue, and we continue to be expected to change our ways, never knowing what we can do to satisfy the Americans.

As long as the allegations are against us, we are supposed to change our practices and our laws. The United States is not expected to go to any trouble. So you have hearings and they don't.

The whole thing is more important to us. Our economy is one-tenth the size of the United States economy, and certain economic sectors and activities therefore loom larger for us than they do for the United States.

In our view, this issue ought to be as important for the United States because of its huge impact on homebuilding and housing starts, which historically have been the engine of the U.S. economy. But we also know the way American politics are organized, and consumers aren't heard very much. Our Canadian allies in this struggle are large and important. Among them are the National Association of Home Builders and the Home Depot Corporation, but they simply don't seem to have the same political clout as the timberland owners.

So while this struggle does have grave consequences for the U.S. economy, the American political system somehow cannot recognize or understand the consequences the way we do.

Finally, this deal is controversial here because of the way it is shaping up. All of us have expected that eventually we would have to reach some kind of settlement with the United States.

The industry in the United States is politically connected because of its influence over the Senate finance committee, which is the pivotal committee governing both taxes and trade. There's nothing of comparable influence in Canada. Government here does not do the bidding of the forest industry the way the United States Congress and the administration, under the influence of Congress, do for the U.S. industry.

Those political connections have meant that the U.S. administration has avoided and evaded the law, and forced Canadians time and again to yield their legal rights to political accommodation in the United States. We're here again, one more of these times, and we should recognize it for what it is.

We have experienced that influence over 25 years. Some may remember, as I do, that the free trade agreement between Canada and the United States was nearly blocked at the Senate finance committee because the chairman at the time, Senator Robert Packwood of Oregon, threw a fit over softwood lumber—it was 1987.

We already had caved in to the pressure and abandoned our legal rights when we entered the 1986 memorandum of understanding. When the five years of that agreement were up, British Columbia could no longer live with it and it was abandoned. We then negotiated the softwood lumber agreement in 1996 after we'd won at the 1991 case—it's important to remember that was a legal case won by Canada.

We'd won and there should have been free trade, but the United States refused to give us our money back, even though the law plainly required that we get it back. In order to get it back without another legal fight, we made a deal, and the United States is holding our money again this time, and much more of it. This time we've paid an illegal tax of 27%, whereas last time it was less than 12%.

People may forget, but I don't. We've suffered under the deal we had to make to get our money back. It imposed quotas that were never sorted out fairly in Canada. Some regions got advantages over other regions. Some companies within regions got advantages over other companies in the same regions.

The simple truth is that managed trade again didn't work and we wound up again in a legal fight, and again the United States changed the law. So again we had to prove that governments were not subsidizing lumber in Canada, and this third time around the Americans changed the rules again. Despite the rules change, we won again. We've proven, no matter how the United States changes the law, that we don't subsidize. And yet here we are again, making another deal.

I must tell you that my association is not opposed to making a deal. We recognize that despite the history, the United States may continue to force upon us restricted and managed trade. But we cannot accept a bad deal that will close our mills, put our people out of work, diminish our industries, and encourage other countries to take our place in the North American market.

British Columbia may be able to look to Asia, but we in central Canada cannot, nor can we very much look towards Europe. In fact, it's mostly the Europeans who want to fill the gaps created in the North American market when the Canadian trade is restricted.

So we must get it right here in North America. We must do it remembering what has happened before. Some of us have been in this business a very long time, and we remember. There's an important difference this time, though. In the past the United States has insisted that Canada could determine how provinces manage their forests, and tried to impose through the federal government penalties on the provinces. This time, for the first time, the design of the deal acknowledges that each province may require its own unique solution.

I remember that during the negotiations for the softwood lumber agreement in 1996, Quebec was negotiating policy adjustments, and British Columbia proposed a quota. This time British Columbia has been negotiating policy changes and an export tax, while Quebec has proposed a quota. Those shifts show that if trade is to be managed, different provinces are going to require different terms at different times. But they also—

[The Vice-Chair, Bloc, Pierre Paquette]

Mr. Milton, you have one minute left. Can you wind up your remarks?

[David Milton]

I will, thank you.

Assuming Ontario accepts a quota, will its volume of lumber shipped to the United States diminish because British Columbia may increase its shipments, restricted only by an export tax? Can Canada's overall market share in the United States under the deal exceed 34% because of the Atlantic provinces', which under current terms are permitted to export to the United States every piece of softwood lumber manufactured there, or because British Columbia might opt for a graduated export tax and pay it in order not to be limited in the quantity of lumber it can ship? The details and the answers to these fundamental questions will determine whether members of the Ontario Lumber Manufacturers' Association will be in business when the deal expires.

Today I can tell you that I cannot tell from the terms presented so far who will live in Ontario and who will die; I can surely tell you, though, that some will die—a morbid conclusion but a realistic one. So we need to take the time to be careful to protect as many jobs and as many companies as we can, not against the natural rationalization of the market, but against managed trade.

My thanks to the committee.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you, Mr. Milton.

I now turn the floor over to Mr. Chevrette from the Quebec Forest Industry Council.

[Guy Chevrette, President Executive Director, Quebec Forest Industry Council]

Thank you, Mr. Chairman. Good afternoon, madam, gentlemen and colleagues in the forest industry.

Mr. Chairman, I begin by thanking you for the opportunity to address your Committee.

As you know, the Quebec Forest Industry Council is the principal spokesman for the forest industry of Quebec. It represents virtually all businesses. I say that because I saw the reporting on Monday. It's as though someone who represented barely 4% of Quebeckers was the representative of all Quebeckers. We represent 96% of the Quebec forest industry. We represent virtually all sawmills, all pulp and paper businesses and rotary cutting, sawing and hardwood businesses. The topic on your agenda today is crucial for our industry. Quebec's forest industry depends heavily on its exports to the United States.

I know that you wish to know what we think of the agreement in principle. For us, it is a simple answer: we have long been in favour of a negotiated settlement as long as it respects the following four principles. First it must be asymmetrical to account for the different realities which apply in different Canadian regions. The agreement in principle seems to achieve this. Second, the agreement must take into account the favourable judgments we have obtained to date. We do not yet know if the final text will meet this requirement but we still hold to it. The agreement must avoid “Lumber V” long enough to allow a return to stability; this seems to have been the common goal but recent drafts raise concerns on this point. Quebec must have a fair share of Canadian softwood lumber exports. That's the fourth principle.

Our members voted in favour of the agreement in principle of April 27, 2006, because these four goals of ours seemed to be met or to be achievable. You certainly must be aware that our industry is going through a serious structural crisis and that it is high time that our members be able to devote themselves to the advancement of their businesses, with stable horizons, rather than all becoming experts in international law.

Some were surprised by the support we so clearly showed on April 28 last, and in the days which followed. Having lived through the process which brought us to that decision by our members, I can tell you that there are several different explanations for that support. Many thought the agreement was a good one, while others felt that they had simply had enough. Some businesses are living through great difficulty; others felt that it would simply have cost too much to go all the way to the end of costly and demanding litigation. Finally, some simply had an urgent need for air, at any cost.

Now, we are at the crucial step of drafting the legal text of the agreement. So far, the Canadian government has allowed us to comment on some drafts, though often with too little time to react properly. Some of the changes we have proposed have been accepted.

On the other hand, there remain amendments which seem to us necessary. I would go so far as to say that they are essential if QFIC is to be able to continue to support the government in its search for a settlement. I comment here mostly on the Canadian drafts we have seen. The American draft is on a great many points thoroughly unacceptable, and we believe that the Canadian government will have to collaborate closely, and directly, with industry to be able to come to an acceptable ground of agreement.

Here are the main issues. First, let's talk about Option B. Those regions which choose Option B, that is a mix of quota and tax lower than in Option A, must have some flexibility to be able to avoid having their commercial relations unduly disturbed. A cap so hard as to disallow in any circumstances whatsoever any over-quota shipment whatsoever is unacceptable.

A dissuasive tax on exports exceeding the quota ceiling would discourage exports beyond Quebec's share, but would allow a company to respond to pressing and time-sensitive customer demands. We should also ensure the possibility of carry-forward and carry-backward of quota from period to period.

Such a provision was in the softwood agreement of the 1990s and worked well. Very few companies saw the need to pay the dissuasive tax. We believe a tax would accomplish the purpose here. In this way, we might accommodate commercial reality without violating the spirit of the April 27, 2006, document, which did not deal with the choice of method of enforcing the ceiling.

Now I'll talk about the subject of policy exit ramps.

For years now, we have been discussing a settlement which would allow provinces to escape the confines of managed trade by way of «policy exit ramps», policy changes which would reassure the American side that we are right to say that our lumber is not subsidized. We are surprised, then, to be shown confidential drafts which remove any hope of even a serious discussion down this path, and which even provide that agreement as to desirable policy changes would not prevent Lumber V allegations that those very changes create a subsidy. This must change.

The anti-circumvention provisions which the American side now seeks would freeze for seven or nine years any modification of Quebec's forestry policies, since any change would expose us to arbitration, with circumvention to be decided by an inflexible test, and then to the rebirth of border duties. This is not the trade peace which the agreement was meant to deliver.

Another essential element for us is the equitable treatment of remanufacturers. The texts we now see provide for differential tax treatment depending whether the remanufacturer is affiliated with a holder of forest rights. Our Quebec government never tires of asking our industry to develop downstream, value-added transformation, but this kind of aberration would take us in the wrong direction. This must be corrected, and all remanufacturers should be taxed on a first-mill basis.

These, then, are some points which illustrate the challenges ahead of us, in ongoing negotiations which must lead us to an acceptable agreement. We are well aware that the task is not an easy one, but we do sometimes have the impression of having to negotiate with our own government before a proposal is even submitted to the Americans.

If the Americans have a problem with our suggestions, why not leave them the pleasure of saying so? We hope very much that Canada will be able to arrive quickly at a commercially viable agreement, acceptable to the entire industry. The government can count on our support, if the essential changes I have mentioned are made. We, for our part, hope to be able to count—and I won't hesitate to say this as an ex-politician—on all Canadian political parties for their non-partisan support of a valid agreement for the Canadian industry as a whole.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you, Mr. Chevrette.

We'll now hear from Mr. Allan, President of the B.C. Lumber Trade Council.

[John Allan, President, B.C. Lumber Trade Council]

Thank you.

Good afternoon, and thank you for the opportunity to address you here.

On April 27, the B.C. Lumber Trade Council gave its conditional support to the draft term sheet we were shown. The conditional support was based on seeing the final details of the term sheet and of course seeing the final details of the final agreement.

Since that day, we've noticed the term sheet changed in the final analysis and we share Mr. Chevrette's concerns about much of the detailed agreement. We are now translating a two-and-a-half page term sheet into probably 50-plus pages of legal and commercial text.

Our first issue is that we must take the time to get this agreement right. This is a huge issue for the Canadian softwood lumber industry and indeed the whole forest industry, given its integrated nature. If we don't have a solid softwood lumber agreement that is commercially viable for the industry, then I fear for the whole forest industry itself in Canada, and the consequences.

In terms of the agreement itself, we have a number of concerns. First, as Mr. Milton pointed out, we have undertaken a massive overhaul of our forest policy framework in British Columbia. We were encouraged to do this by the U.S. government, and indeed different secretaries of commerce, different USTR representatives, different secretaries of commerce, and the Vice President of the United States have all encouraged our Premier to go down the road of forest policy reform, whereby we would be introducing market-based reforms in British Columbia.

We have seen tenure take-back; we have seen massive changes to timber processing clauses, and to tenure arrangements. This is not just a simple change, where we flipped a switch and went from one option to the next. This has been going on for a number of years, and indeed on July 1 we'll be completing the last major plank in this reform, in that we'll be introducing market-based timber pricing in the interior of British Columbia. This is paramount for the future of the industry, particularly with respect to the mountain pine beetle crisis we have in the interior of B.C. whereby the standing value of our mountain pine trees is declining and is expected to decline over time. The resulting impact will be lower lumber recovery factors, higher manufacturing costs, and a net decline in the value of the timber.

The agreement we've seen and the language we've seen in the term sheet around anti-circumvention, as somebody said earlier, basically represents a policy freeze for all of Canada. It will be impossible for any jurisdiction in Canada to amend its stumpage formulas, to introduce programs to rationalize industry—say, worker transition—to attack the mountain pine beetle crisis, for example, unless of course the net result is that your costs will go up. This whole agreement is designed around a framework that says that your costs are frozen in time today, and they can only go one way. They can go up, but they can't go down.

Therefore, our first concern is that the anti-circumvention clause must recognize that in jurisdictions with market-based policy reform underway or implemented or about to be implemented, that clause must recognize those reforms.

The second issue we have with the agreement concerns the cash deposits. The term sheets we saw said the U.S. would get the lesser of 20% or $1 billion. The final term sheet guarantees the U.S. $1 billion U.S. in deposits. I do not believe there is $5 billion on deposit right now, excluding interest; therefore, the Americans are likely to get more than 20%. I find this unacceptable, and we need a reconciliation of the final numbers around cash deposits.

The third issue we have is the running rules—option A or option B. A jurisdiction is going to have to pick which road it's going to go down, obviously: tax or quota. But the actual implementation of option A or option B, the actual rules by which we will be governed over time as to how the tax scheme or the quota scheme will work, need a lot of work.

We have been working diligently, cooperatively, constructively with our provincial government drafting original material on running rules, sharing it with people in Ontario, sharing it with other industry associations in B.C.

But I must say, as Mr. Chevrette said, sometimes I feel as though we're negotiating with our own federal government in terms of their concerns over “administrative simplicity” versus the reality that the industry must have a commercially viable set of rules. We feel that these option A, option B rules must be set on a prospective basis so that companies know what market conditions they're going to be facing going forward. It doesn't make sense to us to be retroactively penalizing behaviour from two or three months ago. So that issue must be resolved, and resolved to the point where the Canadian lumber industry, the shippers of lumber, must have some certainty as to what the business framework will be, going forward.

Last but not least, we are very aggressive and feel strongly that the litigation we are involved in right now must carry on. We've been asked from time to time whether we'd agree to the suspension of certain cases, and for the most part we are saying that the litigation must carry on.

In summary, we are still supportive of the agreement, subject to these details being worked out to our satisfaction. We are working aggressively, as I said earlier, and cooperatively with our government, with the federal government, in trying to get the details worked out, but at the end of the day, this agreement must make commercial sense for the Canadian lumber export industry.

Thank you.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you very much, Mr. Allan.

I'll now ask Mr. Cameron to speak.

[Russ Cameron, President, Independent Lumber Remanufacturers Association]

Thank you for inviting me here today.

You're about to hear from a group that wants you to forget this deal and finish the litigation. I represent the Independent Lumber Remanufacturers Association in B.C., called the ILRA, but more accurately, I represent the non-tenured companies in B.C.

It's not well understood that our forest industry consists of two very distinct sectors. The first sector consists of tenured companies that have an assured supply of wood fibre, with stumpage priced administratively in various ways. The second sector consists of the non-tenured companies that buy their wood fibre on the open market, and I represent that second sector.

The ILRA consists of about 100 non-tenured companies, and when not curtailed—which we have been for the last few years—we have over 4,000 employees and $2.5 billion in annual sales on 4 billion board feet. We sawmill, we remanufacture, and we wholesale. Our markets are all over the world, but our primary market is the U.S.A.

Today I am going to put three hats on. I'm first going to speak for Canadians, then for general forest industry people, and then for non-tenured forest industry people.

As a Canadian, or as Canadians, if we do this deal we're going to lose NAFTA chapter 19—and it won't just be lost to us, it will be lost to all Canadian industry. We believe we almost had this dispute wrapped up. We had won on the Byrd amendment at NAFTA; we had won on injury at countervailing duty and anti-dumping; and we were basically in the middle of doing what seems to be necessary these days to force U.S. compliance.

Even the B.C. government can see that in the worst case, it would have taken only 18 to 24 months to finish up, which seems relatively short after the length of time we've been at this. There are many things that could have ended earlier, and we think you should finish it to preserve chapter 19 and make the U.S. live up to its treaty obligations. We think it's unwise to do a new deal with someone who doesn't respect the one we already have, and unless we finish it, we think we're doomed to repeat all of this in seven years without the aid of chapter 19.

We don't believe that the coalition will be successful in another case. We're not too sure that the political will is even there. We think that the United States doesn't like the WTO, because they are just another nameplate there and they want to be the big guy in FTAs, which they're negotiating all over the world, as you know. Those other countries are watching the relationship with us and they're telling the U.S.A., if you do that to them, what are you going to do to us?

We have a growing lobby in the U.S. I think the U.S. press is finally beginning to get it, as we're seeing articles in some substantial magazines and papers down there, such as The Wall Street Journal, etc. As someone said, we had the National Association of Home Builders and Home Depot onside, which now feel betrayed and are furious with us. The NAHB has even recommended that their members get their wood from overseas.

As for the coalition, if we do this deal, we're paying their legal costs, we're providing a return on investment, we're ensuring them future membership, we're ensuring that they've got future funds, we're ensuring that we get a future case, and we're ensuring that we fight that case without the aid of chapter 19. If we win the litigation, we don't think the coalition will be able to get another case together, and even if they can, with the precedents established by finishing the litigation and with Canadian forest policy change, we don't think they could get levels of duty that we would even care about, or find punitive.

As Canadians, we think that doing this deal was very short-sighted and that it will affect all Canadian industry.

Now, speaking as members of the forest industry in general, we used to speak of this deal as consisting of the policy changes leading to free trade, and the quotas and border taxes were called the interim measures. I don't know what happened, but now the interim measures are the deal, and there is no exit to free trade. There is a vague clause that we will talk about it, and the U.S. says that any policy exits we find during the deal are going to be moot at the end of the deal.

The coalition wanted a quota, so we gave them a border tax and a quota, and then, as our competitors, we also gave them $1 billion to put in their jeans and pay the costs they've incurred in beating us up. We avoid Canada's legal victories at NAFTA and WTO; we terminate the cases we're winning; we agree that the return of part of our money is not a precedent for the next case; and we suspend the rights of Canadian companies under NAFTA chapter 11.

Why would we want to trade a 10% duty that the U.S. is having trouble maintaining, where we can ship as much as we want, where we can get all our money back in six to 24 months, where we can preserve chapter 19, where we can set legal precedents, and where we can discourage future cases for a 10%-or-higher tax, with a quota, where we give up a billion, have no chance to get back what we pay for the next seven years, lose chapter 19, lose all the legal precedents, and almost guarantee a future case? And what industry comments do you hear about all these problems in the newspapers? To borrow an Enigma title, “silence must be heard”.

Speaking as a non-tenured forest industry representative, what's this dispute about? It isn't about companies that purchase their fibre at arm's length. This isn't about companies that buy fibre on the open market, in competition with American companies. This dispute is about renewable tenures and administratively priced stumpage. It could be solved in a heartbeat if all the tenures were handed in and everyone just bought the wood on the open market, as we do. To quote the coalition from their last proposal:

The settlement accord should provide that a province's adoption of fully open and competitive timber and log markets would automatically result in lifting of interim measures for that province. Absent fully open and competitive markets, however, the nature of criteria on the basis of which interim measures would be reduced or lifted remains in question.

Given that we're no longer discussing interim measures, it seems the tenured companies have decided to keep their tenures. We have no problem with that. If we had renewable tenures, we would likely make the same decision. If the financial benefit of having renewalable tenure and administratively set stumpage is greater than what you have to pay to keep it, then pay it, and we would do the same.

The ILRA only begins to have a problem when our government forces us to pay part of the cost of keeping what we don't have. The business conditions and costs that you wish to impose on us right now are too much for us to bear. The Government of Canada thinks we'll be fine if it folds over a couple of the nails on our bed of nails. They think that simply reducing the costs we bear will make us healthy. They offer exclusive right to pay tax on a first-mill price, and then the U.S. tries to negotiate it all away. There are just too many problems.

And on that first mill, according to the U.S.A. you don't get first mill if you have a close supplier arrangement. You have to have an existing secondary manufacturing facility, no new entrants, you have to be continuously engaged, and have been, in producing and exporting. First mill is not really the first mill of the lumber, according to them; it's the total input volume divided by output volume. You pay tax on the freight. Remanufacture, the lumber definition, eliminates almost all the products, certainly everything on this side of the Rockies. And tenure would include, in their minds, the sealed cash bids under our new B.C. timber sales, the data from which is used, or is going to be used, to set the prices on the tenured stumpage, and on and on. All this stuff essentially negates our use of our first mill, which is the only thing that we had in this agreement. It wasn't enough anyway.

As of this writing, we're right in the middle of a 10% tax bracket, or 15% for a region that exceeds the quota, assuming we're under A. The tax looks like it will change every month. There's a good possibility that we're going to be paying the 50% retroactively.

In the remanufacturing industry we serve niche markets. Drawing and remanufacturing takes time, and we're not going to be able to price our products. When you look at all the permutations and combinations, there are eight different possible tax rates, ranging from 0% to 22.5%, three different values for calculating an entered value of $500 U.S. in first mill—

[The Vice-Chair, Bloc, Pierre Paquette]

Mr. Cameron, I'll ask you to wind up, please. You've taken more time than was allotted to you.

[Russ Cameron]

—and the Government of B.C. wants to exempt private logs, which are under control of the tenured companies with which we compete.

Okay, we'll skip some of this stuff, then.

We basically have three options, and one is to ask you to have the tenured companies hand in all the renewable tenures and bid for the wood fibre. Obviously that's not going to happen. We could ask you to have them bear the entire cost of retaining the renewable tenures by exempting us and making them rely upon the open market to try to pass that cost on—which is what we've been trying to do—and it looks like that isn't going to happen. Or we can ask you to provide the aid package that the federal Conservatives had, we thought, promised prior to the election, and finish this litigation.

So bottom line, when we consider it as Canadians and as members of the industry and as non-tenured companies, we urge you to reject this framework, implement the aid package, and finish the litigation.

[The Vice-Chair, Bloc, Pierre Paquette]

I now ask the representative of Abitibi Consolidated, Mr. Weaver, to speak.

[John Weaver, President and Chief Executive Officer, Abitibi Consolidated]

Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, let me begin by expressing our appreciation to the committee for providing this timely opportunity to testify on a matter of importance to Abitibi Consolidated. Let me begin with a short overview of Abitibi Consolidated.

As Canada's largest forest products company, we are North America's leading producer of newsprint and groundwood papers. As well, we are a major producer of wood products—the largest, I might add, east of the Canadian Rockies. Our 13,500 employees in over 40 manufacturing facilities in four Canadian provinces and multiple locations in the United States supply our customers in close to 70 countries. However, the United States is our largest and most critical market, for all of our products. We are also North America's largest recycler of old newspapers and magazines and are committed to sustainable forest management of over 40 million acres.

Over the last five years, we have been impacted by significant increases in stumpage and harvesting costs, a 100% increase in energy costs—I'm sure all of you are aware of this when you fill up at the gas pump—and as manufacturers have had to absorb an unprecedented strengthening of the Canadian dollar, from 63¢ in January of 2002 to approximately 90¢ today.

But let's focus on the reason we're here today. That's the impact of duties levied since 2002 and continuing to this day. For Abitibi Consolidated they amount to $231 million U.S.

As a company we have weathered this “perfect storm” by setting our sights on being a low-cost producer. As a result, we have made some difficult decisions to strengthen our portfolio of assets by closing marginal mills; we've had to sell selective assets, aggressively cut costs, significantly reduce our debt, and develop new products, all in our continuing effort to meet the challenges of our time and restore our company to profitability.

Having said all this, as CEO I remain confident in our future. Our industry in Canada can and will rebound. Paving the path for our future requires pragmatic decision-making. It is in that vein that I appear here today, a voice of support for the softwood lumber framework and with admiration for the steps taken by government. We thank you for moving forward and building on the previous government efforts at both the federal and provincial levels, which contributed to this framework we have before us today.

The framework is a practical solution. Negotiations require give and take. No side gets all it wants; it would be nice, but it is not realistic. The draft is “what the traffic will bear”. It provides orderly trade for seven to nine years and a return of approximately 80% of all Canadian deposits and it establishes clear rules for future trade, which we will never have if the dispute continues. It reduces business risk by eliminating current unpredictability. It provides stability and represents regional differences within Canada, bringing practical solutions and flexibility.

For example, options A and B represent a pragmatic approach to provincial concerns, a creative solution that should bring the provinces together. The framework is designed to provide for the needs of east and west. We can live and hopefully survive under its terms.

Of course, it remains critically important to continue discussions and negotiations to be sure we safeguard our interests. The framework is an important and constructive step, and we need to be sure we see the process through with vigilant focus on details. There is much yet to be done, and we continue to rely on government to give industry a fair and just final agreement, which will allow us to grow and prosper under its terms. Until all the i's are dotted and the t's are crossed, we must maintain maximum leverage and not compromise on our legal bargaining position.

Those who seek to debate abstract principles and legal theories miss the point. This protracted dispute has been far too damaging. The fact is, we must be practical and accept reasonable solutions to the problems we face if we are to ever put them behind us. It is not enough to be wrapped in principle. The framework is not perfect, but we live in a real world, not a perfect world. It is time for the Canadian industry to hold together and secure the details of a final accord.

Details need to be negotiated, such as the caps for option B and true arbitration of the anti-circumvention clause. We cannot afford to be purists, but we can be practical and tough negotiators.

Cut a deal now, because our negotiating leverage is highest. This deal in fact builds on previous proposals and reflects our legal victories. We have won the Byrd amendment. We have won the NAFTA countervailing duty case. We have won cases at WTO that will benefit us beyond the softwood lumber dispute.

This is the right framework at the right time. If we don't move toward settlement now, this occasion may not present itself again for a long time, at a high cost to Canada. Again, the softwood lumber framework positions the Canadian industry on a sound base for years to come, with a much more predictable trading climate. The timing is right.

Thank you very much for your time today. I look forward to joining the panel in addressing your questions.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you very much.

I'll now ask Mr. Lopez, President of Tembec, to speak. Over to you, Mr. Lopez.

[James Lopez, President, Tembec]

Thank you, Mr. Chairman.

Honourable members, ladies and gentlemen, it's a pleasure to be able to speak to the committee this afternoon about the subject that's critical to my company as well as to a number of other people who are in this room today.

I am going to keep my comments somewhat brief, and I'll be pleased to answer your questions when I've completed them.

First of all, here's a quick overview of my company, Tembec. We employ approximately 10,000 people globally, and 8,000 of those people are employed in Canada, with about one-third employed in our lumber business. Tembec has significant lumber operations in British Columbia, Ontario, and Quebec, and we have other pulp and paper and engineered wood operations in Alberta, Manitoba, and New Brunswick. So we feel we are in a somewhat unique situation whereby we can talk about a pan-Canadian solution, because we touch so many provinces that this agreement is going to cover.

We're here to talk about the softwood lumber trade dispute. Some of us refer to it as “Lumber 4”, because it's the fourth time around for this thing. We all know that this dispute has gone on for over four years and has caused significant financial damage to a number of people, a number of organizations that are operating in this industry. It has gone on a long time, and a lot of people believe it needs to be settled.

I believe it can be settled, but it has to be settled fairly for the industry, fairly for our employees, and fairly for the communities where we operate.

Right now we have a framework agreement, and there is going to be a lot of discussion—I guess there was on Monday, and again today—about this agreement. Is it perfect? Of course it's not perfect. To me, perfect is unencumbered, unrestricted free access and free trade with the United States. That's what we all want, to the very person, in this room.

The challenge we have is we're not here today to talk about unencumbered, unrestricted access to the U.S. market; we're talking about a framework agreement that's ultimately, potentially, going to end up in a trade agreement that will govern how we trade softwood lumber with the United States for the next seven to nine years. The challenge is we have only two pages to work with; that was the initial framework. We have to take those two pages into dozens and dozens of legal and commercial documents.

I have stated publicly, representing Tembec, that I think an agreement is possible based on that framework, if we get the details and the mechanisms right and embedded with this agreement. We have to get it right the first time, because we won't get a second kick at the can.

How are we going to accomplish this? A loud message to government is that we have to have extensive and ongoing consultation with the industry: with our associations, with our legal counsel, and with the companies. That's the only way we're going to get it right, because we're the people who have to live with this thing for the next seven to nine years.

In doing this, first of all we must avoid any further dilution of our position. I think Mr. Elliot Feldman outlines it correctly. This industry and this country have had numerous victories through NAFTA and WTO, and it is a shame that in a sense we'll be throwing in the towel if we put this final agreement together.

But I think the reality, is if we're going to work within a framework that's going to ultimately get us a deal that will govern us, we have to get mechanisms in there and we have to take this one opportunity, this unique opportunity, to strengthen the mechanisms that are going to be put in this agreement.

Part of this agreement, we all know, indicates that we have to leave $1 billion behind to the United States. I don't know about you, but I find this extremely distasteful: $1 billion of our money, that is rightfully ours, is going to be left there. Some people are calling that the price of the deal, and I guess if you're pragmatic you have to say, yes, it is the price.

There are some good things that the $1 billion will go toward. For example, it is going to go toward building housing for people who need it in North America, and for this industry it's good because there is significant money that will go toward initiatives that will expand the market for lumber and other wood products throughout North America. Who can argue with that? My only argument is that we're paying for it. We think our American counterparts are going to benefit as well. We think they should chip in to pay for this initiative.

We think, given the significant compromise we make in leaving duty deposits behind, we cannot tolerate or accept what happened the last time we settled this trade dispute, which was a protracted period before this money was paid back to the companies. We insist, and we need the government to insist, that if we come up with an agreement that is liveable, the money comes back to the companies that have paid it within 90 days. I think we need to draw a line in the sand, ladies and gentlemen, and make that position very firm with the United States: 90 days.

I have a few other key points about the agreement. I agree with the people who have spoken here today and on Monday that Canada should work towards preserving our legal wins to date. They are significant; they are precedent-setting, and can serve this country well going forward.

This final agreement, if it comes to be, should contain concrete policy exits that will allow provinces to change their policies appropriately to get towards true market pricing mechanisms that we would all agree represent free and fair trade of our timber in the provinces. And we have to have a truly independent arbitration mechanism to judge whether the policy changes that are made can lead towards an exit and, ultimately, to free trade.

We also believe that Canada should continue all its litigation with vigour, as Tembec will do, until this trade deal is worked out. We do not think that we should compromise one bit on where we are with litigation and on the steps going forward, until we're certain we have a deal.

This trade agreement, or lack thereof, has cost my company $100 million a year for the last four years, up until the end of December, when the duties finally dropped. This has been significant to my company, to my shareholders, and ultimately to our employees, and has done financial damage to our organization.

But there is another issue I want to take the opportunity to highlight before this committee, even though it's not directly related to the softwood trade dispute. It reflects on our ability to trade in softwood lumber. We are extremely concerned about what's happened with the Canadian dollar. It's no secret that over the last two-plus years, the foreign exchange rate with the United States has increased over 40%. This change over the last two years has had an $800 million impact on my company alone. The trade dispute's impact has been $100 million, and foreign exchange $800 million. John talked about the perfect storm; that's our perfect storm.

We don't think that governments directly control foreign exchange rates, nor should they, but the Bank of Canada does have an influence on the foreign exchange rate by what they do with their monetary policy. And we think that the Bank of Canada has to understand that there are a lot of threats to the Canadian economy that are much greater than inflation at this point in time. So we urge the government to recognize, and we ourselves want to send a loud signal, that what's happening with the foreign exchange rate—albeit a trend that global markets are going to dictate—can be moderated with responsible monetary policy.

Thank you very much for the opportunity to address this committee. I'll be happy to take questions.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you very much.

I'll now ask one of the two representatives of Canfor Corporation to take the floor. Mr. Séguin or Mr. Higginbotham.

[Ken Higginbotham, Vice-President, Forestry and Environment, Canfor Corporation]

Mr. Chairman, thank you for the opportunity to be here. We appreciate the invitation by you and other members of this committee.

Let me begin by introducing my colleague next to me, François Séguin, the general manager of Bois Daaquam, a company that we own and a border mill in Quebec.

As some of the others have done, let me begin with a little bit of background on Canfor. Canfor is a leading integrated forest products company based in Vancouver, British Columbia. The company is the largest producer of softwood lumber and one of the largest producers of northern softwood kraft pulp in Canada. Canfor also produces kraft paper, plywood, remanufactured lumber products, oriented strand board, hardboard paneling, and a range of specialized wood products at facilities located in British Columbia, Alberta, Quebec, Washington State, and North and South Carolina.

We employ approximately 9,300 people directly and indirectly, with operations in 16 communities in B.C., Alberta, and Quebec. We produce about 5 billion board feet of lumber annually in 14 sawmills.

Over the past 10 years, Canfor has invested significantly in our supply-chain management systems to target the home building and retail lumber markets in the U.S. Our business strategy relies on a stable and predictable trading relationship with the U.S. to allow us to serve our customers south of the border.

The results of the strategy have led Canfor to become the largest supplier of lumber to Home Depot, Lowes, and Centex Homes, and other established customers in the U.S. market. This position of preferred supplier is based on long-term relationships with our U.S. customers. Today, approximately 70% of Canfor's lumber production is exported to destinations in the U.S.

There is no question that the absence of a lumber agreement with the U.S. hurts our industry. The uncertainty of litigation and the punishing impacts of the duties have drained resources from our company financially, and have occupied the time of executive members of the company who would otherwise be focusing on our core businesses. This hurts our bottom line and makes it difficult to undertake the long-term business planning that is necessary for our company to grow.

Although litigation results have largely been in Canada's favour, it is obvious that the rule of law is not binding in the instance of softwood lumber. Our neighbours to the south have managed to prolong court proceedings and have become masters of the appeal processes, thereby delaying absolute decisions in this case.

The U.S. Department of Commerce and the U.S. trade representative have made it very clear that they will exercise every avenue of appeal to protect the interests of lumber producers in the U.S. Realistically, this will push the horizon for a solution even further into the distance.

A clear win in litigation also does not prevent the possibility of yet another challenge by U.S. producers or, as you have heard it referred to, Lumber 5. This prospect does nothing to establish certainty for our industry and is therefore unacceptable.

The term sheet signed by both the Canadian and U.S. governments on April 27 is a major step forward. It represents the establishment of positive negotiations between our two governments, which began with the previous administration in Canada and have carried on under the current one.

Is the proposal perfect? No. Does it give us everything that we might want? Of course not. But the question we should be asking is, does it represent a compromise that bridges the gap between two long-standing adversaries and establish long-term certainty for our industry? The answer to that question is yes. In the words of British Columbia's premier, Gordon Campbell, "We should not let the pursuit of a perfect deal prevent us from agreeing to what can be considered a good deal".

Canfor has, for some time, encouraged provincial governments and the federal government to take the lead, to show courage and achieve agreement. Eventually, governments had to realize that no agreement based on negotiation was going to be achieved that would make every company in every region of the country totally happy. We applaud the Government of Canada and the provinces for bringing us to this point.

Canfor has the largest amount on deposit at the U.S. Treasury, approximately $760 million U.S. This is a significant amount of money that is not being invested and that is not creating shareholder value or enhancing the communities in which we operate. Under the agreement, after taxes, Canfor should see approximately $460 million Canadian make its way back to the company. This money will not simply go into general revenue for Canfor; it will be put to work investing in our mills, establishing new strategic markets, creating shareholder value, and enhancing the communities in which we work. The return of these duties will help Canfor provide stable, long-term employment for employees in communities across the country. To not take advantage of this opportunity, to be blunt, would be a disservice to our hard-working employees and to shareholders, who have entrusted our board and our executive with pursuing a deal that provides value.

As I mentioned before, this deal is not perfect. There are policy and timing issues that need to be worked out, but let's not stand in the way of allowing the two governments to negotiate these sticking points, and let's judge the agreement once it is final. The process being followed in fleshing out the agreement is allowing ongoing input from provinces and the industry. At Canfor we believe that the policy issues outstanding have been clearly identified and can be solved.

In conclusion, honourable members, I suggest to you that we embrace the opportunity we have before us. I have been on this file far too long not to know an opportunity when it presents itself. Litigation is a long road, fraught with endless appeals and offers no guarantee of victory. What we have before us, although not perfect, is far better than the alternative.

Thank you very much.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you very much.

Our last speaker will be Ms. Sarah Goodman. I turn the floor over to you. You have seven or eight minutes.

[Sarah Goodman, Vice-President , Government and Public Affairs, Weyerhaeuser Company]

Thank you for having me here today.

I also want to thank both the current government and the previous Liberal government for your respective roles in reaching the April 27 framework. This framework is the result of years of hard work and political and legal positioning; thank you for your leadership.

Before I talk about Weyerhaeuser's position, I thought it would be useful to provide some background on our company. We have a significant footprint in Canada, with more than 6,000 employees. We've operated here for more than 40 years and are one of the largest softwood lumber producers in the country, with eight company-owned and one joint-venture sawmill. These sawmills are located across four provinces: B.C., Alberta, Saskatchewan, and Ontario, so like some of the other companies here today, we represent multiple regions in the country and are therefore looking at this deal from a pan-Canadian perspective.

To be clear, although we are headquartered in the U.S., Weyerhaeuser is not a member of the Coalition for Fair Lumber Imports and does not support the trade action; we oppose it.

With a foot in both countries, we have worked to act as an honest broker, working to bring people together on both sides in support of a long-term negotiated settlement.

When making our decision to support the April framework, we asked ourselves two simple questions: first, is the agreement workable? Second, is there a better alternative?

On the first point, although the agreement is complex, we do believe that with appropriate attention to the details in crafting the final agreement, the agreement is workable. It is an agreement that provides important certainty about the running rules going forward. On the second point, we do not believe there is a better alternative.

For those reasons, and pending review of the final terms, Weyerhaeuser supports the agreement and is working constructively with industry and government to ensure the final terms are commercially viable.

We support the framework, as others have said today, not because it is perfect--it isn't--but because we knew from the outset that the complexity of the issue and the divergence of interests meant a perfect settlement that satisfied everyone was not attainable. At the end of the day this agreement represents a compromise, with neither side walking away feeling victorious.

We have always believed a resolution could only be found with a high degree of political will on the parts of both the Prime Minister and the U.S. President. We believe it is important not to take this political will for granted. There is no certainty that such an opportunity will present itself again in the coming months--or even years.

For whatever reason, the stars recently aligned to create the opportunity to negotiate a settlement.

The other alternative to the settlement is simply to continue with the litigation. While we believe litigation is an important tool, we do not believe this dispute can be fundamentally resolved by litigation. By the time all the appeals are exhausted, we could be several years away from a legal resolution.

There is always litigation risk, no matter how strong Canada's case may seem, and of course in U.S. trade law, there is nothing preventing the coalition from immediately starting up Lumber 5 just as soon as market conditions would permit.

The bottom line is this: we believe the framework is the best option for the Canadian industry and for those who rely on its viability. We don't believe the Canadian government could have extracted significantly more from the U.S.

The longer the dispute drags on, the more harm is inflicted, and with a rapidly rising dollar and other competitive challenges before us, we can't afford to continue to devote the significant resources required to keep this battle going. Our time and efforts are better spent finding ways to enhance competitiveness to the benefit of all Canadians.

As we look to achieving a final settlement, our efforts are now best spent working together to ensure that the final agreement is workable and that important details affecting the commercial viability of the agreement are attended to.

Thank you.

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you very much.

I propose to the committee, since we have about 45 minutes left, that our first round be of 10 minutes instead of seven, even though a number of speakers from the various parties will share those 10 minutes. I don't believe we'll be able to do a full second round of five minutes.

Let's proceed in that manner, if you are in agreement, which will enable us to cover all of the concerns that have been raised.

Without any further delay, I'll ask our comrade Mr. LeBlanc to take the floor.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chairman. You known I've been called worse names than that.

First, I thank the participants, who have taught us a lot today. This is a group of people who have broad knowledge of the industry and have for a long time, and who have differing points of view. That is the great appeal of this kind of discussion. I myself learned a lot, and I thank you all for your comments.

If any time remains after my two questions, I will turn the floor over to Mr. St. Amand. If you could answer my two questions quite briefly, that would enable us to get somewhat different perspectives. My first question is for Mr. Chevrette.

I got the impression that you had some concerns about the consultations that took place or are taking place with the industry.

Many of you have expressed support for the deal; some of you have reservations; some of you are more opposed. We've heard that from different groups this past week.

I'm worried that many of you have told me privately that you're concerned about the government's consultation with the industry, in terms of how much time you're given to respond to various drafts of potential legal texts. Do you feel that you've been included adequately in terms of your consultation with respect to very complicated details, which remain to be determined? Are you satisfied that you're adequately involved as the details are worked out with our government? I'm speaking about the federal government. Obviously the provincial governments have different responsibilities with respect to their own industries, and that's a separate issue.

The second question, Monsieur le Président, would be, do you believe there is a bit of a rush to finalize a deal? Mr. Emerson, in some comments of his, had said that the final legal text or the more complete legal text might take 60 to 90 days. We read a week or two ago that there may be a draft in the next 30 days, or by mid-June. Now that we have a framework agreement, I worry that the rush to get the details may in fact mean that for seven years or nine years thereafter, perhaps we might find that hadn't tweaked a particular clause or a particular element.

Mr. Lopez, regarding your comments about the dollar, I'm hearing the same thing in Atlantic Canada that I represent. There's a real concern that as the dollar is going up, the price of lumber may go down. At the same time, the export tax could go up, and you're getting U.S. dollars back at a much different rate than you put them in. You know the industry better than I'll ever understand it, but I worry that the rush before we think through these kinds of things might mean that the anti-circumvention clause, for example, will paralyze the government from helping our industry in a difficult position. Have we given an effective veto on changes to forestry practices? I think Mr. Milton and a few others have talked about their concern there. So do you think we would benefit from taking our time? I don't mean another five years, but maybe 60 to 90 days, as Mr. Emerson had originally said.

[The Vice-Chair, Bloc, Pierre Paquette]

The questions have been put to some of you. I simply want to mention that we have seven minutes left for your answers. So I ask you to be brief and precise.