International Trade Committee on May 31st, 2006

[Russ Cameron]

Mr. Higginbotham was referring to some of the stuff that I had to skip over. Regarding the company allocation of quota under option B, the remanufacturers were already somewhat curtailed by the old softwood lumber agreement in the late nineties. Then in 2001, we became subject to the ad valorem tax on the entered values, so we were paying duty on our propane for the forklift, and leases, and insurance, and heat, and light, and every other thing.

Our shipments are down 15% to 30% for the average company, and there are some companies that just didn't have the money to be able to post bonds and put up cash deposits and stuff, so they haven't been able to ship at all; they've had to go through wholesalers. If you start allocating individual quotas, then some of those companies are going to get none, and the rest of them will be down 15% to 30%. So it's fatal. Plus, under option B, the hard cap, no matter what penalty you were willing to pay, you can't get it in. You know, once you hit your quota, that's it, you're toast.

Under option A, we're competing with Americans who are using American grown fibre, and there's no tax on that; their government isn't taxing them. We're competing with the Chinese; they're not paying tax. We're competing, in some instances, with Americans who are buying Canadian logs and sawing them up; there's no tax.

We're just not able to do it. Commercially, it just doesn't work for us. How long is it going to take us to die?

[The Vice-Chair, Bloc, Pierre Paquette]

Thank you.

Mr. Lopez, I'll ask you to be brief, because I have to turn the floor over to my colleague Guy André.

You mentioned exchange rates. Reference was made in the committee meeting with Minister Emerson to the possibility that we could adjust the taxes under the agreement based on changes in the exchange rate. Do you think this is a promising possibility?

[James Lopez]

I think it would be attractive, obviously, if you can offset part of the taxes with the currency rates, but the danger is that it could be flipped around and could be worked against Canada, if it's not structured properly. To me, that's not part of the game right now.

[The Vice-Chair, Bloc, Pierre Paquette]

If you have any ideas on this question, the committee would be interested in knowing them.

I turn the floor over to Mr. André, and inform Mr. Feldman that Mr. Emerson mentioned in the House on May 16 that he wanted to get an agreement before the House rose for the summer. So he stated here, in Ottawa, that he wanted an agreement to be reached by June 22.

Mr. André.

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

Thank you, Mr. Chairman.

We're pleased to be meeting with industry officials to comment on this important agreement.

My first question is for Mr. Chevrette. You're in favour of a negotiated agreement meeting four essential conditions. I want to talk to you about the last two conditions. You say the agreement should avoid Lumber V for a sufficiently long period to allow the situation to stabilize. However, you now have doubts after reading certain documents. I'd like to hear what you have to say on that subject.

One of the conditions you mentioned was that Quebec wind up with a fair share of Canadian exports. Is that currently the case?

Does the agreement improve settlement mechanisms for guaranteeing the industry a certain amount of stability, in order to avoid the situation we experienced at the time of the first dispute?

[Guy Chevrette]

I don't want to get into the legal details of all the briefings I had, but I will tell you that we clearly don't want Lumber V. We know the costs that represents and I say that with all due respect to those charming legal men.

This is an enormous and prohibitive cost to the industry, and we think we should have mechanisms that solve the original problems through arbitration. Some factors suggest to us that we can find an arbitration mechanism that will no doubt be just as costly—we're not deluding ourselves—but that may allow greater neutrality and speed. We're talking about a neutral arbitration arrangement.

We all agree on the share of the U.S. market held by the Canadian industry, and we also know the market share of each province. This issue has more or less been resolved in our view.

I'll stop here to turn the floor over to the others.

[The Vice-Chair, Bloc, Pierre Paquette]

So we can answer the questions from my Conservative friends.

Ms. Guergis.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Thank you, Mr. Chair.

I'd like to thank and welcome all of the witnesses for being here today. We appreciate the time you've taken to give us your testimony. Although we don't have the amount of time we'd like to have to ask you all our questions, we really do appreciate the information you've given us. It's great information and it will be helpful for us.

I have a couple of questions. I actually have a number of questions here. I'll try to make them very short in the interest of time. I'm hoping for some short answers. I will direct the questions towards Mr. Feldman. Of course, any witness who wants to is welcome to respond.

First, if Canada were to win the litigation, and the anti-dumping and the countervailing duty orders were terminated, how long would the U.S. industry have to wait before filing new cases?

[Dr. Elliot Feldman]

The industry has to be able to show injury. It's now facing the determination that there is no injury and no threat of injury, and it has to be able to look back over a three-year period in order to demonstrate injury, so it is reasonable to anticipate that no petition could conceivably be filed within the next two years because it would be impossible to demonstrate injury under the circumstances of the case having been applied and the orders having been applied over this period, so there's a security that relates instantly to the fact that because of this case, it's next to impossible to make out a new petition.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

If we were to continue the litigation, how long would it be before the U.S. Court of International Trade would issue a decision in the case seeking to terminate the orders?

[Dr. Elliot Feldman]

As I indicated earlier, the first question really must be with respect to the countervailing duty order, because the panel proceeding and the ECC proceeding should conclude in August. There is no appeal from that. There are no other proceedings from that, so the countervailing duty order should be concluded in August under any circumstances.

The anti-dumping order decision, which relates back to the Court of International Trade with respect to what we call in shorthand the section 129 case now pending at the Court of International Trade, may have been delayed by the April 27 announcement. The three-judge panel convened all counsel last week in New York to inquire whether it should proceed in issuing its decision, because of the April 27 developments. The Government of Canada joined all of the Canadian industry in asking that the decision be issued. Judge Restani operates under a 90-day rule. That means the outside date for a decision from the Court of International Trade is July 3.

[The Vice-Chair, Bloc, Pierre Paquette]

Mr. Chevrette wanted to speak on this subject.

[Guy Chevrette]

I don't want to play the devil's advocate, but it should not be overlooked that a challenge of the constitutionality of the NAFTA treaty was possible, not to mention the disputes that are before the NAFTA bodies and the international trade tribunals. Put all that together.

[Dr. Elliot Feldman]

I think, if I may, Monsieur Paquette--

[The Vice-Chair, Bloc, Pierre Paquette]

Please answer very briefly.

[Dr. Elliot Feldman]

The constitutional challenge has nothing whatsoever to do with the countervailing duty order. It arises out of the case on injury and therefore can't impact it.

[Guy Chevrette]

I understand, but madam was asking how much time it would have taken if we had followed through with the legal processes. I supposed that included all the legal challenge options.

[The Vice-Chair, Bloc, Pierre Paquette]

Madam Parliamentary Secretary, it's your turn.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Let's just go a little bit further down the road here. Let's say that there's a decision and that the U.S. coalition could then appeal to the court of appeals, which they could. What is the average duration of such an appeal?

[Dr. Elliot Feldman]

There's no appeal with respect to the countervailing duty order. It's not available, not possible. That comes to a conclusion in August if the ECC were proceeding, instead of being suspended by the two governments illegally.

As to the section 129 case--

[Helena Guergis, Conservative, Simcoe—Grey, ON]

The questions were focused on our winning the litigation--on continuing with litigation without having the deal in place.

[Dr. Elliot Feldman]

Yes, that's right, and you asked me about both the countervailing duty order and the anti-dumping order. My answer to you is that the countervailing duty order is subject to the NAFTA proceeding--

[Helena Guergis, Conservative, Simcoe—Grey, ON]

But I also asked you, sir, how long would it be before--

[Dr. Elliot Feldman]

And I'm about to--

[Helena Guergis, Conservative, Simcoe—Grey, ON]

--the Court of International Trade would issue a decision in the case seeking to terminate the orders.