International Trade Committee on May 14th, 2009

[The Chair, Conservative, Lee Richardson]

That's been taken care of. Thanks, Mr. Keddy. You can appear as a witness next week.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much, Mr. Chair.

I'd like to thank our guests for attending today. I really appreciate the value of your comments. I wish I could ask you all a series of questions.

I have a comment first. Mr. Weir, your comment about looking to see Canada exempted from the buy America policy resonates with me. I just want to offer that as a comment. Unfortunately, I can't get into much more with you right now, because there are a couple of other things I want to ask.

First, Mr. Myers, you provided a four-step plan. Your fourth step struck me as a bit interesting, and I won't lie, I'm nervous about it. That had to do with the Canadian municipalities' position specifically in terms of Halton Hills and your comment that you felt that it provides a strong leveraging position for Canada in the United States. One of your comments, in response to a question, was that the threat of retaliation has some resonance. I'm just wondering if there is not a risk in taking that approach. Do you really believe we could win a protectionist war with the United States?

[Dr. Jayson Myers]

No, I don't think we could. I don't think we want to go there. But I can tell you that it's the only issue, in building allies in the United States in the business community and among business associations, that can say that these buy America provisions should not be in legislation. It's the only issue that draws attention and puts those allies together there.

I don't want to see a protectionist war going on. I think that's the very last thing we want to see. I think the government, though, can legitimately say that these protectionist sentiments are growing in Canada and that buy America provisions do not help this; now, how can we work to avoid it?

[Ed Holder, Conservative, London West, ON]

I would say that when our delegation went down to Washington, we certainly indicated, as well, that it was not helpful and that from our standpoint it challenges the tenor of the dialogue we're trying to have.

That's a great segue into a question I have for Mr. Feldman. As all of you know, we have more than three dozen states within the United States for which Canada is the largest export market, and as their biggest trading partner....

Mr. Feldman, I would like you to build on something. You said in your comments that we need to build allies. You weren't sure about hiring former ambassadors, which was an interesting comment, but you said that we need to establish business connections. I'd like you to elaborate on that as specifically as you can within the limited time. At one point, I was a little confused. At one point, you said that NAFTA has been a failure but that on the other hand, you're not trying to get rid of NAFTA; you're trying to find, I'll say, a new way to do things.

In specific terms, what would your suggestions be for us in terms of creating those relationships so Canada's voice can be heard clearly, not just in the states but obviously right in Washington itself? Do you mind responding?

[Dr. Elliot Feldman]

I'd be delighted to respond, although it's a very big menu you gave me. But I thank you for the question.

I don't think Canada has a longer-standing better friend in the United States than I have been for the last 35 years, but I'm also very critical. One of the things I'm critical about is the difficulty Canadians have, in my view, of understanding the United States in a visceral way.

It's a very different political system. It is not a parliamentary system, as someone over here remarked. There are 585 members of Congress, and they all have their own agendas and their own need for money and their own way of running. Our political system is a completely different system. It means needing to see things for advantage from an American perspective.

For example, on this question of the cost of procurement, why not do an analysis that shows what it's costing the United States? You're all inclined, very understandably, to say, “Look at all the mills we're closing, look at all the jobs we're losing.” There are no Canadian votes in Congress. None of those 585 members care that you're closing mills and losing jobs. What they do care about is that the President is now cutting programs, knows he had an overstuffed budget, and has to find some savings.

The buy American provisions are costing money. They're expensive. This 25% provision instead of 6% in the traditional buy American provision is a very, very expensive provision that made its way through the Senate version of the bill and into law. So when you do your analysis, instead of examining what it's costing you, analyze what it's costing us, what it's costing Americans, what it's costing the United States. Put that kind of research forward.

Begin to tell the story as a story of a partner who's trying to help—because you're always going to be the junior partner, you're never going to be senior partner, and no, you're never going to win a trade war. But if you partner, if you use your imagination, you have better financial institutions than the United States has. Where have you been for the last eight years in initiating some imagination so that the United States didn't find itself in the difficulty it was in, and then when this crisis happened there was no North American response?

That is part of my indictment of NAFTA: there are no NAFTA institutions to have facilitated any North American response. We don't have the institutions to take advantage of Canada's strengths; we don't have the institutions to take advantage of strengths together between Canada and the United States. That's why we need new institutions. Those new institutions can come about through a new treaty that focuses on the agenda of the 21st century. I've mentioned what those items are, but in a specific and concrete way, do the research a different way; answer a different set of questions. Answer the questions that Americans are going to care about, not the questions you naturally have to care about but aren't going to have any traction with in the United States.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Julian, you have three minutes.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Chairman, on a point of order, we have a speaking system here. In the second round, we go to the Liberals, the official opposition, for five minutes; to the Conservatives for five minutes—

[The Chair, Conservative, Lee Richardson]

We're quite aware of that, Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

—to the Bloc for five minutes; and then back to us for five minutes. There has been no change in the speaking order. I didn't hear anyone ask for a change in the speaking order. We have a motion that we're supposed to have settled by 11 o'clock, so I'm not quite understanding what's going on here.

[The Chair, Conservative, Lee Richardson]

I'd be happy to explain it to you at some other point.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

There already is a system decided by the committee.

[The Chair, Conservative, Lee Richardson]

Right now, you're wasting the time of the committee, Mr. Keddy, and I'd like to get through this.

We'll take three minutes and then go to your motion.

Mr. Julian.

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

Thank you, Mr. Chair. I won't take the three minutes. I appreciate that Mr. Keddy wants to get through his motion.

Very briefly, Mr. Feldman, you talked about the costs of continuing with the softwood lumber agreement. It could be in the order of $900 million to $1.4 billion in upcoming litigation that the Canadian taxpayer would have to cough up.

What would be the legal costs of our ending the agreement and going back to secure the kind of access to the American market that we had on October 13, 2006, with the decision of the Court of International Trade? I'm trying to compare that $1.4 billion to what the potential legal costs are to actually get back to the decision that we threw away.

[Dr. Elliot Feldman]

And to punctuate that, there's already a significant legal cost. Your leader in British Columbia remarked the other day that she didn't want to be paying lawyers on softwood lumber. Well, the country has been paying a lot of lawyers a lot of money. They represent the provincial governments and the federal government in this arbitration. It's a lot of money. You ought to look up some of those numbers. You haven't escaped legal costs.

As to the consequence of a termination, first you should know that the coalition in the United States asked, almost a year ago—last August—to terminate the agreement. The Bush administration refused. It's expected that sometime in the near future they will ask again and that the Obama administration will not refuse. So this agreement is going to be terminated, sooner or later, by somebody.

The issue has been the peace clause in the agreement. Would it mean that trade restrictions would be imposed right away? If the United States terminates the agreement according to the agreement, then there's a peace clause for a year. If the Canadians were to terminate, there would be no peace clause. But if the United States were to terminate on the basis of a breach, then the peace clause no longer would apply. That's what we expect the coalition will ask the government to do, so you would see an action right away anyway.

Your biggest problem is that to get into the U.S. market, paying 15% tax, you're all dumping—probably at significant margins. So you face a new hurdle, because on October 12, when this agreement was entered into force, you were paying less than 11%, not 15%--even before the court ruled. Now you have a problem of high dumping margins, but there's a bigger problem, which is that your market share is now only 29%. The International Trade Commission had found no injury caused by Canadian imports into the United States at 34%. Therefore, even if you're dumping at high margins, it will be very hard for the coalition to make a case that you're causing injury. Without injury, there are no tariffs to be applied.

So the answer can't be complete. You'd have to test it. But it's possible that you would return to free trade.

[The Chair, Conservative, Lee Richardson]

Thank you to all our witnesses. I'm going to have to ask that we wrap up quickly here, because we have to go.

Thank you again for your appearance today, and thanks to all of our committee for their questions as well. Thank you very much.

I'm not going to take time to go in camera, because we have a quick motion to be dealt with here.

Mr. Keddy moves that the clause-by-clause study of Bill C-24 be completed on Tuesday, May 26, 2009, and that the bill be reported to the House at the first opportunity.

It's seconded by Mr. Cannis.

Is there any discussion? Mr. Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

First of all, Mr. Chairman, I don't think that's necessary.

I would like to know what the deadline is for tabling this kind of motion. I'm asking the clerk. The deadline is indeed 48 hours, isn't it? It seems to me that's not 48 hours. I wasn't here on Tuesday, when it should have been introduced.

[The Clerk of the Committee, Mr. Jean-Marie David]

If I understand correctly, you're asking the question about the 48-hour period.

[Serge Cardin, Bloc, Sherbrooke, QC]

Yes. That's not 48 hours.

[The Clerk]

According to the notes, the 48-hour period actually means two nights, not exactly 48 hours. Consequently, as the notice of motion was tabled on Tuesday, the 48-hour time frame is met.

[Serge Cardin, Bloc, Sherbrooke, QC]

Who took note of that?

[The Chair, Conservative, Lee Richardson]

It's in the rules. It's also at the ruling of the chair, and the chair has ruled that adequate notice was given. If there's no further comment, I'd like to call the question.

(Motion agreed to)

[The Chair, Conservative, Lee Richardson]

I think we had some other business on the visits to Peru and Brazil, but we're going to have to do that another day.

Thank you. We are adjourned.