Absolutely, Mr. Chairman. Thank you very much.
And thank you to the committee for this opportunity to contribute to your deliberations and study of Bill C-2.
I just want to give you a quick sense of who we represent. We're the Forest Products Association, the national voice of Canada's forest products industry in Canada, with integrated lumber, pulp, paper, and other products forming the mix.
By way of introduction to the industry from an economic standpoint, we represent about 12% of Canada's manufacturing GDP. We directly employ 240,000 Canadians and, indirectly, another 366,000 Canadians across the country. Given the rural nature of the industry, we of course are a huge economic foundation of about 200 Canadian communities from coast to coast.
An instrumental component of our economic strength and long-term viability is our ability to sell into markets outside of Canada. Indeed, about $24 billion worth of our product goes to markets outside of the country. That's well over 50% of the products we make. That makes us the fourth largest Canadian exporter and the most successful forest products exporter in the world.
The lion's share of our product, as most people would know, goes down to the U.S. market--about 70% of our products. Another large part goes to Asia, to China, India, and other Asian countries. About 16% of what we produce goes there. Another 6% goes to Europe. The remainder goes to other countries around the world, including those in South America. For that reason, we find that our opportunity here to contribute to these deliberations is an important opportunity in that it obviously presents a chance for us to grow that success.
Members of this committee and other parliamentarians are of course very familiar with the economic challenges this industry has faced over the past couple of years. We've seen a number of mill closures and job losses and, of course, the communities are gravely affected by this. Many of you have communities in your ridings that have been directly affected by the challenges that this industry has gone through over the past couple of years.
There are some bright lights on the horizon. There are some signs that the industry is picking up. We've seen a growth in demand for lumber. Prices have gone up accordingly. We've also seen a growth in pulp demand, with prices going up there also.
It's too early to tell right now whether this is a short uptick or a long-term trend. Nevertheless, the industry continues to plan for when markets do rebound. We expect them to rebound and we have put in place a four-point strategy that will help or position the industry to be ready for when markets do come back.
First and foremost, it's incumbent upon the industry itself to invest and improve its productivity. We've done so, even throughout this economic downturn.
A second component is to continue to improve our environmental performance and our forest management practices. We've done so. We want to be able to leverage those improvements and practices in a marketplace that is increasingly using environmental criteria as a criteria for buying.
For that reason, if I might just open up a side bracket, we're pleased with the inclusion in this agreement of a separate agreement on environmental priorities, where it has identified both forestry management and sustainable resource management as priorities for cooperation between the two countries.
A third portion of our strategy going forward is looking to maximize the resource, to get as much out of the fibre, out of the tree, as we possibly can. A major portion of this is integrating the new emerging bio-economy, bio-products, and bio-energy into the existing product lines--again, to get as much value out of the tree as we possibly can and minimize the waste.
The fourth--and I put it fourth because it gives us a proper segue--is to grow and expand our markets. Seventy per cent dependence on the U.S. market is a bit too heavy. We see what can happen when you get tied up into a softwood lumber war. We'd like to diversify those markets and expand them elsewhere.
Bill C-2, this agreement, serves as a good example of how those markets can be expanded and of the potential there, so let me give you a sense as to what the potential is. The potential is mostly on the pulp, paper, and paperboard side of things--very little lumber. It looks to us like it's not exactly a culture that builds with lumber, unfortunately; maybe there's some work that can be done there, but let's say that's not part of what we can talk about today.
Overall, Colombia imports about $740 million annually of forest products. I think what's interesting about this is that we're seeing a 13% annual growth in that number. That's a significant marketplace that is growing annually.
There are three core areas where we see opportunity here.
One is in the newsprint business. They import about $60 million annually in newsprint. We represent $41 million worth of that, so that's the lion's share of it. Right now that is tariff free. The advantage this trade agreement will give us is that it will put in place the zero tariff for the foreseeable future, which gives us some security and a long-term security in terms of our marketplace.
The second area is the pulp area. Colombia brings in about $125 million worth of pulp annually. Again, we're seeing about a 17% growth per annum in that import number, so that's a growing market for us.
We're not at play in that marketplace, arguably because we're facing about a 5% to 10% tariff on that, whereas our competitors from Brazil and Chile, who enjoy not only geographical proximity but obviously have no tariff, have much greater access to that marketplace. Getting our tariff down to zero will at least put us on the same footing or level playing field with our core competitors from Chile and Brazil.
The third and probably most important area is the uncoated paper and paperboard product lines. Colombia imports about $450 million of this annually. Again, it's growing. We ship only about $12 million worth of that product into that marketplace. The other big players there are Germany, the U.S., and Brazil.
Germany and the U.S., like us, are faced with about a 10% tariff on their products going into the marketplace. This agreement would bring ours down to zero, obviously giving us a huge leg up on our immediate competition out of the U.S. and opening up a potential market of $450 million in this product line. It will also let us undercut Brazil, which is another one of our major competitors.
We see those three market areas as presenting enormous potential: $740 million in potential. While it may not seem like a big number if you put it on a national scope, the reality is that a lot of the products we are sending down there are coming from certain regions of the country.
Most of the newsprint side, for example, comes from Quebec and Nova Scotia. So you can see that when you're shipping $41 million from one specific region, you're talking about keeping a couple of mills open for a longer time.
Any time we have a chance to open up new markets or expand markets we welcome that. For that reason, we're very supportive of Bill C-2 and what it aims to do. We encourage you to support the bill likewise.
Again, thank you very much for the committee's time.
I will be pleased to answer your questions in French, if you wish.