International Trade Committee on Feb. 10th, 2011

[Ed Holder, Conservative, London West, ON]

I appreciate it.

It feels like a general response. I know I'm out of time, and I guess my only comment is I should probably have been more specific in terms of the question, because I felt, respectfully, that the answer is kind of a feel-good response but wasn't as hard-hitting or specific. And perhaps that's the fault of the questioner, not the responder.

[The Chair, Conservative, Lee Richardson]

Probably.

Do you want to respond to that?

[Michael Rooney]

My apologies.

[The Chair, Conservative, Lee Richardson]

Okay.

Monsieur Carrier.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chairman.

Good morning, madam and gentlemen. I have a few questions about the softwood lumber agreement. It's an important agreement for Quebec. I would like to take advantage of my time in committee to clarify certain points that come to mind.

The London Court of International Arbitration has questioned the programs of Ontario and Quebec. Unless I'm mistaken, the decision has been made. It is probably very unpleasant for businesses that benefited from those programs to be taxed after the fact. I think that calls the credibility of certain programs into question.

How does that agreement work in Canada? Does each province administer it in its own way and then go to arbitration, or are the programs coordinated in advance to avoid unpleasantness and reversals?

[Laurent Cardinal]

The court's decision came in response to a complaint filed by the US government respecting specific programs of two provinces, Ontario and Quebec. Consultations were conducted prior to the arbitration filing. The list of programs questioned by the United States was longer than the list of programs attacked by the United States. It was the Americans who decided which programs, in their view, were consistent or inconsistent with the agreement. Once they had formed an idea about compliance or non-compliance, it was up to the court to decide.

In the case of the programs attacked by the US government, three Ontario programs and six Quebec programs were targeted. The court determined that two of the three Ontario programs were not consistent with obligations under the agreement, as well as three of the six Quebec programs. In short, not all the programs were found to contravene the agreement.

I'll now address the question of coordination. When the federal and provincial governments consider putting programs in place, they always ask each other whether those programs may be perceived by the Americans as inconsistent with Canada's obligations under the agreement. A review is then conducted by the people responsible within each of the governments. The governments also talk to each other to ensure that the approach, in the interpretation of each of the governments, is consistent with Canada's obligations under the agreement.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Does the government give the green light for the implementation of those programs? If they are coordinated in advance, does the government, upon its analysis, accept all the programs? Does it rule that they are consistent with the agreement?

[Laurent Cardinal]

No, the programs put in place by the governments of Ontario and Quebec are provincial programs. Their introduction does not have to be authorized by the federal government.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

To avoid having these businesses questioned or taxed after the fact, don't you think these programs should be reviewed more closely in future with regard to Canada's responsibility under the agreement as a whole?

[Laurent Cardinal]

Those discussions took place, Mr. Carrier. In the final analysis, it was the Government of Quebec that decided to implement the programs. The review and evaluation of the programs are discussed in a cooperative manner between the various governments.

Ultimately, each of the governments decides to go ahead or not to go ahead with those programs.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Have you begun to analyze the effectiveness of this agreement, which will expire in 2013? Among your conclusions, do you find that the agreement should be extended, or should we simply rely on NAFTA without there being a specific agreement for softwood lumber?

In other words, did knowing the impact have a beneficial or negative impact on the Canadian industry?

[Don Stephenson]

The formal evaluation of the program and agreement will be undertaken this year to consider the issue of renewal or renegotiation of the agreement in 2013.

The other part of the question concerned—

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Have you concluded that the agreement will have to be extended?

[Don Stephenson]

Quite recently, we began consultations with the industry and the provinces on the issue of the program's renewal. The process has started.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you.

Do I have any time left?

[The Chair, Conservative, Lee Richardson]

No, I'm sorry.

Okay, we have gone on a little long, but I'm going to have two more quick ones.

Very short, Mr. Cannan, then Ms. Hall Findlay just to wrap it up. Very quickly.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair, and thanks to our witnesses here this morning.

Interprovincial trade barriers are something we've been working on within our own country to break through some of the trade irritants. From the wine industry, that's one Mr. Moeser has been helping me from...and Taiwan, when I was there last year. We're going to try to get our Canadians to be allowed to be able to purchase our goods and services.

With regard to the regulatory review. Mr. Stephenson, I think you said it's a two-year program. Who's on the committee, or how is the selection process taking place? Is industry going to be at the table?

[Don Stephenson]

The process has not been fully decided. When they introduced the program last Friday, the Privy Council Office indicated they had not yet decided who would represent each of the departments in the process, but that the Privy Council, Treasury Board, and the Department of Foreign Affairs and International Trade would lead the initiative on regulatory cooperation. I am anticipating that would be my group in the department, the trade policy and negotiations group.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

And you figure about a two-year timeline?

[Don Stephenson]

Yes.

Our first challenge is as per the announcement, to meet bilaterally within 90 days with the United States to agree on terms of reference and a work plan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Just to clarify, Mr. Julian had talked about the softwood lumber agreement, and in my constituency Tolko mill contacted me, and I've talked with other foresters, and they said it's the best agreement the industry has ever seen to help them provide the stability.

Could you maybe clarify some of the success we've had with the agreement? There seems to be a difference in interpretation across the table. My understanding is we've had a 90%-plus success rate in our negotiations.

[Don Stephenson]

With respect to the three arbitrations, what would you call the last decision on Ontario and Quebec programs?

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I thought it was 97%.

[Don Stephenson]

But we lost on 3%, so how you characterize that is in your hands--

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Well, if I went to school and came home with a report card of 97%, my parents would be pretty happy. As a matter of fact, they'd be shocked.