Thank you, Mr. Chairman.
It is always a pleasure to appear before you to share our views.
It is a pleasure to be here today to present on the Canada-Japan trade partnership.
If you looked at our testimony over the past five years or so, you would see that the industry has gone through some fairly significant economic challenges. If you looked at our numbers five years ago, they would have looked significantly more optimistic than they are today. But I would like to remind all members that despite the bad news about the industry over the past five years or so, the industry still employs directly 240,000 Canadians from coast to coast. It's a more than $54-billion-a-year industry. We are the economic lifeblood of over 200 communities from coast to coast. I know that many members around this table are very familiar with that, as a number of you have constituencies in which our industry is a significant economic player. For that reason, many of you are very familiar with the economic challenges the industry has faced over the past five years or so.
I'm not here today to say that everything is looking entirely rosy, but we are certainly seeing some very encouraging signs out there in the marketplace that the industry is going to be rebounding.
We've been before this committee on a number of the other trade bills or trade agreements that either are being negotiated or have been negotiated. You've heard the story: One of the most important parts of this industry's strategy going forward, as we sort of emerge from this economic downturn, is to continue to diversify and expand our markets beyond Canada.
Right now, of the $56 billion worth that we produce, over half is exported outside of Canada. The lion's share, of course, goes to the U.S., as would make some sense, given the geographic proximity and the ease and the relationship. But increasingly we've been able to diversify away from that marketplace and send more of our product in particular to Asia, which is now the second most important market for the industry. It's in that context that Japan presents a very significant opportunity for the industry going forward.
Somewhat different from other Asian marketplaces, Japan has been a significant client of ours for well over 40 years. They're a wood-building culture, so they have a tradition of building with wood. For that reason it's not surprising to see the numbers that we do have in terms of our shipments to Japan. There is about a $12-billion market overall in Japan in terms of what they import from abroad from the forest products sector.
About $1.4 billion worth of our products go to Japan. The bulk of that, around $935 million worth, is in lumber. So we're shipping lumber there.
One of the interesting things about the lumber that we do ship there is that it's a premium grade lumber. It's called J-grade or Japan-grade lumber. To make an agricultural analogy, it's like taking the beef tenderloin and shipping only that. It's the best part of the tree, the straightest part with the fewest knots. They love it, and they pay a premium for it. From that standpoint, it's a very important marketplace.
We also send a fairly significant amount of pulp there. Of the $1.4 billion, the remaining $500 million or so is in the form of pulp.
In terms of other building products, we're not as successful there, and we would like to be more successful. I think that's why this deal presents a very important opportunity.
All of our products, except for the pulp, face a tariff of anywhere between zero and 7.5%. That same tariff is faced by most of our competitors. Our biggest competitors in the lumber market are found in the U.S. and the Scandinavian countries. So a deal of this nature, which will bring us down to zero on those product lines, is extremely important, because it obviously makes us far more competitive vis-à-vis our main competition from other parts of the world. It will also probably make some of our products, like the particle boards, veneers, and plywoods, more competitive against those of the other competitors that are coming from cheaper producers in places like Indonesia, once we get rid of those tariffs.
Obviously the other part of this is that it presents a fairly strategic play in the Trans-Pacific Partnership negotiations that are ongoing. We certainly support the fact that we're trying to get to that table, but in the event that we're not successful, having this as a bilateral, certainly from a strategic standpoint, puts some pressure on those who are trying to prevent us from getting to the TPP table.
On a final note, one of the reasons we are so successful in Japan is that we have had ongoing government support. Certainly the government has been very helpful in growing the marketplace and supporting not only rebuilding following a disaster like the tsunami, but also rebuilding their economy, as well as helping us share expertise in wood building. We're very grateful for the government support on that front.
On all that, this represents a very important opportunity for the industry. We look forward to growing our market share there as a result of this deal.
I look forward to answering any questions that you may have going forward.
Thank you very much.