International Trade Committee on Dec. 6th, 2012

[Don Davies, NDP, Vancouver Kingsway, BC]

The canola industry met with me recently and said they have the same problem.

[David Lindsay]

Yes. Rail is important. Some of our friends would say that if you have a highway close to town, then you're not a captive customer. Well, that may be theoretically correct, but 8,000 trucks coming out of Kapuskasing on Highway 11 in Ontario is just not practical.

[Don Davies, NDP, Vancouver Kingsway, BC]

What do we need to do—

[The Chair, Conservative, Rob Merrifield]

No, I think that's it for time.

I really like this questioning, though, for two things. If your program gets put into the next budget, it sounds like we're going to get unanimous support for that budget, so that's great. It sounds like the legislation coming forward next week is going to be supported, which is very good.

Mr. Keddy.

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

Thank you, Mr. Chairman, and welcome to our witnesses.

Mr. Shory wanted one question. Rather than run him out of time, I'll let him ask his question first and I'll take the rest.

[The Chair, Conservative, Rob Merrifield]

Oh, such kindness. It must be Christmas.

Go ahead, Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you.

I have one quick question for Mr. Lindsay.

You touched on newsprint. As a matter of fact, a few of the business entrepreneurs who are interested in supplying newsprint to India have been juggling for years. There is such a huge demand today, even with all the tariffs, they were willing to invest hundreds of millions of dollars into some sick plant here, and they could not find any opportunity.

If the tariffs were reduced, would you be able to meet the supply? I mean, you are not meeting the supply today.

[David Lindsay]

The short answer is that if it's not economic to ship, our shippers won't ship it. If the customer is willing to pay a price to extract and process the newsprint, certainly we can meet much more demand than we're meeting right now.

The initial national tariff on newsprint coming into India is 10.3%, and then each province adds its own tariffs, and then each city. Mumbai has an access fee. It's not just the national tariffs that are causing the increase of prices.

The demand for newsprint is wonderful. We want to respond to that demand, and I believe we can respond to that demand. But it becomes so expensive to bring it from Canada, and to add all those tariffs, that if they're not willing to pay the price for it, then our companies won't be supplying it if they can't get the price to pay the costs.

[The Chair, Conservative, Rob Merrifield]

Go ahead, Mr. Keddy.

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

Thank you, Mr. Chairman.

One of the great challenges with negotiations with India you just touched on, Mr. Lindsay, and that's the federal level of negotiations, and then the state and city levels, is the overlapping and overlayering of the tariff and regulatory regime.

One of the great assets we have in the forest industry in Canada I think is often overlooked. It doesn't matter whether we're looking to export product or plastics or cellulose or pulp to India or the European Union, but for years we suffered a lot of pain in the forest industry to go through and verify our log and our timber stream, whether it came from Atlantic Canada or whether it came from western Canada.

We were very successful in doing that. We know the origin of all the logs. We did that deliberately in Atlantic Canada, because that way we avoided countervailing tariffs. That should bode well for us in increased timber exports to the European Union. They make a lot of noise about.... You used the words “green”, “clean”, and “renewable”. Part of that sustainability is proving that you have sustainable practices, and proving where that piece of two-by-four or pulp came from.

How important is that to future negotiations? Perhaps you could expand on that a little.

[David Lindsay]

That's an excellent question.

I have neglected—and it's totally my fault—to formally introduce you to Isabelle Des Chênes. She is our vice-president responsible for the trade file. She worked with our member companies and the government to help promote, through the LEAF program, the good story we have to tell. We thank the government for its help in telling the good story about the forest practices in Canada.

As an association, I believe ours is the only forestry association in the world that requires its members to commit to have a certification process for their forest management practices. There's a number of certification processes. In regard to Canada, I believe, and Isabelle is going to help me with the exact number, that something like 41% of the certified forests in the world are here in Canada. We have a brand. The Canadian brand for forest products is among the best in the world.

That's just in managing the forest. There's the chain of custody, which you referred to. Where did that tree come from? Is it from a certified forest? Is it processed in such a way that you don't have effluent going into the rivers and you don't have pollutants and NOx and SOx going into the atmosphere? It's not just what's happening in the forest; it's what happening right through the value chain.

As I said, as part of our Vision 2020, we're committed not only to promoting the good practices we have, but also to increasing those by some 35% so that we continue to have that brand.

[Isabelle Des Chênes, Vice-President, Market Relations and Communications, Forest Products Association of Canada]

If I may quickly add to that, illegal logging is an issue in India. Protecting and conserving the forest resource over the years is something that India has been very faithful to. It has even implemented government policies which suggest that any new government buildings cannot use wood in terms of their construction in order to help conserve that resource.

From our perspective, we think Canada presents a terrific opportunity in being able to provide certified, legal, and sustainable supply because of those traceability requirements that we do hold.

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

Thank you.

[The Chair, Conservative, Rob Merrifield]

You have about 30 seconds, if you want it.

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

Just thank you to the witnesses for their answers.

[The Chair, Conservative, Rob Merrifield]

Very good.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

He gives me the 30 seconds, right?

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

That 30 seconds—

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, folks.

[The Chair, Conservative, Rob Merrifield]

You don't want 30 seconds...?

[Wayne Easter, Liberal, Malpeque, PE]

On the railway service agreement on which the chair indicated there was a response in the House, it's coming forward, but at the end of this session, sadly, because it will be February before we're back. In my view, as Don said, we are getting a lot of complaints from the agriculture industry and from the mining industry on the service.

We'll see what the legislation looks like, but at this stage, I almost think the railways have the government like a puppet on a string. That's a concern to me, because the railways have not provided the service, and I'll say it on the record, CP especially has not provided service this year, from what I'm hearing.

To go to the Vision 2020 proposal, this question would be for all three of you. I think you indicated that trade is more than trade. There's the whole question of 60,000 people being needed with certain skills.

One of my pet peeves with the way that trade agreements are being handled.... Let's get an agreement, but I think we need much more than an agreement. What's the industrial strategy behind the agreement, from the government side, that's going to add the value in Canada, whether it's education at the provincial level or skills training at the federal level, whatever it might be, and design the industry in Canada so that it can take advantage of the agreements that are signed? What would some of those areas be in the realm of India from the perspective of your industries, both manufacturing and forestry?

[Jean-Michel Laurin]

I can start.

That's a very good point. When it comes to trade deals, it enables companies to grow their business in international markets. It opens up the space, but companies need to be able to take advantage of it.

One of the big concerns we have in some ways, you can almost see it as a nice problem. Many countries would like to have this problem right now. We have all these investments, for example, in the natural resource sector, but also in other parts of the Canadian economy, that are going to be driving economic activity in the next few years. We're in a situation where we already know what the demographic curve looks like. We know there will be a considerable number of Canadians retiring and leaving the job market, and we don't have a sufficient number of people filling those jobs.

So the skills aspect is very important. We have members telling us that it's great we're opening up all these markets, but they're quite concerned that they're not going to be able to find the people they need to grow business in Canada. Some companies have been looking to invest in other countries partly for that reason, because they know they can source the labour they need to staff their operations. Ensuring we have a forward-looking skills development policy in Canada is very important.

There are a lot of positive measures that have been undertaken by this government, and provincial governments as well, to make sure.... Especially for us, it's mostly around skilled tradespeople. We're having a really hard time finding skilled tradespeople. There are some initiatives that have been under development. Some of them have been in place. I think the government has been improving the temporary foreign workers program which a lot of companies have been using. That is a stopgap solution.

There's no silver bullet, but that is one of the top issues, if not the top issue, Canadian companies will be facing in the next five to 10 years. We're already seeing some pretty acute skilled-labour shortages. In fact, half of our members who responded to our survey indicated they are currently facing skilled labour shortage, so it's already an issue for a lot of companies.

[David Lindsay]

That's an excellent question, Mr. Easter.

There are so many avenues I could pursue, but the skills challenge is one. Jean-Michel has covered that, so I won't go there.

I didn't get a chance to fully talk about transportation and some of the challenges there in getting our product out of the forest to the mill, from the mill to the ports, and from the ports to the markets, whether it's India, China, or elsewhere. Transportation infrastructure, and the governance of the transportation infrastructure, is a challenge.

The best way to tell that story is with an anecdote. One CEO I was speaking with just the other day told me they had their product sitting on the loading dock waiting to go. It was going to a B.C. port. Because the railway—I won't name the company—had a lot of cars from its other customers already coming by, and they were a couple of hours late, they thought in order not to slow down the process they would just go right past the loading dock of this forest company, because they wanted to make up time. That is referred to in the railway industry as the public good. You must give consideration to the public good, because we have all these other customers on our railway cars.

I don't disagree that we always need to be conscious of the public good. However, what if you were the mayor of a town and the bus was running a little late and the bus happened to have on it some people who were tired and wanted to get home from work and the bus driver decided to leave a little old lady standing at a bus stop, because for the greater public good, he was going to take everybody else to their destination? Why does the little old lady bear the burden of the public good and not the person who is running behind schedule?

I know this is not the railway committee, but I thought I would tell you that story.

[Wayne Easter, Liberal, Malpeque, PE]

It definitely does tie in, because you can't do the trade unless you have the ability to deliver the product on time and are reliable.

How is my time?

[The Chair, Conservative, Rob Merrifield]

You have less than 30 seconds.