Mr. Chair, members of the committee,
my name is Gaston Poitras and I'm here as the chairman of the Atlantic Lumber Producers.
I appreciate the opportunity to address you today on an issue of vital importance to the Atlantic Canadian lumber producers and the thousands of employees in the rural communities that depend on our mills.
First, with regard to the Atlantic Lumber Producers, or ALP, I would like to begin by introducing the group. Following the decision by the Nova Scotia and New Brunswick governments to remove the softwood lumber agreement file from the Maritime Lumber Bureau, our group was formed to specifically focus on the lumber trade issue. Our membership represents 95% of the lumber produced in Atlantic Canada. Since the formation of ALP in the summer of 2015, our group has been working very closely with the four Atlantic provincial governments on the lumber issue.
It must be noted that three U.S. agreements refer to a Maritimes' exclusion. However, the scope of the exclusion is actually applicable to the four Atlantic provinces. For the remainder of my time, I will, however, continue to refer to the Maritimes.
To give you an overview of the lumber forestry in the Maritimes, our region accounts for only 2.5% of the softwood lumber consumption in 2015. Despite the fact that the softwood lumber from our region was exempt from the export measure under the 2000 softwood lumber agreement, the absolute volume of softwood lumber produced, exported from our region to the United States, dropped from 1.5 billion board feet in 2006 to an average of approximately 1.1 billion board feet between the years 2010 to 2015. While small in comparison with the U.S. market, our forest product accounts for almost 12,000 direct jobs, primarily in rural communities throughout the Maritimes.
Next is the history of the softwood lumber trade agreement. Over the course of four separate U.S. CVD proceedings during the last 35 years, the Maritimes have been excluded from tariffs or any other trade restrictions. In fact the U.S. trade representatives and the U.S. Department of Commerce have never alleged that the softwood lumber production in the Maritimes was subsidized. The main focus of the four U.S. CVD proceedings has always been the allegations by the U.S. Lumber Coalition regarding the subsidized price paid in the Canadian provinces for crown stumpage. As most of you know, crown stumpage is the price paid to the province for the right to harvest standing trees on crown lands.
The main reasons for the Maritimes' exclusion and the lack of allegations related to the stumpage include that fact that the Maritimes have a high percentage of private land. Over 50% of the wood supply comes from private land. Stumpage rates from crown timber in the Maritimes are based on a survey of arm's-length private market price. The crown stumpage rates in the Maritimes have been, and continue to be, the highest in Canada. In fact, based on these factors, U.S. trade officials at the last softwood lumber proceedings recognized the Maritimes as establishing a model benchmark for accountability related to crown stumpage.
In terms of accountability for fair market stumpage evaluation, our provincial governments established stumpage rates based on independent, market-driven surveys of timber harvested from private woodlots. That same system has been in place, but for certain small adjustments, since before the four lumber CVD investigations. The Maritimes continue to improve the survey to ensure that stumpage values are based on the most accurate, comprehensive, and up-to-date data on prices charged by the private landowners. As an example, New Brunswick is now building a comprehensive database of private stumpage transactions that is based on data from all seven forest product marketing boards and other purchases of private stumpage.
This will mean more accurate and timely data, permitting annual calculations of private stumpage prices from a significantly larger data set. This will be an improvement over the past surveys that were based on a sample and done only every three years, with indexing for interim years. To ensure the accuracy and credibility of this approach, New Brunswick engaged the service of an independent third party firm, PricewaterhouseCoopers, to audit and verify the stumpage data and the analysts' reporting of the fair market prices.
Our region's ongoing commitment to improving the system for the established crown stumpage pricing for accuracy and transparency continues to justify the Maritimes' exclusion. Addressing the risk of circumvention that was required in the last SLA case, the Maritimes, by virtue of our process, geography, and a requirement of the last softwood lumber agreement, established rigorous controls to prevent circumvention by other provinces of lumber exported to the U.S. Specifically, for the last 15 years the Maritimes softwood lumber producers have maintained a certificate of origin program ensuring that softwood lumber product exported from the Maritimes to the United States, or further processed in other province and exported to the United States, originates from sawlogs harvested in the Maritimes. While the certificate of origin is no longer legally required because of the expiry of the SLA last October, the Maritime softwood lumber producers are voluntarily maintaining the program, which continued to be administered through the Maritime Lumber Bureau.
In conclusion, in January of this year the provinces of New Brunswick, Nova Scotia, P.E.I., and Newfoundland sent a letter to International Trade Minister Freeland supporting the consensus of the Canadian industry that a new softwood lumber agreement will provide the predictability and stability necessary to protect against a continuation of the endless legal battles that have been ongoing between the U.S. and Canada, and support the overall objective of ensuring that border measures do not apply to softwood lumber exports by Atlantic Canada to the United States. We also wish to go on record with the committee as supporting Canada's negotiations for a fair deal for our country, while recognizing the Maritimes' unique circumstances. Our history of significant private land ownership, along with a rigorous and recognized market-based process to establish stumpage rates, continues to justify the Maritimes' exclusion.