International Trade Committee on April 12th, 2016

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

Mr. Garneau, I have a question for you now.

A presidential election campaign is under way south of the border. Do you think softwood lumber is an important issue to the Americans?

[Richard Garneau]

People don't talk much about it, aside from the coalition.

Recently, we've been seeing signs of support for free trade in the U.S. I believe the National Association of Home Builders, the National Retail Federation, and the National Lumber and Building Material Dealers Association just put out a press release about that. They like Canadian lumber. I think we now have conditions in Canada that could open up access to free trade. All we need to do is make sure our rights are respected. The fact is Canada won across the board in 2006. When a legal ruling is made, it's merely a matter of enforcing the contract. A signed contract must be complied with.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you kindly.

I'm being told that I have just 30 seconds left.

Mr. Tremblay, if you could propose two solutions, what would they be?

[André Tremblay]

Earlier, we talked about the possibility of building some flexibility into the agreement. The agreement that just expired did offer that, option A or option B. Western provinces chose option A and eastern provinces went with option B.

Obviously, problems vary from province to province. Nothing prevents us from revisiting the idea of a flexible agreement, in other words, one that would satisfy the needs of western provinces, on one hand, and those of eastern provinces, on the other, in terms of the exemption we discussed earlier.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the NDP now, and Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

Madame Trudel will be taking my time.

[The Chair, Liberal, Mark Eyking]

Welcome, Madame Trudel.

[Karine Trudel, NDP, Jonquière, QC]

Thank you, Mr. Chair.

I'd like to thank all the witnesses for their presentations.

My question is for Mr. Tremblay.

I have two questions for you. First of all, Quebec's new forest regime was mainly intended to facilitate entry of Quebec softwood lumber into the U.S. and, by extension, refute the claim that its producers were subsidized. Is that correct?

[André Tremblay]

That's basically what the Quebec government wanted to show by bringing in a new forest regime, and that's what it did. We can say that, since April 2013, so for three years now, Quebec has had a forest regime that meets those requirements.

[Karine Trudel, NDP, Jonquière, QC]

I think we've pretty well covered that issue.

I have one last question for you.

You said the Quebec government was trying to be proactive in changing its forest regime. Why were you never able to go back to the bargaining table even though the agreement provisions allowed for that?

[André Tremblay]

Mr. Garneau brought up article XII. When the new regime was put in place, pressure was brought to bear on the federal government to have it included as an agenda item for the talks between Quebec, the U.S., and Canada. For all the reasons mentioned, neither the Canadian government nor the American government ever had any appetite to address the issue. I sent numerous letters, made plenty of phone calls, and had many meetings in Ottawa with the people in charge at the time. I would say no one wanted to throw sand in the gears, so to speak, when it came to taking a different view of Quebec's situation in light of the changes that had been made. I think that was the most commonly cited reason.

[Karine Trudel, NDP, Jonquière, QC]

Thank you.

My next question is for Mr. Garneau.

We discussed jobs earlier, but I'd like to know how many direct jobs could be affected in the Saguenay—Lac-Saint-Jean region, specifically.

[Richard Garneau]

Off the top of my head, I believe it's close to 5,000 jobs in the Saguenay—Lac-Saint-Jean region, but it's important to consider the bigger picture.

In 2006, just prior to when the agreement came into force, Quebec had 82,000 jobs, and by 2015, that number had dropped to 55,000. That's a decrease of 32%. Let's not forget about Ontario, where things are just as bad. There, they went from 62,000 jobs to 36,000—a 42% decrease. We are talking about people in northern communities who lost their jobs because we didn't have access to the U.S. market. I know issues other than the softwood lumber agreement were involved, but these are workers who were affected. Not only was the industry abandoned, but so, too, were the workers.

[Karine Trudel, NDP, Jonquière, QC]

Thank you.

[Tracey Ramsey, NDP, Essex, ON]

I'll take the remainder of the time.

We know that the 2006 agreement expired in October of last year. Have federal representatives asked Canada's softwood lumber producers for their views about a new softwood lumber agreement, including the provisions that it should and should not contain? If you have been asked, have you been satisfied with the manner and extent to which you've been consulted? You can each answer that.

[André Tremblay]

We are in constant contact with the people at Ms. Freeman's office, as well as the officials in charge of leading the talks. So the answer is yes, we are being consulted. We are trying to find ways of gaining access that aren't necessarily obvious. Different regions in the country have different interests. The proper discussions are indeed under way to try to pinpoint the types of methods I just mentioned.

[Gaston Poitras]

I would support that answer. I think back in December the Canadian government went throughout Canada and consulted with all the provinces and came up with some recommendations. They were getting the pulse; they've done that. From what we know, because they've been communicating with the industry members—maybe not every week, because not much is going on as we speak, but they have been consulting with the industry. You have to understand that the Canadian government has a big challenge on its hands because you have all these provinces and everybody is pulling the covers on this or has a little different spin on how the thing should be dealt with. To answer Mr. Tremblay's remark here, I think they've been at it.

[Richard Garneau]

I also sent my views following a meeting with Minister Freeland. She is very engaged in this file and with consultants. We're insisting on NAFTA. NAFTA is an agreement that has been signed between Canada, the U.S. and Mexico. There is also dispute resolution. With Madam Freeland we insisted that she make sure with chapter 19 that there is a roster of panellists. We also suggested ways to try to deal with a dispute, if we ever are unable to have access to free trade. I think the main concern I had was to make the point for Quebec and Ontario. Ontario is the only province where the residual value system has been tested by the chapter 19 panel. In 2005 I insisted again on this point. In 2005 the panel said that the Ontario producers were not subsidized with the residual value. I think that's important and has been completely forgotten. In Ontario when you look at employment and production, Ontario's production went from 3.5 billion to 1.7 billion. When you're not subsidized and are limited by a quota and you have to pay a tax, then you don't survive. It's that simple. I think I made that point to Madam Freeland, who was listening very intently.

[The Chair, Liberal, Mark Eyking]

Mr. Garneau, thank you very much. We're way over time, but I let it go because you had some good comments and there were good questions there.

We're going to go back to the Liberals. Ms. Ludwig, you're up for five minutes.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Good morning, and thank you for your excellent presentations. I represent New Brunswick Southwest, so I'm going to direct a couple of my questions to my Maritime colleague.

Mr. Poitras, you had mentioned 12,000 direct jobs. That doesn't include all the spin-off jobs. In areas like the Atlantic provinces where we do have large land mass and lots of trees, but a small population, that represents a significant number of jobs that we are focusing on, so thank you for raising that.

The Canadian industry certainly is working to be innovative. As Mr. Garneau had mentioned, there are 40 companies that own U.S. sawmills, so they were looking at different ways to be flexible. How prepared is the Canadian market, particularly the Maritime market, to expand into the Asian area and to produce value-added products?

[Gaston Poitras]

Maybe I could start by tackling the second question on the value-added. We're doing as much value-added as anybody else is trying to do with what you can do with lumber. When you ask me about China, unfortunately China is a long way from where we are. To get there you have climb over British Columbia, because they're a lot closer than we are. They have an easier way to ship their wood to China than we would have. We do ship wood to China from New Brunswick. It's highly specialized wood. It's hardwoods and things like that, but it's more difficult because of our location.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Great. How does the exemption from the 2006 softwood lumber agreement's quota and export tax provisions affect softwood lumber producers in Atlantic Canada?

[Gaston Poitras]

We've been excluded from that, as I said in my presentation, for the last 35 years. Based on the fact we have a high percentage of private woodlot owners in New Brunswick, there are over 100,000 transactions a year. We have information and data that is surveyed and determines the value of the Crown. What makes us different in New Brunswick is the fact we have a high percentage of private land that determines the price of Crown, and that we have free access to the U.S.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Is it accurate to say the Atlantic provinces pay the highest timber costs in Canada?