International Trade Committee on June 4th, 2021

[Colin Barker]

Thank you for the question.

I'm not aware of a specific expert panel that has been formed to look at those particular HS codes.

We do work on behalf of specialty product producers. In fact, we did have a recent victory for cedar shake and shingle producers in which we were able to get their products excluded from the duty orders completely by working closely with the industry on that issue. That was one recent victory in which we were able to exclude an entire category of products from the duty orders.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Barker.

Madam Chair, through you to either witness, please, it was a little bit disconcerting for me when I heard the minister say that they are looking at other opportunities such as Australia and offshore.

This is for either witness. Does that mean perhaps there's really no hope for the Canada-U.S. softwood lumber agreement? Could they perhaps expand on that and let us know if they have personally received direction from the minister's office and the Prime Minister's Office to look at further opportunities for Canadian lumber?

[Arun Alexander]

Thank you very much for that question, honourable member.

Madam Chair, the United States is the largest single market for Canadian softwood lumber exports, and I expect that it will remain so. We will work very hard to reach an agreement to remove these unwarranted tariffs from Canadian softwood lumber exports.

I think we also work hand in hand to look for other markets for Canadian softwood lumber and forestry products to export to. I'm talking about markets in Asia and Europe.

Maybe I will ask Rosaline Kwan, who is with the trade commissioner service, to speak very briefly about what we're doing to find other markets to help Canadian exporters.

[Rosaline Kwan, Director General, Trade Sectors, Department of Foreign Affairs, Trade and Development]

Thank you, Arun, and thank you, Madam Chair and honourable member.

Of course, as part of the trade diversification strategy, the trade commissioner service works very hard to help Canadian companies, including those in the forest industry who are so vital to our economy, to be able to look at markets—whether in the U.S. or around the world—to bring all the opportunities that they could tap into and link them up with these opportunities.

In that regard, of course, we have the established traditional products. As you may have heard, we also help the Canadian forest industry companies tap into the innovative side of bio-based and wood-based products for markets around the world, including in Europe, Asia and the United States.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much.

Madam Chair, again through you to either of the witnesses, it has been roughly 18 months since I sat on the international trade committee. Basically, we were told not to worry about it, to leave it out of CUSMA, and that we were going to get a deal done. I understand from my other colleagues that this has been since the early 1980s, and I'm not here to throw blame; I'm here to get a job done.

I have a final question, please, through you, Madam Chair, to our witnesses.

When was the last time government officials actually sat at the table with our U.S. government officials—and I don't mean politicians—to hash this out and give direction back? Could I please get that answer?

[Arun Alexander]

Canada has been very clear, right from the Prime Minister to the minister and senior officials, that Canada is always open to having discussions to settle the softwood lumber issue. We've made this very clear to the Americans.

The minister last raised softwood lumber when she had the Free Trade Commission meeting with Ambassador Tai about two weeks ago. I understand the Prime Minister has made this very clear in meetings with President Biden. The avenues of discussion are always open, and we welcome the United States to join us in a discussion to settle this dispute.

[The Chair, Liberal, Judy Sgro]

Ms. Bendayan, you are next for five minutes.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Madam Chair. It's a pleasure to see Mr. Lewis back at the international trade committee.

I would like some clarification from our officials. I did not catch the minister identifying Australia in particular as a market for diversification of this particular sector. I did ask a question about what markets we might be looking at for our forest industry.

Could officials clarify? Are there specific countries we are looking at, or are we looking at all options?

[Arun Alexander]

The answer is that we are looking at all options. We look everywhere to find markets for Canadian forestry products, and that could be in Asia and Europe. We are very open to finding avenues in order to help Canadian exporters export their products to anywhere in the world, and we look for key markets that can be most successful for Canadian exporters.

[Rachel Bendayan, Liberal, Outremont, QC]

From a legal perspective, I understand that lawyers at international trade, representing the government, have been studying this issue very closely for some time now, and believe that Canada has nothing to be concerned about in terms of respecting our obligations under CUSMA.

Even though our preference, of course, would be for a negotiated settlement with the United States, our government is prepared to use the tools that are available to us under CUSMA's chapter 19 in order to advance our position and resolve the matter.

Could you take us through what a chapter 19 dispute would look like?

[Arun Alexander]

I'll ask Michael Owen, our lead litigator, to answer that question.

[Michael Owen]

A CUSMA chapter 10 binational panel essentially takes the place of a court in the first instance under U.S. law. That court is the U.S. Court of International Trade. The CUSMA panel, which is formed with three members from one country and two members from another, essentially steps into the shoes of the U.S. court and determines whether or not the U.S. Department of Commerce's determinations are supported by substantial evidence, or otherwise, in accordance with U.S. law.

If they are not—if the CUSMA panel finds there is insufficient evidence to support the U.S. findings or that they run afoul of U.S. statutes or regulations—the panel will remand the decision back to the U.S. Department of Commerce for correction.

It's a type of judicial review under U.S. law. There may be a series of determinations and remands between the panel and the U.S. Department of Commerce before we have a final outcome.

[Rachel Bendayan, Liberal, Outremont, QC]

Of course, I said chapter 19, but that was under NAFTA, and now it is chapter 10 under CUSMA.

Mr. Owen, obviously this is a question hated by lawyers, but how long, approximately, do you think that this type of dispute would take before arriving at a decision?

[Michael Owen]

It's really difficult to say. There's a separate record for each segment of a proceeding and investigation, and then an administrative review. There is an evidentiary basis the panel has to review.

Typically, we would expect maybe two to four remands, with the period growing shorter with each remand and redetermination. An agency might receive a fair amount of time the first time issues are sent back to it, and usually the agency returns with a determination the second time. It's then challenged anew by the Canadian parties. There are probably fewer issues, so it's also given a shorter amount of time by the panel to comply with the decision.

Based on—

[Rachel Bendayan, Liberal, Outremont, QC]

During that time, are the measures in place? The measures continue to be in place, I assume.

[Michael Owen]

The measures continue to be in place.

The one big advantage of a CUSMA review is that, to the extent that the duty is ultimately reduced at the end of the process of the remands and redetermination, the money is refunded with interest to the Canadian industry.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

You have 50 seconds, if you're quick.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

As a result of that short but complete explanation of the process, I wonder if you could let us know your best advice in the circumstances. Is it to conclude a negotiated settlement or, should we need to, would you be pushing for litigation under CUSMA?

[Michael Owen]

I think we've consistently approached this issue through litigation and attempted to secure wins through litigation to build pressure on the United States to return to the negotiating table, to be at the negotiating table, but we're always open to negotiations and discussions.

I think the high price of lumber potentially may lead to that in the future, but there's no one-size-fits-all way to resolve this long-standing dispute with the United States.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Mrs. Gray for five minutes, please.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Madam Chair.

Thank you to all of the officials for being here today.

We know the facts are that since October of 2015, when our last softwood lumber agreement expired, production in Canada decreased almost proportionate to increases of production in the United States. This is a real concern when you look at these trend lines, because mills have closed and we're losing jobs to the United States.

We heard today from officials and from the minister that they've been raising the issue with the U.S. and that they're open for discussion with the U.S., but I will go back to a question that my colleague Mr. Lewis was asking. To any of the officials who can answer this, by direction of the government, how many softwood lumber negotiating meetings have you had since 2015, since we haven't had a softwood lumber agreement?

[Arun Alexander]

Thank you for the question, honourable member.

From the Prime Minister to the minister to senior officials, we take every opportunity to raise the softwood lumber issue with the United States. At any opportunity we have to raise the issue and to indicate our willingness to enter discussions on a fair and equitable negotiated deal, we take that opportunity.

The last time I understand the issue was raised was by Minister Ng herself with U.S. trade representative Tai, and that occurred on the margins of the Free Trade Commission meeting. I believe that was on May 17.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Through you, Madam Chair, raising the issue is not the same as having a meeting where you sit down, go through all of the details, hash it out and have a negotiation. Are you saying that there have been no meetings, no sessions like that, since we've last had a softwood lumber agreement expire?

[Arun Alexander]

Thank you for the second question, honourable member.

We take every opportunity to indicate our willingness to engage in meaningful discussions on this issue. We've made it clear to the United States through the Prime Minister, through the ministerand through senior officials that we are willing to engage in fruitful discussions that will result in an agreement that's fair to Canadian forestry workers, Canadian forestry communities and the Canadian forestry industry, and we will maintain those open channels for discussion.