International Trade Committee on June 4th, 2021

[Mary Ng, Liberal, Markham—Thornhill, ON]

I want to thank the honourable member. I think this might be the first time we've had an opportunity to speak at committee. It's wonderful to have the opportunity to do this.

I think the tariffs that have been imposed are certainly causing concern for home builders and for consumers. We are, of course, concerned about it from the standpoint of our sector and our industry. Certainly, there is cause for concern. The tariffs just add to the cost. As I said, they are like a tax to the American home builder or consumer who is looking for this product. We are committed to working with the United States on this matter.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Minister, one thing that the steelworkers noted was that many large Canadian companies also have sizable footprints in the United States. For example, Western Forest Products, probably the biggest player in my region in terms of the mills they operate, has a much larger footprint in the United States, especially in the state of Virginia.

Are those companies playing different strategies on both sides of the border here? Are you noticing anything? That was a concern that was raised with me directly.

[Mary Ng, Liberal, Markham—Thornhill, ON]

My team and I are in constant discussion and dialogue with the industry, as you can imagine, because it's very important that we stay very connected. I too have had the opportunity to speak to the steelworkers here in Canada as well as in the U.S. so that I can be informed by the workers' perspective as well.

I think what I would say here is that keeping the supply chain open is what they said was really important to them, and continuing to defend the industry against the tariffs that have been levied, which are unjustified.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Okay, but I'm not sure I got an answer on how companies might be playing with sides, depending on which side of the border they're on.

To follow up on what Mr. Dhaliwal asked, he made reference to U.S. groups that are opposed to what's going on with the application of the duties. These are groups such as the National Association of Home Builders. We know that adding duties to already high lumber prices is going to hurt home construction, naturally.

Just for more clarification, what is the Canadian government doing to identify groups like that? Is it trying to maybe latch on to the lobbying power they have with U.S. elected officials? Is that part of the strategy? Can you inform the committee with more information on that aspect, please?

[Mary Ng, Liberal, Markham—Thornhill, ON]

The answer is yes, we are speaking with and working with both industry and workers on both sides of the border. We're very much taking a team Canada approach. My team and I are in very close contact with both workers and businesses here on this side of the border, and we continue to work at all levels of government, including through the ambassador in the United States, to make sure that we are taking a whole government of Canada approach here to see if we can get to a discussion and a resolution.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Minister.

I maybe have time for one more question. How much longer can Canada afford for this perennial problem to continue? To some extent, our mills are going gangbusters right now with the high prices in lumber, but that's not going to be the case forever. Is there a point at some time in the future where lumber prices decrease to a certain point and these tariffs start applying far more hurt? At what point does Canada have to change its strategy? If you could illuminate the committee on that front, it would be greatly appreciated.

[Mary Ng, Liberal, Markham—Thornhill, ON]

We will keep doing the work to defend the industry against these tariffs and we are ready for a discussion, and we always have been, but the work for the industry, in supporting the industry, has been going on for a number of years under our government. In 2017, when the first U.S. import duties were applied, we invested $867 million for the softwood lumber action plan so that we can help businesses in this sector with the tools to diversify and support them with employee training and so forth, so we are supporting and helping the sector.

It's really wonderful to see that the sector, whether it's in the indigenous forestry initiative or through the investments on the forest industry transformation, is really innovating. They're innovating by creating products that really are also going to tackle climate change and they are doing that here in Canada, creating new products, new innovations, and being able to export them.

[The Chair, Liberal, Judy Sgro]

Thank you, Madam Minister. Sorry to cut you off.

We will go to Mr. Martel for five minutes, please.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Madam Chair.

I would like to thank the minister for being here this afternoon.

Minister, CUSMA was a golden opportunity for the government to negotiate a resolution to the softwood lumber dispute, but that did not happen.

Why did the government sign CUSMA without coming to an agreement on softwood lumber?

[Mary Ng, Liberal, Markham—Thornhill, ON]

I'm not sure I fully understood the question. What I would say is that Canada stands ready and willing to always have a discussion. We do believe that a negotiated settlement would be in the best interests of both countries.

In the meantime, we must defend against these unwarranted tariffs, which we will continue to do.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

On March 4, 2021, the U.S. Department of Commerce announced the notice of initiation of its third administrative review, or AR3, of the softwood lumber countervailing and anti-dumping duty orders.

How does the government plan to respond to this threat to Canada's softwood lumber industry?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you so much to the honourable member. I know how important the sector and the industry are to the people in his riding in Quebec.

We of course are disappointed at the announcement around the administrative review. We have clearly communicated that the duties are unjustified and that they hurt workers in both of our countries.

We will continue to defend the interests of the Canadian softwood lumber and forestry sectors through chapter 10 in CUSMA and through the WTO. We will continue to defend their interests.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Right now, as you know, our softwood lumber industry cannot count on stability in its trade relationship with the U.S.

How you plan to secure other international markets or boost domestic demand for Canadian lumber?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Right now, as we are all looking to help—well, not right now; we've been helping businesses right from the beginning of this pandemic and supporting them to get them through the pandemic, but right now there are real opportunities to help our businesses look at new and different customers.

The Canadian trade commissioner service has been doing excellent work for the last number of years because of the government's commitment to a trade diversification strategy and an investment of $1.1 billion. We are really seeing some excellent innovations by Canadian companies.

There are a couple of examples of good wood biocomposite solutions developed by Canadian companies that are being exported to both the U.S. and Europe. Tall wood construction, which is an innovation out of British Columbia, is finding markets for its products in Australia, Japan, and the Philippines.

We are providing the opportunities to help our businesses on this economic road to recovery and to build the capability for them to diversify, in addition to defending their interests here against American tariffs.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

According to Statistics Canada, the price of softwood lumber two-by-fours has more than tripled, going from $600 to $2,000 per thousand board feet.

What is the government doing to stabilize prices?

[Mary Ng, Liberal, Markham—Thornhill, ON]

The tariffs that have been applied cause difficulty here for the Canadian industry, but they certainly do as well for American consumers and home builders. We will raise this issue with my American counterparts at every opportunity.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Minister.

Ms. Bendayan, please go ahead for five minutes, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Madam Chair.

I want to start by underscoring how important the forestry industry and softwood lumber are to Quebec, which exports approximately $10 billion a year in forest products and supports more than 65,000 direct jobs in the province, and many more. I should mention they are well-paying jobs.

It is also important to note that Canada and Quebec are at the international forefront of sustainable forest management, with some of the strictest legal and policy frameworks in the world, as the Minister pointed out.

The softwood lumber trade dispute between Canada and the U.S. is nothing new. It's a long-standing problem that goes back to the 1980s.

Actually, Minister, I remember studying the softwood lumber disputes while I was in law school studying international trade dispute resolution. It's really important to remember that this is a disagreement that spans many different Canadian governments and many different American administrations.

Could you let us know a bit more specifically the approach this particular government has taken, since coming into power, to defend the Canadian softwood lumber industry?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you so much to my terrific parliamentary secretary for that question.

My colleague is absolutely right. This is an issue that spans a very long time. We have always been very clear that the duties that have been imposed by the United States on Canada's softwood lumber are both unwarranted and unfair, and they hurt workers and industry on both sides of the border. I don't think I can underscore enough that we will continue to vigorously defend their interests.

We have certainly launched a series of challenges against the United States' duties, both through the WTO and the new NAFTA in CUSMA as well as through the original NAFTA.

As I've said before, Canada has been consistently awarded legal victories that clearly demonstrate that our softwood industry is in full compliance with international trade rules. In other words, Canada does not subsidize the softwood lumber industry.

We're going to take a team Canada approach here. We're working hand in hand with the industry, labour unions and provincial and territorial partners on all fronts. We're going to keep doing this work. It doesn't stop.

This is a sector that supports hundreds of thousands of good middle-class jobs for Canadians, and certainly in your home province of Quebec, so it's very important.

I often remark at just how innovative this sector is and what a leader it is, particularly in terms of both the environment and economic growth. It is exactly that which we are delighted to support through having the trade diversification strategy, making sure our resources in the trade commissioner services are working hand in hand with the sector to help them with market analysis in different international markets and helping businesses pursue both investments and opportunities for their products.

In fact, it's the green products they're taking. It's the biofuels. It's the inputs into PPE and inputs into new fibres that are going into automobiles. There's a real range of innovations that the sector has pursued, which we are supporting through our efforts and our investments.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much for that, Minister.

I know we will have the opportunity, perhaps later with officials, to ask questions about Canada's position and the legal analysis behind the government's position. I understand that we as a government are fully in compliance with our CUSMA obligations.

Of course, though, these legal disputes do have a tendency to drag on. With regard to diversifying the market for our forestry sector, do you feel as though there are any particular markets this government can help the sector diversify to in terms of new trading opportunities?

[The Chair, Liberal, Judy Sgro]

Can we get a brief answer, Minister?

[Mary Ng, Liberal, Markham—Thornhill, ON]

The answer is that there are 1.5 billion customers in the global marketplace because of the trade agreements Canada has with countries around the world.

What I would also say is that the opportunity to grow not only green but inclusive is very much what I see happening here, meaning women-led businesses, indigenous-led businesses and racialized-led businesses. Providing opportunities for them to grow and supporting that growth through, for example, the CanExport program, are things we are very committed to for the sector.

[The Chair, Liberal, Judy Sgro]

Thank you, Minister.

We now go to Mr. Savard-Tremblay for two and a half minutes.

Go ahead, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

Two bills have been brought forward in the U.S., one in New York State and one in California. The idea is to ensure the states no longer procure products that contribute to boreal forest degradation. That is the terminology used.

We are not against protecting forests, far from it. However, “degradation” is a broad term, so these bills could lead to new barriers to lumber exports. British Columbia and Quebec, in particular, would be affected.

Do you have any details on what constitutes forest degradation?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you for your question.

Canada's forestry sector is sustainable. They're a leader here. Canada's forest laws are among the strictest in the world. We very much collaborate closely with the United States on forest management. We certainly are again taking a team Canada approach and monitoring the situation in the legislation in these other jurisdictions in the U.S. and making sure that we're working with our provincial colleagues, as well as the industry, to register our views. We're making sure that we are keeping a close eye on this.

Our forest management practices and our sustainability are among some of the strictest in the world, and this is really important to us.