International Trade Committee on March 23rd, 2022

[Derek Nighbor]

I'll maybe defer to Susan in terms of the national home builders data.

Susan, would that help?

[Susan Yurkovich]

Yes, there's a very good analysis done by the National Association of Home Builders, who worked in partnership with Canada for years. I'll send it to you after the committee is over. It used to be a relatively small sum on a house. It used to be around $5,000 to $8,000, Michel, give or take.

It's now up around $30,000, so that's a very substantial change and of course that's pushing people out of being able to purchase a home.

When Ms. Gray asked what can we do, what are the lessons learned. We can be focusing more on that. It is not part of the Biden.... The Biden administration wants to have affordability as one of its things that's really important, and this actually flies in the face of it.

The work that we can do to support what the NAHB is doing and to make sure that people understand what this is costing them directly would be very helpful.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

That data would be very helpful to us because the trade committee has gone to Washington and has gone to the United States. We're discussing where we as a committee would go. Usually when we go to Washington we have a number of meetings set up through the embassy, and that kind of data would be very helpful because it's really important to get into the face of the American legislators to tell them that. A lot of times when we were down there for the steel, they would be like, what?—they didn't know that information. So that information would be very helpful.

Just to keep on this, what other groups in the United States do you work with? Are you working with their chambers of commerce or their unions, other folks as well, to get that kind of messaging across about how much damage they're doing to their own middle class with these punitive tariffs?

[Susan Yurkovich]

I'll start and maybe turn it over to Derek.

We work very closely with United Steelworkers, which represents a lot of our industry. They've been very vocal about this alongside us. There's the chamber. There are the Canada-U.S. business groups that we've worked with from time to time. We're trying to tell that exact story, but it's very hard.

It's a very competitive marketplace, and to try to get traction on any issues in the Beltway area is very difficult. Frankly, if you're trying to make a concerted lobbying effort, as industry and government tried to in the early 2000s, it's very costly. It's millions and millions of dollars.

Derek, maybe you want to add some comments.

[Derek Nighbor]

In terms of the bills, I was talking about California and New York. It's the same thing. United Steelworkers and Unifor have been tremendous—they're really good partners of ours—along with the Indigenous Resource Network. Stateside, the California and New York forestry associations are very concerned about the precedent-setting nature of some of these dubious claims and terms that are being used. It's the same with the homebuilders in those states, and our union brothers and sisters in those states.

There's no shortage of allies, which is a nice thing to have.

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Martel for five minutes.

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

Thank you, Madam Chair.

My question is for Mr. Labbé.

I want to talk about woodland caribou again. Do you think the government has gone too far with the woodland caribou protection strategy, by putting all the blame on the forest industry?

[Sylvain Labbé]

I'm not an expert on caribou, but I know a bit about the issues brought about by the effects of climate change. The UN has a boreal forest committee, and Canada is on it. The committee analyzes the impacts of climate change, including as they relate to caribou. I think all the blame is being placed on the forest industry because climate change affects forests in their entirety. I would say the real culprit is climate change. Even if the whole area were covered by a bell jar, the caribou would still not be adapted 40 years later. The area would have to be moved a thousand kilometres north.

I think the issue is being confused. Tackling climate change is what will help caribou. Smaller-scale solutions can also be implemented on a regional level. Right now, all the blame is being laid at the industry's door, but I don't think that accurately reflects what's happening.

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

You talked about diversification, Mr. Labbé, but without access to raw materials, it's practically impossible to develop new products. How are you going to diversify products?

[Sylvain Labbé]

You're absolutely right. Primary processing is extremely important for the development of secondary processing. Between you and me, in the future, we won't have more access to land for logging in Canada, despite the demand, given the rules around biodiversity conservation. We'll keep what we have now, and the growth will come from adding value to what we have. That is the only option, short of intensive planting, and even then, the lumber wouldn't be available for another 40 years. Added value is the only solution in the short term.

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

If the land is seriously limited, it will inevitably hurt small and medium-sized businesses and their growth.

[Sylvain Labbé]

Yes. If primary processing is doing well, secondary processing will do very well.

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

Thank you, Mr. Labbé.

[The Chair, Liberal, Judy Sgro]

You have two and a quarter minutes left.

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

I would like to share my time with Tracy.

[The Chair, Liberal, Judy Sgro]

I thought somebody would like to have the remaining two minutes.

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

Thank you, Madam Chair. I never pass up an opportunity, so thank you very much.

I have a couple of questions for Mr. Warner. Despite what we've heard from our trade minister, it appears that there's no progress on the softwood lumber agreement with the U.S. The U.S. trade representative said last summer that Canada wasn't interested in engaging on softwood lumber, but Minister Ng stated on several occasions that softwood lumber is a top priority for the Canadian government.

In your view, has it been a top priority for Canada to be engaged and at the table on softwood?

[Mark Warner]

The problem that I see is that we have to decide how to approach the United States generally with these sorts of trade disputes. From what I can see, this government has taken the approach of being very conflict-oriented from the start on everything. We elevate and escalate really quickly.

As I said, I don't think there is a litigation solution. I'm not even sure that most of these victories that we talk about in softwood lumber are ever really such complete victories as the way they're presented when you're in Canada. They're really narrow legalistic victories, and that's why they don't stick and that's why they're hard to enforce.

From my vantage point, I think if we had a more coherent approach to trade negotiation overall with the United States then we'd be in a better position to negotiate something like softwood lumber, but if you are going down to the United States to lobby against the signature initiative of an American president and then you expect that same American president to tell his secretary of commerce to cut us some slack on softwood lumber, I think it's just not going to happen.

Somewhere along the way, we have to decide whether we want to go this litigation route, whether we want to go escalating everything to Defcon 1 or we want to find a way to sit down and figure out whether there are some “grand bargains” that will go beyond this industry into others that will allow us.... I think Susan talked about how this might have helped in some previous settlements.

I think that's what is missing here. I don't think Americans are all that interested in whether Canadian politicians think that their middle class is being hurt, to be very honest with you. We could go and lobby that. You're right—it will be expensive because that's a tough sell. There probably is an argument for sitting around a table and figuring out a way to settle it, but it can't be if you're going to take a very elbows-up approach, in my view.

[The Chair, Liberal, Judy Sgro]

Thank you very much. Those were interesting comments, Mr. Warner. Every time you come here, you give us interesting comments.

We will go to Ms. Dhillon.

Go ahead, please, for five minutes.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

My questions are for Mr. Samray.

My line of questioning will be similar to Mr. Sheehan's.

Given that the Government of Canada committed to working with the sector to defend Canadian interests, does the Canadian forest sector believe that this softwood lumber dispute can be resolved through negotiation? In the sector's view, is that the way to resolve it?

[Jean-François Samray]

As my fellow witnesses have all said, sooner or later, it will come down to negotiation, whether the focus is solely on softwood lumber or on other issues as well.

Trade disputes get resolved through agreement. That is the only way to proceed in the long term, so we have to start the dialogue, build on common points and try to find pathways. That is crucial.

As Raymond Aron said, diplomats and soldiers are two public servants who need one another to work. In this case, the lawyers are on one side and the industry and government are on the other. The two sides need one another in order to move forward because they have to find pathways to agree on a solution.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

As far as you know, does that rationale reflect a shared belief?

[Jean-François Samray]

I believe so. Ms. Yurkovich, Mr. Krips, Mr. Nighbor, Mr. Vincent, Mr. Labbé and Mr. Warner all talked about it. I think all the witnesses would tell you today that we need to come to the table with a Team Canada approach. That is the preferred approach, the one we should adopt as soon as possible, in the industry's view. We are ready to play for Team Canada.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

How do you think fluctuations in the duty rates on Canadian softwood lumber exports to the U.S. affect Canadian firms?

[Jean-François Samray]

You could say the annual rate fluctuations are the result of some black box inside the U.S. Department of Commerce. We don't know why the rates go up or down from one year to the next, but they bring great uncertainty. The only thing companies can control—to the extent that's possible—is their costs.

Cost is one factor that determines competitiveness, but the other factor is the tax rate, which affects market predictability and the industry's capacity to meet demand, make investments and commit to purchasing lumber.

Without long-term predictability, the industry will have a harder time planning for the future, making investments, undertaking processing, developing new products and meeting the needs in the coming decades.