Thank you, Madam Chair.
Members of the committee, I am pleased to share with you our response as researchers from the Institut de recherche en économie contemporaine, or IREC.
For several years now, IREC has been examining the forest industry's place both within Quebec's economy and its international trade. It is truly no surprise that the issue of tariffs is once again the subject of a major dispute between the United States and Canada.
In that respect, I don't think it can be described as a true crisis. As stated by the previous witness, the imposition of these duties is certainly unjustified and, in many ways, illegitimate. However, this is not a true crisis, even if it causes significant disruption. Even if people chose to designate these disruptions as a crisis, they would still have to recognize that this is actually a trend that is characteristic of the United States' position on this matter.
In essence, we're not dealing with a problem of legal interpretation. We are in a situation of trade power dynamics. Those power dynamics can be corrected through the law. In this regard, the courts have demonstrated in the past that this perspective was justified and that Canada had every right to request remedial measures. However, the law does not remove the power dynamic. It simply shifts it.
In essence, we're faced with competition that is supported by the use of tariffs. That competition is the subject of consensus among Democratic and Republican representatives in Washington. It essentially goes back to the fact that, in previous years, we missed opportunities presented by rulings, even favourable ones.
We really must consider a major restructuring of the Canadian industry, insofar as reforms should lead the industry to better create added value. The softwood lumber crisis is very much one of production that is less and less relevant in a niche that can be replaced: commodities. We need a Canadian industry that is more focused on added value. In this regard, previous opportunities should have shown us that there needs to be a much stronger response from Canada's forestry companies.
Quebec adjusted its forestry regime to make it perfectly consistent with the requirements and expectations of our American interlocutors. However, despite those adjustments, nothing can dampen the challenges. In fact, what can dampen them is shifting the industry and our trade relationships to other niche markets, to ensure that powerful incentives support stronger industry responsiveness and divert some of the commodity production to manufactured goods with improved processing. In that respect, we have an opportunity to merge an industrial policy with our commercial interests by taking full advantage of the housing crisis, which requires a greater effort from the construction sector.
In addition, we should aim, through incentives and appropriate industrial policy, to have Canadian companies acquire a greater share of the domestic market for processed goods. This will allow us to better position the Canadian industry in relation to exports to the United States, but also to other markets. Our over‑reliance on the U.S. market makes us doubly vulnerable. It makes us vulnerable, on the one hand, to challenges and, on the other hand, to a certain numbness in production, because the industry, which is overly comfortable in a market that is becoming too familiar, will become less responsive and, perhaps, a bit lazy.
Under the circumstances, I think we should continue efforts to correct the litigation, but we need to get out of this mess by incentivizing the industry to become more dynamic and creative. There are encouraging signs in that respect, but much greater government involvement is needed.
Thank you very much.
