International Trade Committee on Nov. 4th, 2024

[Maninder Sidhu, Liberal, Brampton East, ON]

Do any other witnesses want to respond to this question?

We know Canada has—

[Robert Laplante]

I agree with Mr. Niquidet. We need a fair and equitable agreement to support the development and prosperity of Canadians.

What's more, the agreement must be favourable to industries that have potential and wish to develop. In this respect, we must not conclude an agreement at any price. It must be done by prioritizing greater prosperity, i.e., by targeting fairer tariffs, and by demonstrating greater flexibility and autonomy so that companies can develop by tapping export markets.

[Maninder Sidhu, Liberal, Brampton East, ON]

With one minute left, I'll be really quick with this one.

As we know, Canada has many long-standing trade agreements, like CUSMA, the CPTPP and CETA, which are giving us preferential market access in the Indo-Pacific and ASEAN markets.

Besides the North American market, which markets do you believe hold the biggest potential for industry? We've heard that the Quebec government will be reaching out to the European market, as right now it's doing roughly over $300 million in lumber trade. It's looking at some of the European markets with the access we have through the CETA agreement.

This may be for both of our witnesses here today. Are there markets that your industry is looking at, where you can see the biggest potential?

[Kurt Niquidet]

I can start.

We've always had long-standing relationships with different places in the Asia-Pacific region. Certainly, with Japan, there are long-standing relationships. Really, in terms of the high-value products, they've been a source of demand. China has also been a significant place for our products. There's been a lot of competition with Russia. Then, certainly, with South Korea and India, these are all places throughout the Indo-Pacific region, I think, that have potential over the longer term.

[The Chair, Liberal, Judy Sgro]

Thank you very much. The time is up.

Thank you very much to our witnesses.

I will suspend momentarily for our other witnesses to come on screen.

[The Chair, Liberal, Judy Sgro]

I'm calling the meeting back to order.

We have with us on this panel, from J.D. Irving Limited, Jerome Pelletier, vice-president of sawmills and chair of the New Brunswick Lumber Producers. Welcome, Mr. Pelletier.

From W&M Enterprises, by video conference, we have Wayne Harder.

Welcome to you both.

Mr. Pelletier, we'll give the floor to you for up to five minutes please.

[Jerome Pelletier, Vice-President, Sawmills, J.D. Irving Limited and Chair, New Brunswick Lumber Producers]

Thank you very much. I would like to thank the committee for allowing me to be here today.

I represent J.D. Irving Limited, but I'm also a co-chair of the New Brunswick Lumber Producers. New Brunswick lumber producers represent 95% of the softwood lumber production in New Brunswick. We're a key part of the New Brunswick forest products value chain. We're the largest roundwood buyers for local private woodlot owners. We support thousands of employees working in the mills, as well as professional loggers, truckers and silviculture workers in all regions of the province.

The NBLP, the New Brunswick lumber producers, are the largest supplier of wood chips, biomass and sawdust, which are key ingredients in the manufacturing of the New Brunswick pulp and paper industry, as well as of pellet products. We also supply products to wood fencing manufacturing facilities as well as pellet manufacturing operations.

There are currently 40,000 registered private and industrial woodlot owners in New Brunswick. Historically, the Government of New Brunswick timber utilization survey reports that approximately 50% of the sawmill wood supply comes from private land. This makes New Brunswick the only province, with Nova Scotia, where such a large volume of logs comes from private sources. This is the primary reason that New Brunswick was, until 2017, excluded from the previous four lumber trade cases.

In 2021, New Brunswick's forest product sector generated the highest provincial GDP per capita in Canada, 56% more than the next closest province. In 2021, the New Brunswick forest product sector directly employed almost 12,000 employees. When you add in indirect and induced employment, there are over 23,000 people working in the province in the forest product sector, which is one in every 18 people in the New Brunswick workforce.

The impact of the duty imposed on the New Brunswick lumber producers significantly reduces our capacity to compete with other producers located in the northeast of the United States, Scandinavia and Europe. It also limits our ability to further invest capital in our operations, again reducing our long-term overall competitiveness.

It is interesting to note that, since 2017, the Canadian lumber industry lost almost 10% of the U.S. market share, while EU producers gained 5% during the same period of time.

As part of the trade dispute resolution process under NAFTA and CUSMA, several appeals have been filed by the New Brunswick lumber producers and other Canadian lumber companies. Although NAFTA and CUSMA direct that a final panel decision be made in less than one year, after more than five years no decision has been made. The delay has in part led to the enormous cash deposits held by the U.S. Treasury. Our view is that the NAFTA and CUSMA legal process is broken and ineffective. This leads us to believe that a negotiated settlement is the only way that we will resolve this trade case.

Based on the West Fraser and Canfor shareholders' latest annual reports as mandatory respondents for the CVD and AD administrative reviews, the total duty rate to be imposed by the U.S. Department of Commerce in August 2025 is now forecasted to be over 30%. Today the Canadian industry is paying 14% combined duty, and in 2023 the industry paid 8% combined duty. Next year's forecasted duty is quite significant.

If such duty is implemented, it will have a significant impact on Canadian production. We expect to see many curtailments that will take place all over the country that will impact mill workers but also loggers, truckers, pulp and paper mills, renewable energy manufacturing plants and mass timber and engineering wood manufacturing facilities. It will also impact the railroad companies and port activities.

Minister Ng has been active with the Canadian industry on developing a framework for the next softwood lumber agreement. The New Brunswick Lumber Producers appreciate all the efforts and focus that Minister Ng has dedicated to this important file.

Unfortunately, the Canadian industry is not always aligned on the negotiation strategy that Canada should adopt to resolve the current trade case. We are concerned that a small group of Canadian lumber companies may not want to resolve the current trade case in a timely manner. We believe it is important for the Government of Canada to lay the path forward to a settlement that will be accepted, maybe not by all, but by the majority of Canadian lumber producers. It is important for the survival of our industry.

The current lumber trade case between Canada and the U.S. is the fifth one in the last 40 years. In the past four trade cases, the softwood lumber dispute was resolved only when both the Canadian and the U.S. governments made it a priority. For that reason, the New Brunswick Lumber Producers respectfully ask the Government of Canada, led by Minister Ng but also by our Prime Minister, to work jointly with all parties of each province, lumber associations and lumber producers to develop a negotiation strategy and, following the U.S. election, to encourage the United States trade representative to enter into a serious negotiation to resolve these long-term issues.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Pelletier. I'm sorry to interrupt. The committee members have many questions.

Mr. Harder, please go ahead for up to five minutes.

[Wayne Harder, W&M Enterprises]

I've been a contractor for 32 years, and have 38 years in the industry.

The effect of the shutdowns has been 90% job losses in this area alone. The businesses in the area that I've spoken to have anywhere from 10% to 25% losses due to people just not spending money. It's pretty significant in our area.

Provincial legislation has definitely been a big problem. The tariffs are just the straw that broke the camel's back, so to speak. It's just unsustainable at this point.

Someone mentioned fires earlier. We've had some of the largest forest fires in B.C. here and have been able to harvest almost nothing due to permitting and an unwillingness of the government to do anything. It seems to us that it's unimportant for any politician to try to make anything happen going forward.

I think that's all I have to say.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Harder.

I will open up the floor for questions.

Mr. Zimmer, you have six minutes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you, again.

My questions will be for Wayne Harder.

After nine years and three U.S. presidents, Trudeau and the Liberals have failed to get a deal with the Americans on softwood lumber. Harper and the Conservatives got a deal within 80 days of forming government with him as prime minister, while we see the current Prime Minister on a New York talk show, dismissing his failures on softwood lumber as a “small issue”.

I'm sure you've seen that, Wayne.

You and your wife, Marie, have worked hard for up to the last 38 years in the industry and have a business that employed hundreds of people and contributed millions to our local economy. You have employed countless apprentices, summer students and young people who are starting out in life, giving them a job and, in many cases, eventually giving them lifelong careers.

This is my first question of three. How devastating has the softwood lumber failure been for you, your business and other businesses?

[Wayne Harder]

It's been very significant.

Like I said, 90% of jobs were lost in my business alone. When I talked to the other contractors around, the percentages were very similar. Everybody employs a different number of people, but the percentage stays the same.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Maybe put a value, Wayne, to your company before the closures happened. We know how many people you employed. You're a big employer in Fort St. John. The value of your business then and now, what has been that difference? Can you say that?

[Wayne Harder]

Yes, from 2016 would have been the high. That was shortly after the tariffs were settled. We had a few years that were good until 2018.

From then we had a downslide of 25%, just steadily down, up until the last, which was the final 90% that cut off. Are you asking dollars and cents? Is that what you're trying to ask?

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Yes. What's the dollar amount in the millions?

[Wayne Harder]

From the peak it would be $30 million.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thirty million dollars.

[Wayne Harder]

Yes.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Wow.

I'll move to my next question, Wayne. I know that time is short here.

In the last nine years, you know better than most that we've lost 24 mills in B.C. alone. They have been in government for nine years and there's still no softwood lumber agreement, in contrast with us, who got it done within the first 80 days. The radical Prime Minister and the radical environment minister and their close friend in B.C., Premier Eby, should be ashamed of themselves for the damage they have caused you and thousands of B.C. forestry families like yours.

This is a personal question. If the Prime Minister and his radical friends were sitting here in front of you and you were asked to fire anyone for incompetence, who would you fire in this NDP-Liberal government?

[Wayne Harder]

All of them.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Well, that's a simple answer to that question.

Here's my last question, Wayne. Actually, maybe I'll slip in another one too.

The NDP-Liberal government and their provincial counterpart have done a very poor job in terms of forest management. You talked about the forest fires. I've seen you in action, really trying to mitigate some of the damage, some of the trees that have been downed, trying to do firebreaks and things like that, trying to preserve that fibre and the trees. We have seen an increase in forest fires, but we've also heard on the ground about this government's and its provincial counterpart's lack of action on forest management. Really it's been forest mismanagement. Again, the loss of timber has been incredible.

This is my third question. If people aren't logging and harvesting the wood, what do you think will happen with the loss of that good forest management that harvesting and logging provides? We know that an active forest is a healthy forest. What happens if all of a sudden there's no forestry? Is the forest healthy?

[Wayne Harder]

It's not at all, actually. There are forestry consultants out here. We do fire training every year for our guys. They've been telling them for the past 20 years, regarding that Donnie Creek fire, that they needed to log areas in there for firebreaks and better firefighting access to slow fires down and regenerate the areas versus old and decadent wood.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

That's right.

[Wayne Harder]

That was ignored for a very long time by the provincial government. That ended up being a large contributor to this 620,000-hectare fire, never mind the Red Creek and Stoddart Creek fires, which were on top of that as well.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

More trees are going to burn, in other words.

That brings me to my last question. I think I've heard from you on this question that often lands in places like Toronto or Vancouver, that you'd think there were no trees left in northern B.C. to harvest, and that's why all these closures have been happening. A 50% loss in the annual allowable cut is incredible. That's half. We used to have this vibrant forestry sector in the province. It was our best sector, our best-performing sector

This is just a super-simple question for everybody out there. Do we have sufficient trees in northeastern B.C. to continue to grow forestry in B.C.? I think with this retraction, there's a huge opportunity for this to grow. Even just in the trees that have burned, they're still harvestable.

Wayne, could you speak to that question? Do we have sufficient trees in northeastern B.C. to continue to grow forestry in B.C.?