International Trade Committee on Nov. 4th, 2024

[Robert Laplante]

Essentially, the difficulties we're experiencing with the sawmill sector in the United States, in particular, stem from the United States' alignment with the trade doctrines of both parties vying for American governance. The protectionist current, which is strong, favours the U.S. industry.

We need to find a path towards reconciliation by suggesting to our American interlocutors that they adopt conventions that will define what reasonable volumes could be protected on both sides of the border. That's assuming, of course, that our negotiators are able to bring industry to the table. For the time being, however, they have no interest in doing so.

The idea of collecting deposits is probably the most appealing, inasmuch as we could use it to otherwise support the strategy of resisting that challenge, inviting businesses to subscribe to productivity improvement programs.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Mr. Savard-Tremblay for six minutes.

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

Thank you, Madam Chair.

Thank you to all the witnesses for their opening remarks.

Mr. Laplante, I'd like to know whether I am summarizing your remarks by saying that, ultimately, the situation we're currently experiencing with the United States is a vast array of missed opportunities.

Einstein said that insanity is doing the same thing over and over and expecting a different outcome. The Americans are anything but crazy, but they do keep losing their cases. Their true calculus is happening elsewhere—undermining our competitiveness, delaying our modernization and putting us in a loss position while the case drags on, even though they know, and fully expect, that they will eventually lose.

You said yourself that the Quebec regime was specifically designed to comply with free trade. So I wonder how it remains unacknowledged to this day.

In addition, your colleague said that the dispute settlement mechanism hadn't really been called into question and hadn't been sufficiently overhauled in the Canada—United States—Mexico Agreement, or CUSMA.

You also mentioned construction and industrial policy. What would be the purpose?

Would it be diversifying markets or would it be another way of investing more in the domestic market?

What are the advantages of using wood more than concrete, for example? It seems like a green material to me. Moreover, the forest industry is no longer as portrayed in the film produced by Richard Desjardins. There have been significant changes.

I'm opening up a number of avenues for discussion so you can flesh out your opening remarks.

[Robert Laplante]

Thank you, Mr. Savard‑Tremblay.

Indeed, the Americans know that the law is not on their side and that they are going to lose. Their goal lies elsewhere. Their real objective is to take advantage of these disputes to put Quebec and Canadian industries on the defensive by depriving them of considerable sums that could be used to improve their productivity and modernize equipment.

In that context, I think the way forward is to incentivize Canadian industries to switch niches. We have to lead them elsewhere, to high value-added sectors. To do so, we have a major opportunity, which is the response we must summon to the housing crisis—which will necessarily require more and more construction. If, on the one hand, we have a set of industrial policies that make greater use of wood as a material, and, on the other hand, if we support the industry to produce more than just commodities and inputs into the supply chain, we will embark on a path that will give the industry the momentum it lacks.

This effort must also be coupled with a push for market diversification. Dependence on the U.S. market is a major factor in weakening our exports and our industry. The truth is that its potential is poorly served by this dependence on this market.

We now have an opportunity to propose a comprehensive response that is not just a wait-and-see approach, limited to being patient while we wait for dispute resolution mechanisms to prove us right. Instead, we need to take a much more active role. We should have a more proactive response and implement a comprehensive and integrated response in all available public policy spaces. We did it for the automotive industry, in which billions of dollars were invested. We could do the same for the forestry industry, as long as that industry is not perceived as solely dependant on export markets.

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

You mentioned diversification. We are entering an era of trade and geopolitics that is not too dangerous in some parts of the world. We know that not everyone can be considered—I'll say this politely—a reliable and rules-compliant trading partner. Which region do you think we should be looking at?

[Robert Laplante]

Situations are extremely fluid. No one can predict how things will evolve over the next 20 years. One thing is certain: The housing crisis is also hitting Europe hard. European economies are going to need materials to support efforts that governments are forced to make. I think we can look carefully at interesting collaborations and breakthroughs in the European market, which does not exclude Asian markets. However, Asian markets are going to present much more complicated situations because of China's trade practices, which aim to create barriers for other Asian countries that might also be tempted to reduce their dependence on Chinese trade.

One does not exclude the other, but, in terms of weighting, our effort should focus on European markets, which are solvent markets, and we should make a greater effort to improve the housing stock.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Laplante. I apologize for having to interrupt. Thank you.

Mr. Desjarlais.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Madam Chair. I want to thank the witnesses for being present with us today.

I want to just pick up in some regard on some information that was presented by Mr. Laplante in his opening testimony.

Before I get there, I want to focus on Mr. Niquidet, if you may respond to the following questions.

You heard some of the opening testimony by Mr. Laplante. Part of that testimony involved two incredibly important pieces that I want to address today in regard to the softwood lumber dispute in the United States.

One is the particular situation of productivity today.

What is the productivity like within the membership you represent and many of the members there?

There are many factors that I'm sure impact productivity in terms of climate, policy and even just wages.

What is the productivity like for employees there, and how are workers experiencing that job today?

[Kurt Niquidet]

The sawmills in British Columbia are very advanced. We utilize some of the best technology in the world. I think Canadian technology in general for softwood lumber production is known for being very advanced.

As a result, we have very highly productive sawmills and, as a result, we're able to pay high wages. These are really good jobs. If you look at some of the recent stats that we've produced, where average wages in British Columbia were in the $60,000 to $70,000 range, we're well up over $100,000.

These are good, family-supporting jobs throughout the province. A lot of that has to do with the productivity of the sawmills. That's why they're able to pay those wages.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you so much, Mr. Niquidet.

That's probably the most important piece to me in this. It's making sure that Canadian jobs are protected and Canadian families get what they need, so they can put food on the table and continue to do the hard work of building up our economy.

My concerns, of course, come from the very unique perspective or frame that if we're going to organize our economy, like Mr. Laplante suggests, which I agree with, we do need an industrial policy that looks at our inputs and our outputs, particularly the outputs that help the public good.

As policy-makers and people who sit in the House of Commons, our job isn't necessarily to make the bottom line higher for Canada's corporations, or in some cases the multinational corporations. Our job is to make sure our economy is working for Canadians and for everyday people.

That's why I asked that question, and that is why I ask the next question.

How many of the workers that are present in B.C. or in the membership of the mills that you represent are unionized?

[Kurt Niquidet]

I don't have a specific figure on that. I would say the majority are unionized. It's mostly with the steel workers, but that can vary. I would suggest that the majority would be union workers.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thanks so much, Mr. Niquidet.

Mr. Laplante, I wanted to give you a moment to expand on your proposal, which is a philosophical one I hope will become a manifest reality. It is related to industrial policy in Canada.

Canada, as you are well aware as an economist, is a resource-rich country. Much of our economic output and outlook is largely based on raw material production and raw material export, including softwood lumber.

You speak to a really important piece of how we can modernize our economy here in Canada and how we can become more competitive in the United States and all across the globe. That's by ensuring we have value-added products.

I come from Alberta. I come from an oil-rich province. We talk about this issue a lot. We talk about diversification of our oil. We talk about diversification of our assets. We talk about becoming more relevant and more productive and having bigger paycheques for our workers because of it.

Can you speak to why diversification is important for all of our natural resource sectors, in particular softwood lumber, as a means to increase not just wages for workers in Canada but also our production?

[Robert Laplante]

In essence, it's because we have this enormous wealth, the boreal forest, which is where most of the softwood stocks are. It's an extremely rich ecosystem, producing very high-quality fibres. We have an opportunity to better exploit this resource by valuing its full potential. It is all the more important to do so given that this forest resource is threatened by climate change that is causing major disruptions, which add to the economic difficulties we're experiencing as a result of the softwood lumber crisis or the fierce competition from American competitors.

Wildfires have reduced allowable cuts in several provinces. British Columbia knows a thing or two about that. Last year, Quebec experienced truly devastating forest fires, the result of which threatens the viability of a number of plants. The way to counter that threat will be to shift the effort to added value, because we'll have less wood.

So we have to extract more value from a diminished resource. This is a major strategic challenge for businesses, because there is extremely significant human capital and a skilled workforce. We must find a way to shelter them from climate disruption. In that sense, seeking added value is not a strictly economic avenue, it is also a green avenue, since we have to deal with scarcity.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Laplante.

Next is Mr. Martel for five minutes, please.

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

Thank you, Madam Chair.

Thank you to the witnesses for joining us today.

Mr. Laplante, I was elected in 2018, and I can tell you that, since that time, I have been continually hearing about the softwood lumber agreement. When I meet with forestry sector representatives in my riding, they tell me that it's crucial for businesses that we finally reach this agreement.

There is something I find hard to understand. When we were in power, we dealt with this situation in 79 days. Since the current government has been in power, three successive U.S. presidents have been elected, but our government has been unable to resolve this issue.

Business representatives don't talk to me about new niche markets or about reinventing themselves; they tell me that we have to reach an agreement. How is it that the issue has still not been resolved?

I'd like to hear your comments on that.

[Robert Laplante]

I share your frustration and theirs.

That said, there's one thing we can't ignore. Regardless of our impatience, it is dependent on the evolution of the American situation. Since those three presidents came to power, American society and economy have undergone major transformations. One of those transformations has been the effort that the government in Washington and state governments want to make to reindustrialize the United States. To do so, major public policy measures have been deployed. This also involves the activation of a much more protectionist reflex.

When we talk about the Buy American Act or the provisions—

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

I'm sorry to interrupt you, Mr. Laplante.

Your comments are interesting, and I respect that, but if we hadn't dragged our feet on this agreement, you might be saying something different today.

Isn't that so?

[Robert Laplante]

I wasn't at the negotiating table, but from what I understand, one of the two parties had something to gain from dragging their feet, and I don't believe it was Canada.

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

Mr. Laplante, I don't wish to interrupt you, but time is short.

You know that job losses in the forestry sector are a grave concern. Some businesses are even closing their doors, which can hurt certain communities.

If the situation doesn't change, what will the long-term repercussions be for workers?

[Robert Laplante]

The situation is extremely worrisome. Whatever indicators we choose, one thing is clear: the forestry sector is in decline. At least, that's the case in Quebec. It varies from province to province.

The industry has been in structural decline for several decades, and has failed to implement a repositioning strategy. The problems associated with the trade agreement are only part of the problems affecting this industry. As I pointed out, it occupies niches where its competitiveness is threatened by emerging economies, among other things.

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

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have about 26 seconds.

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

Mr. Laplante, what is your level of confidence in the government's ability to negotiate effectively with the United States?

[Robert Laplante]

I wouldn't know how to characterize it. What I fear, however, is that the American protectionist effort will intensify. That's going to require Canadian negotiators and the Canadian government to find negotiating elements that will enable us to find compromises. For the moment, I don't think that's a given.