International Trade Committee on Nov. 4th, 2024

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

What kind of legal agreement [Inaudible—Editor]?

[Jerome Pelletier]

I refer to a settlement or a long-term agreement. That's what I refer to.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Ah, I understand. Thank you very much.

In terms of aspects of CUSMA, this is an area that is coming up for this committee's review here soon. It's an important operating agreement.

As you know, a conservative to the south of us forced Canada and Mexico into an agreement that's not necessarily beneficial for our industries here. Of course, American conservative interests are often very heavily weighted in North America and often have a paramountcy across our economy.

How do you recommend that we amend CUSMA to ensure Canadian businesses and Canadian owners can combat American conservative tariffs?

[Jerome Pelletier]

We are concerned with the appeal process in CUSMA. As I alluded to earlier, CUSMA directed one year for the panel to rule on any appeal process, and we're five years out.

I think there's a need here to be more prescriptive on how panels will be appointed, how they will function and how they will deliver their rulings.

[The Chair, Liberal, Judy Sgro]

Thank you very much. I'm sorry. Your time is up.

We'll go on to Mr. Baldinelli for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you, Mr. Harder and Mr. Pelletier, for being here. It's an important study for a sector that employs over 400,000 Canadians.

Today, through your comments, we get a real sense of the frustration of business owners, communities and workers who have been impacted by, I would say, government inaction to reach a resolution on softwood lumber duties. It's been nine years and three U.S. presidents, and this government is unable to resolve the situation. Meanwhile, we had a previous government that did it in 79 days. This inaction has cost the sector about $9 billion to $10 billion in U.S.-imposed tariffs.

In August, the U.S. announced it's going to increase those tariffs to 14% from the current 8%. At the time, our minister of international trade said it was disappointing. We saw the Prime Minister on U.S. television then claiming it's a small issue. I'm not going to suggest it's disappointing. I'm going to say it's devastating for those companies and, more importantly, for workers in the communities they live in.

You know, in September, just following that announcement of the duties being increased, Canfor in B.C. announced the closure of mills in Vanderhoof and Fort St. John. That's 500 jobs.

Statistics Canada shows that 90,000 jobs have been lost in the sector since 1990. That's 40,000 in British Columbia alone. Twenty-four mills have closed in B.C. since 2016.

I'm going to start with you first, Mr. Harder.

What has been the impact on these communities and workers in your area because of this failure of the government?

[Wayne Harder]

It's very significant. Actually, the 500 jobs would only include Chetwynd north. It wouldn't even include Vanderhoof; that would be even more than that.

We've had farmers—a lot of loggers here are farmers as well—come up to us, saying they're not sure how they're going to be able to sustain farming, because they rely on that off-farm income to help them sustain that. The ripple effect is going to be very large.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's not to mention just the merchants in the area. We're talking communities of about 4,500 and 21,000.

What is the economic spinoff and pain that's also being caused?

[Wayne Harder]

The people I talk to, the merchants, are telling us.... The lowest number I've heard was 10%, but most people are in that 20% to 25% reduction in sales due to the mill shutdown in town.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

What's particularly frustrating is that back in November, this committee tabled its 12th report. It was entitled “Anti-Dumping and Countervailing Duties Being Applied on Certain Canadian Softwood Lumber Products”. It contained seven recommendations, and the government agreed to all seven.

The first recommendation response even included this passage, which says, “The Government will continue to engage the United States to accelerate the pace of impartial dispute settlement processes with the ultimate objective of resolving the softwood lumber dispute.”

What struck me was the words “accelerate the pace”. I mean, it's been nine years now. What is the government waiting for? My colleague mentioned that it's not even in our international trade minister's mandate letter to resolve this dispute.

How do you accelerate the pace when you have a government in office that thinks this is simply a small issue?

Mr. Harder, I'll start with you.

[Wayne Harder]

Obviously, they didn't see it as a very big priority, because it's a little hard to negotiate if you wait till the last possible second to engage.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Mr. Pelletier, there must be a sense of frustration on your part in what you're seeing out in eastern Canada with regard to the lack of a resolution or a dispute settlement in this area.

[Jerome Pelletier]

Yes, it's very concerning. It's concerning for us at Irving. It's concerning for our members at the New Brunswick Lumber Producers. It's also concerning for all of the rural communities. We have companies operating in 70% of the rural communities in New Brunswick. The level of anxiety is higher now that we're paying 14% duty and people know that 30% is coming soon.

We need to act. We need to engage the United States in a meaningful negotiation.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Sheehan for five minutes, please.

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

Thank you very much.

Thank you for the testimony from our witnesses.

I'm from Sault Ste. Marie, located in northern Ontario, which has 90% of the land mass of all of Ontario with about 8% of the population. There's quite a bit of forestry going on throughout northern Ontario.

I was picking up on Mr. Pelletier's testimony about the differences between the provinces. There are a lot of Pelletiers up in Dubreuilville and in Sault Ste. Marie, just for the record. They're very good people.

I had a roommate from Dalhousie, New Brunswick, and his family worked in the forestry industry. We used to have quite a few chats about the differences. His name was Ferlatte, and his dad used to travel across the country as a consultant. One of the things we need to recognize is that this has been going on for 30 years, this softwood lumber dispute. There have been nine prime ministers.

I appreciated your remark when you said that the lumber barons have a veto and are very powerful. How important is it, Mr. Pelletier?

In talking with my former roommate and with people in the industry about how the Americans continue to buy our lumber because of the demand.... They can't produce enough in the United States, in particular with all of these disasters that are happening in the United States due to climate change. They're destroying homes at a record pace, and they're rebuilding them, so they have to buy it.

One of the things that I found effective.... I come from a steel town, Algoma Steel. We went down to the United States and made sure that they understood what these tariffs are, what these duties are; they are really a tax on the American people, because they're still buying our wood. We have great wood. We produce it excellently. We have great transportation networks that can get it down there reliably.

Mr. Pelletier, would you agree with that terminology, that this is really a tax on the American people who purchase our wood at the end? They're in an acute housing crisis, and then along come these climate disasters and it's creating that demand. How should we go about getting that message into the United States?

[Jerome Pelletier]

There are different organizations in the United States that are taking the costs of building materials very seriously, for example, the homeowner associations or the retailers. They've lobbied in the past. They've sent letters to Capitol Hill to raise this issue about lumber duties and possibly reducing access to lumber from Canada or other jurisdictions.

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

Through you, Chair, to the witnesses, would it make sense that this trade committee actually go down there after the election? In particular, it would be due to some people talking about increasing these tariffs across the board by 10%.

First of all, I'd like to ask what a 10% increase would look like for the forestry industry in New Brunswick, if that were to happen.

[Jerome Pelletier]

A 10% increase would be devastating for the New Brunswick industry. I would expect a lot of our operations to be curtailed. Due to the fact that we're highly integrated with other forest product sectors, the impact of sawmills going down would also have an impact on tissue mills, paper mills and wood pellet operations.

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

Thank you.

[Jerome Pelletier]

To answer your question on lobbying in the United States with different organizations, I wouldn't have any concerns with that approach.

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

Okay, thank you. That's duly noted.

One of the places up in northern Ontario, White River, reopened. It actually shut down when Stephen Harper was prime minister, but it recently reopened. It reopened with a partnership with the First Nations in the area, with the Anishinabe.

How important do you think it is for the forestry sector to work with Canada's indigenous peoples in managing and growing the forestry industry?

[Jerome Pelletier]

It's very important to work with our first nations. Today, I can't envision a system in which they are not consulted when we're operating on Crown land. It would probably be beneficial to have them at the table also when we talk about trade cases and how impactful they are to our industry.

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

Thank you very much.

[The Chair, Liberal, Judy Sgro]

Mr. Savard-Tremblay, you have two minutes, please.

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

Thank you.

I'll come back to the fact that we don't have an agreement yet.

I quite agree with my Conservative colleagues that this lack of agreement doesn't make sense. On the other hand, I also agree with my Liberal colleagues that having no deal is sometimes better than a bad deal. In other words, we need a deal, but it has to be a good one. A losing deal wouldn't do us much good.

How do you explain the fact that an agreement has yet to be concluded? Is this the best way forward, the only solution that can be considered sustainable in the medium or long term?

I'm addressing both witnesses once again.