International Trade Committee on Nov. 4th, 2024

[Wayne Harder]

Absolutely. I think those studies have been done. They had enough sustainable forest for four mills, I believe. We have only two left that are running now. One of them in town here doesn't even have a licence to cut. You can't get a licence to cut. That's all done on a private land base, which doesn't get regenerated. It turns into fields after.

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

Thanks, Wayne.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sidhu, you have six minutes, please.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Madam Chair.

Thanks to our witnesses for taking the time to be with us today.

We've heard about Canadian lumber being used to construct homes here in Canada. What I hear from my constituents is that we need to build homes faster. With our housing accelerator fund, we've invested over $4 billion through municipalities to help cut red tape, so that houses can be built faster by developers and of course municipalities.

We've heard the Leader of the Opposition, Mr. Pierre Poilievre, say that he will cut this fund. Now we're hearing directly from municipalities that will be impacted, including cities like Brampton. The housing accelerator fund in Brampton will help build over 25,000 homes. In Surrey, Saskatoon, Guelph and here in Ottawa, we're hearing from the municipalities that cutting the fund will hurt homebuilding.

Coming back to the lumber industry here in Canada, the housing accelerator fund is going to fast-track roughly 750,000 homes. I think when we focus on the lumber industry here in Canada, we need to support them with local homebuilding as well. I'd like to hear from our witnesses in terms of local demand from the housing industry and how this would help them with some of the industry issues we're having and with supporting workers here in Canada.

Maybe we can start with Mr. Pelletier.

[Jerome Pelletier]

That's a good and interesting question.

Building 750,000 homes would represent roughly half of what's being built in the United States in an entire year, so it's a very significant volume. I'm convinced that the fibre, the material and the lumber are available here in Canada to be supplied to build those homes, so there are no roadblocks that I could say would prevent us from doing it with Canadian lumber.

[Maninder Sidhu, Liberal, Brampton East, ON]

Okay, that's good to hear. I mean, 750,000 is no small number, as you just said, and I think constituents in my riding and across Canada expect us to support industry and support municipalities as we build those homes, so it's unfortunate that Mr. Pierre Poilievre has already said he's going to cancel that very important program.

Coming back to lumber, I wanted to ask you about the trade agreements that we have and—whether it's through the CPTPP, CETA or CUSMA—our access to the Indo-Pacific region.

Have you thought about growing into that market? What are your thoughts? What are you hearing from stakeholders in the industry about opportunities in the Indo-Pacific region?

[Jerome Pelletier]

In the Pacific region.... We're located in eastern Canada and in the state of Maine, so for us it's outside of our historical markets.

Having said that, there are opportunities to sell lumber overseas, but it always comes at a cost premium for transportation, and I think we should be more focused on growing the market here in Canada and North America to avoid that extra transportation component.

[Maninder Sidhu, Liberal, Brampton East, ON]

When you talk about the local market here, where are you seeing lumber products come in from? What other countries are you seeing that are trying to come into the Canadian market?

[Jerome Pelletier]

There's a bit of European lumber coming into the Canadian market. Most of the imports into North America are going into the United States. We see some volume also coming from South America, but they are still fairly small compared to our domestic production.

[Maninder Sidhu, Liberal, Brampton East, ON]

I had the opportunity to ask the previous panel about our government being focused on lumber. We want to make sure we get a good deal rather than a fast deal.

What would a good deal look like to you?

[Jerome Pelletier]

A good deal would allow for predictability. Today, the duty rates will move as much as 100% year over year, so we would like to have a long-term agreement of 10 years plus. We would like the agreement to be predictable. We would like to have access to a fair portion of the U.S. market.

We mentioned the cash deposits. There's over $10 billion today, so we would like, as an industry, to be able to recover some of those cash deposits, understanding that we'll have to share them with, most likely, the U.S. companies or the U.S. coalition.

Also, we need to consider using some of those cash deposits to grow the market and to allow us to invest more in research and development for mass timber, for example. We should keep that in mind.

[Maninder Sidhu, Liberal, Brampton East, ON]

We're seeing that as an innovative technique to build more homes using mass timber.

My last question before my time is up is about the stakeholders in the U.S. What kind of weight do they hold with the government down there? Are there roadblocks stopping an agreement from taking place from the U.S. government's perspective?

[Jerome Pelletier]

I'm not a trade law expert, but my understanding is that the U.S. Lumber Coalition, which filed a petition against the Canadian industry, has a veto on any agreement. It's important to work with them to ensure they are comfortable with the agreement.

[Maninder Sidhu, Liberal, Brampton East, ON]

Even if the U.S. government wanted to do a deal, the industry down there has a veto. Is that correct?

[Jerome Pelletier]

Don't quote me on that.

[Maninder Sidhu, Liberal, Brampton East, ON]

Okay.

Thanks, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have six minutes.

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

Thank you, Madam Chair.

I thank the witnesses for their statements.

In the first hour of this meeting, we heard witnesses talk about all sorts of medium and long-term solutions. We've heard conversion ideas for the industry and ideas for an industrial policy. In the short term, however, we need to address the difficult situation in which the industry finds itself. Unfairly withholding money will hurt companies, because they'll be deprived of the cash they're entitled to.

Would it be desirable for the government to offer companies a loan guarantee program that would compensate for the sums being withheld in the United States, thereby at least getting them through the crisis?

My question is for both witnesses.

[Jerome Pelletier]

I think programs to help Canadian companies, if the tariff rate goes up to 30%, would probably be favourable to some companies.

However, I think we have to be careful, because if these programs aren't economically justifiable, these loan guarantees are going to be seen as direct subsidies to companies. This would probably increase countervailing duties in the long term.

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

Mr. Harder, would you like to add any comments?

[Wayne Harder]

There's opportunity, but I would have to agree that it would look like subsidies, and I don't think, long term, it would be a big help.

In the short term it would help people bridge over until the markets come back or mills start up, so people don't sell into a depressed market and mostly lose their livelihood.

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

I find your comments interesting, because you are representatives of the industry.

In the first half of this meeting, we had a representative from the Institut de recherche en économie contemporaine. He wondered whether we shouldn't be adopting a broader industrial policy, rather than just aiming to get out of the crisis and end tariffs. That's obviously what everyone wants. He proposed going further, in the sense that companies should make greater use of wood, whether we're talking about commodities or domestic construction projects. He also favoured export diversification, i.e., tapping not only the U.S. market, but also the European Union.

In your opinion, would it be worthwhile to follow these potential solutions?

[Jerome Pelletier]

That's an excellent question.

Lumber or engineered woods such as glulam are the only building materials that are entirely renewable. Today, the National Building Code of Canada allows residential and other buildings of up to 12 stories to be built with wood alone.

In Ottawa, there are virtually no 12-storey buildings built with just wood. We still use concrete and steel, materials that have a very negative ecological footprint compared to wood, even when wood is burned. Forest products can store carbon in a building for 300 years. It's possible to significantly increase lumber consumption here in Canada, in our own market.

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

It seems logical to remove much of this wood, which is subject to tariffs in the U.S. and leads to consequences such as a trade war, from the U.S. market for use here.

Do you agree?

[Jerome Pelletier]

In an ideal world, we could also keep access to the U.S. market and allow the Canadian forest industry to prosper further.