International Trade Committee on Feb. 7th, 2022

[The Chair, Liberal, Judy Sgro]

You have 10 seconds, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

I can't follow up with the dairy, then.

[The Chair, Liberal, Judy Sgro]

Thank you very much. I'm sorry about that.

Mr. Hoback, you have five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Madam Chair, and Mr. Masse, on dairy I think you were probably going to go on TRQs.

I'm actually going to go in a little bit different direction. I'm just going to want a little more background information in regard to when the officials down in Washington were aware that this EV credit was coming, and then when the minister's office was made aware of it. One of the complaints I had from one of the senators down there was that we showed up too late, and they had no ability to adjust things because we showed up too late.

Where did we miss the ball here? Did we not insert ourselves at the right time when we were seeing that legislation being written, or did we just ignore it until it became too late and they had no ability to actually modify it? Can you give me some insight on when you were made aware of it and when you made the minister aware of it?

[Michael Grant]

Thank you very much. I can answer that.

First and foremost, the fact that it was in the legislation did come as a surprise to us in terms of the details favouring U.S. manufacturing. The fact that the Biden administration is in favour of promoting EV vehicles wasn't a surprise, but the way it was drafted certainly was.

Immediately upon learning of that, we began our intensive engagement at the official level as well as at the political level. The fact that we were able to build such awareness is a tribute to that engagement.

Now, of course, the legislation is taking a different turn, but we remain plugged in to the influence-makers and the key decision-makers. We are being vigilant, depending on which way that goes.

[Randy Hoback, Conservative, Prince Albert, SK]

I wouldn't pat yourself on the back too much there. The reason I say that is that in my conversations with different senators, they commented to me that we never insert ourselves when the legislation is being written. We're always sitting there when it's going through the Senate or at the last stage.

The question I have is this: Why is it taking so long for us to react when we see something in a piece of legislation?

I use a case in point. Senator Marshall from Kansas brought up the fact that when Keystone was cancelled by Biden, he expected to see us down there talking to him, but there was nothing. We had meetings later that week with three of the big labour groups in Washington. They were all saying to us in that meeting—the minister was present at that meeting—that we weren't anywhere to be found when it came to Keystone pipeline. They were willing to go to the White House for us on that because there are so many labour and union jobs at stake.

Where did that direction come from?

[Michael Grant]

On both issues, I can tell you that it was part of our engagement across the board. I can't speak to your specific reference in terms of the comments you heard, but I can say that for a number of years, Keystone had been a key item that was raised both in and outside of Washington.

Again, on the EV tax credit, as soon as it was made clear that it was in the legislation, we began a full-court press.

[Randy Hoback, Conservative, Prince Albert, SK]

See, that's the concern. It was in the legislation. We should have been there when they were writing legislation. They didn't really have a target on Canada. They just never thought of us.

By the time we got there to inform them of the negative consequences of that and how it would impact the auto sector across North America, the Democrats had no ability to change it because of the political situation in the U.S. They made the point very clear to this government that we were too late to the game.

I'm trying to figure out where the breakdown was. Was it because the minister's office didn't react quick enough or did the bureaucrats not inform the minister quick enough?

[Michael Grant]

My response will be the same. As soon as we realized that this was in this legislation, we began a full-court press.

In fact, depending on which way the legislation goes.... Right now, it's off to the side. There are mechanisms for changing that legislation, so we will remain vigilant and engaged.

[Randy Hoback, Conservative, Prince Albert, SK]

I want to add that in that legislation it was unionized workers. With the legislation following, there is talk that Manchin may come on side if it's not unionized workers. All of a sudden, if that was to change in his state of West Virginia—where they have Toyota and other plants—I was told by some in the auto sector that there would be a huge sucking noise of jobs out of Ontario and Michigan into right-to-work states.

Is that fair to say? Do you analyze that or do you assume that it would be the same thing? What is the threat of that actually coming to fruition?

[The Chair, Liberal, Judy Sgro]

Give a brief answer, please.

[Michael Grant]

One of my colleagues might have a comment on the impact. All I can say is that we will remain engaged to prevent this from happening.

Arun, did you want to comment?

[Arun Alexander]

I would just add that if you refer to the minister and the deputy prime minister's letter, we're advocating very strongly for equal, fair and CUSMA- and WTO-consistent treatment for all Canadian-assembled vehicles.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Ms. Dhillon, you have five minutes, please.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

In Quebec, the forestry industry is very significant and provides over 60,000 jobs. The American administration released the results of its third review of the anti‑dumping and countervailing duties imposed on Canadian lumber. Resolute Forest Products went from a rate of 29% to a rate of 20%.

Could the minister, or any government official, shed some light on this update?

[Arun Alexander]

Madam Chair, it is true, under administrative review three, which I believe applies for the year 2020, the anti-dumping and countervailing duty rates—and these are preliminary results, so they're not applied yet, but they are an indication of what the final results would be—lowered. They decreased on average, and I believe the number is from 18.9% to 11.6% for most companies. As the honourable member said, there are certain companies for whom the rates are higher.

Once the results of administrative reviews are released, Canada does an analysis of the basis of the anti-dumping and countervailing duty rates, and we will determine whether we would challenge it in consultation and coordination with provinces, territories and industry.

We challenged administrative review one and administrative review two, because we believe that any tariffs against Canadian softwood lumber are unwarranted and unjustified.

Thank you very much.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you so much for that explanation.

I'd like to follow up with something the minister was saying but didn't have the chance to finish explaining to us.

How can the government best support the softwood lumber sector? Which companies have benefited from the export of softwood lumber?

[Arun Alexander]

Perhaps I will refer that question to my colleague Michael Cannon, who knows better about the specifics of the industry.

Michael.

[Michael Cannon, Director, Softwood Lumber Division, Department of Foreign Affairs, Trade and Development]

Thank you, Arun.

I apologize, Madam Chair. I missed the beginning of the question. Would the honourable member mind repeating the question quickly?

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Yes, not a problem.

I was saying the minister didn't have a chance to finish explaining, so my question was, how can the government best support the softwood lumber sector? She was also talking about companies that have benefited from the export of softwood lumber. Maybe you can talk a little bit about these as well.

[Michael Cannon]

First of all, I think as far as the softwood lumber dispute goes, the minister spoke to the three main initiatives that the government is undertaking to help resolve the dispute. We believe the duties are unwarranted and unfair. The minister mentioned our ambitious litigation strategy where we're challenging the U.S. duties at the World Trade Organization under NAFTA and under CUSMA as well. Canada has been successful in our litigation on softwood lumber in the past, so we believe we will be successful again in the future.

The minister also mentioned that we're engaging U.S. interlocutors at every level at every opportunity. For example, the Prime Minister raised the file with his counterpart in November on the margins of the North American Leaders' Summit. The minister raises the file with her U.S. counterparts, U.S. Secretary of Commerce Raimondo, and the United States trade representative, Katherine Tai.

Finally, the other important element to keep in mind is the team Canada approach. We believe that a negotiated settlement is in the best interest of Canada and also in the best interest of the United States. We work very closely with stakeholders in the file in industry, provinces and territories, indigenous partners and other stakeholders as well.

In terms of some of the other things the government is doing, the minister referred to the diversification of our softwood lumber exports. She mentioned the increase in exports to Asian markets in particular. We have some success stories through our trade commissioner service with Global Affairs Canada, where trade commissioners are helping exporters connect to new markets. For example, we have a situation where a company in Merritt, B.C. was successful in landing a new contract to export lumber to Korea working through the trade commissioner service. That's part of the diversification strategy. As well, the minister spoke to some of the—

[The Chair, Liberal, Judy Sgro]

Mr. Cannon, thank you very much. My apologies, but everything is timed around here.

[Michael Cannon]

My apologies.

[The Chair, Liberal, Judy Sgro]

Mr. Martel, please, for five minutes.

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

Thank you, Madam Chair.

I want to look at the softwood lumber agreement again. The former Conservative prime minister, Stephen Harper, was able to reach an agreement with the Americans. Why is the current government unable to reach an agreement?