Thank you very much, Chair.
Good afternoon to you and to all of the other committee members. Thank you very much for inviting me here today to speak to you about the important work Government of Canada officials are doing to advance Canada’s interests in the ongoing softwood lumber dispute with the United States.
Canada’s partnership with the United States is fundamental to our foreign and economic policy. Our softwood lumber industry provides well-paying jobs and is a key economic anchor for communities across the country. Canadian softwood lumber helps build American homes and workplaces, exemplifying the deep integration between our two economies.
President Biden’s recent visit to Ottawa confirmed the significance of the relationship between our two countries. While here, the Prime Minister and President Biden discussed a variety of shared priorities. Significantly, both the Prime Minister and Minister Ng raised the issue of the softwood lumber dispute directly with the President, emphasizing the harm that U.S. duties cause to Canadian producers and workers, as well as the communities they support, and to U.S. consumers as well.
Now more than ever, a resolution of the dispute is needed given the challenges facing the forestry sector, including wood fibre constraints and labour shortages. U.S. tariffs on softwood lumber exports are exacerbating the situation and creating unpredictable operating conditions for many Canadian companies.
The U.S. has imposed tariffs on most Canadian softwood lumber products since 2017. Currently, most Canadian companies are subject to a combined tariff rate of 8.59%. However, the U.S. continually adjusts tariff rates as part of its annual reviews, known as administrative reviews. This results in an unpredictable trading environment for the Canadian industry and in billions of dollars in unfairly collected duties.
These unfair U.S. duties also impact U.S. consumers, retailers and builders, who rely upon quality Canadian lumber to build American homes. These additional costs are particularly concerning now, at a time when inflationary pressures and high interest rates have already exacerbated housing affordability issues. Canadian softwood lumber products are critical to addressing U.S. production shortfalls and housing affordability. To put this into perspective, in 2021 U.S. producers supplied only about 70% of the U.S. demand for lumber—roughly 35 billion board feet—leaving a 30% shortfall, a gap that was largely filled with Canadian lumber products.
This sentiment has been conveyed frequently by the Prime Minister, by Minister Ng and by Ambassador Hillman when speaking with President Biden and his administration regarding the softwood lumber dispute.
Canada has repeatedly conveyed to the United States that we are ready to enter into meaningful conversations about realistic solutions that would be acceptable to both sides. A negotiated resolution to this dispute is in both parties' best interests. Unfortunately, we have yet to see a willingness on the part of the United States to engage in meaningful discussions.
The Government of Canada will continue to raise softwood lumber at every possible opportunity until this is resolved. We also will continue to work closely with partners across the industry and all provinces and territories to coordinate and maintain a team Canada approach to resolving the dispute.
To that end, Minister Ng continues to communicate regularly with partners and stakeholders across the country who are concerned about accessing the U.S. market. For example, on March 9, Minister Ng hosted a round-table discussion with stakeholders to hear their perspectives on industry trends and the impact of the softwood lumber dispute on their businesses and workforces.
In addition to our engagement with U.S. and Canadian partners, we are vigorously defending our interests through litigation under chapter 19 of NAFTA and chapter 10 of CUSMA and at the WTO. In total, Canada is currently pursuing 10 legal challenges along with other Canadian parties, including the softwood industry itself. Most recently, we established two different panels under NAFTA's chapter 19 to hear Canada's challenges regarding U.S. countervailing duty and anti-dumping duty orders, and we expect initial decisions in late 2023 or early 2024.
However, our legal challenges have not proceeded as quickly as we would hope. The timely adjudication of Canada's legal challenges before fair and impartial panels is a priority for the Government of Canada, and we are working closely with U.S. officials to ensure that our cases proceed swiftly. As in the past, we are confident that impartial panels will side with Canada and tangibly demonstrate that U.S. duties are unfair and unwarranted.
As I mentioned earlier, a negotiated solution continues to be in the best interests of both countries.
The Government of Canada continues to support the forestry sector, including by encouraging market diversification, supporting sustainable forest management, and promoting the role of the forestry sector in the fight against climate change.
At the same time, we will continue our ambitious agenda of legal challenges to defend Canada's interests. Successful legal challenge outcomes will strengthen Canada's negotiating position.
In the past, U.S. allegations have been judged to be unfounded, and we believe that this will again be the case.
Thank you for this opportunity to talk about the important work we are doing to advance the interests of the Canadian softwood lumber industry. I would be pleased to answer any questions you may have.
Thank you.
