International Trade Committee on May 11th, 2023

[Aaron Fowler]

On that particular one, I would have to go back and check the records as to who may or may not have been suggested as a possible mediator in 2016. It has been some time, as you can appreciate.

As a general rule, I think we would be hesitant to accept a binding mediation type of approach. We want to ensure that any deal we sign is a good deal that has the support of the softwood lumber industry, not just the major producers. It should be a deal that reflects and protects the interests of producers all across the country, because it is a very different industry in different regions of Canada.

There are risks, I think, to a mediator-led approach, although as I recall, it was discussed at that time.

[Colin Carrie, Conservative, Oshawa, ON]

It seems right now that there's a housing shortage, and it appears on both sides of the border. Both governments want to get homes built, and as you mentioned, there are associations in the United States that actually are on our side. They want to get Canadian lumber there. It seems like everybody's at the table, except the government isn't even able to open a negotiation.

What associations has the minister engaged with in the United States? What meetings has she had in order to engage American stakeholders to help Canada in resolving this issue that's outstanding?

[Aaron Fowler]

I would have to come back to you with an exhaustive list of the groups with whom the Minister of International Trade has met in the United States. We do meet regularly at the ministerial and officials level with the NAHB and with other groups. We've also held meetings directly with representatives of the U.S. softwood lumber coalition in the past.

I think it is really important to understand, if you want to appreciate the dynamics around the negotiation of the deal, the role that the U.S. Lumber Coalition plays in all of this, because a long-term deal requires them to suspend the constitutional rights that they have to petition the U.S. government for a redress of unfair trade practices. If they are not prepared to suspend their constitutional right to petition the government, then there would not be much value in a long-term deal because it could be undone through a petition on behalf of the U.S. industry at any point in time. Their buy-in really is critical to putting anything in place for any lengthy period of time.

[Colin Carrie, Conservative, Oshawa, ON]

I do know that it is possible. We've had agreements in the past, and it's just very frustrating for industry to see how long it is.

[The Vice-Chair, Conservative, Kyle Seeback]

Mr. Carrie, you're unfortunately over time.

[Colin Carrie, Conservative, Oshawa, ON]

If you could table those meetings, that would be great.

[The Vice-Chair, Conservative, Kyle Seeback]

Great. I think that got on the record.

We have Mr. Arya for five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

I would like to give the opportunity to Mr. Michael Owen to respond to my colleague Arif Virani's question on what is impeding the litigation from proceeding.

[Michael Owen]

Thank you.

As Mr. Fowler was explaining before, we have litigation in two different fora: the WTO, and before NAFTA and CUSMA panels.

With respect to the WTO, the appellate body impasse, which we've all been working to try to resolve, has essentially meant that any case that is pending appeal cannot be considered anymore. It's not moving forward in the WTO dispute settlement system.

With respect to NAFTA and CUSMA panels, under chapter 19 and chapter 10, that's essentially a system that is set up where the NAFTA or CUSMA panel steps into the role of the Court of International Trade, which is a court of first instance in the United States, that considers whether or not the imposition of duties is in accordance with U.S. law.

In that context, we've had delays and problems with the nomination of panellists, and we are committed to working with the United States to ensure the panellists are impartial. As Mr. Fowler touched on before, there are very many practitioners in trade in Washington, D.C., but a lot of them have touched softwood lumber. I think one of the issues that we've had is that, when panellists have been put forward, sometimes we've had concerns over their previous involvement in the case.

I hope that helps.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Chair, I have a question for Mr. Fowler.

Mr. Fowler, you mentioned that discussions are going on, but there's no indication when the negotiations can begin. Hopefully sooner or later the negotiations should start. When the negotiations start, do you expect that Bill C-282, if the bill passes and it becomes legislation, will affect the negotiations?

[Aaron Fowler]

Thank you.

No previous round of this dispute and no previous softwood lumber agreement has contained provisions that would in any way implicate the supply-managed sectors, so I can't imagine a scenario where our inability to take commitments with respect to those sectors would have any bearing on the prospects for successful negotiation of a long-term softwood lumber agreement.

[Chandra Arya, Liberal, Nepean, ON]

Are you suggesting that the U.S. negotiators will not raise the legislation on supply management?

[Aaron Fowler]

Thank you for the question.

If the United States has concerns with respect to Bill C-282 or its impact on Canada's ability to engage on issues affecting supply management, it will not wait for the occasion of negotiations on softwood lumber to bring those concerns to our attention.

[Chandra Arya, Liberal, Nepean, ON]

Okay. Got it.

The softwood lumber exports to the United States, if I'm not wrong, are in the range of $8 billion to $10 billion. The exports to other countries, like Japan and China, I think were just around $300 million last year. We have been signing so many free trade agreements across the world, and not many sectors are taking advantage of all the free trade agreements that we have been signing, except probably the agriculture sector.

Even with this dispute we have with the U.S., why is it that the softwood lumber industry is not exporting to other countries in a much bigger way?

[Aaron Fowler]

Thank you for the question. I'll give you a preliminary answer and then ask my colleagues to elaborate.

I think there are a variety of reasons. Other markets are far away. Other markets do not have the history of wood frame construction that is common in North America. Teaching and informing consumers in these countries how to build wood frame construction and how to use softwood lumber in the construction industry takes time. A lot of money and effort over successive governments has been put into market development overseas, outside of North America, to create the conditions where Canadian softwood lumber exports would be more successful in those markets.

I think we've seen benefits from those efforts, but it is a heavy lift. This is not something they are accustomed to using in the same way we do. It requires building codes, educating builders and so on.

[Chandra Arya, Liberal, Nepean, ON]

I have only a few more seconds, and I want to ask one question on the dispute settlement process—

[The Vice-Chair, Conservative, Kyle Seeback]

Unfortunately, Mr. Arya, you're over time. We're at five minutes and 20 seconds.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

[The Vice-Chair, Conservative, Kyle Seeback]

We'll go to Mr. Savard-Tremblay now for two and a half minutes.

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

Thank you.

Earlier, you were talking about the lack of appetite on the American side. We know that there is a housing crisis in the United States, where costs are skyrocketing. However, the Association for Neighborhood & Housing Development, or ANHD, is opposed to punitive tariffs, because obviously it would like to be able to get its hands on these products and our wood.

Is there any possible leverage there? Do you have any contact with the association? Is it able to lobby the politicians at all?

[Aaron Fowler]

Thank you for the question.

Yes, we have excellent contacts with the NAHB. We've worked with them over successive rounds of this dispute going back many years. They do strongly support the Canadian view. They understand the importance of access to Canadian softwood lumber to support the efforts of their members and to ensure affordability for housing in the United States.

Unfortunately, it is not the construction industry that is bringing these trade actions to the Department of Commerce. It is the softwood lumber industry in the United States that is petitioning for trade action. We can have allies, but we need to have more than just allies on the construction side in order to move the needle on this file.

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

That is the other question I wanted to ask you.

You've probably done some research on groups, in other sectors than construction, that could help lobby U.S. policy-makers.

What sectors could you turn to, in that case?

[Aaron Fowler]

Again, thank you for the question.

You can imagine that anybody who uses softwood lumber in the United States has an interest in ensuring the affordability of the softwood lumber they use. In addition to the home builders, we have worked in the past with big-box retailers, such as Home Depot, to ensure that they have an adequacy of supply of softwood lumber. We've worked with advocacy groups in the United States who advocate for affordable housing. We've worked at the state level with allies in some cases. It's a mixed bag, but the NAHB has been there for a long time and works very closely with us.

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

You talk to them—but they, in turn, have to talk to the U.S. policy-makers. What do they tell you after meeting with those policy-makers?

[Aaron Fowler]

They have allies in Washington, but so does the American softwood lumber industry.