International Trade Committee on May 11th, 2023

[Randy Hoback, Conservative, Prince Albert, SK]

It might; it might not. It's actually their money. You're actually just giving it back to them and collecting it from the U.S. government. It's not adding more—

[The Vice-Chair, Conservative, Kyle Seeback]

Mr. Hoback, I'm sorry but you're out of time.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Fowler.

[The Vice-Chair, Conservative, Kyle Seeback]

We now turn to Mr. Virani for six minutes.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Mr. Chair.

I believe Mr. Hoback was referred to as “Mr. Chair” a couple of times erroneously. There were some retrospective points, but the chair is on Zoom.

Thank you to the officials for being here. It's important to have you here, and we appreciate it.

I want to take you back to some of the chronology you outlined. The President of the United States was here about two months ago, and you indicated that the issue of softwood lumber was raised by both the Prime Minister and Minister Ng.

Is that correct, Mr. Fowler?

[Aaron Fowler]

It is.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Without breaching any confidences, but as well as you can, can you tell us a bit about the President's response to the fact that it was raised? Did he provide any sort of justification for the imposition of duties or explain the American position in any way that could shed light on what's transpiring?

[Aaron Fowler]

Thank you very much.

I am aware of who's chairing. I was instructed to direct my answers through the chair, so I will do that again this time.

I thank the member for the question. Obviously that was a private conversation. I'm not privy to the nature of the discussion.

When we raise these issues, including at very senior levels with the United States, typically they acknowledge that this is an important issue for Canada. It's one they're prepared to work on with us, but they require a level of support for any direction that the U.S. government may want to take that would be supported by their softwood lumber industry, represented by the U.S. Lumber Coalition or the Coalition for Fair Lumber Imports.

At this point in time, there does not appear to be support within the U.S. industry to negotiate a long-lasting settlement, and I would presume that was the nature of the discussion that leaders held.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

You mentioned Minister Ng convening a round table on March 9 of this year. In response to Mr. Hoback, you also mentioned that similar round tables were held in 2022 and 2021.

Can you tell me the composition of those round tables? We hear sometimes from a regional perspective, with respect to Quebec, sometimes with B.C.... Is it an amalgamation of entities from around the country that have a stake in issues that relate to softwood lumber and exporting to the United States?

[Aaron Fowler]

It is a representative cross-section of entities.

I would ask my colleague Mr. Cannon to reply in more detail.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

Go ahead, Mr. Cannon.

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

Thank you for the question.

As Mr. Fowler mentioned, Minister Ng has held a number of round table discussions with representatives of the Canadian softwood lumber sector over the past few years, most recently in March.

I would say that the composition of those meetings is always intended to ensure that the broad range of interests from the Canadian forestry sector are represented as much as possible—without having an unwieldy number of people around the table—from companies, industry associations, indigenous partners and all of the major lumber-producing provinces in Canada.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

Mr. Fowler, you also raised a series of litigations, which got my interest as a former litigator. I was particularly concerned that you said—and I understand this from previous information I've seen—we've been successful repeatedly when things have been litigated. I think you mentioned that there are as many as 10 different pieces of litigation right now. There are specific instances where we're raising this under chapter 19 of NAFTA, chapter 10 of CUSMA and at the WTO.

Can you give us a sense of what you think is impeding the progress of that litigation? I think you said that you anticipate some decisions by the end of this year or early next year.

What is making you more pessimistic about having those results within that time? Is there any way you would suggest that we, as parliamentarians, can work to address or alleviate some of those impediments and push toward a more speedy resolution?

[Aaron Fowler]

Again, thank you very much for the question.

There are different things that are impacting the pace of litigation, depending on the form in which that litigation is taking place.

At the WTO, we successfully carried both of our cases, challenging the initial U.S. countervailing duty and anti-dumping orders, through the panel stage. We had a very strong result at the panel stage with respect to the countervailing duty order and a somewhat more mixed result with respect to anti-dumping. However, both of those decisions have been appealed to the appellate body.

There is a lack of quorum at the appellate body in Geneva right now, owing to an ongoing policy by the U.S. administration to block the appointment of new appellate body members. Consequently, it's not possible for Canada to continue to prosecute its cases through the appellate stage at the WTO. That accounts for the delay in moving forward with respect to the multilateral challenges under the WTO.

With respect to the panels that are being established either under NAFTA or CUSMA, that is a question of ensuring that the panellists who are named to these panels are qualified, impartial and in a position to render an objective judgment. We realize that it can be frustrating, but we want to take great care in ensuring that we name and accept panellists who meet these criteria.

As you can imagine, with a dispute that's been going on for 30 years, there are a lot of people in both countries who are familiar with the industry and familiar with the issues, but have already played a role in this that can colour our perception of their impartiality.

With your permission, I might invite my counsel to add to my response.

[The Vice-Chair, Conservative, Kyle Seeback]

We are five seconds over the six minutes, so perhaps they can get to that in a different question.

We'll now turn to Mr. Savard-Tremblay for six minutes.

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

Thank you, Mr. Chair.

Thank you, gentlemen, for your input and for being here today.

In March 2021, the Minister of International Trade appeared before the committee. We discussed the expanding market opportunities program, which is designed to develop international markets for forestry products. We highlighted the fact that it had served western producers, in British Columbia in particular, much better than eastern producers, in Ontario and Quebec. In 2020, according to figures reported in 2021, three-quarters of the program's funding had been allocated to organizations in British Columbia.

Do you have an update on those numbers to share with us today?

[Aaron Fowler]

Thank you very much for your question.

There are various programs that the softwood lumber industry can benefit from. Did you have a specific program in mind when you asked that question?

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

Yes. As I mentioned, I was referring to the expanding market opportunities program.

Here's a quick recap. In 2021, it was reported that, in 2020, three-quarters of the funding went to organizations in B.C., at the expense of companies in eastern Canada.

Do you have up-to-date numbers?

[Aaron Fowler]

I do not have the details on where the funds were spent by province. However, I can provide you with information for British Columbia.

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

Yes, I would like you to provide the committee with the most up-to-date information on that.

I have another question for you.

In 2022, we did a study on Canada's relationship with the United States. There was a component on softwood lumber. I believe you appeared before the committee, but I'm not sure.

The report recommended that the government give priority to the objective of returning the amounts of anti‑dumping and countervailing duties that had been collected by the United States to the producers who had paid them.

Have the amounts of duties collected by the United States been returned to the producers, or are they in the process of being returned?

Could you also inform the committee of the status of this matter?

[Aaron Fowler]

Thank you very much for the question.

Duty amounts that have been collected by the United States to date continue to be held by the U.S. government. Our litigation strategy is focused on achieving litigation victories that will ultimately result in the full refund of those unjustified and unwarranted duties to the Canadian industry, but as I mentioned, our litigation strategy continues to move forward not as quickly as we would hope.

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

Are the amounts of duties collected by the United States in the process of being reimbursed? Have they already been reimbursed? What is the status?

Can you summarize the situation?

[Aaron Fowler]

If I've understood the question, there has been no money refunded by the United States government to date.

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

That's fine. Thank you.

The Canada-U.S. Softwood Lumber Agreement, which came into being in 2016, after the previous agreement expired, has now expired.

The Standing Committee on International Trade, in its report following its study, made the following recommendation:

That, on a priority basis and as soon as possible, the Government of Canada establish the parameters of a new softwood lumber agreement with its American counterpart.

What has prevented the negotiation of a new agreement?

For example, there were the trade negotiations leading to the Canada-U.S.-Mexico Agreement, or CUSMA.

Why didn't the government use that opportunity to tackle this issue head-on, since we knew all the irritants?

[Aaron Fowler]

Thank you for your question.

The short answer is that it takes two to tango. Right now, we don't have a dance partner on the U.S. side. The United States is not willing to engage with us to find a long-term solution. That's why, so far, there is no agreement in place.