International Trade Committee on May 11th, 2023

[The Vice-Chair, Conservative, Kyle Seeback]

We'll go now to Mr. Cannings for two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'd like to get back to the WTO question and the lack of quorum at the appellate body. I'm just wondering if you could provide some information on where that is right now.

What are the prospects of the Biden administration stepping in and actually fixing this? What's the general view in Washington about the WTO?

[Aaron Fowler]

I think I'll defer to Mr. Owen on this, in the first instance.

[Michael Owen]

With respect to WTO dispute settlement reform, there are active negotiations ongoing in Geneva to try to reform the system. The genesis of this was the 12th WTO ministerial conference, where members agreed, including the United States, that they would work towards the restoration of a fully functioning WTO dispute settlement system by 2024. I think many of the members would like to see that happen at the next WTO ministerial conference, which is in February 2024, although I think the U.S. views it as perhaps longer than that.

Currently, we're in the third phase of negotiations. The U.S. set up a framework for these discussions. They're led at the legal adviser level in Geneva. I work with my counterpart in Geneva on these negotiations. They've come to a point where there are 12 core interests that are being discussed. One of them is the U.S.'s concerns over the WTO appellate body, which the U.S. has criticized quite extensively in the past. We're now at the solutions phase, which is being led by a facilitator in Geneva. We're actively putting forward proposals with other like-minded countries, including the European Union, Brazil, Japan and others. We work very closely with them to try to put forward a position that will restore effective, impartial adjudication at the WTO.

I hope that helps.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Just to clarify, is the the lack of quorum directly related to these reform issues that are ongoing?

[Michael Owen]

Yes, that's right. If a dispute is appealed to the appellate body, it essentially, we are calling it, is appealing into the void. The dispute effectively goes nowhere because there is no appellate body.

There is a group of countries, including Canada, that are party to the multi-party interim appeal arrangement, which is a workaround, but not all countries are party to that and, not surprisingly, the United States is not party to that.

While you can proceed with dispute settlement—and there have been a couple of cases now—through the MPIA, and you can proceed through the WTO dispute settlement system, we unfortunately can't in this case.

[The Vice-Chair, Conservative, Kyle Seeback]

We'll now go to Mr. Baldinelli for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Chair.

Thank you to the witnesses for being with us this afternoon.

I just want to follow up on some of the comments and documents that resulted from budget 2023. It was identified there that Global Affairs Canada was to be provided with up to $51 million over two years to continue supporting Canadian responses to U.S. softwood lumber duties in efforts towards a lumber agreement and reaching one.

As part of that, the government identified five key pillars. The first one was ongoing legal proceedings and defence. In their documents, they talk about how there are currently 10 active legal cases contesting unfair U.S. duties on Canadian softwood lumber. I know that it would take too long here, but would you be able to table for this committee a status update of those 10 cases—the dates that they started and where we stand now?

One of those pillars talks about pursuing a negotiated resolution. It talks about how the department leads efforts to unify region-specific priorities into pan-Canadian positions. Can you provide a status update on that in terms of unifying the region-specific priorities into pan-Canadian positions and how that is working?

They talk about advocacy and how targeted advocacy strategies are deployed. What is the current status of the targeted advocacy strategies being deployed in support of a successful resolution of this dispute? Who are you working with, both in the United States and here, to support that? Can this be costed? How much of the $51 million is going towards advocacy and programs?

They also talk about Canadian stakeholder engagement and consultations. Is engagement with the interlocutors in developing and negotiating a legal defence position that reflects the views from across the country currently happening?

Finally, there is the administration of export permits. Global Affairs has a legislative mandate to issue permits for exports of softwood lumber and logs. Are you able to share with us how active the verification process is right now, given the mill closures, ongoing duty disputes and forestry sector stakeholders moving operations south of the border?

Hopefully, in terms of some updates on those five key pillars—they were identified in the budget—you could table with this committee that type of information, because it would take more than five minutes to provide these answers. I just wanted to get that into the record. Would you would be able to provide some of that?

[Aaron Fowler]

I certainly can.

If I may, I'll just take about 30 seconds to say that, for all of this money, none of it is going to programming. For example, none of it is going to, say, an advocacy campaign in the United States. It supports the engagement of officials at Global Affairs Canada to do the things that you described, including to engage in advocacy to support our litigation approach.

There's no particular reason that Global Affairs Canada should have a softwood lumber division. We would hope to eventually reach such a solution that we don't need to have one. The work we do on softwood lumber is not funded through the normal budget allocation of the department, Global Affairs. It's provided periodically through specific budget line items. That is what the $51 million over two years is. It's intended to support our internal efforts, but we can certainly provide an update along the lines that you've requested on the specific elements.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Mr. Fowler.

Quickly, going back to the March meeting with the stakeholders and the minister, the name that was brought forward to be an envoy was that of former ambassador David MacNaughton. On that whole notion of appointing joint emissaries, was that topic ever broached with the Americans on their side in asking if they would be willing to do that as well and appoint an envoy? We're talking about appointing someone on our side. Have the Americans rejected it outright?

[Aaron Fowler]

The Americans have communicated to us that they're not interested in negotiating at this time, so an envoy whose job would be to focus on advancing the negotiations I would assume falls very much into that category.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

They just rejected it outright.

[Aaron Fowler]

At this point in time....

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Chair, how much time would I have left?

[The Vice-Chair, Conservative, Kyle Seeback]

You have10 seconds.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

I'll cede my 10 seconds.

[The Vice-Chair, Conservative, Kyle Seeback]

We'll go Mr. Sheehan for five minutes.

Mr. Sheehan, you're on mute.

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

I think he was going to cede some of his time to me.

Mr. Sheehan...?

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes.

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

Mr. Chair, how much time do I have? I'm conscious that we're coming up to 5:30 p.m.

Are we doing one full round for all of the parties?

[The Vice-Chair, Conservative, Kyle Seeback]

Yes, we'll finish this round. You have about four minutes and 40 seconds.

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

Mr. Fowler, you raised something earlier and I need some clarity on this. I'll also ask Mr. Owen to pipe in.

You started talking about constitutional impediments. I believe you were talking about entities like the National Association of Home Builders, etc. You talked about their having to waive their right to petition. I was looking up this right to petition under the U.S. Constitution. It's protected under the First Amendment.

Can you flesh out what exactly you're talking about? What is required, or what is impeding entities like the National Association of Home Builders from participating in some of this work we need from them as allies, in order to assist in sorting out this softwood lumber dispute?

[Aaron Fowler]

I'll invite Mr. Owen to speak to this.

[Michael Owen]

I believe my colleague misspoke slightly. It's a U.S. statutory right that exists under the Tariff Act of 1930. Any U.S. industry has the right to petition the U.S. government—the U.S. Department of Commerce, in particular, and the U.S. International Trade Commission—to investigate unfair trade practices that include alleged subsidization and dumping. They have that legal right under U.S. law. That's something of a foundation stone, if you will, or a touchstone of U.S. trade policy. In order for us to conclude the 2006 softwood lumber agreement, one thing the U.S. Lumber Coalition had to do was have a substantial majority of its members essentially waive that statutory right to start a new petition.

We could reach an agreement, but if they have a right to start a new series of investigations the next day, that wouldn't do anyone any good. They have to waive that right as part of the agreement, which is what gives them such influence over the potential start of negotiations.

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

Okay. The entity we're talking about is actually on the lumber side, not the home builders side. That's one. When the agreement was reached in 2006, which endured for approximately 10 years.... Did they waive that right successfully in 2006 to allow that agreement to take place?