International Trade Committee on June 12th, 2023

[Colin Carrie, Conservative, Oshawa, ON]

I think it has to be at the highest levels. I was wondering, and perhaps you could comment, because I was going to talk to Mr. Bromley about jobs. A good friend of mine is a union steward in a mill, and there are concerns on the ground.

Could you comment on investments in the industry in the last few years or a hesitancy to make investments to improve our productivity because of the uncertainty and maybe foreign direct investment? You could even talk about the opportunities that we have; however, they might be held back because of this uncertainty.

[Trevor Kennedy]

Perhaps this is a broad comment, but what we saw with CUSMA entering into force was the restoration of certainty in the industry and across many industries, not just the softwood lumber industry. With that, we've seen companies comfortably make long-term investments for a number of sectors. Unfortunately, we haven't necessarily seen that extended to the softwood lumber industry, so we would welcome any initiative that could bring the certainty that other industries have experienced through CUSMA to those firms.

[Colin Carrie, Conservative, Oshawa, ON]

I'm just concerned; it seems to be getting worse. You mentioned buy America instead of improving.... We have buy America thrown at us, and the WTO is not working either.

Perhaps, Mr. Krips, you would be able to comment on the idea of these investments. Mr. Arkle said he has equivalent shutdown mills. I'm hearing that people are really concerned about it. This is a great opportunity. We know that Canadian lumber will help with climate change, and it just seems not to be a priority. Would you be able to comment on the amount of investment we're perhaps losing out on unless the government makes this a super priority?

[The Chair, Liberal, Judy Sgro]

I am sorry, Mr. Carrie, but your time is up.

Mr. Krips, perhaps you could give a brief answer to a long question.

[Jason Krips]

Certainly. Thank you, Madam Chair.

I would certainly echo Mr. Kennedy's comments around needing certainty. Business always needs certainty. It certainly helps with the investment climate. I would say that, from a forestry perspective—from an Alberta perspective—a number of factors go into what that certainty looks like. There are a number of policies that are not just federally driven but also provincially driven, which can impact....

To cut a long story short, we very much believe in the sustainability of our industry and the fact that we are a key contributor to reduction and net zero by 2050. The more we can get investment certainty.... That will help with increased investment for forestry within the country, and in Alberta in particular.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I will go to Mr. Sheehan for five minutes.

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

Thank you, Madam Chair.

I want to make the following statement.

We have forest fires happening all across Canada. We're thinking about all the people who work in the forest—“in the bush”, as we say in northern Ontario—and their safety.

Thanks to all the fire crews out there protecting people, and those people's livelihoods as well. Thank you for that.

My first question, Madam Chair, is for the Business Council of Canada.

Can you provide an analysis of the political and economic factors within the United States that contribute to their current stance on the softwood lumber dispute and hinder the prospect for negotiations?

[Trevor Kennedy]

I'm happy to weigh in.

To our understanding, at least at the administration level, this has not been a priority. I know we've seen some public statements from the USTR, indicating that they would be open to a negotiation. However, we know we haven't been able to move the discussion forward, at least with this administration, and I suppose the previous administration as well. We're aware of groups like the Lumber Coalition in the United States, which have favoured delaying a negotiation and are perhaps providing political support for the approach the administration is taking.

Within Congress, it's a bit more complicated. We've seen some congressional leaders, like we did last year, express support for a softwood lumber agreement. I know that when Ambassador Tai testified in front of the House ways and means committee earlier this year, she was asked by some members of Congress what their approach was. There are some supportive voices in Congress, and there are also voices critical of Canadian lumber policies. In certain parts of the country, there are areas where they have an industry they're protecting.

It is a complicated political environment, but we know that all three parties—this includes Mexico, as well, through USMCA—value the agreement. Once again, the certainty it provides.... We think the agreement.... Collectively, business communities across all three countries support the implementation and enforcement of the agreement. It is critically important that all three countries honour the agreement and understand this in that context as well.

We are hopeful that we'll at least be able to create the political conditions in the near future to get the United States to come to the table and have an honest discussion about how we can resolve this dispute for the long term. That would be a favourable development.

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

Thank you for that.

My next question is going to be for the New Brunswick Lumber Producers.

Frank, my college roommate, was from Dalhousie, New Brunswick. His father and his summer jobs were at the mill there. I've heard about that area quite a bit.

My question to you is this: In your opinion, what role can the Canadian lumber industry, alongside the government, play in advocating for negotiations and demonstrating the importance of resolving the softwood lumber dispute in both countries' economic interests?

[The Chair, Liberal, Judy Sgro]

Excuse me, Mr. Sheehan. Can you get your video back on, please?

There you go. Thank you. Please continue.

[Jerome Pelletier]

Thank you for the question, Mr. Sheehan.

As you know, we live in a large country. The forest regime in every province is different. It's a complex issue to start a negotiation.

I think the answer to your question here is that the industry has to work very closely with the government on developing a negotiation strategy. I believe the more interactions we have early on with Minister Ng, or any members of Intergovernmental Affairs, to work on building what that framework should look like.... That is key to starting a constructive and effective negotiation with the USTR.

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

There seem to be slight differences between the provinces, as was mentioned by one of the speakers here.

In Ontario, my brother-in-law worked for the provincial MNR on softwood for years—going back years and years.

What seem to be the differences that the Americans are getting hung up on?

[Jerome Pelletier]

I'm not sure whether the Americans have a specific opinion on a specific province or a specific item in the Canadian industry. I can't answer that question, unfortunately.

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

I'll perhaps go to the one who mentioned that there were provincial differences. I don't know whether it was Jason or Nick who mentioned it.

If you don't have a lot of time to answer that, maybe someone could submit it in writing.

[Jason Krips]

Quickly, that was more about the different policies at a provincial level that impact growth in a forestry sector.

I apologize if I misspoke, but I was not speaking to U.S. differences within Canada. We very much believe in a team Canada approach when we look to negotiating a softwood lumber agreement. It has to be, absolutely, a team Canada approach.

[The Chair, Liberal, Judy Sgro]

Thank you. Your time is up.

Mr. Savard-Tremblay, you have two and a half minutes, please.

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

Thank you, Madam Chair.

Mr. Arkle, a representative of your company, Mr. Reedy, appeared before this committee in 2006 and criticized the 2006 Softwood Lumber Agreement as an "abomination". That was the last time a solution was found to this dispute.

In anticipation of upcoming negotiations to reach a new agreement which will hopefully be a lasting solution, what would you recommend to avoid repeating the mistakes of the past and which your company denounced back then?

[Nick Arkle]

Mr. Reedy has been gone for a long time. I imagine that views and approaches have changed dramatically since then. My understanding is that back in those days, there were two groups in B.C., with differing views of how this should be approached.

Today, as I mentioned, we are members of the BC Lumber Trade Council; therefore, we support and are supporting the messaging from the BC Lumber Trade Council on a combined and collaborative effort. Going to Jason's point, that then fits into the team Canada type of approach.

The “abomination”—boy, that's a strong term—was before my time. That certainly isn't the approach we would take today.

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

That's perfect.

Earlier, I asked all the witnesses whether they had been consulted, given the recommendation to consult more closely with the lumber industry, which came out of the study we conducted last fall on the relationship between Canada and the United States. Have you been further consulted since then?

[Nick Arkle]

I certainly would have been, through the BC Lumber Trade Council. I sit on that board, so any kind of communication coming back from Ottawa through the BC Lumber Trade Council I would have been part of.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, you have two and a half minutes, please.

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

Thank you.

I'll continue with Mr. Arkle.

You mentioned, as I was questioning you earlier, the headwinds that the B.C. industry faces through reduced fibre supply, beetle epidemics, forest fires, etc. What is a real black box for me in this whole thing is how the U.S. sets the rates of these illegal tariffs. I'm wondering if those changing circumstances for the B.C. industry in particular are taken into account by their methods, by how much farther you have to go to get trees and by all of those extra costs because of that reduced supply.

[Nick Arkle]

I don't think that comes into any of the thinking. It's all about the value of the product going across the border. The costs associated with that aren't considered at all.

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

Theoretically, though, these tariffs are in place because they think your costs are too low, at least the cost that you pay to obtain the rights to harvest that timber.

[Nick Arkle]

Yes. It's an interesting dilemma, because the world we live in today is very different from how it was when these disputes started. A lot of the assumptions that were being fed into the dispute.... As you point out, there's a lot less fibre supply today. There's a lot less lumber going across the border today. It's going at much higher cost. It's a very different world.