International Trade Committee on Oct. 27th, 2025

[Michelle Auger, Director, Trade and Marketplace Competitiveness, National Affairs, Canadian Federation of Independent Business]

Thanks, Corinne.

While tariffs and direct costs continue to pose significant challenges for small businesses, many are also struggling with non-tariff barriers that limit their ability to trade effectively with the U.S. and Mexico.

Barriers such as the complex licensing rules, complex customs procedures, regulatory differences and other administrative requirements often make it difficult for small businesses to fully benefit from CUSMA. There’s a need for better coordination amongst all government departments, agencies and those involved in trade. Businesses often face overlapping requirements, unclear communication and a lack of responsiveness when seeking clarification on cross-border issues. For small firms, even those short delays or a lack of guidance can have major financial consequences.

Another challenge lies in the rules of origin and ensuring that products are CUSMA compliant. For many SMEs, determining and proving origin is an extremely technical process that can vary depending on the product's composition and supplier documentation. All of this adds uncertainty for small businesses that are importing components or raw materials before they're exporting that final product. The result is that many SMEs simply avoid cross-border trade altogether because of the risk of non-compliance or the administrative burden involved.

Also, SMEs are struggling with the rollout of CBSA’s new CARM portal. Its financial guarantee requirements are often inaccessible for many smaller firms, and the platform itself remains difficult to navigate.

The loss of the U.S. de minimis threshold has also been particularly difficult for small exporters, which essentially removes an important cost and paperwork advantage that helped facilitate low-value shipments into the U.S.

Labour mobility is a key concern. While CUSMA was meant to ease some of the temporary movement of professionals across the borders, many small firms continue to encounter inconsistent interpretations of the rules at ports of entry. The uncertainty adds time, cost and risk for many SMEs trying to send staff and service providers to their U.S. clients.

In short, reducing regulatory misalignment, simplifying border processes and improving communication among government and businesses would go a long way in helping SMEs succeed in North American trade.

Historically, we've seen that trade agreements really reflect more of the priorities of large firms, while small businesses, which make up 98% of all Canadian businesses, have been under-represented. While CUSMA takes an important step forward by including a dedicated SME chapter that called for information-sharing platforms, an SME committee and digital trade supports, there’s still a lot of room to do more to help small businesses navigate trade in North America.

As we approach the review, we urge that a small business lens be applied across all relevant chapters of the agreement so there is a focus on the needs of small businesses, not just in one key chapter of the agreement but throughout the entire agreement. Chapters such as rules of origin, custom administration, trade facilitation and digital trade are just a few that could include the small business lens to really help small businesses navigate the agreement.

We thank you for your time today. We look forward to answering any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Hamel, go ahead, please, for up to five minutes.

[David Hamel, Operation Manager, Scierie Clermond Hamel Ltd.]

Thank you, Madam Chair.

I'd like to thank all the committee members for giving me the opportunity to talk to them about our reality and what we're actually experiencing, day after day, in the softwood lumber industry.

My name is David Hamel. I'm the operation manager at Clermond Hamel Ltd., a family business that has been based in Saint-Éphrem-de-Beauce for over 135 years now. My sister France, my brother Nicolas and I are part of the fifth generation to work there. Our story begins in 1890 with my great-great-grandfather, who operated a small sawmill powered by water from the river. Today, we've become a large, modern sawmill producing 150 million board feet of wood per year. One hundred per cent of our wood comes from private forests.

We produce wood that can be found in homes, businesses and infrastructure across the country. That represents approximately 4,000 trucks of finished products every year, not including chips, sawdust, shavings and bark, which account for just as much. We employ over 140 people, many of whom have been there for over 30, 40 and even 50 years. They're passionate workers who care deeply about their profession and the region. Around 100 indirect jobs also depend on our activity.

Over the years, we've consistently invested in technology, automation and training to always stay the best and be the leaders in our field.

We're currently going through an extremely difficult period. Since August 9, tariffs imposed by the United States on Canadian softwood lumber have skyrocketed. We've gone from 14% to over 35%. Since October 14, an additional 10% has been added. In concrete terms, we're now paying 45% in tariffs to export our wood. I said “we” because, in the softwood lumber sector, it's the exporter who pays the anti-dumping and countervailing duties and the Trump tax.

The result was that a company like ours, which was still making a profit in July, went into deficit overnight. Before those increases, half of our production went to the United States. Today, we export barely 5% of our production, so we've turned inward to the Canadian market. All of our competitors have done the same thing, and the result is that the Canadian market is being inundated with wood. Prices are falling, and it's getting worse every week. In three months, the price of two-by-fours in Canada has gone from $2.91 to $2.60, down by 12%, while our costs continue to rise.

In Canada, forestry accounts for a total of 495,000 direct and indirect jobs, a GDP of $34 billion and exports of $45 billion. In Canada, our sawmills are some of the highest performing in North America. Almost 95% of them are already highly modernized and equipped with the latest technology. We don't need loans to become more productive, we already are, and that would only make it worse. What we need is a bit of breathing room at a time when the pressure is getting unbearable.

That's where the government can really improve things. It has to make us independent from the United States. It should give us back the money from the retaliatory tariffs that it imposed this year. It's also important to stop saying that there's a housing shortage in Canada and ensure that homes are built with wood, while rewarding those who use wood in their construction. All construction and renovation of public buildings should use wood. Another way to help us would be to reduce costs at the source, including harvesting, transportation and energy costs, which would enable sawmills to have a better supply cost. The government could also negotiate a different agreement with the United States on mills that source 100% from private forests, as was the case between 2006 and 2015, since the supply costs are higher than those for public forests.

Softwood lumber isn't just an export product; it's a source of national pride, a unique know-how and the economic heart of many regions like ours. If nothing is done, a part of our industrial history is at risk of disappearing, along with the jobs of the thousands of workers who will have given everything for their craft.

The bottom line is that we're not going to be able to hold on for very long while suffering financial losses, and we need help quickly. The Canadian market is being inundated with wood, so prices are dropping every week. The current market also isn't enough to consume all the wood produced, so it's important to stimulate wood consumption, and quickly.

The time to act is now.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Viel, go ahead, please, for up to five minutes.

[Carl Viel, President and Chief Executive Officer, Québec International]

Madam Chair, ladies and gentlemen, dear committee members, thank you for the invitation and the opportunity to speak to you this afternoon. I'm joined by Émile Émond, senior economist at Québec International.

As a leading partner of regional economic development agencies, Québec International facilitates and supports business growth and accelerates their success in Quebec, Canada and internationally, all with a focus on sustainability and diversity.

As the economic development agency for the Quebec City region, we support businesses in attracting and retaining international workers and students, we prospect for foreign investment and we support technological entrepreneurship, export and marketing, and the development of sectors of strength, all for the benefit of our ecosystem.

In 2024, in a context marked by uncertainty and a slowdown in the Quebec economy, our team supported 177 projects and more than 1,800 businesses and organizations, generating $1.34 billion in economic spinoffs in investments in the region, the third consecutive year above the billion-dollar mark.

As the regional export promotion organization, or ORPEX, for the national capital region, Québec International offers local, front-line services to SMEs to facilitate their international market development efforts.

For over 150 years, the supply chain has been interconnected between Canada and the United States. With North American free trade agreements, it is common for raw materials from one country to be processed and assembled in another and then sold in a third.

Today, U.S. tariffs are at their highest level since the 1930s. This situation has a tangible impact on the approximately 800 exporters in the Quebec City region, particularly those directly affected by these tariff measures. In response, Québec International, in collaboration with several partners, has organized events specifically focused on market diversification.

In June 2025, 92% of Canadian exports to the United States still crossed the border without being subject to tariffs, largely due to the Canada-United States-Mexico Agreement, or CUSMA.

The U.S. market is crucial for Quebec City businesses. There is every reason to believe that the United States will remain their main international trading partner, given its geographical proximity and the size of its market. The market access made possible by CUSMA is beneficial for the development of local businesses. It also serves as a strong argument for attracting foreign subsidiaries to the region, which contribute to our economic development.

However, in the current context, diversification is no longer a luxury: it is a necessity. To successfully develop new markets with other international partners and within Canada, SMEs need support, sometimes financial, but above all, personalized guidance. Successfully penetrating a market outside Quebec takes time—about two years—and requires significant resources and effort.

It is therefore essential to support organizations such as Québec International that assist these companies. With our contacts, network and knowledge of different markets, we can provide adequate support to companies, particularly SMEs, to help them succeed.

Our activities generate significant benefits for the regional economy. In 2024, our foreign market development team supported 15 new exporting companies, and the various export and marketing activities generated economic benefits of $26 million.

Here are a few priorities. First, the government needs to train and support businesses, particularly in their market diversification. To do so, it must intensify support for organizations such as ORPEX and Québec International to equip SMEs in their market diversification and strategic use of the CUSMA. Second, the government needs to give SMEs a voice. That means including all sectors and, above all, including the perspective of Quebec SMEs during consultations to ensure that their needs are considered during the joint review of CUSMA—

[The Chair, Liberal, Judy Sgro]

Excuse me, Mr. Viel. My apologies for having to interrupt, but the members have many questions. I'm sure you'll be able to get the remainder of your testimony in with those questions.

Thank you very much.

Mr. Groleau, please.

[Jason Groleau, Conservative, Beauce, QC]

Madam Chair, witnesses, good afternoon.

Mr. Hamel, the Clermond Hamel sawmill is a leader in the forestry sector in Quebec. It's a company in the most beautiful region of Canada, obviously Beauce, which I love to repeat. It's specifically in Saint-Éphrem, a proud little village in my region where there are a lot of businesses. I'd like to mention that you and your family are involved in your community and have generously contributed to it for decades. Congratulations, Mr. Hamel.

Now I'd like to talk about American tariffs, which have reached 45% in your field. That's significant. What are the immediate consequences for your company? You mentioned this, but who pays those tariffs?

[David Hamel]

I would like to clarify something.

Many people think that duties are paid by the Americans, but in our field, exporters are always the ones who pay the duties. When one of our trucks transports lumber across the border, we are the ones who write the cheque at customs. We're basically paying a 45% tax. Roughly speaking, for a truck carrying around $20,000 worth of lumber, $9,000 is thrown into the wind.

[Jason Groleau, Conservative, Beauce, QC]

I imagine your profit margin isn't 45%.

[David Hamel]

No, far from it.

[Jason Groleau, Conservative, Beauce, QC]

The fact is that you're selling at a loss right now.

[David Hamel]

That's right. The Canadian market is currently adjusting to the exchange rate with the American market. If the price goes up in the American market, it will go up somewhat in the Canadian market based on the exchange rate. However, that doesn't take tariffs into account. If lumber sells for $500 U.S. per 1,000 board feet, for example, it will be a little more expensive in Canadian dollars because of the exchange rate, but it won't be enough to offset the duties.

[Jason Groleau, Conservative, Beauce, QC]

Basically, you're losing money.

You said that your company used to export 50% of its production, but that is now down to 5%. I imagine that many companies in Canada are in the same position. You're now saturating the Canadian market. What effect does that have on it?

[David Hamel]

It means that the price drops every week. Right now, we know that the Canadian market can handle a little more, but winter is coming. We're very concerned about what's going to happen this winter, because construction slows down a lot during the cold season in Canada. We've often turned to the U.S. market in the past, but we won't be able to do that this time, and there is no way we are going to pay 45% tariffs to sell lumber.

[Jason Groleau, Conservative, Beauce, QC]

You said you didn't need loans to become more productive. What did you mean by that?

[David Hamel]

This is a very interesting topic. Sawmills have greatly automated over the years. Canadians are world leaders. In Quebec, we have the best sawmill machinery manufacturers.

However, even if we receive money to become even more productive, we'll simply produce more lumber and flood the market even more. Where we need help is in finding tricks to lower our production costs. Adding a sawline is not going to get us there. Yes, it will lower our production costs, but we'll just produce more lumber. I mentioned energy, for example. Why is diesel more expensive in Quebec than elsewhere in Canada? Perhaps we could get forest fibre more efficiently using electricity. In our business, we use a lot of diesel. You have to transport the lumber from the forest to the mill and then from the mill to the customer. As I often say, it's a very large product, but it's not worth much.

[Jason Groleau, Conservative, Beauce, QC]

Mr. Hamel, you said that we needed to stimulate the use of Canadian lumber in the construction of Canadian buildings. That's an extraordinary thing to say. What did you mean by that?

[David Hamel]

During the downturn we went through between 2008 and 2015, I believe, the government put programs in place to help the forestry industry, at least in Quebec. I don't know if it was the same elsewhere in Canada, but the government made it mandatory to use wood to build things like schools and hospitals. That is something that needs to be put back in place. Maybe it already has and I'm unaware, but I just wanted to point that out.

Now, in Quebec, we are allowed to build wooden buildings up to 18 storeys high. It's the same in Ontario and British Columbia, while the limit is 12 storeys in the other provinces. Also, if we could manufacture modules in advance, buildings could be put up in record time. Wood has a lot of advantages, but it will definitely take some enticement.

[Jason Groleau, Conservative, Beauce, QC]

Then it's easy to produce. You don't have a production problem.

[David Hamel]

That's right. Stimulating the lumber market would just require help to train the companies that are used to building a certain way. If that happened, we could put up buildings very quickly. In a week, we could have a new building in place.

[Jason Groleau, Conservative, Beauce, QC]

You said that the forestry industry creates 490,000 direct and indirect jobs in Canada. The steel sector creates 25,000 jobs and the aluminum sector creates 10,000.

We hear the Liberal government talk a lot about steel, autos and aluminum. Why isn't it talking about lumber? Why isn't it talking about forestry?

[David Hamel]

It's hard for me to say, but I think it's really focused on the big cities and not so much on the small towns.

[Jason Groleau, Conservative, Beauce, QC]

The rural regions are cast aside.

[David Hamel]

That's my impression, but I can't really say.

[Jason Groleau, Conservative, Beauce, QC]

Thank you.