Natural Resources Committee on Feb. 26th, 2021

[The Chair, Liberal, James Maloney]

We're on the record and I'll say this. My practice, if we hit the time on the button, is to not interrupt witnesses if they appear to be close to finishing an answer. I did it when you asked your last question. I try to do that with everybody regardless of who's asking the questions. Sometimes it doesn't work out as precisely as I would like. I plan to continue that practice unless the will of the committee is that I stop people no matter what, right on the button. If you were to check the blues for this meeting and other meetings, they would reflect that I'm pretty fair with everybody's time regardless of which party they are with.

But again, I thank you. I will admit that sometimes it blows up in my face when I let them go on, and I regret it, but that's my burden to bear.

Mr. May, go ahead.

[Bryan May, Liberal, Cambridge, ON]

Mr. Chair, I would seek some guidance, maybe from the clerk, if we're suggesting that members of Parliament do not have the right to call a point of order on relevance. First of all, that's a misinterpretation of the rules, and for the future, yes, the chair should be jumping in, but if the chair isn't jumping in, members should have the right to call relevance on an issue.

[The Chair, Liberal, James Maloney]

Mr. May, I thank you again for the comments.

I'm not a fan of frequent and repetitive points of order. Relevance is always a guiding principle at this committee and everywhere that we are carrying on our business. I don't intend to let anybody on this committee usurp my decision-making, but if people want to raise a point of order, they are within their rights to do so. It's then up to me to rule on whether it's appropriate or not.

I don't know that we need a ruling.

I see Mr. Cannings' hand is up. I'm going to let him speak, of course, but I would like to move on to questions because we do have witnesses who are sitting here patiently watching this. As much as they may be enjoying it, I'm sure they would rather have questions from us.

Mr. Cannings.

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

Mr. Chair, when we have the minister before us to question about the estimates, most of the questions that are put to the minister at that time have very little to do with the estimates. Basically we can ask the minister anything and that's what we do.

I'm siding with Mr. Patzer. I think it was fair game, as much as I thought the minister did face a lot of questions about forestry. I wanted to point that practice out. It's probably not in Bosc, but I think it should be considered.

[The Chair, Liberal, James Maloney]

It reminds me of that scene in A Few Good Men. Not everything's in the book, but people follow certain practices.

I don't see any more hands up, so let's move on to carry on the discussion with our witnesses.

Mr. Lloyd, I believe it is your turn, appropriately.

You have the floor for five minutes to ask questions of our remaining witnesses.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

I'm not sure exactly which witness would be best suited, but here's one of the questions I had. There is a new U.S. administration. We know the previous administration was refusing to fill key WTO roles, which was really gumming up the works for the appeals process on softwood lumber. Is there any line of sight on where the new U.S. administration is going in terms of filling these vacancies?

[Arun Alexander, Director General, North America Trade Policy Bureau, Department of Foreign Affairs, Trade and Development]

Thank you, honourable member, for the question. It's a very good question.

My name is Arun Alexander. I'm the director general for North American trade policy.

As you stated correctly, the previous U.S. administration had created issues with respect to creating a quorum for appellate body members. The new U.S. administration under President Biden has displayed a willingness to work with allies, as the minister stated. With respect to the WTO, it has been supportive of filling the director-general position that had been vacant.

We see that as a good sign that the new administration is willing to engage on WTO issues. I would just state that both Democratic and Republican administrations have raised concerns about the appellate body and dispute settlement process at the WTO, but we take this sign that the U.S. has engaged on the filling of the director-general position as a positive sign that they would be willing to engage with partners at the WTO and to resolve the quorum issue at the appellate body.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

Maybe this would be also appropriately guided to you as it's on North American trade policy.

In our negotiations with the United States, they made claims about our stumpage rates being below market value. This is the justification for their countervailing duties and tariffs.

We have carbon taxes in Canada. We're talking about a clean fuel standard. It's quite clear that our government has more taxes on industry. Particularly, I was speaking to a sawmill owner in my riding. They have kilns, which they use to dry the lumber. Their trucks are burning a lot of diesel and gas to move these products. The cost of the carbon tax and the soon-to-be-announced clean fuel standard will represent yet another increase in the cost of their inputs.

Is this being used at the trade negotiation level to show the Americans that our cost of doing business is higher because of taxes? Is this bearing at all on the negotiations?

[Arun Alexander]

Thank you very much, honourable member, for the question.

As you noted, the U.S. takes issue with the difference in our stumpage rates because our system is based on a public land ownership system versus the United States, which is based on a private land ownership question. In our minds—and I think it's a state of fact—our market rates are fair.

With respect to environmental issues, the Biden administration has shown a very keen interest in addressing issues like climate change and environmental issues in general. I think that the Canadian green forestry practices are a selling point for the forest industry.

I can speak personally. I was the head of the Canadian trade office in Japan. I can say that Canadian green forestry practices were a huge selling point in Japan when people were looking to purchase lumber. This differentiated us from our competitors.

I think our positive environmental practices will hopefully be seen as another positive with the Biden administration in negotiations.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

I don't want to get into a political debate on this one, because I know you're a bureaucrat, but a bit of an observation is that when we're dealing with our trading partners to the south, they might appreciate that we're putting on more taxes and being more green in our industry, but whether or not that's reciprocated by them raising similar taxes so that our industries can be on a competitive playing field with each other is a whole other matter.

One of the other concerns that has been raised—and maybe you're not the appropriate person—is that we have sky-high lumber rates right now in Canada, and I know the industry is happy about this, but they're concerned about the future. What actions are we planning in the future to ensure that this industry can remain sustainable?

[Arun Alexander]

I'm not sure that I'm best placed to answer the honourable member.

Maybe I'll ask Colin Barker, who is the director for the softwood lumber division, if he can speak to that.

[Colin Barker, Director, Softwood Lumber Division, Department of Foreign Affairs, Trade and Development]

Hello and thank you. I'm Colin Barker and I'm the director of the softwood lumber division at Global Affairs Canada.

The high lumber prices at the moment are insulating companies against the impact of the duties, certainly, so that is helping companies weather the current situation. Obviously there are negative impacts on consumers and the homebuilding sector as a result of those high prices, so it's not sustainable in the long term, and eventually prices will come back down as supply is increased. Certainly, the lower the price goes, the more impact the duties have. Over the past few years, the price has been at a favourable level, but we can't assume that will always be the case.

As the minister pointed out, it certainly will be our priority now that the new administration is taking shape to investigate ways that we can perhaps arrive at a new negotiated agreement to this dispute. Certainly, our efforts on the litigation side will also help to increase the pressure on the U.S. to come to the table, as will our co-operation with groups in the U.S. such as the home builders association. Their press release was pointed out earlier in the discussion. They're an important advocacy ally in the U.S. to convince the administration and Congress that it's time to come back to the table on this issue.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Lloyd. I gave the witness a bit of extra time there. I hope you don't mind.

Mr. Sidhu, I believe you are next.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to the department for being with us today.

We all understand the importance of the forestry sector. It supports over 200,000 jobs across Canada and it's 1% of our GDP. I'm happy to hear that most of the sawmills that closed during the early days of the pandemic are now back up and running and to see communities back to support their mills and the industry in general.

I'd like to hear from the department about how they are supporting the forestry sector in diversification. What are their thoughts on that?

[Arun Alexander]

Thank you very much for that question.

Supporting the forestry sector is a key priority of the department, and we look at it in probably three ways. I'll turn to my colleague Rosaline Kwan, who works directly in the trade commissioner service, to provide more detail.

We look at it in these three ways. One, we look to diversify markets and look for new markets internationally for Canadian forest products. Two, we look to promote new innovative products. The minister made reference to high-rise buildings. There's the 14-storey Brock Commons wood structure at the University of British Columbia, which we promote very much as new technology that is safe and green. Three, we try to attract investment from foreign investors into the Canadian forestry sector.

Those are our three priorities in promoting diversification, but I'll turn to Rosaline to provide more detail.

[Rosaline Kwan, Director General, Trade Sectors, Department of Foreign Affairs, Trade and Development]

Thank you, and thank you, honourable member, for your question.

Mr. Chair and members of the committee, I'm Rosaline Kwan, the director general for trade sectors at Global Affairs Canada. I myself am a trade commissioner and part of the trade commissioner service. I'll quickly say thank you to those of you who have expressed your appreciation for our service in your work with us and in the work of your companies with us. We're always very happy and committed to supporting Canadian companies in the forestry sector.

As my colleague, Arun Alexander, mentioned, trade diversification is our priority, and as very well elaborated by Minister Ng, we look at trade diversification in a number of ways. She mentioned the markets, whether they're in Europe or Asia or elsewhere. We also work with Canadian companies to look at the wonderful and new innovations that they have and that they're working on to help them take advantage of those opportunities in the marketplace globally. I should also mention that as part of the trade commissioner service, we have regional offices across Canada as well as over 160 missions around the world. Our regional offices across Canada work with companies in their regions to be able to support their businesses.

In the forestry sector, of course, our trade commissioners work very closely with those you might know in the sector from your areas or constituencies. That's more general on trade diversification in terms of markets.

I also wanted to touch a little bit on looking at new and innovative products using Canada's innovation capacity through our forestry sector, which has been impressive, as the minister mentioned, not only through the pandemic but also in terms of looking at biopolymers and bio-based composites, biofuels, to be able to take advantage of the growing opportunities around the world. Part of our job is to help support them to identify those opportunities and to be able to tap into those opportunities so they themselves can get into the supply chains of opportunities around the world.

Through that, the minister also talked about some of the work that we do, whether it's virtual trade missions, whether it's working directly with companies, whether it's through the CanExport program, through a number of tools that we have to be able to help further the objectives and support the important companies in this sector across Canada. Of course, we continue to place this as a priority, as it was clearly stated, in terms of how we help to support trade diversification for the forestry sector regarding Canadian companies.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you for that.

Mr. Chair, how much time do I have left?

[The Chair, Liberal, James Maloney]

You have about 15 seconds, so you're essentially done.

[Maninder Sidhu, Liberal, Brampton East, ON]

Okay.

Thank you for that insightful answer.

[The Chair, Liberal, James Maloney]

Thank you.

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

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair. I'll ask my questions quickly because I have two and a half minutes.

I spoke to the minister earlier about the fact that some forestry companies were having trouble receiving funding from CED. When these companies engage in primary wood processing, they're told that they can't receive funding from CED because of the trade agreements. The companies are referred to Global Affairs Canada. However, the companies have told me that it's almost impossible to receive funding.

Can you explain this to me?

[Arun Alexander]

Mr. Chair, the government has made available numerous funding programs both in response to the tariffs themselves, the softwood lumber action plan, or SLAP, as we call it, as well as in response to the COVID pandemic crisis. In devising these programs we have to be very careful to ensure that they are consistent—

[Mario Simard, Bloc, Jonquière, QC]

Sorry, Mr. Alexander. I don't have much time. I simply want to know whether it's impossible for forestry companies that engage in primary processing to receive support from CED, even if they do business only in Canada.

[Arun Alexander]

The very short answer, then, honourable member, is no, it is not impossible. Such industries can receive financial support from Canada as long as the financial support that they receive is consistent with our international trade obligations. Just to be clear, yes, they can receive support from Canada.