Natural Resources Committee on Feb. 26th, 2021

[Arun Alexander]

Thank you very much. It's a very good question.

I understand the Europeans and the United States are both considering carbon border adjustment measures. The level of policy development in each is probably in the earlier stages.

Canada also is taking very strong measures with respect to carbon and climate change. I think we have an opportunity to work together with the United States, the European Union and other allies to address the challenges of climate change and carbon border adjustment measures multilaterally. I think Canada should seize this opportunity and work with our allies to make sure we develop a system that recognizes the strong green practices of the Canadian economy, Canadian companies, Canadian provinces and the federal government.

I'll ask if any of my colleagues would like to add anything to that.

I'd be happy to answer any other questions.

[The Chair, Liberal, James Maloney]

It sounds like the answer was no.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you for that, Mr. Alexander.

Maybe this next question is for Mr. Owen.

We've talked about it already, but the World Trade Organization ruled that U.S. tariffs on Canadian softwood lumber exports were unjustified. The U.S. is now appealing that decision to the U.S. appellate body, but there isn't quorum right now because the U.S. has been blocking the mechanism to appoint new judges. Without the appointment of new judges to this appellate body, what recourse does Canada have before the World Trade Organization?

[Michael Owen]

That's an excellent question. Thank you.

I didn't introduce myself the last time. I'm Mike Owen. I'm the director of the softwood lumber litigation division in the trade law bureau at Global Affairs Canada. That's not to be confused with Mr. Barker's softwood lumber division. The names are similar.

In terms of moving the WTO litigation forward, all of the WTO litigation, regardless of whether it has been brought by Canada against the United States or it involves other countries, is currently awaiting a multilateral discussion about the future of the appellate body and the resolution of that with the new U.S. administration. I don't really think there is a way to move things forward without first getting the appellate body back up and running.

I will say, importantly, that the WTO obligations—

[Mario Simard, Bloc, Jonquière, QC]

Excuse me, Mr. Chair, but we can't hear the interpretation anymore. Perhaps the witness can bring the microphone closer to his mouth.

[The Chair, Liberal, James Maloney]

If you could adjust your mike boom and speak a bit louder, Mr. Owen, that might solve the problem.

[Michael Owen]

Certainly. I am very sorry.

One important thing to bear in mind with respect to the litigation is that the World Trade Organization's obligations under the WTO Agreement on Subsidies and Countervailing Measures, which the U.S. was found to have violated, are very similar in some respects to the obligations in U.S. law. The United States implemented those obligations in U.S. law when it adopted the WTO agreements. The decision at the WTO is, I think, persuasive, analogous and on point. It is something we can bring before the NAFTA and CUSMA panels to argue that the decision is also equally inconsistent with United States law. There are different standards of review in the two systems, but there is a lot of parallel between the legal obligations.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Owen.

With this and some of the challenges with this in mind, I'm wondering if one of the witnesses could speak to some of the work we're undergoing right now to reform the World Trade Organization.

[Arun Alexander]

I will, certainly, honourable member. Thank you for the question.

Canada is very much involved in looking at the World Trade Organization and looking at aspects of reform. As you may know, Minister Ng leads the Ottawa group, which is a subgroup of members of the WTO, and it's looking at ways to reform the organization. It was established in, I think, 1995, so over 25 years ago, so this is a good opportunity to look at the structure, the rules, and the way the organization operates.

I'm very proud to say that Canada is playing a leading role through the Ottawa group to ensure that the reforms of the WTO are effective and implemented.

[The Chair, Liberal, James Maloney]

That's great.

Thank you, Mr. Weiler.

Members, we have nine minutes left in this meeting. We're starting a six-minute round. If we stick to the schedule, we'll get only two more people in. I would be willing to allow time for four people to ask questions, but that would mean sharing the time equally and reducing the question time to three or four minutes each. Does anybody object to that? Okay, good.

We have Mr. Patzer, Mr. Lefebvre, Mr. Simard and Mr. Cannings, and I'll give you three minutes each. We'll start with Mr. Patzer.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much, Mr. Chair.

I'm actually going to move my motion:

That, pursuant to Standing Order 108(1)(a), the committee request the Minister of Natural Resources to appear no later than Friday, March 26, 2021 for consideration and reporting on the Supplementary Estimates (C) referred to this same committee for the fiscal year ending March 31, 2021.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Patzer. I can tell you I've already extended an invitation to him, and my understanding is he's available on March 22 to attend the committee.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Perfect.

[The Chair, Liberal, James Maloney]

We can vote on the motion if you want, or we can just carry on.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Well, I mean, I would...

[The Chair, Liberal, James Maloney]

Put it this way: If you want, we can go straight to a vote and a show of thumbs and just move on to—

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Why don't we go to a quick vote, just to get it on the record? I would greatly appreciate that.

[The Chair, Liberal, James Maloney]

Okay, I see all thumbs up, so it's unanimous.

(Motion agreed to)

Thank you, Mr. Patzer.

Okay, carry on.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much.

Mr. Owen or Mr. Barker, what are our realistic prospects for diversifying export markets for softwood?

[Colin Barker]

I'll try to answer quickly, given the time constraints.

Obviously, as has been discussed at length today, we're working very hard to help the industry find new markets for its products. Of course, the United States will always remain the chief market for our products. That is on the basis of geography and also of the cost of transporting lumber over large distances, obviously. However, there are markets around the world for speciality products, and that's where our focus is and will continue to be: to help industry develop innovative products that can find markets around the world for which proximity is not as essential.

That's where the work is focused. Maybe I'll stop there in the interest of time.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you for the quick answer. I have a quick follow-up question.

Will searching for other buyers further strain our relationship with the U.S., do you think?

[Colin Barker]

No, I don't believe so. Our view is that obviously the United States depends on our high-quality wood products for their home construction industry, so we see their duties as self-defeating ultimately. I think we're seeing that play out now with high prices, which are not all due to duties certainly, but the duties are contributing partially to those high prices.

Our view is always that they need our high-quality products, but certainly it's good for the industry to have multiple outlets for its products, depending on market forces and demand, which do fluctuate around the world for different reasons.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you.

Really quickly, I've seen expert speculation, following the DSB's meeting this past Monday, that the impasse at the WTO is likely to continue through 2021. Do you think that is a good guess, or do you believe it is realistic to resolve this problem any sooner than by the end of this year?

[Arun Alexander]

Maybe I'll answer that question.

I think it's very difficult to speculate. I think all members are working towards resolving the appellate body quorum dispute. We will work as hard as we can to make sure the issues that have been raised by some members are addressed. Our goal would be to have a functioning appellate body back in place as soon as possible.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you.