Natural Resources Committee on May 30th, 2023

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

No. It's right there.

[The Chair, Liberal, John Aldag]

We have 30 seconds left if anybody wants to answer.

[John Williams]

I'm honestly not cognizant of that approach, so I really can't answer the question.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

The Canada-China Foreign Investment Promotion and Protection Agreement is a treaty between Canada and the People's Republic of China. It gives Chinese investors superior rights to Canadian investors to seek damages. That's just to explain if you're not familiar with it.

Given the investments that were made by the People's Republic of China bank, which you said, on the record, has now been completely paid off, that was the concern.

[The Chair, Liberal, John Aldag]

We're out of time. Thank you.

With that, I'd like to thank....

Mr. Angus, you have a point of order.

[Charlie Angus, NDP, Timmins—James Bay, ON]

On a point of order, I want to follow up on Mr. Blois' comments. He had asked if they would be willing to submit papers, but I didn't get any specifics. I was thinking of maybe the corporate ownership structure so that we could at least see how Mr. Wijaya controls operations in Canada.

[Kody Blois, Liberal, Kings—Hants, NS]

The intention of my statement, Mr. Chair—I would be happy to seek some procedural guidance on this—was that I wanted to have on the record that the executive leadership team here from Paper Excellence is willing to disclose what this committee reasonably thinks is necessary to be able to do that. Obviously, there's a legal dynamic to that. I don't have anything specific in mind.

Certainly, as I sit here as a committee member trying to distinguish between some of the elements that were being raised versus the answers that were there, I want to make sure, at the end of the day, if there's something more that can help demonstrate and bring confidence—I see Mr. Williams nodding—I was trying to flush out what that could be. That was really the intention of the question.

[The Chair, Liberal, John Aldag]

I'm happy to work with our clerk and the analysts to determine what has been asked and to put that to our representatives from Paper Excellence to see what response we get back.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

It's just that it's hard to give an answer when you don't know what the question is. If there are more specifics, I think that would be more my preference.

[The Chair, Liberal, John Aldag]

We'll go through the record and see what we can pull out as specific requests. There were a couple of other things that were asked, so we'll pull that together in a comprehensive package to send to the witnesses.

[Kody Blois, Liberal, Kings—Hants, NS]

Mr. Chair, if you'd like, I can put it a little more specifically, since Mr. Angus asked. I would ask that the members from Paper Excellence, at their discretion, provide whatever they think could be helpful to this committee to determine the validity that the connection to the People's Republic of China is not of any direct relationship, and any information to help to try to bring down the concerns that have been raised generally in this committee.

[The Chair, Liberal, John Aldag]

We will send a formal request to—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Just on that—

[The Chair, Liberal, John Aldag]

Go ahead, Charlie, and then we need to wrap up and get to our second panel.

[Charlie Angus, NDP, Timmins—James Bay, ON]

It certainly should be whatever this committee thinks is necessary. I don't think we should haggle back and forth here, but we could talk about what we feel in terms of follow-up, and if follow-up is necessary in paperwork, we'll ask for that.

[The Chair, Liberal, John Aldag]

We do have time at our meeting on Friday, where we can carry on this conversation.

With that, I would like to thank our panellists again, not only for coming today but for coming for a second time, although the first time was not productive due to circumstances beyond our control. Thank you so much.

With that, we're going to pause and pull in our second panel.

[The Chair, Liberal, John Aldag]

Welcome back. We're back in session.

Thank you to those joining us remotely for standing by. Welcome to those who are here in person.

If you weren't here for the first part of the meeting, I just want to welcome you. We are in hybrid, so those of you online have access to the floor audio, which is the real-time language being used, or to the English or French interpretation. If you want to chime in, you can use the “raise hand” function and then take it down.

For those joining us remotely, we ask you to mute and unmute yourselves. For those here in person, we have a team here that will do that.

Folks, we were 45 minutes late starting today because of the votes. We normally go through and have five-minute opening statements from each of the witnesses. We have four different groups and individuals represented here today. Only one of the opening statements was received in bilingual format. Those were circulated.

We have until no later than 6:10 today. First of all, I apologize for the late start, but that was beyond our control because of votes.

This is going to put our witnesses on the spot. On Friday, we do have an hour of time set aside for in camera report review, and I am willing to take that time if our witnesses, on short notice, would be available to join us on Friday. You don't have to answer right now, but if there is any hope of having you, our time slot is 9:45 a.m. to 10:45 a.m., Ottawa time. That's when we would be looking at inviting you back to continue today's discussion. I don't know if we can get a thumbs-up if anybody knows yes, no, absolutely not, or “I'm not sure”. We do want to hear what each of you has to say, and that is the easiest time we could make available. It will just help me guide the opening time.

I saw one thumbs-up.

We have Dr. Christian Leuprecht from the Royal Military College, whose notes have been distributed in bilingual format, so we could also ask to forgo an opening statement to save five minutes there. We could do abbreviated rounds for members, but if witnesses would be available to come back, we can carve out some time on Friday.

Okay, we have one “no” for Friday.

If there would be a willingness, we could explore having you back even next week. We'll try to squeeze in as much as we can today. We could perhaps also do somewhat abbreviated statements, although that's not entirely fair, so I'll give you five minutes on the clock for your opening statement. If you can cut it off shorter, then we can get into some questions. We'll do, perhaps, an abbreviated first round of questions, and then we'll see if we can get you back to finish off this panel.

With that—

[Charlie Angus, NDP, Timmins—James Bay, ON]

I'm sorry, Mr. Chair.

You're saying that we're going to do five-minute opening or abbreviated.... Then are we going to do a five-minute round? For me, I want to know if I'm doing a full round or not. Otherwise, it's—

[The Chair, Liberal, John Aldag]

Let's see where we get to when we're done the opening statements and how much time we have left before 6:10. Then I'll divide that by four to see how much time that will give each of us.

Randy.

[Randy Hoback, Conservative, Prince Albert, SK]

I just want to make sure that they get their full five minutes because—

[The Chair, Liberal, John Aldag]

Yes, I'll start the clock for five minutes for each of the three, and then we'll go to our representative from the Royal Military College to see if he would like to make his opening statement as well, although it has been circulated and hopefully read by everyone.

Let's jump into this.

Welcome, everyone. I apologize for the chaos today.

In person with us right now, we have the Forest Products Association of Canada.

I'll start the clock, and you'll have the floor for five minutes. Let's get this started.

[Derek Nighbor, President and Chief Executive Officer, Forest Products Association of Canada]

Thank you, Mr. Chair.

I'm Derek Nighbor, president and CEO at Forest Products Association of Canada. My colleague Mahima Sharma is with me. She is our VP of innovation, environment and climate policy, and she's our in-house chemical engineer. We're going to talk a bit about some of the energy transformation happening in our sector, and her expertise and experience will be valuable to that discussion.

I look forward to talking about how we can work more collaboratively and in an impactful way with the federal government to accelerate decarbonization and to strengthen economic prospects for individuals and families in our mill communities, which—as most of you know—tend to be in more rural and northern parts of our country.

You heard a bit about it earlier today, but our sector is very much an integrated sector, so our pulp and paper mills and biorefineries are dependent on sawmills for their leftover wood chips or what would otherwise be wood waste. That's what feeds them, and for the sawmills, the sale of those chips provides an important revenue stream to strengthen their bottom line. It's our own little circular economy, if you will, in forestry.

The goal is to minimize waste and to get value from every part of the harvested tree, and in parts of the country that are more vulnerable to fires—and we're seeing that right across the country, unfortunately, with a very early start this year—finding a market for these chips means they're not piling up to become kindling for the next fire season.

I'll say a couple of quick things on the forest management side of things. Our sector plants 400 to 600 million seedlings annually to regenerate our forest landscapes and to keep them as forests forever. About 50% of Canada's forests are unmanaged, so the sector is actually operating on about 50% of our forested land base. Given our commitments to conservation and biodiversity, sustainable management, whole-of-ecosystem management and community values management, about half of our managed forest today is under some kind of a conservation measure.

Mill GHG emissions are down by about 60% since the early 1990s. We have an opportunity to do more with your support.

One of the things we actually talked to Minister Wilkinson about last week was the importance of a clear industrial action plan for the forest sector to accelerate decarbonization and economic growth. I think we've seen a lot of energy around the oil and gas sector, critical minerals and electric vehicles and batteries, but we think there needs to be a similar play with forestry in the weeks and months ahead, and our international competitors in those countries are doing just that.

I'll pass it over to Mahima.

[Mahima Sharma, Vice-President, Innovation, Environment and Climate Policy, Forest Products Association of Canada]

Thank you, Derek.

In its recent annual report, Canada’s Net-Zero Advisory Body highlighted the forest sector as one of Canada’s seven priority sectors and specifically noted the competitive risks that stand before Canada’s forestry and steel sectors, given the aggressive subsidies and tax credits from the U.S.A. Inflation Reduction Act.

Finland and Sweden have embraced the carbon-capturing power of forests by creating integrated strategies and incentives to leverage the full forest-sector value chain. We need Canada to do the same or we risk falling further behind our global competitors.

In addition to the U.S. Inflation Reduction Act, the U.S.A. has doubled down on its forest biomass play by including forest biomass as something that is eligible for investment tax credits, but Canada has yet to respond. While budget 2023 included in detail the social, economic and environmental benefits that forest biomass can provide, it stopped short of including its enabling technologies in things that are eligible for investment tax credits, which has left us with a massive competitiveness gap vis-à-vis the U.S.

Including forest biomass technologies in the investment tax credit for clean electricity as well as the investment tax credit for clean technology manufacturing is essential for Canada to capitalize on its abundant forest biomass resource and to accelerate progress towards our climate goals.

We’re not just looking for financial tools and incentives. We're also looking for policy coherence. While the federal government took the necessary steps in budget 2023 to recognize forest biomass for its clean-fuel potential, its clean-fuel regulation is more ambiguous. Although designed to incentivize cleaner and greener energy, the clean fuel regulation, to date, still does not recognize the sustainability attributes of biomass sourced from Canada’s independently certified and audited forests, and we would like to see this fixed.

There are two other game-changing plays in the decarbonization space for the pulp and paper sector—lime kiln decarbonization and bioenergy with carbon capture and storage. I would be happy to speak to these opportunities in more detail during the question and answer period.

In closing, with a more deliberate approach on industrial strategy, a more inclusive approach on investment tax credits, better policy coherence and tailored programs to accelerate lime kiln decarbonization and bioenergy with carbon capture and storage, we can attract more investment to Canada, improve our global competitiveness position and do more to achieve our shared climate goals.

Thank you for your time and your attention today.

[The Chair, Liberal, John Aldag]

Thank you for being within the five minutes for your opening statement.

We'll jump now to Dr. Leuprecht.

I will give you the opportunity for up to five minutes for your opening statement. Take as much of that as you'd like. The floor is yours.

[Dr. Christian Leuprecht, Professor, Royal Military College of Canada, As an Individual]

Thank you, Mr. Chair.

I'm going to shorten my speech, which will be in English. I will, however, welcome your questions in both official languages.

My overall concern here is to ensure a level and competitive playing field for foreign direct investment in Canada and that the investment we see here may not meet that test.

It appears that Paper Excellence may have been and may still be in violation of Canadian law by effectively circumventing Canadian law. That may also be the reason why Paper Excellence continues to be intransparent and not forthcoming about its foreign resourcing, nor about its ownership structure.

I'm concerned about the structure behind the company, but I'm also concerned about the pace at which it has acquired a significant share of a Canadian business here. If another business acquired 21% of, say, the telecommunications media or the airline business in Canada, and we had the sorts of questions that we have here about financing and ownership structure, Canadians would be up in arms, especially in Quebec.

For a purportedly foreign entity that may be connected to China, there are interesting questions here. Why were transactions allowed to proceed? Was this in the public interest? Do these transactions comply with a particular competition law? Do they comply with Canada's foreign investment laws?

It reveals that Canada's posture is yet again inadequate in terms of identifying, disrupting and possibly deterring potentially malicious intent in terms of foreign investment. It's also another reason why this government needs to get the financial crime agency of Canada up and running.

I provide a comparison here with the United States, where, if this investment had proceeded, it would have required a proactive disclosure to the committee on foreign investment, known as CFIUS, which is in the Treasury, where the office of investment security is housed, along with the financial intelligence unit. We would have had a proactive disclosure of foreign funding, and that would have flagged suspect resourcing, ownership, reporting and control structures.

What we need, then, in this country is something that mirrors CFIUS. Canada needs proactive disclosure of foreign direct investment in Canadian companies and real estate by means of a Canadian equivalent of the U.S. Foreign Investment Risk Review Modernization Act of 2018 and the political will to deter possible deliberate misrepresentation or obfuscation of foreign financial flows into Canada, as well as control of Canadian companies.

This case raises Canada's potential vulnerability to foreign economic interference and manipulation across a vast spectrum.

Thank you for your attention.