Natural Resources Committee on Nov. 6th, 2025

[The Chair, Liberal, Terry Duguid]

I call this meeting to order.

Everybody seems in very good spirits this morning. That's nice to see. It's nice to see that collegiality.

Let me start by acknowledging that we are meeting on the unceded territory of the Algonquin Anishinabe nation.

This is meeting 12 of the Standing Committee on Natural Resources.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders. I would like to make a few comments for the benefit of our witnesses who are online today. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. Also, at the bottom of your screen, you can select the appropriate channel for interpretation: floor, English or French. Do be mindful of our interpreters and their ears. Don't speak too quickly, and keep foreign objects away from your microphones.

Before we dive in, some time ago you requested that the minister come to see us. I know that the minister wants to honour that request. We're working on a time for him to come to talk to you about his mandate and the supplementary estimates. We're thinking either the week after the constituency week or the week after that. We're going to work with his schedule. As you know, the tradition is an hour with the minister and officials and then an hour with the officials alone. That's to let you know that we're trying to tee that up for you and honour the request the committee made some time ago.

Pursuant to Standing Order 108(2) and the motion adopted on Thursday, September 18, the committee resumes its study of the forestry industry.

I would like to welcome our witnesses on the first panel. They are all on Zoom today.

We have, from the British Columbia Council of Forest Industries, Kim Haakstad, president and CEO. From the Canada Wood Group, we have Bruce St.John, president; and, from the Independent Wood Processors Association of British Columbia, we have Andrew Rielly, the board chair.

To our witnesses, you will each have five minutes or less. Please do your best to stick to the time.

Ms. Haakstad, you have the floor for five minutes.

[Kim Haakstad, President and Chief Executive Officer, BC Council of Forest Industries]

Wonderful. Thank you, Mr. Chair and the committee, for the opportunity to appear before you today.

As the chair said, my name is Kim Haakstad, and I am the president and CEO of the BC Council of Forest Industries, or COFI.

COFI represents the majority of lumber, pulp, paper and manufactured wood product companies across British Columbia. It's a sector that remains a cornerstone of our economy and of life in more than 140 communities across B.C. Forestry in B.C. sustains nearly 100,000 good-paying jobs. That's one in 28 jobs in British Columbia and, importantly, it's one in six manufacturing jobs. That represents about 24% of B.C.'s exports.

In many towns, forestry isn't just an industry; it really is the community, but today B.C. is the highest-cost forestry jurisdiction in North America. Companies are contending with uncertain wood supply, regulatory complexity and, of course, the punitive U.S. duties and tariffs, which combine for an average of 45% on softwood lumber producers.

The result is, as I know many of you have seen, that mills are closing. Contractors and businesses along the value chain are struggling, and families are worried about their future.

However, British Columbians still believe in this industry. Eighty-seven per cent say resource development is key to our future growth, 84% agree that forestry plays a vital role in wildfire resilience and 73% have an overall favourable view of the forest sector.

Forestry can and must remain a cornerstone of Canada's economic and environmental future because forestry is a truly renewable industry. In parts of British Columbia, we are now harvesting third-growth forests. We have been at this a long time, and we keep getting better.

Forestry and all resource development in Canada can and has to be about “and”, not “or”—economy and environment, reconciliation and jobs, rural and urban prosperity—because forestry is a solution to many of the challenges we face as a society. For housing and carbon goals, wood is a renewable, low-carbon building material that we need, from family homes to tall timber towers. For wildfires, active forest management reduces the fuel that drives catastrophic fires. Salvaged wood, when harvested quickly enough, can become lumber—not just pulp, paper or other bioproducts.

For economic development, forestry supports contractors, transport companies and many other suppliers throughout the value chain in every region of the province of British Columbia and throughout our country.

For reconciliation in B.C., more than 20% of forest tenures are now held by first nations, with new partnerships embedding indigenous stewardship and ownership throughout our value chain.

To keep people working and communities strong, we need a team Canada approach that treats forestry as the strategic sector it is. As you have already heard and will hear from my colleagues across the country, the sector in Canada is more united than it has ever been, and we see federal and provincial governments working together. That is even stronger when industry is also in the room.

Coming out of this week's forestry summit with B.C. Premier David Eby and Minister LeBlanc, we're calling for a coordinated federal-provincial work plan focused on three priorities.

The first is a fair and durable softwood lumber agreement with the United States. The long-standing dispute undermines confidence and threatens jobs in every region of Canada.

The second is faster and simpler access to federal support programs. A single-window approach and timely rollout of the softwood response package will help companies keep operating and workers stay employed.

The third is regulatory and permitting reform. We support strong environmental standards and indigenous partnerships, but duplication between federal and provincial systems adds costs and delays. Streamlining those processes will improve competitiveness and maintain confidence.

Of course, there is also market diversification, which Bruce will talk more about. It's really important, when we think about getting more markets in Asia and Europe, that they complement, not replace, our core relationship with the U.S. market.

The strength of Canada's forest sector will depend on restoring predictability, securing fair trade and ensuring that companies can invest and operate with confidence, because forestry is not just an economic engine; it is part of the climate solution. Every year, we harvest less than one-third of 1% of B.C.'s forests. For every tree harvested, three are planted. That's sustainability in action. It's supporting jobs, storing carbon and renewing the resource for generations to come.

With governments working together and with industry and labour ready to be at the table, we can build the conditions for a strong and sustainable Canadian economy, where forestry continues to play a central role.

Thank you, Mr. Chair and the committee. I look forward to your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Ms. Haakstad.

We're now going to Mr. St.John.

You have five minutes or less.

[Bruce St.John, President, Canada Wood Group]

Thank you, Mr. Chair and members of the committee, for the invitation today and for making a discussion on the state of Canada's forestry industry a priority.

The Canada Wood Group is a not-for-profit, industry-government partnership that was established in 2003 to focus on diversifying export markets for Canadian wood products and construction systems. Representing the full geographic and product diversity of Canada's forest sector, Canada Wood operates as a united team Canada platform, supported by industry, the Government of Canada and provincial governments.

With the current trade dispute with the United States and 45% combined tariffs and duties, it's critical for Canada to diversify its markets away from the United States and grow offshore export markets.

From 2015 to 2024, Canada's offshore lumber and OSB exports contributed over 126,000 job-years of employment across Canada, generated over $10 billion of labour income earnings nationwide, delivered over $690 million of government tax revenue, added nearly $20 billion to Canada's GDP and delivered a return on investment of $15 for every dollar invested in promotion. The Canada Wood Group has contributed to this using its staff located in China, Japan, Korea, Vietnam and the U.K.

We've communicated to all of our stakeholders the importance of increasing market share and growing offshore markets through our key strategic focuses. The first is regulatory alignment and code access. That is working with regulators, engineers and building authorities to align foreign codes and technical standards with the performance characteristics of Canadian wood products and systems, including seismic-resilient, fire-tested and energy-efficient assemblies.

The second is demonstration projects. We deliver and support high-profile demonstration projects that showcase Canadian timber and hybrid systems, catalyzing broader adoption and influencing local procurement and code decisions, as well as proof of concept.

The third is market activation and buyer engagement. Canada Wood connects Canadian manufacturers to international buyers through trade missions, seminars, road shows and business-to-business networking events, building trust in the Canadian wood brand.

The fourth is in-market infrastructure and collaboration. We are funding our lean, hybrid staffing model, which utilizes experienced technical staff and contractors located in offshore markets. They work in direction coordination with Canada's trade commissioner service and provincial government partners to maximize efficiency and impact.

It's critical to have consistent, long-term funding that allows for multi-year research and market development. When building relationships with governments, universities, technical organizations and trade, we cannot be in and out. Most programs take years to develop, since they are highly technical in nature and require multi-year funding.

While the industry has contributed consistently to offshore promotion, in today's current market circumstances it's not in a position to increase its funding. We ask that the government increase its percentage share of programming and contribute to increased market diversification. Increased government funding will strengthen Canada's ability to reduce reliance on the U.S. market and expand trade resilience; open commercial access in priority offshore regions, particularly in Asia and Europe; promote Canadian innovation in low-carbon, climate-smart construction systems; support rural and indigenous economic development through export-led growth; and align with federal priorities under the Build Canada Homes plan, the Indo-Pacific strategy, and the 2030 emissions reduction plan.

Again, thank you for your invitation today to present the opportunity for offshore market diversification. Thank you for your time. I look forward to your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. St.John.

Now we'll go to Mr. Rielly. You have the floor for five minutes.

[Andrew Rielly, Board Chair, Independent Wood Processors Association of BC]

Thank you. Good morning, everyone.

My name is Andy Rielly. I am the board chair of the Independent Wood Processors Association of BC. Our organization has 60 member companies, mostly located in the Lower Mainland and on Vancouver Island. Member companies are small and medium-sized firms, all non-tenured, engaged in the value-added manufacturing process of B.C. softwood. We represent roughly $2 billion in sales and employ 3,800 people directly. Roughly 70% of our production ships to the United States.

I have been employed in the B.C. value-added industry since 1984, having worked at Sauder Industries and MacMillan Bloedel. In 1995, I started my own company, Rielly Lumber.

Over the past 41 years, I have witnessed a great deal of change in the forestry industry. This is the fourth time I have experienced a softwood lumber dispute with the United States. In my four decades of enjoyable and rewarding work in the value-added business, I have never seen a critical situation facing us like we have today. I would like to offer my perspective as the association board chair, employer, investor and business owner, particularly as it relates to the softwood lumber dispute.

I'd like to stress what the committee needs to understand. First is the critical urgency of the situation facing the forestry industry and the value-added sector; second, the financial and emotional strain small and medium-sized companies are facing; third, some ideas on how to resolve the present crisis; and lastly, the potential good news, if the right things are done quickly.

In the past 10 years, the forestry industry in British Columbia has been reduced by roughly 50%. If we want to reduce it by another 50%, let the situation continue that we have now, and that will happen in five months. The only companies left in the value-added sector here in British Columbia are the survivors. These are well-financed second- and third-generation companies that have established supply lines and customers. These companies react quickly to situations, but if they face an extended period of losses, they will close or move to the United States. The very bad news is that once they are gone, they are not coming back.

The committee needs to understand the raw numbers facing the softwood manufacturers in Canada. Most small and medium-sized companies need to secure a U.S. customs bond with cash or a credit line. In most cases, when Canadian companies ship to the U.S., they get a weekly bill for the duties and tariffs. That duty bill is due before the customer pays them.

Rielly Lumber manufactures western red cedar, which is the most expensive species in British Columbia. This week we shipped one truck of finished products to the U.S. The value of the truck was $197,000 U.S., and the duty and tariff portion was $61,000. That bill will come to us this morning, and it's due to be paid to U.S. customs next Thursday. Add in the threat of a retroactive increase in duties that have already been paid for in 2023 and 2024. This situation is not for the faint of heart. That bill could be over a $1 million for our company alone.

What are the options to resolve this? There are two options.

We need a trade deal that involves softwood. The very best way to move forward is this option. If the U.S. says it does not want to talk about softwood now, Canada has to pivot and say, “If you want to talk about energy, critical minerals and the golden dome security strategy, we have to include softwood.” We have to create some leverage, as the WTO and CUSMA are ineffective at this time. A trade deal provides certainty to enable companies to invest and employ.

If option one is not there, the federal government must buy the duty deposits that each Canadian company has at the border. This provides liquidity for the affected companies. It ensures the government has the incentive to retrieve the deposits. The expenses will be somewhat secured, as, historically, a good portion of these deposits have come back to Canada. At this time, our company has paid over $13 million, and that money is at the border now.

The good news is that the possible silver lining is based on my historical experience. Once a softwood trade deal is reached, our biggest market will be more open to us than it is now. Some level of certainty will encourage Canadian companies to invest and employ in our country. The drain of companies relocating to the U.S. will be stopped. Any duty deposits that return to Canada will be reinvested at home, fuelling growth. After the 2006 settlement, the B.C. value-added sector flourished for 10 years.

The value-added business has been good to me. It's been good to our family. I'm proud of it. I think it's worth fighting for, and I hope you agree.

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you very much, Mr. Rielly.

I thank all of our witnesses for their crisp testimony. All of you were on time.

We're now going to our rounds of questions.

We're going to start with Mr. Malette for six minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

My question is for Ms. Haakstad.

In British Columbia, how many communities depend on forestry?

[Kim Haakstad]

Well, we say that there are forestry jobs in 140 communities in British Columbia. Often people think of forestry in B.C. as being a rural industry, but 25% of the jobs are in B.C.'s Lower Mainland, the greater Vancouver region. It's a massive contributor, and in some communities, we are still the largest employer.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

How many jobs would you say have been lost in the last six months?

[Kim Haakstad]

It's hard to tell, because most of them have happened in the last couple, and obviously those statistics lag. However, we are hearing news of curtailments and closures nearly every day.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

Mr. St.John, you talk of other markets. What would be the capacity of India and China if the government and your association pushed hard? What percentage would they take away from other markets?

[Bruce St.John]

Let's take a look at China as an example and consider that Canada has 250,000 building starts per year, Japan has 900,000 and the United States has 1.5 million. China has 6.5 million annual housing starts. We started in China 20 years ago, and it's been a slow process, because they had no wood building codes at that time. What we've been doing is investing and working collaboratively with them to put in building codes.

If you have 6.5 million housing starts, that's a huge potential. It's very slow right now, just due to the general economic circumstances in China and to the housing situation there and construction, so right now we most probably have somewhere in the neighbourhood of around 1% or 2% of the market. Therefore, we have a much, much larger opportunity to grow that market.

In India, it's a bit different, just because there are some climate issues, given the rain and humidity. Also, there are pests like termites and so on, so it's slower in India. We have done some work in India already to get started, but it's very, very slow to take off because of India's traditional building style, which is to use concrete.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Wouldn't you have other markets in furniture manufacturing?

[Bruce St.John]

Yes, India is a very, very large furniture manufacturer. It has smaller manufacturing segments than what you'll see in North America, China or Vietnam, for example. We have staff in Vietnam, and they're very focused on furniture, the majority of which goes to the United States. It's under threat from duties—or tariffs—right now, but there's a large hub in Vietnam and in India. We work collaboratively with the B.C. government, and there's the High Point area in North Carolina that we work with collaboratively to develop that market for Canadian wood that goes into India and Vietnam.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Would the industry in Canada have to retool to supply that furniture market in India?

[Bruce St.John]

There are some instances where it would make sense, especially with some of the value-added communities, for example, but they do a large.... Mostly they break everything down over there in India or in Vietnam, and then they have to process it correctly, dry the wood properly, to make the components for the furniture.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

I want to go back to China. You have the numbers on the housing starts. It's a tremendous market.

Do you have in your forecast...? How long would it take us to penetrate that market with a substantial...to replace a good part, a strong part, from the United States?

[Bruce St.John]

It's going to take a number of years; there's no question about it. As I said, we've been working at it for 20 years so far. Our focus right now is primarily on the non-residential construction, and we're starting to work on the urban renewal, which is building houses in the rural areas of China. We see that as a very large opportunity, but it's going to take a number of years. There's no question about it. It takes quite a long time to do these things. You know, codes and standards can take upwards of 10 to 15 years to get developed. If you're working on market development in terms of different building systems, you develop it, and it takes three to five years to develop a system. Then you have to promote it, and it can take another five to 10 years of work to do that.

It's not a short situation by any means.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

It's not a solution for the immediate future and the tragedy we're having with U.S. trade.

[Bruce St.John]

No. China is very cost-conscious as well. Especially right now, with the war over in Ukraine, there's a lot of volume coming from Russia and going into China right now. Russia's shipments into China have grown quite dramatically. For us, what we do is we focus on value, as opposed to volume, per se. The value makes more sense for us, because, if it's going to be strictly on competing with Russia, it will be very difficult to compete with them on their pricing.

[The Chair, Liberal, Terry Duguid]

Your time is up, Mr. Malette. Thank you so much.

Mr. McKinnon, go ahead for six minutes.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thank you, Mr. Chair.

I have so many questions but so little time. You've all spoken of the softwood lumber agreement and how imperative it is.

I'm going to start with Ms. Haakstad. Can you tell us this: What are the essential features that we need to see in that agreement, and what do you see as the chief impediments at this point?

[Kim Haakstad]

It's a bit hard to describe the conditions when we're in a venue like this—and we very much agree with the approach that the federal government is taking on not negotiating the terms in public—but we need to make sure that it's a good deal. We can't take just any deal at any percentage, just because we're at 45% combined duties and tariffs right now. We need a deal that actually provides long-term certainty and predictability and continues to allow a good share of our products into market. If we end up under a system with a very tight quota, it means that our provincial industries are fighting with each other to decide who gets the biggest share. We need to make sure that the terms of any agreement have that broad-based opportunity for the sector all across the country.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

My recollection is that this kicked off, originally, in the early nineties, because U.S. producers felt that Canadian stumpage fees were too low, and they felt that gave us an excessive advantage in the market. Is that still a concern, or has this progressed way beyond that?