Natural Resources Committee on Nov. 6th, 2025

[Kim Haakstad]

I think it's fair to say that's still a concern. We strongly believe that the way the U.S. calculates the stumpage and what they call “countervailing duties” is flawed. They're not comparing apples to apples, not only in the way that our stumpage system is built but also in the way that fees are calculated in the United States. You have a group that has much more expertise on this coming up in your next panel, so I would strongly suggest digging into it with them as well.

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

Thank you.

I'll open up those very same questions to our other panellists.

Mr. Rielly, would you like to weigh in on that?

[Andrew Rielly]

Thank you. I can say that, yes, historically, going back to the early eighties, in fact, Mr. McKinnon, is when the initial complaints were lodged. I guess, just with my being a bit of a pragmatist, I would ask why, if Canadian companies have so much more advantage because of the low stumpage system, American companies aren't coming up here and buying our forest companies. It's basically the other way around. A lot of Canadian companies have relocated to the States to be behind the U.S. duty wall, so that is certainly a concern. It's still there.

I need to point out to the committee that this fight right now is about...it's actually U.S. trade law that is skewed towards a lobby group called the U.S. coalition for fair lumber imports, and they control what is being said and done.

There are a lot of value-added companies and non-tenured companies that export to the United States, and it's been proven time and again that we do not get any because we don't hold any tenure. Even if they could prove that there is an advantage to a low stumpage fee, which they have not been able to do, then the value-added people in particular do not get an advantage from it, because we pay the same price for our raw materials as a company from Seattle that takes our raw materials south of the border and produces them there.

One other thing I would like to point out to you is that when a value-added company buys lumber for $1,000, we put $1,000 of dry kiln—planing, chopping and everything—and we sell our product into the U.S. for $2,200. We pay the duty on the $2,200, not on the $1,000 raw material bill. That is called the first mill disadvantage. In fact, a lot of value-added companies pay not only on the lumber; we also pay the duty on our processing. That is the critical situation we're in, as manufacturers here in Canada.

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

I'll invite Mr. St.John to weigh in as well.

[Bruce St.John]

We don't deal directly with the softwood lumber situation, just because we're focused on the offshore.

However, it's critical for the industry to have that strength in terms of continuing to operate, and they're in a very difficult situation right now. We work hand in hand, together, and what we do is offer other solutions for the industry to go offshore, but we're beside the United States, and it's a critical market for us.

Without having that support, the industry overall is going to be in a very difficult situation for many years to come.

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

Thank you.

I think I have about 45 seconds left, so I'll pass. Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. McKinnon.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I would like to thank my colleague Mr. McKinnon for giving me these 45 seconds.

First of all, there is one thing that is essential for the committee to understand: We are in a critical situation. Long-term measures can be put in place for the forestry industry, but before we see any effect, we must ensure that all players in the forestry ecosystem are maintained.

It is in this spirit that I put my first question to Mr. St.John.

I understand that it is essential to focus on developing new markets. However, I strongly doubt that this is possible in the short term for commodity products. First, the use of the imperial system rather than the metric system makes it difficult to consider sending commodities to European markets. Perhaps this will be possible for value-added products.

In your opinion, is it possible, in the short term, to bypass the American market in order to develop new markets specifically for commodities?

[Bruce St.John]

For us, when we look at the markets, we target markets that are not self-sufficient. For instance, if you take the United States as an example, it's 74% self-sufficient. They have to import lumber. It's the same as China, which is 56% self-sufficient. Japan is 71% self-sufficient.

We target the markets where, in the short term, we can at least get as much volume in there as possible, but we're competing against countries like Sweden, which is 400% self-sufficient. They have large volumes that they have to export. That's the same with us. It's the same with Russia. They have to export volumes because of where they're at.

If we're going to compete on price, we're going to be at a disadvantage, just because of the transportation and also because we're a high-cost jurisdiction, so we do try to focus on value and make sure that we can get as much volume with the highest value possible, because that's where we can find our niche into the markets.

That being said, there are low-grade opportunities. For instance, there's a lot of low grade that goes into China and is used for concrete forming and applications like that.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much for your response.

Mr. Rielly, you raised two options.

The first option is to include the lumber sector in the Canada-United States-Mexico Agreement, or CUSMA, negotiations so that we can put an end to countervailing duties and customs duties. Everyone wants that, by the way.

The second option is to buy back the duties. We discussed this in committee earlier this week with the representative from Chantiers Chibougamau. There is a proposal circulating in Quebec, and I would like to hear your opinion on it.

For your part, you mentioned buying back all the duties. I agree with you that this is the ideal solution. That said, it is currently estimated that Canadians have paid $12 billion in customs duties, which are sitting in U.S. coffers. That would be a big pill for the government to swallow. The other proposal circulating is for the government to buy back 50% of the customs duties paid to the United States on a monthly basis, going forward.

Do you support this proposal?

[Andrew Rielly]

On the issue of purchasing the duty deposits, I speak to the provincial government here in British Columbia fairly regularly, and the way they look at the duty deposits the Canadian companies have put at the border is as almost a receivable to us. Historically, that has come back if we went through the regular legal channels or had a negotiated settlement.

This idea has been floated several times by people across the country in order to get liquidity, and, Mr. Simard, the one thing I would like to stress is that we are in an urgent situation. I would certainly like to hold out for a good deal for fear of taking a bad deal, but I need to point out to everyone on the committee that we are in the bad deal right now. We have companies that are facing 45%. Canfor, one of the largest companies in the country, is paying 55%, and they're virtually not able to ship to the U.S. very much anymore.

The idea of the purchasing of the deposits is just a way to provide liquidity that is not a loan and is secured somewhat by the money that Canadian companies have already put in.

Yes, I agree that it's a hard pill to swallow to say, “Yes, there's $13 billion out there that we have all paid”. In fact, as you know, there are hedge fund companies from the United States that are coming to Canadian companies and saying, “We're going to give you guys 30% of what you paid for the first four years if you sign over that receivable to us”, because they are expecting more than 30% to come back.

It's funny how politics works sometimes. The financial markets sometimes don't lie. There is a receivable out there somewhere, and I think that what you suggested is probably a good idea.

[The Chair, Liberal, Terry Duguid]

Thanks to you both.

Colleagues, we're going to our second round of questions, and we're going to start with Mr. Tochor for five minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you very much to our witnesses.

My first question is for Mr. Rielly.

In B.C., even the NDP has criticized the federal government for not having a sense of urgency about the tariff threat to the lumber industry, especially when compared to responses to other industries. Why do you think that is? Why have the government and somewhat the national media ignored the plight of this sector? Why do you think that is?

[Andrew Rielly]

I was in Ottawa in July for a meeting with ministers LeBlanc and Hodgson, and at that time they told a Canadian lumber trade association group, including the value-added companies, that they considered lumber to be as important as steel, aluminum and auto parts. We came out of that meeting, and we were quite encouraged. One of the things that Minister LeBlanc said was that every time he turned around, he was hearing about softwood, softwood, softwood.

We were a little disheartened when they had a mission down to visit President Trump, and after the meeting, Minister LeBlanc said that the three main things they had made headway on were steel, aluminum and energy. At some point between July and this meeting three weeks ago, softwood lumber was not discussed.

It's a contentious issue, as you know. It's never been included—

[Corey Tochor, Conservative, Saskatoon—University, SK]

On that same front, about being disappointed, I would suspect you and many Canadians were encouraged when Mark Carney claimed that he knew how to handle Trump and guaranteed a trade deal by July 21. Would that be another example of where words don't match up with actions? Obviously, we never got a trade deal by July 21 from Mark Carney.

[Andrew Rielly]

Hey, I'm cheering for Mr. Carney to get a trade deal for us as soon as he possibly can, but I will sort of acknowledge that the present administration in the United States is quite protectionist. They're probably not the easiest. I know that Ambassador Hillman is working day and night to try to make headway on this, and one of the things I would like to highlight is that we need to package lumber in with some of these other issues, because they do want things from us.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Mr. Rielly, I understand that you're the board chair and an investor in the industry as well. If you knew that tariffs were coming, would you have divested your interest a bit to protect yourself?

[Andrew Rielly]

That's a great question. We all kind of knew this was coming, but, as I said, I've been through this four times before. It has never gone this long, and I do think there is some responsibility on the federal government for not dealing with it, particularly during the COVID time, when lumber prices were at an all-time high. That was the best time to do it.

[Corey Tochor, Conservative, Saskatoon—University, SK]

On prices, though, were you aware that Brookfield divested its interest in forestry products? I couldn't find any of your members who had involvement with Brookfield. If you could go back in time, they had different funds for it, and then they divested. Is that true?

[Andrew Rielly]

Yes, that is true. I think Brookfield was instrumental in buying the Canadian coastal company, which was MacMillan Bloedel before, so we were—

[Corey Tochor, Conservative, Saskatoon—University, SK]

There wasn't a personal interest for Mark Carney to get a deal in this industry after they sold the shares in those companies, which is a little suspicious.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

I have a point of order, Chair. This is a personal allegation against the Prime Minister. It is extremely offside.

[Corey Tochor, Conservative, Saskatoon—University, SK]

It's accurate.

[The Chair, Liberal, Terry Duguid]

Yes, that's debate.

Please continue.