Mr. Speaker, I am pleased to enter the debate again on softwood lumber, a problem that does not seem to want to go away. Today's debate is more in the context of how we might support the industry and the workers who may be affected.
We hear a lot of numbers being thrown out: 30,000 jobs or 40,000 jobs. My guess right now is that those numbers are somewhat exaggerated. Some of the numbers do reflect some restructuring of the industry. Some of the numbers reflect some companies that may be in difficulty. One of the other problems is measuring whether a mill has gone from three shifts to two shifts or has taken some extra down time as opposed to straight out mill closures.
The reality is, whether it is today or in the fall, if no deal is reached with the Americans, and frankly I do not see how can be done, and if the tariff remains, some very serious challenges will be presented to a number of forest products companies in Canada.
I want to come back to the main theme of the motion. The U.S. administration should be absolutely castigated for its lack of involvement in this file. We all know that the U.S. producers have a very strong lobby but if the U.S. administration put its mind to it, it could actually exert more influence on this lobby group. It could better balance the interests of U.S. consumers and homebuilders in the construction industry.
What do the Americans do? They sit back and let the U.S. producers define the terms of the engagement. I think that shows a lack of responsibility on the part of the White House, the president and all his staff.
What we have are basically bullying tactics. When we go to the WTO and to NAFTA, as we have done in the past, it will be proven that we do not subsidize our industry. However, the Americans do not seem to care about that. They just launch another countervailing duty action. In the meantime, from one to the other, they change the rules so they are able to re-launch another countervailing duty process.
Later on in my discussion I will address what we can do to move forward, because having the softwood lumber debate come back again and again is really not in anyone's interest.
We must support the government's position of a two track process, and that is, we take it to the WTO and to NAFTA and, in the meantime, we try to seek out a solution if one is possible.
My own view is that there is no viable solution. The Americans come at it from a totally different perspective. Most of their forests are private lands and they think that auctions are the panacea for everything. We have a system of public forest lands. Even if the Canadian provinces, and it is a matter within provincial jurisdiction, were able to crank it up to 50% or 60% of timber that would be sold by auction, the pricing of timber might even go down.
Right now there are various programs in various provinces where small business operators can bid on timber. A sawmill or pulp mill is able to buy that timber at a certain price because it is at the margin, but if they had to buy all their raw material from auction prices, there are only so many sawmills or pulp mills that are going to be built in Canada. In fact we have probably reached a reasonable limit now in terms of sustainable operations. There is a certain economic price that the mills can sustain. In terms of Canada's traditions and public policy framework I do not think we can move to an auction of 50% to 60%. I am quite sure that is the kind of parameter the Americans are thinking about but I am not sure it is possible in Canada.
I think it is reasonable to seek out a negotiated solution but I do not think one is possible. I do not think a negotiated solution that makes sense for Canada is in the cards because the Americans are coming at this from a totally different perspective.
Where does that leave us? It leaves us to pursue our challenges at the NAFTA panel and the WTO. How long does that take? It may take a year, a year and a half or longer. What will happen to these companies in the fall, especially when they will need to come up with a 27% duty? Some of the large integrated companies, meaning they have sawmills, pulp mills, newsprint operations and panel board mills, will be able to absorb the blow.
A lot of it will depend on what happens to the pricing on softwood lumber. If the pricing stays reasonably high more companies will be able to absorb the duty, but 27% is a huge amount to cover.
I think we should be looking, and I know that our government is looking, at various alternatives. There are different approaches. We could say that we should look after the workers, we should look after the companies or we could do a combination of both. If we look after the companies, in other words, help those companies that will not be able to weather the storm, then by definition if we can keep the company afloat we will help the workers.
The other approach is to go through Human Resources Development Canada but I am not sure it has a lot of creative magic to come up with programs that will be much different or slightly different from those that are already in place. I think that is a reality. If we did that for forest products we would probably have to do it for the automotive sector, the mining sector, et cetera.
While I think we should push the envelope on seeking solutions through HRDC, ultimately the best solutions will be coming in terms of offering support to our forest products companies.
How do we do that? First, a lot of discussions have taken place about taking measures that are not countervailable, in other words, that the Americans could not re-launch another countervailing duty process because the government support constituted a subsidy.
I want to throw something into the hopper here today in this debate. If it were countervailable, and I agree that we should try to keep it as a non-countervailable type of support, but if it were, it would take about a year to a year and a half through the American system for them to attack it and for that to be resolved. By that time, we may have a favourable decision. We will have a favourable decision, if the timing is right, through the WTO and NAFTA. If we win the decision at the WTO and NAFTA, guess what? All those duties will be refunded with interest. I think the risk of that not happening is very slight.
I think our government, either through loan guarantees from EDC or through the Canadian Commercial Corporations being a buyer of softwood lumber in Canada, should manage the risk, charge the companies for that risk on a commercial basis and resell the lumber into the United States market. The Canadian Commercial Corporations already do this. There would be a cost to that but the companies could probably handle the cost of servicing that type of support. When we win at NAFTA and at the WTO, those duties will be refunded. Therefore I think the risk to the government is relatively minor.
We need to look at it on a commercial basis. I do not think the government should try to backstop those companies that are facing financial problems, whether it be because of mismanagement, some bad asset acquisitions or some internal cost problems of their own. It should be done based on a sound commercial footing through those companies that have a solid credit rating. I believe we could do it through the Canadian Commercial Corporations or the EDC.
The reality is that we will need to find some help for the companies and for those employees who have become dislocated. I think we will need to have a bit of both.
Notwithstanding the rhetoric that is floating around, some mills have shut down and some mills are taking additional downtime but the big hits are still to come. They will be big hits and as a federal government we need to be prepared to support those companies and those individuals.
How do we move forward? Can we possibly be back in a countervailing duty fight year after year? I would like to make some suggestions. First, as part of a negotiated solution, if we could get a cross-border commission to deal with these trade irritants more efficiently that would be a great step forward.
NAFTA has worked well for Canada. In fact it has worked so well that about 86% of our exports go to the United States. It is an easy market, a closed market and we need to diversify.
I was just in India with the trade minister on team Canada and the wood products industry has put up a wood showroom in Bombay that is working out very well.
I do not know how we can accept the fact that the Americans talk about an integrated energy market when it comes to a certain commodity, but when it comes to softwood lumber they are sorry, it is not an integrated market. Of course they are both integrated North American markets, wood products and energy. There is no difference.
The Americans want their cake and eat it too. We should play hardball on that issue. I know we cannot link things formally, but I believe that suddenly the energy debate should slow down to a snail's pace and I do not think we would have to draw a picture for the U.S. administration or the elected people.