Resolute Forest Products Inc. President and Chief Executive Officer Richard Garneau appeared this week in Ottawa, Canada, before the Canadian Parliament's Standing Committee on International Trade. Testifying in support of free, unencumbered access for softwood lumber exports from Central Canada (Quebec and Ontario) to the U.S. market, Mr. Garneau formally presented his perspective, drawing on over 40 years of experience in the forest products industry across Canada.
Mr. Garneau challenged the claims by some that the previous 2006 Softwood Lumber Agreement between the United States and Canada produced predictability and stability. In his formal comments, and in the question and answer period that followed, Mr. Garneau made the case that managed trade increased volatility, creating an unpredictable and unstable trade environment between the two large trading partners.
While Western Canadian softwood lumber producers benefited from China's extraordinary economic development, logistical limitations mean that Asian markets remain out of reach for Central Canadian producers, said Mr. Garneau. Additionally, Western softwood lumber producers' purchase of some 40 sawmills in the U.S., with a production capacity of some five billion board feet, afford them an important measure of insulation from future restrictive measures, he added.
"To put this capacity into context, it is over 150 percent of the total existing capacity of Ontario's sawmills. Canadian demand is simply not enough to absorb all the production of Central Canadian sawmills," stated Richard Garneau. "We need to be able to sell freely to the U.S. Indeed, that was the whole point of the Canada – U.S. Free Trade Agreement and NAFTA. Just about every industry enjoys free trade, except for softwood lumber," added Mr. Garneau.
In his formal remarks, Mr. Garneau emphasized the incredibly destructive nature, particularly for Central Canada, of the last managed trade arrangement between the United States and Canada.
"The purpose of a deal must not be simply an alternative to litigation. It must be to assure fair and equitable trade," offered Mr. Garneau.
Canadians have won every legal fight with the United States over softwood lumber, he said. Canada has played by the rules and proven according to the law that its industry is not subsidized, and does not cause injury to any U.S. industry. Softwood lumber producers in Quebec and Ontario need and deserve nothing less than free trade, Mr. Garneu said.
"If there is to be a deal, it must recall a principled purpose: that the Canadian softwood lumber industry does compete fairly in North America and pays a fair market price for timber, and that our forestry regimes are market-based. The Government of Canada must not negotiate a deal that does not fully recognize Central Canada's right to free trade," summarized Mr. Garneau.
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