MONTRÉAL - Resolute Forest Products CEO Richard Garneau made the case for free trade in the wood products industry with the U.S., noting that managed trade increases volatility, creating an unpredictable and unstable trade environment between the two large trading partners.
Canadian demand is not enough to absorb output of Central Canadian sawmills
Garneau advocated to the Canadian Parliament's Standing Committee on International Trade for free, unencumbered access for softwood lumber exports from Central Canada (Quebec and Ontario) to the U.S. market.
Garneau challenged the claims by some that the previous 2006 Softwood Lumber Agreement between the United States and Canada produced predictability and stability. 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. 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.
Resolute is Canada's largest forest products company and the largest producer of softwood lumber east of the Rockies. Garneau has spent over 40 years in the field.
"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. 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.
"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," says Garneau.
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