NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 3, 2000

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): I call the meeting to order.

Pursuant to Standing Order 108(2), our order of the day is a study of Canadian forest management practices as an international trade issue.

With us again this morning we have representatives from the Canadian Pulp and Paper Association. They were good enough to be with us about a week and a half ago, and we were interrupted by proceedings in the House.

We have the vice-president of international trade and government relations, Fiona Cook; the director of international affairs, Joel Neuheimer; and Mr. Tony Rotherham, director of forests.

Before I turn the mike over to our witnesses, I would like to ask members to stay behind for just a few minutes to handle some business. I need all of you here, otherwise we won't be able to get that business done. Mr. Keddy, Mr. Canuel, Mr. Duncan—our members here are a pretty transient group.

In the last intervention we had, we didn't get an opportunity to ask a lot of questions. I know you've updated your presentation marginally. Have you? I thought you did. Okay, let's say you did.

Ms. Fiona Cook (Vice-President, International Trade and Government Relations, Canadian Pulp and Paper Association): We have a French version available this time.

The Chair: Good. Everybody will be happy to get that. Have we distributed it already? Good.

I will turn the microphone over to you, and you can begin by maybe just summarizing some of the salient points that were raised the last time. We'll turn the rest of the meeting into a dialogue with members, because they were anxious to speak with you before, and unfortunately House proceedings cut us off. I don't anticipate the same thing today, but anything can happen.

Ms. Fiona Cook: Okay.

The Chair: Before you begin, let's just get one thing straight here.

[Translation]

Mr. Canuel, are there technical difficulties?

Mr. René Canuel (Matapédia—Matane, BQ): Yes, I'd like it if we could turn up the sound a bit. Thank you, Mr. Chairman.

The Chairman: Very well.

Ms. Cook.

[English]

Ms. Fiona Cook: Thank you very much, Mr. Chairman.

As you noted, we did get cut off last week, and it was our sense that there was an interest in engaging in a more extensive dialogue on this issue.

[Translation]

We are happy to have the opportunity to appear before the committee again.

[English]

In our opening remarks we'd like to—if will you permit us—focus the direction the dialogue may take. We believe the issue has essentially already been defined in terms of trade and sustainable forest management practices. The issue is really that misconceptions concerning Canadian forestry practices risk having Canadian forest products excluded from purchasing decisions that are made by international customers. Today we'd really like to take a look at why this problem exists and what can be done to address it.

We've seen this misunderstanding of Canadian forest practices manifest itself in various forms, through either government legislation or customer-based initiatives. For example, about two years ago the government of The Netherlands proposed legislation that would have discriminated against Canadian forest products if they were not certified according to a particular program.

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In this case it was a fairly simple process to address the issue and have it resolved. It was clearly a government-to-government issue, given that it had manifested itself in the form of legislation. Using WTO rules, the Canadian government was able to enter into a dialogue with the Commission of the European Communities and have the legislation defeated.

We're seeing other cases in the marketplace where the solution is less obvious. They are coming again from this misconception of customers concerning Canadian forest practices. We've seen it with a recent BBC declaration to move toward FSC-based procurement for paper, which effectively would exclude any other paper product that was not certified according to the FSC. Here, we're advocating that the marketplace remain open to various certification programs.

We're also seeing moves in the U.S., on the behalf of municipal and state governments, to similar procurement-based policies. We've yet to see any sort of resolution of this, and it's unclear exactly what federal or provincial governments can do, in this regard.

There's also an issue in Germany right now. German publishers are feeling significant pressure from Greenpeace, and are now turning around and putting pressure on German paper producers, who use a significant amount of Canadian pulp to produce their paper. They are saying “Listen, if we don't see forest practices and land-use decisions being made in Canada that fit into our general guidelines, we're going to recommend that you no longer purchase pulp from Canada”.

These are the things that are out there. The question is, how do we address them? It's not clear whether the WTO rules or other rules-based systems that exist can apply here. I think what we're basically looking at is public opinion, and there is a basic misunderstanding out there about Canadian forest policy. There seems to be a view that Canadian industry just enters into the woods and goes about its business, without any adherence to rules at all.

As we stated last week, and you have also noted in your report, we're involved now in an unfortunate situation, where rather than being viewed as a model for sustainable forest management, Canada is now a target.

We're advocating today that there needs to be a dual approach. We're not dismissing the role of industry in addressing this problem at all, but we do believe that government, as the landowner here in Canada, has a role in communicating, as well.

What makes us different from Europe, of course, is that 90% of the forest base here is in public ownership. In Europe, we've seen private landowners try to address this issue and take it head-on. This isn't happening here in Canada. Accordingly, we've become vulnerable to these misconceptions.

I think we want to first focus on what the industry is doing right now and how it has been communicating its progress. Then perhaps we can turn to what we would like to see on the side of government.

Can I turn that over to you, Tony?

Mr. Tony Rotherham (Director of Forests, Canadian Pulp and Paper Association): We feel that over the last decade the industry has been doing a great deal in the woods to improve management, generally. As a few examples, the Canadian forest products industry has a biodiversity program that is spearheaded by the CPPA. We are also working with member companies and other companies in Canada to try to help forest managers understand the whole business of biodiversity conservation, and how to build that into their management planning. We have a full-time wildlife biologist who's working on practically nothing but this.

Forest regeneration after harvest used to be a problem in this country. The problem started getting solved back in about 1979, when some federal-provincial agreements were signed that helped provinces build forestry nurseries across the country and start large planting programs. We went from planting about 200 million trees per year in 1979 all the way up to a maximum of about 800 million. We're now down to around 650 million trees per year. Everywhere I go on forest operations from coast to coast, I see forest regeneration after harvest in very good shape indeed.

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The industry has been involved in discussions with other stakeholders, such as environmental groups and conservation groups, to help to make recommendations to the Canadian government on endangered species legislation, which is part of biodiversity conservation and very much a part of sustainable management of our forests.

We've also been very active in certification. The whole business of certification is designed to improve forest management and provide credible information on performance that has been verified by an independent third party.

There was a question about that during our last session here, which I didn't get an opportunity to answer. The question was where do you get independent third-party verification? The answer, in this country, is by using our national standards system, which has a process of accrediting and training auditors and accrediting certification organizations, keeping separate the roles of consulting and auditing, and the development of standards, so there's no conflict of interest. So if we just use the well-organized national standards system of this country, we get that independent, competent third-party verification.

Industry certainly has a key role in the whole business of certification. It is industry that has to implement the standards, live up to those standards, and go through the audit. But we believe that provincial governments have a role as well, because they are generally the landowners. They should participate in this certification business, as landowners. They're legally responsible for management and policy and setting sustainable harvest levels. In our view, they have a sort of inextricable role in this whole business of certification.

Those in the industry have the role of being active managers of forest land. We must manage sustainably, according to modern understanding of the guidelines for sustainable forest management. I personally think, and I am supported by industry action, that certification is a good thing to do. If you use a management system standard, like ISO 14001, you will get a discipline in your management and a concentration and focus upon environmental performance that perhaps normal management procedures won't give you. It also provides a credible means to communicate through third-party verification of good performance.

One thing that's of increasing importance to the industry, on the subject of certification, is mutual recognition, and we touched on that briefly during the last session. A variety of certification programs are being developed in different countries in the world. There are good reasons for having a variety of systems in place. But we have a huge marketplace. The total value of forest products produced each year around the world is about $450 billion U.S; in a really good year, it's perhaps $500 billion, and about 30% of that gets into international trade. There are about 130 countries involved as either producers or importers.

People need some way to judge the rigour and credibility of different certification systems, so some form of mutual recognition is required. There are three groups hard at work now, trying to figure out a good way to assess equivalency among certification systems, in order to provide a framework for mutual recognition. Canada is among those countries, and we are among the industries that are involved in those discussions.

The other thing that is very important to us, and was also mentioned by Fiona Cook, is that the federal government has a clear role to enforce WTO rules to ensure an open marketplace. An open marketplace is of fundamental importance to the public, industry, and business all over the world.

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There are some things we would like to see on this in the matter of forest management. The first is that we need credible communication by governments and industry, especially in sensitive overseas markets. Industry is going to continue to implement management standards and be certified to them, and certification, as I mentioned before, provides third-party verification of good performance and is the basis for credible communication. I think members around the table have a copy of a bulletin. We produce this about three times a year to let people around the world know what's going on in certification in Canada. It's produced in English, French, German, and Italian in order to communicate with our important market areas.

We would like to let you know that industry is going to continue to review its practices and defend them based on sound and accepted science. We strongly believe that governments should defend their policies. And the main policies are the provincial government's forest policy rules on harvest levels, the strength of Canadian democratic institutions, and particularly, I would underline, the importance of land use planning procedures in this country generally run by provincial governments.

There's a lot of public consultation, and I believe that Canadians should make the decisions on land use planning, not Greenpeace in Germany, for example, through the application of marketplace pressures. And there's a lot of that going on. We should establish protected area strategies to meet the commitments that Canadian governments have made, and we should above all support the implementation and use of Canada's national standards system and work within it for certification on public lands, because it is a public trust.

I would add to that as a final point that we would like to see a formal structure and schedule for foreign posts to provide the latest market intelligence and the results of their interventions and meetings with influential players in the marketplace overseas. This can be extremely helpful to industry, not only in figuring out how to meet the needs of customers, but to meet those needs in ways that conform to Canadian democratic institutions and the rules and regulations in this country.

Thank you, sir.

The Chair: Do we want to add anything else? No?

We'll go first to Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Ref.): Thank you very much.

Thank you for coming today.

In this handout we have here it says on the back page in respect to FSC and British Columbia that a new standards development process should be presented by March of this year. Has that occurred, do you know?

Mr. Tony Rotherham: I believe there's a new process in place with a lot more industry involvement than was the case with the first attempt at an FSC process in B.C. My friends who were involved tell me that it may be 18 months to two years before they actually have a draft standard ready for presentation to the FSC in Oaxaca for approval.

Mr. John Duncan: Thank you.

In the bigger presentation there's a statement on page 3 that says:

The FSC, which has yet to develop regional standards for most of Canada, is seen as a tremendous source of potential funds.

May I ask for whom? Is there a push and a pull over this, and is there a likelihood that we may indeed be funding the green movement through this organization?

Mr. Tony Rotherham: Yes. The various environmental organizations, which are the main supporters of the FSC, have established in about 12 countries buyers groups. These buyers groups bring together customers and retailers of forest products. One of the rules of the buyers groups is that they will all agree that they will sell only forest products that have been certified by the FSC. The FSC has a label. In the event that the FSC label gains real weight in the marketplace, it would be possible to charge for it. I've been told by senior marketing people working for Canadian forest products companies that it would be very easy to charge $1 per cubic metre for lumber, $1 per cubic metre for wood-based panels, and up to $10 a tonne for pulp and paper products.

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It's possible that the cashflow that could accrue from this, not just from Canadian sources but worldwide, could easily amount to $50 million or $60 million a year. That is very attractive.

Mr. John Duncan: Thank you.

Home Depot recently made a public statement about Canada having a history of bad forest practices. I'm sure you're aware of that. Has CPPA done anything specific to write to the person, I think it was Suzanne Apple, about that statement or to counter it in any way, shape, or form?

Mr. Tony Rotherham: I'm not aware of the CPPA having done that, but I believe that the industry has taken that up, as has the Forest Alliance of B.C. We tend to stay out of the business aspects of our member companies' operations. I think this has probably been adequately dealt with by companies like Weyerhaeuser, Canfor, International Forest Products, and companies like that, which are particularly under the spotlight there, sir.

Mr. John Duncan: The question does occur to me, who is going to take on Greenpeace? They've decided to take on Canadian industry and they made no bones about it. Surely this must be the subject of some debate. I wonder if you could give us an indicator of who you think is most appropriately suited to do that in the international marketplace.

Mr. Tony Rotherham: I think that like many other problems in this world, if it were an easy problem to solve we would have done it long ago.

Greenpeace has considerable credibility and great imagination in the way they put their message across. The most effective person I have ever seen talking to and about Greenpeace is Dr. Patrick Moore, who is exceptionally articulate and knows just how to answer their questions. I don't consider myself in his class at all. He fights three or four weight classes above me.

I think that probably the best thing from the Canadian industry's point of view is if there could be a coordinated effort by Canadian governments in support of their policies, in support of their decisions on management, and by Canadian industry in support of its practices. It will probably take all of us together to do it.

Mr. John Duncan: Have you done any kind of analysis on the Y2K budget to see if there's an allowance to do exactly that?

Mr. Tony Rotherham: I haven't, no.

Mr. John Duncan: Will CPPA be doing that?

Ms. Fiona Cook: I think we will. We haven't seen any signs that there's anything specifically outlined in the budget that refers to that, but there is a big section that deals with the environment in a broad way.

Mr. John Duncan: Right. The details come out by the end of March, so it probably would be a more appropriate time.

Ms. Fiona Cook: Yes.

Mr. John Duncan: But it's not a bad time to get your oar in the water before the details are announced, I would suggest.

My last question, for the moment anyway... I don't know if you have an interest in this or not, but I like to bring it up, because I think it's important. We have a major issue on the west coast that to me is wrecking the reputation wood has, and it is the leaky condo, which is a bad name. It's actually a wet condo problem, and it's basically making people lose confidence in wood. We don't have wet condos in Washington State because we have a different building code down there. This is a big problem. I hear nothing from industry to address it. Government doesn't want to touch it. No level of government wants to touch it. If industry doesn't want to back its own product, they're going to watch its reputation go down the drain in that marketplace, and that's an important marketplace. Are you aware of anything industry is doing to try to turn this issue around?

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Mr. Tony Rotherham: Yes. There is a joint Canada-U.S. program, which we all refer to as the “wood is good” program. It's being well funded by the American and the Canadian industry, I believe, over a three-year period. Kelly McCloskey, who was until very recently the president of the Canadian Wood Council and is no longer, is heading up this program. You may have met Kelly.

Mr. John Duncan: Excuse me. I'm aware of the “wood is good” program, but I'm not aware of anyone countering the “wood is bad” reality of leaky condos in British Columbia.

Mr. Tony Rotherham: On the leaky condos business, that's a building code problem. The CPPA doesn't deal in building codes at all. Certainly the Canadian Wood Council does. But all over the western world, if you will, there is a growth of “wood is good” programs to promote the attributes and the virtues of wood as an environmentally friendly, renewable material. We hope that will go some distance to counter the gains that have been made by plastics and cement and steel and aluminium recently in our marketplace. But in terms of the leaky condo business, I don't know of any specific program that is being designed to counteract that.

Mr. John Duncan: I wouldn't build a wooden building in B.C. on the coast right now under the current building codes. I haven't heard industry or any of these councils say that. Government's not going to move until somebody with a lot of authority in this business tells them they have to fix the building code.

The Chair: I think you've made your point.

Mr. John Duncan: Yes, I have made my point.

The Chair: You made your point.

I wondered whether people in British Columbia are becoming expansionist or imperialist, when you said we have a different code there but then we have a different code in Washington State? Did we grab Washington State as people were sleeping overnight?

Mr. John Duncan: No. The point is that they have the same weather in Washington and Seattle as they do in Vancouver.

The Chair: I thought it was a political question.

Mr. John Duncan: No.

The Chair: Mr. Provenzano. You guys are a little bit more parochial. Go ahead.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): Mr. Chair, my question is to anyone.

Sometimes government is accused of not seeing the forest for the trees. There are some who accuse the forestry industry, saying you will not see the trees for the forestry industry. We're maligned on the world stage as having forestry practices akin to some of the third world countries.

What appalled me was a situation—and it happens maybe all too frequently—wherey last year, at just about the same time, there was a resolution before the European council. We weren't going to send anyone from this committee to monitor the discussions there or to make any kind of a case. I raised that, and as a result there were two people who went from the committee. One of them was Mr. Duncan. I thought that attendance was appropriate.

It seems to me those things shouldn't happen. People in government should have a heads-up from the forestry industry when these kinds of resolutions... Everybody knows what the game is. I think in order to provide the counter-argument you need a proper heads-up, and the heads-up has to come from the industry to government. What do you think you can do to improve that? What kinds of resources are available in terms of a partnership arrangement to counteract some of this negative, unfounded publicity about our forest practices? Because the damage that's done hits the forestry industry right in the pocketbook.

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I don't know whatever came of that attendance last year before the council, but it seems to me that we need to be a lot more proactive and that some of us certainly are prepared to take on a proactive role.

How can you help?

Ms. Fiona Cook: I guess it's our understanding that there already is a government and industry vehicle for that exchange of information, the International Forestry Partnerships program. It was actually referred to in your interim report.

In this case, I don't quite know why the information wasn't relayed quickly enough. It is our understanding that there is that conduit there and it should be working more efficiently. In light of your question perhaps we should focus our attention on adding resources to that program.

It comes back to a comment Mr. Rotherham made earlier about having a better exchange of information from the posts, and particularly in this case given that it was a government initiative. The European Parliament here was involved. As far as we knew, the heads-up was given. We have to look at perhaps why the take-up wasn't as effective as it could have been.

I think the real issue, though, is why are we vulnerable? Why are we vulnerable to these misconceptions? Why, when you have forestry practices in the Nordic countries that could be the subject of as much controversy, are they not controversial? Why as Canadians are we vulnerable to this? I think it really comes down to communication and public opinion.

Mr. Carmen Provenzano: Thank you. That was the question I had.

Mr. Tony Rotherham: Perhaps I could add that I think one of the reasons we're vulnerable is that Canada has so much untouched, let's say, natural, virgin forest. Of the 417 million hectares of forest we have in this country, probably 320 million are untouched. Europe has virtually zero untouched forest. There have been large numbers of people living in Europe for 1,000 to 2,000 years, and they have literally changed all of their landscape. What used to be forested is now, in some countries, virtually deforested. It's been transformed to agricultural land, urban infrastructure, and so on.

So they live in a very different landscape from us, and many of them think we should safeguard our virgin, natural landscape because they have not.

We believe we are conducting our forest operations in ways that maintain the natural biodiversity of our forests. We're only going to be working in or on probably about 40% of the total forest area in this country.

So we are going to be safeguarding a terrific natural heritage, but they would like to see us back off much, much more and reduce the size of our forest operations. It's a public opinion thing.

The Chair: Thank you.

[Translation]

Mr. Canuel.

Mr. René Canuel: I would like to thank the witnesses for coming to meet with us.

For several years now, I've been hearing virtually the same thing. When people ask why we are vulnerable, it's as though we want to blame others. When criticisms are unfounded, you hear about them for some time. However, we are continually hearing about those criticisms which are founded. In Canada, these criticisms come back every year. We can't bury our head in the sand and pretend that we have not made any mistake with our forests. Some members say that we have to counterattack and be proactive. I agree with them and I recognize that when it comes to certain standards for certification, among other things, Canada has made tremendous progress compared to other countries, and I think that congratulations are in order.

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However we have to look at the situation in the east and in Quebec. I was the president of the Société d'exploitation des ressources de la Vallée, a wood company, for several years and I can tell you that when we took over, some areas, the situation was pitiful. Some of the big companies had come through before us and had felled all of the softwood, for example, and left all of the hardwood standing. When these deciduous species fell, no one went in to collect them and the losses were enormous.

Everyone knows full well that the forests come under provincial jurisdiction. In the year 2000, there are still some companies—and I do mean some, not all of them—that are overexploiting the forests. Can you say with any scientific certainty that we are not over-exploiting Quebec's forests? Don't simply answer no. Do you have real data to support this? Do you have any studies which confirm that in ten years' time, in 2010, Quebec's forests will be in a better shape than they are in the year 2000?

A number of companies, including Abitibi Consolidated, say that factories in Quebec and in Canada are producing too much pulp. Is it true that we are producing too much pulp in Quebec, in Canada and even around the world?

[English]

Mr. Tony Rotherham: To reply to your second question first, I don't think we produce too much pulp in Quebec, and neither do I think we produce too much pulp in Canada. It's a very cyclical market, and there are lots of other producers getting into that marketplace, so sometimes the Canadian pulp producers don't make a lot of money.

One way you could decide or judge whether or not we make too much pulp would be in terms of what we make the pulp out of. Across Canada, about 65% of all the fibre that goes into the pulp and paper industry comes from sawmill chips, sawdust, and planer shavings. About 12% to 15% is recycled paper. The balance, a little over 20%, is roundwood. That tends to be the smaller-diameter, lower-quality roundwood.

Across Canada, it's probably fair to say that, on average, about 80% of all of the logs cut in the forests go to the solid wood industry. In Quebec, about 75% goes first to the sawmills, and the pulp and paper industry lives off the residues.

So we are making pulp out of residues, generally, not out of trees that could be transformed into some better product. We could make the case that we should be making perhaps more paper and less pulp. Unfortunately, everybody in the world wants jobs for their own people.

Some very high-quality pulps are made in this country. We are the producer of perhaps the highest-quality pulps in the world. We have a great variety of the high-quality pulps made in the kraft and TMP industry across Canada because of the variety of species. Those pulps get sold to paper manufacturers around the world to make paper for sale in their marketplaces.

I guess it's sort of a compromise between people—we get the jobs to make the pulp and they get the jobs to make the paper.

We sell about $700 million worth of pulp a year into Italy. We sell a lot into the U.K. and a lot into Germany, France, and The Netherlands. It's a very big business. It comes from eastern Canada and western Canada.

I hope that helps to answer your question about pulp.

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In the matter of forestry in Quebec, I have a lot of faith in the professional competence of the foresters who work for the Ministry of Natural Resources in Quebec, who have forest inventories, who calculate the allowable annual cut in that province—the province I also live in—and who make sure the allowable annual cut is not exceeded by the companies. They also have a duty to make sure there is good regeneration after harvest.

Everywhere I go on company operations in Quebec, I see good regeneration after harvest. It's the same in British Columbia, and the same in Newfoundland and Nova Scotia. We solved that problem starting in about 1979. We were in a mess before then, and some of the mess was caused by a separation in responsibility between provincial governments and companies. In some cases the company did the harvesting but the provincial government said it would look after reforestation. Quite frequently, it didn't get done.

After 1979, province after province said they had to straighten this mess out, and that they were going to make the companies responsible for reforestation and that the companies were going to pay for it out of their own pockets. It was done in one after another, all across the country. That solved the problem, because you had nowhere to hide. You had to do the job because you knew who was responsible.

It was done in British Columbia on October 1, 1987, if I remember correctly, when the government changed the rules there. It was changed in Ontario at some point, but I can't remember the date of that change. These were very good changes that were made, because then the companies knew who was responsible: it was them, and the money had to come out of their own pockets, so get on with the job. And they did it.

The federal-provincial agreements on forestry helped a lot to supply the infrastructure to do that reforestation through the construction of nurseries. As I said, we went from a production of about 200 million seedlings a year in 1979, all the way up to about 800 million. That probably topped off somewhere around 1990, and we've gone down since then.

[Translation]

Mr. René Canuel: I'd like to ask a question on reforestation. Is there proof that we are generally reforesting with the right species? Whole hectares have been reforested with softwood, for example black spruce. However, if the spruce budworm attacks them, it won't be very pretty in 20 years' time. I think that when we started reforesting, people thought it was important to respond to the most urgent needs. So it was decided to plant certain species which would grow easily in certain soils. However, can we be certain that, in 20 or 25 years, all of our reforestation efforts of today, will not have been in vain?

[English]

Mr. Tony Rotherham: We do virtually all of the reforestation in Canada using native species. We plant about 31 different species across this country. The only exotic species—that is to say, species from other countries—that are planted in Canada generally are planted on privately owned lands, and they tend to be Norway spruce and a couple of other minor species. I believe virtually all, meaning 99.999%, of the seedlings that are planted on the publicly owned forest lands in Canada are native species. They are species that are selected to be appropriate to the soil, the moisture regimes, the climate, the micro-climate and the aspect. They are right for the site. They are site-adapted species.

The foresters are getting better and better at seeing to it that the seedlings are healthy when they're put in the ground. They are put in the ground by well-trained planters. We have high success rates on planting. And again, they are the right species for the site.

No one can control when the spruce budworm, la tordeuse, which you have correctly named, will come along and start to eat the spruce trees. They do it in the untouched natural forest, and they will do it in a managed forest as well. There's no way people can control that unless we are able to spray insecticides. The Canadian public generally does not like to have insecticides sprayed broadly in this country, nor herbicides. We're anti-chemical in forests. However, we are able to spray biological insecticides, like bacillus thuringiensis for one, and I think there are others being developed.

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We're also getting better at using some other biotech systems to control insect attacks. I'm thinking mainly of the use of pheromones against bark beetles, particularly in British Columbia. But you can't control all these things, sir. You can only do your best.

The Chair: Thank you.

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Mr. Chair, I've seen and been taken through some very spectacular areas of natural regeneration. I remember travelling up near Beardmore with a forester by the name of George Merrick in the late 1970s. He took me through there, and he had developed techniques for natural regeneration in clear-cuts.

Just as a matter of interest, we're assuming here that regeneration is planting, but how much regeneration takes place through natural techniques? What would you say the percentage is?

Mr. Tony Rotherham: I can give you Canadian averages, because I work for a national association and I have the Canadian figures in my head, not province-by-province ones. My head isn't big enough to hold all that.

Certainly the Canadian averages are about 55% by natural regeneration, about 40% by planting, and about 5% by aerial seeding. The aerial seeding is generally done in northwestern Ontario. There's a little bit done in some other provinces, but it's successful there and it's generally not successful elsewhere.

The natural regeneration usually happens where you have well-distributed precipitation throughout the year so that there are good growing conditions all year. The planting is done wherever we think natural regeneration will not be successful. It's not the first choice; it's the second choice.

It used to be that people equated good forest regeneration with planting. If you weren't planting trees, you were obviously not doing your job properly, so people planted probably too much. But then people said no, natural regeneration is better, and in some instances it certainly is. People therefore got pushed away from planting trees and relying more on natural regeneration. That's certainly the case in the province of Quebec, where, about ten years ago now, it was a very firm policy of the provincial government to conduct forest operations with protection for soils and for pre-established natural regeneration, in order to try to keep those natural trees there and give them a chance to grow after the harvest.

Mr. Julian Reed: Okay. I just raised the subject to get on the table the fact that natural regeneration is a fact and is a very important part of this process.

Just as a brief question about the FSC label, if the FSC label were to be sold, would that not be a direct conflict of interest? I mean, you're bartering, you know, selling one's soul. It seems to me that it's totally contrary to the ideal of setting standards.

Mr. Tony Rotherham: I can't improve on your words.

Mr. Julian Reed: Thank you.

The Chair: Mr. Keddy.

Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman. The member's back. I missed you the first time, so give me a second chance here.

The Chair: We did it just for you.

Mr. Gerald Keddy: Thank you. I appreciate that.

The Chair: It's a social thing.

Mr. Gerald Keddy: There are a couple of things in your presentation that I thought were glaringly left out, and a couple of things you touched on but which I think we need to look at it in a lot closer detail.

Certainly in that whole idea of federal-provincial relations, it's really not a relationship; it's all about jurisdiction. The provinces have the jurisdiction over the land in the provinces. In Nova Scotia, 72% of our land is privately owned, and 50% of that is small private. I think that has been a good thing in the long run. Right now, it's becoming a bit of an issue because of a lack of fibre. The fibre that's left is on small private, because the majority of the big private has been cut and the majority of the crown land has been cut.

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You were saying there are good statistics being kept, but there haven't been statistics kept on the cut in Nova Scotia for five years. We have no idea what our annual cut is. We also don't have any idea of how much first nations are cutting. I would think it's probably similar in New Brunswick, but it may not be. So there are a number of issues out there on annual cuts.

There are also a number of issues that haven't been touched on through the Food and Agriculture Organization in the United Nations, and how they view forestry. A lot of their decisions are what affect WTO decisions, what affect international trade.

On cross-border pests, I'm sure you're familiar with the pine-boring nematode in Nova Scotia. That completely wiped out a billion dollars' worth of trade to Europe. In the last year that we traded lumber with Europe that didn't have to be kiln-dried or heat-treated, the figure was $900 million. Now it has to be kiln-dried and heat-treated.

I would argue a little bit on one principle. Although I agree with you that sawmilling practices have changed, subsequently changing the dynamics of the pulp industry, sawmilling practices have changed because saw logs have increased in value, lumber has gone up, and pulp has stabilized. I would say it's market-driven much more so than industry-driven. We've changed the way we supply the pulpwood market in Nova Scotia, because we can sell that same stick that we were hauling to the mill ten years ago. We'll put it through a re-saw, we'll curve-saw it, and we'll make a marketable product. If we have to cut it up and finger-joint it, or whatever else we have to do, we can make a marketable product out of it, and the market wasn't there ten years ago. So I think it has definitely been market-driven.

I'd like a little more input on this whole non-tariff trade barrier issue, on the role that pests play in international trade, and how you guys relate and work with the Food and Agriculture Organization through the United Nations. I think they have a much greater input on our trade and certification and everything else than we might like to think.

The Chair: Okay, you have about three or four items there.

Mr. Tony Rotherham: First of all, on federal-provincial jurisdictions, you're absolutely right. That's what it's all about. I don't think there's any comment required on that.

Cut controls on private lands are a difficult thing in every province in this country. With the exception of certain private lands in British Columbia, where there are cut controls for a variety of reasons, the provincial governments have stayed away from trying to dictate to private owners what they shall and shall not do. That's the case in all of the provinces where there is significant private land under forests. Those really are in Ontario at about 12% or 14%; Quebec at about 12% or 14%; New Brunswick at 50%; Nova Scotia at 72%; Prince Edward Island at virtually 95%, I think; and then Newfoundland, where it's very small, at about 1% or 2% private. It's not being done, and it's very difficult to do. If the provinces want to take their political courage in their hands and their management courage in their hands, I guess they will do something about this. However, I suspect they're loath to do that.

We don't work closely with the FAO on phytosanitary controls. These things are normally national considerations. The pine nematode, which cut off the sale of softwood lumber from virtually all of Canada to Europe, is something that was used in country after country in Europe as a trade protection measure. We've been selling white pine into Europe with the bark on probably since about 1700. If we were going to kill all their forests with our pine nematodes, I think we would have accomplished it before now.

A voice: Hear, hear.

Mr. Tony Rotherham: I think it's a straight non-tariff barrier to trade. So having identified the enemy, how do you deal with it? I hand this over to my trade friends.

Mr. Joel Neuheimer (Director, International Affairs, Canadian Pulp and Paper Association): This is actually not the specific case, but the principle you're talking about is really sort of my pet area of interest. Really, this is a very good illustration of why things like the WTO and trade rules are so important to Canada.

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In this case, we have a clear example of a country using a non-tariff barrier to trade in a very discriminatory fashion in order to keep our forest products out of their marketplace. It was our science versus their science. This thing has just been sort of drifting along endlessly.

So basically I'm very sympathetic to your point. I point out for your consideration, when you're making conclusions from this process, that this is why the WTO is so important to Canada. I say that if the rules didn't work in this case, we need to figure out how we can improve those rules to alleviate these situations in the future. We're faced with the same cases all the time. It's an ongoing point of concern for us every day, especially with the Europeans.

The Chair: Do you want to follow that up, Mr. Keddy?

Mr. Gerald Keddy: Yes, just briefly, if I may, Mr. Chairman.

The other issue, which I question if we've ever looked at, in that whole phytosanitary regulation scheme is the fact that if you look at the European Community and the last countries to join... When Italy joined, we were still selling forest products in Italy. All of a sudden they join the European Community and, that day, we're shut out of Italy. We didn't ship any more Christmas trees to Italy, we didn't ship any more roundwood to Italy, and we didn't ship any more lumber to Italy. So what changed in the dynamics so that all of a sudden one day there was a phytosanitary regulation?

The Chair: Do you want to give it a shot?

Mr. Joel Neuheimer: Yes.

Again, there's great sympathy there. We've seen basically the same situation on tariffs on our forest products when Finland and Sweden joined the EU. Sadly, I think it comes down to national politics and those countries' national politics basically affecting the EU's overall politics versus Canada. Hopefully there's a better way that we can find in the future, because that's a real hindrance for us. It's a real handicap on Canada, that's for sure.

Ms. Fiona Cook: Just to add to that, tariffs on pulp and paper products are scheduled to come to zero by 2004, so that's why we're ever more vigilant in tracking these non-tariff barriers: because they're going to become much more prevalent in the future.

The Chair: Thank you.

Mr. St. Denis.

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chairman.

Thank you for coming back to our committee. I must say that I was quite impressed with this bulletin you've put out. Maybe I've seen it before, but I don't recall. I wonder how broadly you distribute this. I think it's a very good educational tool and a nice summary, assuming it's all 100% correct, which I'm sure it is. It's a nice summary of where we are in terms of certification, which is certainly the common denominator issue in terms of market access. So I have a quick question on that: how broadly do you distribute this?

Mr. Tony Rotherham: A total of about 20,000 in the four languages are produced. They're distributed all over Europe, in English, French, German, and Italian, through our office in Brussels. They're also distributed across Canada to people who are interested in this subject of certification.

Mr. Brent St. Denis: Would that include buyers at, say, Home Depot? Are you mailing this to Home Depot buyers, to the Home Depot president, for example? This is very educational.

Mr. Tony Rotherham: As far as the CPPA is concerned, I think the answer to that is no. We don't mail it to them. But it could well be that large companies who sell to Home Depot do in fact send it to them. We could certainly send that to Home Depot without going over the line and getting into our member companies' business—

Mr. Brent St. Denis: Yes.

Mr. Tony Rotherham: —because it's not really business related. It's just informational. We could do that.

Mr. Brent St. Denis: It's just a question, or even a suggestion to say that if either directly or through your member companies everybody that had anything to say about deciding on purchases had this, because over time, little by little, you're getting the message out that the folks in Canada in forestry are really serious about all of this.

Mr. Tony Rotherham: Yes.

Mr. Brent St. Denis: As you said, it's perception. It reminds me of when videotape was first coming out. It was Beta versus VHS. You could buy one or the other, but eventually one of them won. Well, at some point, there will be one certification scheme, presumably, maybe in five, ten, or twenty years. It's who gets off the mark most effectively and broadly who will win the day.

Now this is not a criticism, but I see the members are basically all from industry. Somehow masked in this list, do you have labour, do you have first nations, and do you have the science side, including the foresters? Because this is very credible, but it would enhance credibility to have others involved. Maybe they are there but just not listed.

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You're listed here, Tony, as the contact, so I figure you're the point man in Canada on this one.

Mr. Tony Rotherham: Yes. I'd like to differentiate between the coalition, which is the listing of industry associations there, and the technical committee of the Canadian Standards Association, which developed the CSA standard and where you will find a broad range of people. There were 32 people there. It was a multi-interest committee.

There were regulators from the provincial and federal governments. There were producers, foresters who work for forest products companies across Canada. There were scientists and professionals, and then there was the general public interest. There were four chambers, if you will, and it was that group that developed the standard. These are the people who were supporting its implementation, so—

Mr. Brent St. Denis: I'm looking at it from the point of view of marketing your image.

Mr. Tony Rotherham: Yes, I take your point well.

Mr. Brent St. Denis: Can I just go on with a supplementary, Mr. Chairman? I have another couple of minutes, don't I?

Again, that was very helpful.

From the Sierra Club, we heard their point of view. I would assume it's the view of, shall we say, the preservationist side of the issue: that it's good to have several certification schemes.

I see that as a divide-and-conquer approach, actually, whereas I think, if I read this correctly, that the industry would prefer an eventual evolution to one system, an integration, so that everybody knows the rules of the game. Do I misunderstand that? What is better: that it eventually moves toward one system or the alternate view that numerous systems is a better way?

Mr. Tony Rotherham: We are at the early stages of trying to figure out how to develop standards and implement them on forest management operations.

If we could imagine that it's 1905 and we're looking at the automobile industry...or if it is now and we're looking back at the automobile industry, there were literally hundreds of people who had a good idea about how to make a car. They went into the marketplace, and some of them won and some of them didn't. We now have about eleven big companies that manufacture automobiles and sell them into the world marketplace, and we have a bunch of very good cars. You can buy practically any one of them and know that it's going to work for you.

I strongly believe in democracy, in the freedom of the marketplace, in the freedom of the exchange of ideas, and in the ability to try new products in the marketplace to see if they'll win. It's that freedom that has brought the western European democracies to the rich lives that we enjoy in this country and in several other countries. If you shut that sort of thing down, you reduce the competition for ideas, which is essential to the continual rebirth and renewal of economies and cultures and everything.

So I'm in favour of quite a few systems trying their wings in the marketplace to see if they have a better mousetrap. What I'm not in favour of is people who try to develop a monopoly. I'm very much against that. That's why I believe it's important for people to work through the national standards systems so that there's a certain discipline and rigour among all of the systems that are trying their wings in the marketplace in order to see if they have a good mousetrap.

The other thing is that there's a terrific diversity of land ownerships, just in this country, but certainly around the world. There are differences in forests, in history, in the cultures of people, in the legislative packages they have to determine how those forests shall be managed, and in their marketplaces. Each one of these situations will demand a slightly different approach to the certification of forests and to forest management. They have different values. They think about their forests differently.

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So what we need is a variety of systems in use, but we need to have a certain rigour and discipline among all of them so there's no conflict of interest and there are good systems in use by everybody. That's what the idea of a mutual recognition framework is about—to try to get some good measures of what's important in all systems, so that you can say that this system is as good as that system; they're different, but they achieve the same objectives, so we'll value both of them.

If I may add one more thing, sir, in the matter of the FSC, there's absolutely nothing wrong with the ten principles of good forest management that are supported by the FSC. There are a great many people in the FSC movement who have the highest possible ideals. I've been to several of their meetings and I have a great admiration for some of those people. But in some ways and in some places, the way the system is being applied is distorting the marketplace and reducing the freedom of choice that I highly value as a Canadian.

The Chair: Thank you very much.

Now we're just about at the end. I'm going to give Mr. Duncan another minute. He wanted to add a very brief question before we go in camera.

Mr. John Duncan: Yes, just a clarification.

Thank you; that last response was tremendous. I think we'll all probably make reference to that in the transcript at some point in time.

I'd like to make a small clarification first. When you talked about the reforestation issue you mentioned a date for British Columbia of October 1, 1987. That was true for crown land tenures, not in tree farm licences. I'd be remiss not to say that there were clear reforestation responsibilities for the major harvest on the coast certainly from the early 1960s. That is the most controversial area, after all. I know you know that, but I just thought I'd add it in.

I have two quick questions. First, I assume that CPPA has no formal position on the softwood lumber agreement. Am I correct in saying you have no position?

Secondly, does your organization or anyone you're aware of have a developed number for the percentage of wood biomass going into long-term carbon storage from Canadian wood sources?

Mr. Tony Rotherham: That is a jungle, because I guess that as the largest exporter of forest products—not producer—our products go into a terrific range of end products. There's a certain amount of those that are recycled and some that aren't.

I don't know of any study on exactly what proportion of the forest products we make goes into various products around the world, and what the half-lives of those products are. There is some knowledge developed in the last five years about what the half-life, as they put it, of different products is. I can't tell you what those half-lives are, but I know there's a half-life for newsprint, a half-life for lumber, a half-life for furniture, and for various other classes and uses of products.

This, of course, brings up a very interesting thing. If we are adding to the world's carbon reservoir through forest products, is there some way we can obtain some credit for it and help Canada reach its Kyoto target, which as we know is an ambitious one, shall we say? It's not in the Kyoto agreement right now. It's one of the things that may get negotiated in. The trick will be how do you develop a verifiable measurement system that is truly credible for these things?

We have a big enough challenge to do that just for our forests, because our forest inventory systems are not designed to show trends. They are designed to do an inventory of a certain block of forest at a certain point in time. To use that information to feed the sort of national-level forest carbon flux models leads to an unsatisfactory result. So we have to change our inventory systems, I believe, to be able to determine these things and know where to go in that. It's a very complex business.

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Mr. John Duncan: The potential payback to Canada from developing that number is huge, though.

Mr. Tony Rotherham: Yes.

Mr. John Duncan: If we can get it into Kyoto.

Mr. Tony Rotherham: That's correct.

Mr. John Duncan: Thank you very much.

The Chair: On behalf of the committee, I want to thank the three of you for being patient with us. I think over the course of this last presentation you've enriched the committee's reservoir of information for its deliberations. I thank the three of you for having come to us once again.

I'm sorry I have to usher you out quickly, because we're going to go in camera.

Thank you very much.

[Editor's Note: Proceedings continue in camera]