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]

Wednesday, April 12, 2000

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[English]

The Chairman (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): I call this meeting to order. Pursuant to Standing Order 108(2), the order of the day is a study of Canadian forest management practices as an international trade issue.

First of all, colleagues, I want to thank the officials from DFAIT for making every effort to come here on such short notice. They are accompanied by representatives from the Department of Natural Resources.

Let me introduce the witnesses. From the Department of Foreign Affairs and International Trade we have Mr. Richard Ballhorn, Director General, International Environmental Affairs Bureau. From the Department of Natural Resources we have Dr. Dan Welsh, Director of Programs, Industry, Economics and Programs Branch; Mr. Douglas George, Director, Softwood Lumber Division; and Mr. Greg Graham, Coordinator, International Forestry Partnerships Program, International Communications, Communications Programs and Outreach Division. I said that all in one breath. That's not bad.

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Gentlemen, thank you very much for coming. As I said a moment or two ago, some of our other colleagues will join us momentarily.

I've already advised everyone that you do not have a written presentation, nor did we expect one.

What we want to do is draw on the expertise you have. We understand that some of that is in a state of evolution in the context of the negotiations that are currently underway with the Americans on the softwood lumber issue. We want to touch on that, as well as on your perception of forest management practices as they relate to some of those negotiations and to our position internationally. Finally, we want to hear from you on the question of certification and how that impacts on our position in international commerce and if possible on your position with regard to the negotiations that are ongoing.

I hope I haven't said anything untoward.

Now, who shall begin? Mr. Ballhorn.

Mr. Richard D. Ballhorn (Director General, International Environmental Affairs Bureau, Department of Foreign Affairs and International Trade): I was going to suggest that maybe we could start with the softwood. We can go in any order. You have the expertise in certification, softwood, and environmental pressures, and I'm sort of everything else, or miscellaneous. The true experts are on either side of me.

The Chairman: Members of this committee are always delighted to be able to cover all bases, so we're extremely happy that you came prepared to cover all bases.

Mr. Richard Ballhorn: If you want to start with the softwood, I'm sure my colleague would like to go ahead.

The Chairman: Certainly. Mr. George.

Mr. Douglas George (Director, Softwood Lumber Division, Department of Natural Resources): Just to clarify, we're not at this moment in negotiations with the United States.

The Chairman: That's news.

Mr. Douglas George: I won't go through the full hundreds of years of history of the irritant, but bilateral softwood lumber trade has been a longstanding irritant with the United States.

Early in 1996 we entered into a five-year softwood lumber agreement that covered exports of softwood lumber first produced in four provinces in Canada: B.C., Alberta, Ontario, and Quebec. This agreement expires in a little less than a year, on March 31, 2001.

The federal government is engaged at this moment in a consultative process. The Minister for International Trade appointed Doug Waddell, who is currently our deputy head of mission at the Washington embassy, to lead consultations with stakeholders across Canada. He and his team met with 25 to 30 groups of stakeholders, plus government representatives from all 10 provinces and the Yukon, in a series of meetings across Canada to seek initial views on what we should be doing at the end of the softwood lumber agreement. We also sought comments using two different routes. One was a Canada Gazette notice of December 11 of last year seeking views from the public at large. Through our notice to exporters we advised all companies currently working under the softwood lumber agreement of the end of the agreement and sought views as well. On that we've had over 40 responses.

There are industry groups that are continuing their own process toward seeking consensus. They met most recently last month in Calgary, I believe, and I believe they have another meeting planned for later this month or early next month.

You should be aware as well that the U.S. government is engaged in the process of consulting its stakeholders. They had a federal register notice published about a month and a half ago, I think it was, and their comment period will be ending at the end of this week. So they as well are still engaged in consultations on what their industry believes is the best direction to go.

So at the moment both sides are engaged in consulting their stakeholders on where to go next. I can't say where we're going to go next, because it's still an ongoing process.

The Chairman: Mr. Graham, did you want to comment?

Mr. Greg Graham (Coordinator, International Forestry Partnerships Program, International Communications, Communications Programs and Outreach Division, Department of Natural Resources): Not on that subject.

The Chairman: Okay. Mr. Ballhorn.

Mr. Richard Ballhorn: Maybe we could hear about certification next. Then we could maybe talk about how the Department of Foreign Affairs and the Forest Service are dealing with the environmental challenges vis-à-vis the campaigns against Canadian forest practices.

The Chairman: Good. Dr. Welsh.

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Dr. Dan Welsh (Director of Programs, Industry, Economics and Programs Branch, Department of Natural Resources): Thank you very much, Mr. Chairman, members.

I was advised that you would like to hear about the status of certification in Canada and around the world, which is obviously a rather broad subject. Considering the amount of testimony you've had to date, I'll give you a very brief overview of a few things that I think are salient and then try to answer your questions later.

First of all, from a federal government perspective, we've held the position that certification is primarily a private sector activity between buyers and sellers and that to be effective it should be at arm's length from government. We fundamentally believe that certification is only as good as its credibility in the marketplace. If it doesn't work in the marketplace, it's not credible. It would also seem that marketplace acceptance requires ENGO buy-in. Without ENGO buy-in, marketplace credibility will certainly be hard to come by.

We also fervently believe that Canadian companies need access to certification systems that work for them and their customers. At present, as you are aware, there are a number of certification systems around. We think it's healthy to have a diversity of systems, but we recognize that there may be some risks in having too many systems, which your committee of course addressed earlier.

Our primary effort is to promote forest certification that contributes to the maintenance and enhancement of market access for Canadian forest products. While we're not directly involved with certification, we are very concerned about trade and business practices. We try to ensure that there's a fair and efficient marketplace available for Canadian companies. In that regard, we have considerable involvement in the World Trade Organization. We deal with other countries, cities, and states in order to intervene where appropriate and to try to promote fairness. As well as that, we deal directly with a number of the standards organizations in order to try to present points of view and perspectives that are positive to Canada.

In addition to those things on the international scene, we have quite an active involvement with the provinces through something we call the federal-provincial-territorial certification committee, which is a committee of the Canadian Council of Forest Ministers. Through that activity the provinces and federal government try to stay abreast of the issues and become involved where appropriate. We find that the provinces are increasingly becoming involved in a number of activities, particularly in relation to regional development of standards and that sort of thing.

With reference to the status in Canada, as you are aware, there are three systems currently in use. The ISO 14001 and the CSA Z-808 and Z-809 belong to what I think we would consider as the international family of standards. They live within the broad body of the many tens of thousands of standards the world societies have put in place to regulate and control standards. The Forest Stewardship Council, the third one, is independent activity primarily developed through ENGO activity a number of years ago.

All three are presently in use. CSA has close to half a million hectares certified. Approximately 13 million are certified to ISO and a little over 200,000 to the Forest Stewardship Council system in Canada at this point. So it's clear that Canadian companies are making use of all of those systems, and indeed several of them are looking at using all three of them.

When we look at those systems—and I won't get into a lot of detail—I think with both ISO and CSA it is important to bear in mind that they are part of a recognized international standards system and approach. As such they have a well-established, fully independent audit approach that follows international rules for such things. In addition to that, ISO makes use of existing management and policy activities that are in place. But we must view it as essentially a management system. It says that the way in which you are managing your affairs on a given piece of land is satisfactory, but it doesn't deal with performance per se. That certainly is a problem from the perspective of a lot of the environmental organizations, which are exceedingly interested in seeing performance.

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In relation to the CSA approach, it gives us a single approach for all of Canada that links to the Standards Council of Canada. The Standards Council of Canada, as I'm sure you are all aware, is essentially a crown corporation related to Industry Canada that regulates standards in Canada. It has some link with our structure and I think that was its initial appeal. It's a highly advanced system in relation to science in practice. It links both management and performance standards, but it's exceptionally complex and it's time-consuming and we don't have very much product out there. The reality is that we have half a million hectares. Companies are finding it tough to get there, although there are more coming on all the time.

The Forest Stewardship Council has the blessing of the NGOs and consequently has enormous marketplace acceptance. It's based on ten global principles that are broadly accepted. As a performance-based system, it can in fact give accreditation for what's actually happening on the land base, which has been quite important.

The challenge from a Canadian point of view is that there aren't very many regional standards that are actually out there, so you have principles but you don't have a way of putting it into place. To date it's been pretty tough for Canadian companies to get there. Although FSC has enormous global acceptance, it's been tough for Canadian companies to get FSC certification.

I'll speak a little bit about global status and then I'll leave off. To date, the certification focus has clearly been in Europe, but it's increasingly becoming an issue in the United States as well. From a trade and a market perspective, this is very critical. In rough numbers, if we think of close to $40 billion in forest product exports, almost 80% of those go to the United States and only about 8% to Europe. While Europe may well be a bellwether—it may indicate where things are going—we have 80% of our forest exports into the U.S., so we're obviously watching the United States much more carefully.

Certification really developed and became an issue in Europe primarily six or seven years ago, although interestingly enough, the Forest Stewardship Council had its beginnings in Toronto. I think that's a little-known fact. There's a very strong push in Europe from the international ENGOs, particularly the World Wildlife Fund. They promoted the development of buyer's groups. Throughout all of the early years, the global system of note was the Forest Stewardship Council.

In the last three to four years, the issue has become increasingly broad and complex. There are now many players and many different systems. I think it's fair to say that it's moved from a niche market to being very much a condition of market sale. I think it's going to be increasingly difficult to sell product into a global market if you don't have some sort of registration, some sort of certification.

In summary statistics, the Forest Stewardship Council presently has about 17.5 million hectares certified. In contrast to that, just looking at some of the major European certifications, Finland has a certification system now that in their own country certifies close to that, probably about 14 million hectares. Norway has another 10 million and Sweden has a million under their own system and another 9 million under FSC. I don't want to bore you with numbers but to make the point that there is a lot of certification that's coming on stream very quickly with a number of different systems.

That brings us to something that I think is of interest to you, based on some of the questions I'm aware you've raised. That is the question of mutual recognition or harmonization. How do you get different systems to work together? The conclusions aren't out, but there are some very clear trends in that regard.

There's a major activity in Europe called the Pan-European Forest Certification scheme, and that's developed around the concept of mutual recognition. In principle, the definition of sustainable forest management that was developed through a European criterion indicator system forms an umbrella and then they will recognize individual, national certification systems. The PEFC presently has 17 countries that belong to an alliance and they cover about 12 million land owners.

Quite clearly, looking at ways to recognize each other's certification systems is going to become a very important activity. What we anticipate is that equivalency and harmonization—and there's a little bit of sloppiness in definition right now—are going to become really big issues over the next few years.

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In that regard, on a promising front, there's an independent verifier called Kerhoot that does a verification process within Holland. They've recently recognized a CSA and ISO product out of northern Vancouver Island as being acceptable to their system. They're going to be bringing it into Europe, I hope with quite a bit of fanfare, saying here's a Canadian system that seems to be recognizable as having the same standards we have and that should be mutually recognized. This is an important step forward.

In relation to the U.S., it's quite clear that the demand is growing. I think the important directions have been set by Home Depot. I understand that you met with the Canadian president yesterday. In addition to that, Maynards, Wickes, and a number of others have talked about certification, but mainly they've focused on environmentally sensitive, ecologically threatened habitat. There's sort of a double aspect to those messages they've given us, but it's quite clear that they're going in the direction of certified product.

More recently we've seen some of the large American home builders like Centex, Kaufman and Broad, and companies like that start to receive pressure to use certified products. They say they'll consider using only certified wood in the building of houses in the United States. That's important to us because that's probably half of our lumber exports into the United States.

Perhaps I'll stop there. I'll be happy to answer questions later, but I tried to give you a quick overview as we see it. Thank you.

The Chairman: Thank you very much, Dr. Welsh.

Mr. Ballhorn, I think you wanted to kind of wrap up or put things in perspective.

Mr. Richard Ballhorn: Sure. Just briefly, can Mr. Graham tell us how the government is set up to deal with the environmental challenges of Canadian forest practices? How have we actually organized ourselves to deal with that? That's not to say it's the only way we deal with it, but it's sort of the ongoing program.

Mr. Greg Graham: The program I'm coordinating, although it's lodged at the Department of Foreign Affairs, is actually a program of the Canadian Council of Forest Ministers. So I have to answer not only to my own department and NRCAN, but also to all of the responsible ministers in the provinces and territories.

Basically what we try to do is coordinate activities internationally so that we can monitor and report back on what the perception of Canadian forest products is vis-à-vis sustainability and environmental stewardship. We undertake political and diplomatic initiatives, which include making representation to foreign governments, legislation, on any way in which a barrier may be set up that could use environmental perceptions as a trade barrier against Canadian products.

We also liaise with non-governmental groups in the various market countries—Europe, the United States, and Japan—to try to persuade them that Canadian wood and Canadian forest products are environmentally sustainable. Among the activities we undertake is bringing tours of decision makers in from Europe, Japan, the U.S., and actually taking them out in the woods and showing them how we harvest our forest. We give them a sense of the expanse of the forest in Canada. This is especially true for the Europeans and the Japanese. When you can fly them from Quebec to British Columbia and they don't see anything but trees, they go back with quite a different perception.

Those are some of the ways in which we try to change the perception. We try to have people at each of the posts in our target markets who are ready to answer questions or respond to criticisms. They are armed with the latest facts and figures. They have sort of a hotline they can call if something comes up that they need further assistance on. When an issue arises, we try to have somebody from one of our Canadian posts go in and address it immediately.

Just to give an example, in the U.S. recently some of the home builders were approached by environmental groups and asked to change their policy towards sourcing wood. Now, $18 billion worth of Canadian wood goes into U.S. home building every year. The largest home builders were targeted, Kaufman and Broad and Centex.

Practically the very next day, we had people from our posts in talking to their public relations people, giving them a walk-through of how stuff is actually harvested in Canada, providing background information, including documents from the provinces and from NRCAN, inviting them to come and see forest operations in Canada. This is done behind the scenes with little fanfare but it is being done and I think that's an important message to get out.

Thank you.

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The Chairman: Thank you, Mr. Graham.

Mr. Ballhorn.

Mr. Richard Ballhorn: Another form of action internationally has been through something called the United Nations Intergovernmental Forum on Forests, which is an ongoing process. Two processes in the UN system in New York have focused on forest issues and problems, and they finally came to a conclusion in February. We were able to, from those processes, get agreement on a new United Nations permanent forum on forests to focus on forest issues, as well as a supporting secretariat in the United Nations. As well, there's a recommendation to draw together various international bodies that work on forest issues or aspects of forests. We also got a commitment to develop a mandate to negotiate an international forest convention within the next five years. So that is another place where we've been trying to...

This is all with the end in mind of getting a common agreement on what sustainable management of forests is all about, what it is, so that we don't have everybody defining it differently and creating all sorts of impediments or justifying blockages of trade.

We have been the leaders in that process for a long time. We've literally been doing it for ten years. I just wanted you to know we've had some success in that area. We hope to get into a process where we can negotiate a convention on forests and actually draw together and have forests looked at overall, holistically, rather than little bits and pieces being dealt with on forests through the whole international system.

The other thing I'd like to emphasize is it's been a fairly cooperative relationship on the forest issues with the Canadian Forest Service. There's not very much we do that doesn't also involve them, because they're very much the knowledge base about what happens domestically in Canada. They have the network out to deal with the provinces, and they have the science base. We have the trade involvement in the broader political picture, but it's been very much a cooperative relationship on these issues.

The Chairman: Thank you, Mr. Ballhorn.

I'll go immediately to members. Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Canadian Alliance): Thank you, Mr. Chair.

I'll start at the back end with Mr. Graham's presentation.

We'll have two groups here tomorrow before the committee, the IWA and the Forest Alliance of British Columbia. They were before the committee, I believe, in November 1998. This committee followed up, inviting them to come back with a specific proposal that would deal with the same kind of broader issue, which is market access.

They would look at it somewhat differently in that they're looking more at the target. The prime target in Canada right now, as we all know, is the central coast in B.C. So they've developed a format they think will work. It's a pilot project. I wanted to make you aware of that.

Also, I'd like to make you aware that this is not an attempt to subvert anything being done now. It's a supplementary thing with a different focus, and they could be very complementary.

It would have been nice if their presentation had been ahead of yours, but that didn't happen. So we may want to hear from you in some fashion again after they've made their presentation.

Just to change gears again, for Mr. George, last week I was in Washington with the Free Trade Lumber Council. That may have been the meeting you made reference to, because they had earlier meetings in Calgary. We had, for example, a presentation by the federal trade representative, Mary Ryckman. You may know her. One thing that became clear is there's one issue that could blunt a subsidy argument from the U.S. side, and that is a minor change, but it's a federal regulation that needs to be changed on log exports in British Columbia.

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B.C. is different from the other signatory provinces in one minor way to do with log exports. So there's been discussion with the federal authority, and I don't know exactly who it is. Are you aware of that issue, and is Canada going to initiate that change?

Mr. Douglas George: Yes, we're aware of the issue. In the last countervailing duty investigation launched by the United States, more than half of the final duty related to log export controls. The issue has been raised, and it is being looked at.

Mr. John Duncan: Who's in charge of that file?

Mr. Douglas George: The log export permits are issued by the Department of Foreign Affairs and International Trade.

Mr. John Duncan: So would that be you?

Mr. Douglas George: Not my division, no.

Mr. John Duncan: Okay.

Mr. Douglas George: I handle the administration of the softwood lumber agreement. A different organization handles that.

Mr. John Duncan: So you don't know exactly who that is?

Mr. Douglas George: It's the export-import controls bureau. I'm part of it; I'm just not the division that deals with log export control.

Mr. John Duncan: Okay, thank you.

I have one more specific question, and it probably falls into Mr. Ballhorn's court.

From an international environmental standpoint, a project has now been initiated where Canada is going to attempt to estimate carbon reserves in our forests, but what it doesn't do is estimate the carbon budget consequent to the creation of forest products. It seems to me that's a crucial number. It has to be a verifiable number internationally and so on. It's a very expensive study to do, but it has a huge potential payback for us nationally. Do you know of any effort to make that happen?

Mr. Richard Ballhorn: I presume this is all in relation to the work on carbon sinks for the climate change area.

Mr. John Duncan: That's correct.

Mr. Richard Ballhorn: I think the funding for that has come through the Climate Change Action Fund.

One of the challenges of this area is that, first of all, our data isn't very good, though work is being done by the Canadian Forest Service.

We have a second issue about how important carbon sinks will be to Canada's part of its climate change implementation strategy, because what is not known about the science of carbon sequestration is this. It's understood that when trees are younger, they take up more carbon, and they take up less later on, but we don't know overall, in the balance, how important that will be to Canada as far as a strategy is concerned—how much carbon our forests are actually sequestering over a certain time period.

In the whole area of sinks, Canada has been very much pushing to get recognition of forest sinks as well as agricultural soils as sinks. One of the problems has been that the science is not what it should be and our own data is not what it should be. But the idea is that through this study, we will have a better basis on which to make a calculation.

Mr. John Duncan: But my point is it only addresses half the issue. When you cut forests and create forest products, every forest product has a potential storage regime attached to it. Unless you work hard to develop those numbers, you cannot make that case. Quite possibly that's a much bigger number than the difference between young forest and old forest.

Mr. Richard Ballhorn: I think part of it will be that they'll focus on what is allowed to be considered a carbon sink. It relates to areas of afforestation. There are certain limitations within the Kyoto protocol on what could be a sink.

I don't know the background; we could check the details on this one. They may be zeroing in on the areas that are permitted sinks under the protocol, as opposed to the general issue of sinks. I'll have to check on this. I know this has been a challenging project for them. If my colleague can find some exact information from the Canadian Forest Service, we'll try to get back to you on that.

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I don't know the exact details, but I know the area of sinks. What you can claim as a sink is somewhat limited by the agreement. It isn't everything you do in forestry. It isn't all the carbon that's sequestered; it's only in certain circumstances.

Mr. John Duncan: Yes. I have written—

The Chairman: Mr. Duncan, I'll have to get back to you.

Before I go to Mr. Reed, let me bid a welcome to the Forum for Young Canadians represented here. They joined us just toward the end of your presentation, Mr. Ballhorn. I'm sure they'll be more than interested in hearing what members have to say with respect to some of your presentations.

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you very much, Mr. Chairman. I have some questions for the presenters, and I'll try to be as brief as possible.

Mr. Graham, it sounds like the operation you're running is just what the Canadian industry needs to answer the attacks that have been levelled at it over the recent years. Do you have enough budget? I realize—

Mr. Greg Graham: You should never ask a question like that.

Mr. Julian Reed: —we never have enough. But do you feel what you have to work with is able to meet the challenge?

Mr. Greg Graham: A lot of what I have to work with, I would say, depends on what I'm expected to do with the budget. For example, there is no budget at present to do a major international publicity campaign. If we were to try to launch the type of campaign that some environmentalist groups do with advertising, posters, etc., we wouldn't have a budget for that.

What this program works on is basically $800,000 a year, which handles coordination, some printing and distribution, tours, and those types of things, and we use the personnel who are already there at the post. We make somebody responsible. So we're really doing a lot with what is a relatively limited budget.

We try to work with industry and with provincial undertakings as well. We're not trying to be the be-all and end-all, but we are a sort of front line, because we are out there at the posts and we're monitoring what's going on in the different countries—the attitudes and what the media are covering about Canada.

Mr. Julian Reed: That's great. Thank you.

Dr. Welsh, one of the concerns I've had about certification generally is the cost to the small lot owner. There are some small holdings that are incredibly well managed, and there are individual operators—and I know some of them personally—who are exceptionally good managers of their woodlots. I'm trying to get an indication of the cost of certification and the necessity to recertify every year, and it seems to have the potential to put such a burden on the small woodlot owner that he will simply fall victim to the big corporate structure with the deep pockets. Do you have any comment to make about that?

Dr. Dan Welsh: Certainly I would agree with your assessment. It's a huge risk for small private landowners. It's clearly a reality the marketplace is forcing on them. I think the good news is that what we are seeing develop in a number of areas, including Canada, is that woodlot associations and syndicates and various other mechanisms that allow small private landowners to work in groups are starting to come into play in a very major way.

There are several other programs, such as the green tag program in the United States, that seem to be working. In many ways the pan-European certification process, which they claim includes 12 million landowners, was essentially a reaction to the concerns you've expressed, and they are in many ways paving the way to finding ways in which group certification can take place.

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In group certification the concept is that the association or syndicate would in fact take over a lot of the bureaucratic process and help pave the way for small private landowners so they don't have to bear the enormous costs of development themselves.

Within Canada we see some examples of that, both in the province of Quebec and the province of New Brunswick, with the Southern New Brunswick Wood Cooperatives. There has recently been a new pilot developed in the eastern Ontario model forest, just south of Ottawa, to look at these questions.

So the issue is very important, but I think there will be some breakthroughs in the next few years that may allow small private landowners to stay in the game.

Mr. Julian Reed: We could call it a work in progress, but we won't see a solution for a few years yet.

Dr. Dan Welsh: I know that Southern New Brunswick Wood Cooperatives hopes to have certification by this summer under the CSA system. That's important, certainly.

Mr. Julian Reed: All right. Thank you.

Dr. Dan Welsh: The other thing that will be important is that this industry increasingly is looking at its role in helping support small private landowners who are supplying product for them. They obviously have a vested interest in making sure the people who supply fibre to them can be certified under their system, because that's increasingly what the marketplace will develop, as well. We're seeing some new partnerships explored between large industry and small private landowners. That may offer a little bit of relief as well.

Mr. Julian Reed: Thank you.

The Chairman: Thank you, Mr. Welsh.

Mr. Julian Reed: Mr. George, on this softwood lumber issue, from the perch that I was on as a member who's on the receiving end of concerns in ridings, it seems that the softwood lumber agreement was not a perfect document. There were certain administrative problems with the allocation of quota, but also, over time, with the United States there were certain challenges to that softwood lumber agreement over the kind of material that could be classified as wood and shipped into the United States.

I'm wondering if you could share with us the direction you may want to head in when you get into negotiations. I'm not trying to get you to reveal the negotiating positions, but are we going to be faced with another quota system, for instance? That's number one.

Are we going to establish specifics about what constitutes lumber and what constitutes something that has been value-added, if you like?

What kinds of trade barriers have you discovered in the four years this agreement has been in place?

Mr. Douglas George: That's a fairly broad range of questions.

As a comment on the allocation system, when the agreement was put in place we had a fixed amount of quota to allocate. The allocation system was developed after extensive consultation with stakeholders, industry, provinces, etc., before it was done. It's done on a mathematical basis using a formula applied across the country.

There have been a number of disputes. There was one involving B.C. stumpage, which was settled with a bilateral agreement. There have been certain products that our industry has developed and sent down to the U.S.—or had been sending well before the agreement came into place—that the U.S. has since reclassified, using its customs classification system, to a tariff classification that's covered by the agreement. They were originally entering from outside it.

We've pursued that through the World Customs Organization, where there was a decision only last week of the World Customs Organization's harmonized system committee that again upheld Canada's decision that drilled studs would be outside the agreement. But we're having to pursue both drilled and notched studs and rougher-headed lumber through bilateral arbitration with the U.S. under the agreement.

On where we're going to go with the agreement and whether it's going to be a quota arrangement, I don't think it's possible to say at this stage. In the consultations we've heard a pretty broad range of views—from groups that want to get rid of the agreement altogether to groups that might want to have a similar agreement, but with changes.

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We've heard from the United States that they're also looking for something different, although as I said, both on our side and on the American side we're still engaged in extensive consultations with our stakeholders and have not yet come to a position on how we'll proceed when the agreement ends in a little less than one year.

The Chairman: Mr. George, what percentage of the American market is filled by Canadian product?

Mr. Douglas George: I couldn't say exactly, but it's approximately one-third; it's 33% or 34%.

The Chairman: But you're not in a position, as I heard you say to Mr. Reed, to give us an indication of which way you're going: whether we're going to a non-allocation system, a non-quota system, or whether we're going towards a free trade system.

Mr. Douglas George: At the moment, we have an agreement that expires in one year. We're engaged in consultations with our industry and stakeholders and the provinces to see if it's possible to forge a Canadian consensus on how to proceed. It's an ongoing process. I've explained where it's at, but I can't tell you what the end is because we're not there yet.

The Chairman: Let me go to Dr. Welsh for a second, then, because in part of those considerations I'm sure you're going to be consulting with him in some substantive detail.

Is the certification process presenting a non-tariff barrier to Canadian products going into the United States?

Dr. Dan Welsh: I think I'd probably ask Mr. Ballhorn to back me up with further detail, but I think the important distinction is perhaps to recognize barriers that are controlled under policy, regulation, and law, such as the World Trade Organization. It's a question of whether any regulations are in fact being broken. As things now stand, we're not aware of any regulations being broken.

Certainly we've had a look—and continue to look—at the arrangements under the Canada-U.S. Free Trade Agreement as well. That seems to pertain primarily to government activities and government procurement policies at senior levels. We monitor it very carefully to ensure that no laws are broken. To date there don't seem to be, but it's actually something that Mr. Ballhorn is perhaps more expert in.

The Chairman: If a large buyer and distributor like Home Depot makes a decision—I think and I hope I'm not misrepresenting what you said earlier—in the marketplace to indicate a preference for, and to show direction that it will eventually be exclusive, a product that has a particular certification, in this case, FSC certification, what would happen, then, to the market accessibility of Canadian product, which you've indicated is far from FSC certification?

Dr. Dan Welsh: Probably nothing. Based on statements that were made already, I'd suspect that what they would end up saying is that they would want FSC or equivalent. The producer would be obliged to meet their requirements. That would not, in the circumstance you described, contravene any laws or regulations that we're aware of.

The Chairman: Except that as Mr. George and his group do the consultation and preparations for negotiation, they would probably include, I would imagine, the additional cost to the Canadian producers and build that in as part of the considerations for where they're going to go. Would you agree? Or should we ask Mr. George to answer that?

Dr. Dan Welsh: It might, but certainly we would not anticipate that Home Depot or any other large organization would make that declaration in a way that discriminated between Canadian product and American product. Relative to the costs of certification, they would be equal to everybody who supplied product to them, be they from Sweden, which is increasingly moving into the U.S. market, or be they United States producers or Canadian producers. So it would be—

The Chairman: I tried to jot down some of the figures you gave us, Dr. Welsh. It would seem to me, on the basis of the figures you gave about forests under FSC certification in the Nordic countries, that those countries would have a substantial advantage over Canadian products for an American market.

• 1550

Dr. Dan Welsh: I think that's absolutely true, sir. It's certainly very hard to get figures on these things, but we have indications that in fact there are significant increases in Swedish product going into the United States, into markets that we may have trouble meeting until we have certified product that meets the buyers' demands. You are quite correct.

The Chairman: We'll go to Mr. Godin.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): And me?

[English]

The Chairman: I don't know. I don't have you on my list, Mr. Cardin. Did you want to get in?

[Translation]

Yes? Very well. It's your turn.

Mr. Serge Cardin: Good afternoon, gentlemen, and thank you for coming. Your presentation was interesting. Unfortunately, my colleague, who is the forestry specialist, is absent. I am rather green when it comes to the lumber sector, but rest assured that I will not get bent out of shape by gaining some experience.

The chairman asked you a question about the certification systems. He asked you whether the systems were not turning into non-tariff barriers to international trade. Mr. Welsh, you said earlier that certification was a private sector matter. The buyer or the producer examines the standards and everything that is involved. The environment is a very major concern in the forestry sector, both in terms of how we use the forest and how we conduct our operations. Whey aren't governments playing a significant role in establishing certification standards?

My second question is as follows: is it utopic to think that, at one point, we could have an international standard which, of course, could, in part, be more tailored to the region where the forestry products are harvested? We know that conditions are probably not the same throughout the world and that not all forests have the same environmental impact on the planet. When we realized what was going on in South America, many people stood up and denounced the situation. Can we, therefore, hope that one day we will have an international standard that will ensure that all international players can engage in healthy competition? How long will it take for this to happen?

[English]

The Chairman: Dr. Welsh.

Dr. Dan Welsh: Thank you, sir. It's a broad-ranging group of questions.

First of all, let me distinguish between the role of government in the specific aspect of certification, which is and has been demanded by the marketplace as a third-party statement, a stamp of approval that something is happening... I didn't mean to in any way suggest that governments were not involved in standards of sustainable forest management. In fact, just the opposite is true. Canada is now, I think, probably the global leader in policy and regulation for sustainable forest management. It's something that we as a country have taken seriously, as you all know, for many years. We've had processes that have led to the development of what I think is the best set of sustainable forest management policies, rules, and regulations in the world. We have a far-reaching national forest strategy, and each province has very complete rules and regulations.

On the international front, as Mr. Ballhorn mentioned, we've been working for many years with a number of other countries to try to get a convention or some sort of an agreement so that there is a level playing field and we can agree about what sustainable forest management means.

So it's only in the very specific area of how you put a label on and who puts the label there that government has said this is a question between buyers and sellers. The reality is that the buyer is saying he would like some confirmation that all of these things are happening, that he would like somebody, at arm's length, to have a look and confirm for him that this product comes from a well-managed forest.

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Because government is so involved in setting the policies and rules and regulations, it would be confusing at the very least, if not a conflict, for them to then come along and try to provide that same certification. I think there's a general feeling in the marketplace that such certification is best conducted by somebody else.

I hope that has dealt with the questions you asked me.

[Translation]

Mr. Serge Cardin: Yes, for the most part. The government does not necessarily have to set the standards or establish the certification systems, but it could at least specify when it will intervene in matters pertaining to resources or the environment.

The Chairman: Thank you, Mr. Cardin.

Mr. St-Julien.

Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): Thank you, Mr. Chairman.

Up until now, the boycotts against Canadian forestry products have been aimed at British Columbia's public forests in particular, but I am going to talk about the film by Richard Desjardins, L'Erreur boréale. We are all familiar with the debate that is currently going on in Quebec. Are you not worried that the film L'Erreur boréale will result in Quebec becoming the next target for environmental group campaigns?

[English]

Mr. Richard Ballhorn: Mr. Graham.

[Translation]

Mr. Greg Graham: If this film has any effect, we will see it in Europe in particular. This film even won an award in France. According to our embassy in Paris, there was no big reaction from the public. The embassy did not receive any letter criticizing Quebec, etc. There are still people who denounce the practices in British Columbia, because at one time Germany had broadcast, on television, images of the big trees, etc. A good number of people saw this film, but the groups themselves are not doing any external advertising.

If Quebec is going to have a problem, it will come from the United States because of the Cree protests with respect to land management in the James Bay region. As far as Quebec is concerned, this situation has had a much greater impact than Mr. Desjardins' film.

Mr. Guy St-Julien: My final question is about the Grand Council of the Crees and its Chief, Ted Moses, who went to Washington. Do you have any other details about what's going on right now?

Mr. Greg Graham: I really don't have any details. I was told today that he is still there, but we don't have any details at the moment. We expect to be receiving more information.

Mr. Guy St-Julien: What is the department's version as to the James Bay Crees? We know that the federal government, like Quebec, is the trustee of the James Bay Agreement. Do you have an opinion on the James Bay Crees and the forest?

Mr. Greg Graham: I don't really have an opinion. My job is to look after external public relations. There was the federal government, the Quebec government and the governments of the Aboriginal nations. I cannot give you an opinion today.

Mr. Guy St-Julien: Fine, we won't talk about your opinion. In your dealings with Washington, with the United States, do you mention that the federal government and the provincial government are trustees of the James Bay and Northern Quebec Agreement?

Mr. Greg Graham: We mention this fact when questions are asked. Up until now, the press has not asked very many questions. For example, despite the fact that there have already been protests by the Crees, in Washington or in New York, the American press has not asked our embassy any questions on this issue.

Mr. Guy St-Julien: Have you...

The Chairman: Every time you add a word, Mr. St-Julien always finds a final question to ask. Mr. St-Julien, this will be your final, final, final question.

Mr. Guy St-Julien: Have you read the James Bay Agreement, which pertains to the Crees?

Mr. Greg Graham: Yes.

Mr. Guy St-Julien: Thank you.

The Chairman: Are you sure?

Mr. Guy St-Julien: Yes. I am very happy.

The Chairman: May I give the floor to someone else?

Mr. Godin.

• 1600

Mr. Yvon Godin (Acadie—Bathurst, NDP): Thank you, Mr. Chairman.

We have some concerns that I will deal with very quickly. We talk about the environment, forests and all these things. I have discussed the issue with others who have appeared before the committee. I even talked about this issue with the president of Home Depot, who was here yesterday. You will recall that we did not pay attention to our fisheries and we lost them. The people in the Atlantic region are suffering as a result. Everything that has been said is all well and good, and trade is a good thing. However, when you don't have anything left, you suffer for a long time. I will now ask my questions.

Is the purpose of ISO 9000, ISO 9001 or ISO 9002 certification to protect the environment in addition to guaranteeing the quality of goods produced? I was under the impression that the ISO standards were primarily about quality. Is this a standard that can protect the environment? Is this also true for the CSA standards? Is it not true that the standards deal primarily with quality?

Let's talk about FSC now. There are many players in the forestry sector, whether they be the forest owners, the paper mills, the environmentalists, the sawmills or the government. Should there not be an international organization? Numerous discussions have been held in many different places, particularly in Kyoto. We are always trying to save our planet and our forests for the long term future.

Instead of spending money on ISO 9000 or CSA standards, could we not make FSC the international solution? We would not need to spend money elsewhere. There would be an organization that would be recognized everywhere in the world. Today, there is globalization. We do business with markets everywhere in the world. This would be a certificate that everyone would recognize and everyone would participate in ensuring that it is recognized. That is my question.

The Chairman: To whom is your question addressed?

Mr. Yvon Godin: To the person who can answer it.

The Chairman: Mr. Ballhorn.

[English]

Mr. Richard Ballhorn: I think what normally happens in this area of standards is a number always come up at the same time. That's because people have different ideas. That's exactly what's happened at the Forest Stewardship Council. It had one concept when it started out. It didn't want to deal with government or industry; it only wanted to deal with importers and consumers. If you look in the Canadian context, that's not reality for Canada, when so much of our forest land is owned by government and regulated by government. Certainly not dealing with the industry itself...

There were initial problems with FSC because of that focus. It seemed to be very much exterior to us. It wasn't really a Canadian process that recognized what Canada was. In response, that's why we have a CSA process and an ISO process—to develop our own home-grown process.

As well, the ISO and CSA processes are capable of going internationally through the standards-making system. The way standards work is you develop a national standard, and then you can go to the international standards organization and get them to look at your standard as maybe a model for an international standard. That's not really doable with FSC because it doesn't belong to a standards organization; it is outside of it. That's why the CSA and ISO looked rather attractive to Canada.

The one thing the FSC has going for it is the fact that it has a relationship with an environmental group—one of the major ones, the WWF—and it has had some success in making that known to the world. I think we would have difficulty thinking we all had to go to the FSC. We think the solution is that there are a number of ways to get to heaven, to get to the end result. The thing is not to be exclusive. We don't want buyers to be exclusive, saying there's only one way and no other way, when it's clear there's a great deal of similarity in the processes.

We think a number of standards should be recognized, and that's why the mutual recognition's important. But we think it would be very hard to concentrate on just one standard for the world, because that's a monopoly situation. I don't think we want to get into monopoly situations.

Mr. Yvon Godin: There may be a problem going back to the ISO, though. I raise the question again. Does it take care of the environment, and do people in the environment agree with it? We have those people who don't agree. They are in Europe and say “Let's put a boycott on it”. We have one the whole world should agree to, but if they decide to not buy our wood, it doesn't help us.

• 1605

One at the table a little while ago said “We take somebody from here to Vancouver in a plane and they see green”. Yes, but it could be grass too. Do you know what I mean? That's what the difference is with the ISO or the CSA. Is it something that is saleable to Europe? Do we just want to force them to take it and say that's it—

Mr. Richard Ballhorn: No. I think the reality is that the certification is sufficiently new in Canada, in the sense of actually having significant hectares certified. We're just now experiencing it for the first time.

We've developed these systems, and there was some gap between ISO and CSA before the FSC was taken up by anybody, because it took some while before people actually got certified.

We have found in the last year there has been quite an increase in the number of certifications. Right now we're testing the situation. We'll find out how acceptable that is—other than FSC. We've had some good signs in Europe, as Mr. Welsh mentioned. One Dutch firm, which is influential, has actually said the CSA and ISO are equivalent to the FSC. That is very significant, and that's what we want to happen, basically.

I will let Mr. Welsh comment as well.

The Chairman: Mr. Welsh.

Dr. Dan Welsh: We should recognize ISO as a truly international system. At the current time, in addition to being FSC-certified, for example, almost all of the large Swedish companies are also ISO-certified. The subtlety here is that ISO deals with the recognition of a management system for the land base. Do you have a way of dealing with environmental problems? Do you have a way of training your staff? So it looks at the management system the industry has put in place in order to deal with the environment.

The Forest Stewardship Council is dealing with evidence of performance—that the land is adequately regenerated and the water quality is there, whereas ISO is dealing with the mechanism. So it may well be that the marketplace will ultimately decide that you need both. It would seem that in the case of the Swedish industry, they are putting both in place. We have Canadian companies that are looking at both.

As Mr. Ballhorn has suggested, it's very early days in relation to global markets deciding whether they need two separate systems or not. I don't think we should necessarily see them as being in competition with each other, as much as answering different needs. So we probably shouldn't be looking for a single system as a panacea, particularly this early on.

The Chairman: Mr. Carmen Provenzano.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): It seems fundamental to any certification system that the certification criteria be uniform. I'm interested in your comments about the amount of Swedish forest that's been certified and the opening in the American marketplace that has created.

I'd like a response from officials from each department here. Having that in mind and understanding the importance of that from a natural resources standpoint and an international trade standpoint, what efforts have each of your departments made to independently determine whether the certification standards—and I'm thinking of FSC certification standards—are uniform and applied in a uniform way in Canada and in Europe?

To put it another way, to what extent have you tried to determine whether the standards are different and whether FSC certification—either the process in obtaining that certification or the criteria considered in the certification process—is different in any way for Canadian forestry?

• 1610

Dr. Dan Welsh: Thank you, sir. Those are very good questions.

First of all, you're quite right that the uniform criteria or principles are exceedingly important. The level at which you can establish those principles is higher in relation to what sustainable forest management actually means. We tend to call those the criteria of “sustainable forest management”.

We've been spending a lot of effort as a country to work on the criteria and indicators to get a uniform definition. That links into some of the activities that were mentioned earlier in relation to the international forest forum. With further UN discussions, we hope those will link with what the pan-European folks are doing in relation to their process. So we've been working very hard trying to get a uniform definition.

In relation to your specific question about the Forest Stewardship Council, there is not a formal process that can say absolutely, but I should tell you, many people would argue that the Forest Stewardship Council standards are not equivalent from country to country, and that they do not have an effective process for dealing with that.

I personally have had the opportunity to discuss this question with their international board. They advised us that they would be dealing with the question of harmonization. I know this past month they had a major meeting in Spain behind closed doors to try to look at how they would harmonize.

There are big challenges there, and those are challenges below the level of principles. One can say we should conserve biodiversity, but what does that mean? One can say we should regenerate the forest adequately, but what does “adequately” mean?

So there are huge differences between countries, and that's where you find the differences. There is not yet a formally agreed-to process to determine how you find equivalency when the circumstances are very different from place to place.

Mr. Carmen Provenzano: I'll interject at this point, if I may.

Surely there is a process to identify differences. While I acknowledge everything you say, and agree, I don't think it takes an extraordinary exercise to determine whether different criteria are being applied. If you can identify it...

I guess I'm asking you, if we haven't been doing this, what's in the way? Is it money? What's in the way in something that is so important, in something that opens a door to international trade? What's in the way of the foreign affairs and international trade people producing an authoritative document that says this is how these standards are different, that says we are being discriminated against, in a sense, in Canada when it comes to one or another form of certification?

I would say FSC, from what I know about it, is discriminatory. I've seen these carrot-patch forests in Europe. We are told that biodiversity is such a big factor; it's 80%, and 20% is the trees. When you go over there, all you see are the trees. You can see through the trees. There is no wildlife.

It grates someone who has a Canadian perspective on all of this to listen to that kind of bunk. I think it's incumbent upon us to play that role in analysing or in determining where the differences are and in what way we're being discriminated against, if at all.

If there's something standing in the way of that, what is it, and what do we do about it?

Mr. Richard Ballhorn: Again, it's how fast certification has come on. It's come on relatively quickly in terms of volume and in terms of the area covered.

The one difference about this area as opposed to say other trade barriers is that the FSC process is outside the standard system. It's outside of government. Even if we say it's different, so what? We have no recourse. All we could do is publicize that fact, possibly, but we have no recourse against Sweden or Norway or Poland or whomever. This is private sector activity under a private sector thing. There are basically no disciplines in this area.

• 1615

That's the challenge. It's not something where government is saying this is the system, and I'm either imposing a system or accepting a system. Government hasn't been involved in it. That's the issue. Usually we have something to go on if the hands of government are on it in some fashion, and they're not on it in certification.

Mr. Carmen Provenzano: There's a relevance here, though, I suggest. I'm not disagreeing with what you're saying, sir, but you see, what FSC has done is to attack the market, essentially. They've used the market to control this whole process.

Well, if we have some definitive work that says we are involved in a discriminatory process, and we can talk authoritatively about where the discrimination is, we can go back to the consumer. We can make these arguments. We can use this documentation in the same way as the market is being used to control the producer.

I think that's important. It's important to the industry and it's important to us as Canadians to have that kind of data and the ability to make these arguments. Whether anybody listens or not is another question.

The Chairman: That's more of a comment. You don't want a response?

Mr. Carmen Provenzano: I wouldn't mind a response on that.

Mr. Richard Ballhorn: I guess there are a number of things we do. I think we have more anecdotal information on FSC and how quickly some forests have been certified, and where it seems to be much harder to qualify in Canada. But I don't think we have hard data as yet.

Literally, the product has started to flow only in the last little while. It's only now that we're starting to get a sense of that, quite frankly.

Mr. Carmen Provenzano: We could be behind the eight ball soon.

Mr. Richard Ballhorn: The other thing is that some of our own firms have an interest in FSC being a credible scheme. So we would have to be careful about that. I mean, we could find information, okay, but then what do we do with it?

I don't know; for the federal government to basically take on FSC frontally—essentially it's an NGO group, a wholly owned WWF subsidiary—you're taking on an awful lot of people. That may be negative overall for Canada. It may be better to get our own systems recognized and credible. Probably we'd put our emphasis more on analysis.

I mean, we do have anecdotal information but we don't have sufficient information.

Mr. Carmen Provenzano: If we're going to fight Goliath, at least give me a slingshot.

The Chairman: Mr. Provenzano, thank you.

We're just about finished. If you want, I'll give you thirty seconds.

Mr. Yvon Godin: I'll try to do it in thirty seconds. I'll do my best.

The Chairman: You've used up five.

Mr. Yvon Godin: I'm still concerned about the ISO. If we were going to be talking about the environment, forestry, and all that, how is ISO pushing for what is needed to save, for example, the environment? Who looks after that in ISO, and what organizations can force it to do it if we go with that one?

I don't know if I'm clear on the question.

Dr. Dan Welsh: The major way in which we manage crown forests, the public forests in Canada, is through policy and regulation. That participation between all the stakeholders you referred to takes place in the consultations the government has when it makes laws and policies. That's what determines what can be done on the land. That's fundamental to the way we manage. The ISO process is only dealing with a specific land management unit that's normally under contract to government.

Mr. Yvon Godin: That's right.

Dr. Dan Welsh: It's much broader policy that includes the interests of all of the different stakeholders in that discussion. That's a process that is normally dealt with by the provincial government through sustainable forest management policy and legislation.

Mr. Yvon Godin: I got the answer. ISO doesn't do the job.

The Chairman: Dr. Welsh, Mr. Ballhorn, Mr. George, and Mr. Graham, thank you very much for coming and for sharing with us the perceptions you've developed so far. We may actually get a chance to talk again before we write up our report, and we hope you'll be at least as available as you have been now, both with your information and with your time.

Colleagues, I'd like to ask you to stick around for one moment, please. They don't want us to lose the quorum we need for the item we discussed yesterday.

The meeting is suspended for a couple of minutes.

• 1619

• 1621

The Chairman: The meeting resumes.

We have with us, from the Association des manufacturiers de bois de sciage du Québec, the vice-president of forestry, Mr. Jacques Gauvin.

Mr. Gauvin, I'm sorry that we were a little delayed.

I think you've been here before. No? You have about ten minutes, after which there will be questions and answers with members.

[Translation]

Mr. Jacques Gauvin (Vice-President, Forestry, Association des manufacturiers de bois de sciage du Québec): Thank you very much.

First of all, I would like to thank the Standing Committee on Natural Resources and Government Operations for inviting the Association des manufacturiers de bois de sciage du Québec to make a presentation on Quebec's forestry practices.

I submitted a text in advance. I believe that this text has been distributed to you and will be appended to the minutes of this meeting so that we will have as much time as possible for an exchange.

Presentation by the Association des manufacturiers de bois de sciage du Québec to the Standing Committee on Natural Resources and Government Operations, House of Commons, Canada, Ottawa, April 12th, 2000:

Forest management practices in Quebec

Preamble

We would like to begin by thanking the Standing Committee on Natural Resources and Government Operations for inviting the Association des manufacturiers de bois de sciage (AMBSQ) to come and make a presentation on current forest management practices in Quebec. Before we get to the heart of the matter, allow us to give a quick overview of the AMBSQ.

Founded in 1953, the AMBSQ is recognized as the main association of lumber producers in eastern Canada and the biggest association in the Quebec manufacturing sector. It comprises 177 member mills and 237 companies that supply the lumber industry with goods and services.

Accredited as a grading agency under the rules and standards of the National Lumber Grading Authority (NLGA), the AMBSQ is the biggest lumber grading agency in Canada, with 6.8 billion bd. ft., or more than 90% of all the softwood lumber produced in Quebec.

The association's mission is to advocate, promote and protect the interests of its members, with respect for all users of the various forest resources.

The forest: A driving force for the economy and an invaluable part of our heritage

No discussion of forest management practices in Quebec would be possible without first looking at the big picture in order to get a sense of the importance of forestry in Quebec. It would be accurate to say that Quebeckers are blessed with forests. More than 90% of the forest in Quebec is publicly owned, which means that it belongs to the entire population. It is one of the largest public forests in the world, covering 758,000 km², almost 1.3 times bigger than the combined forests of Sweden, Finland and Norway!

The socio-economic benefits of forestry are of course commensurate with the strong presence of the forest in Quebec. The following data clearly illustrate this point.

With 290 mills creating 37,800 direct jobs (mill and logging), the sawmill industry is crucial to economic and social development in Quebec. In addition, there are many other smaller mills (in all, there are no fewer than 1,300 holders of timber processing mill operating permits in Quebec) that are no less important in these communities in which they are located.

It is also important to note that there are some 700 mills and shops specializing in the production of lumber components, treated wood, kitchen cabinets, doors and windows, and many other products.

When all the jobs created by these businesses are added to the roughly 40,000 jobs created by the pulp and paper industry (63 mills), the total is almost 80,000 jobs, or 13% of all manufacturing jobs in Quebec. When indirect jobs are factored in, the livelihood of almost 200,000 people is related in some way to the forest industry.

From a trade perspective, forestry plays a vital role in the Quebec economy. It generates production valued at approximately $18 billion and accounts for 20% of Quebec exports. Finally, more than 250 municipalities depend directly on the harvesting and processing of forest products, and the forest industry accounts for 100% of manufacturing jobs in 135 towns and villages.

Added to all these people whose jobs depend on the use of timber are those whose jobs are related to other forest resources. For example, resorts, hunting and fishing, represent a market of more than $125 million for outfitters and wildlife reserves. Approximately 420,000 people purchase services from businesses in these sectors, 60,000 of them from outside Quebec.

The sawmill industry: the constant challenge of competitiveness

The Quebec sawmill industry is a major player on the world's stage. However, if it is not careful, its competitiveness may be jeopardized and it may loose ground to its competitors. In recent years, sawmill businesses, which account for almost all the timber royalties paid to the government, have had to deal with substantial increases in those royalties and other operating cost, including costs related to environmental considerations.

The substantial increases in costs are on top of the heavy regulatory burden the industry carries: the Forest Act, the Regulations respecting standards of forest management for forests in the public domain, logging roads, development of private forest, environment, etc. Meanwhile, our competitors are taking steps to become more competitive and are also able to rely on conditions, such as the growth rate and size of trees, that gives them a structural edge.

There is the looming prospect of new constraints affecting access to the resource and efforts to keep costs competitive. The need to improve forest management practices and do more to involve local communities in forest management means higher costs for the industry. Further, access to timber could be compromised by an increase in protected areas, Aboriginal claims and pressure from other users of forest resources.

In the age of market globalization, keeping our industry competitive is crucial. The keys to competitiveness are a better control of costs and assurance of access to resources and markets so that the industry remains the pillar of the economy and a major source of employment in Quebec.

Market globalization has led to a rise in protectionism in many of our markets that is manifested in non-tariff trade barriers. For our industry, the main barriers take two forms: Canada-US lumber disputes, and the phytosanitary measures issued initially by the European Union and now adopted by many other countries.

The imposition of quotas on exports to the United States forced Quebec companies to find new markets and develop value-added products that could be exported duty free in order to ensure their prosperity. All indications are that the gamble is paying off: our production continues to grow and diversify, and our output of value-added products is on the rise.

One of the lessons that can be learned from the Canada-US softwood lumber agreement is that environmental problems (forest management practices) are not solved by bending market rules. Only the rules of the free market can regulate the production of lumber and, by extension, logging. All a trade barrier will do is shift production from one region of the country to another or from one country to another and boost the production of alternatives (steel, concrete, plastic, etc) that are less environmentally friendly, as we have seen in recent years.

A quota system forces companies to produce the maximum year in and year out so that they do not loose the privileges attached to their quotas instead of following market demand. Further, trade restrictions discourage investment in machinery and equipment that enable the industry to increase productivity by producing more lumber with fewer logs.

That being said, the fact remains that the industry does not consider this quota system to be fair. At a special general meeting on the issue on October 26, 1999, the members of the AMBSQ voted unanimously in favour of free access to the american market for Quebec lumber. Their view was that there is no justification for maintaining the current quotas, because Quebec has already proven to the Americans that its system of timber royalties is based on a free market and that companies do not receive any subsidies.

As we are faced with these various constraints, countries benefiting from the emergence of plentiful quantities of material from post-war plantations, such as Europe, Brazil, New-Zealand and Chili, are now present in our traditional export markets and our developing markets. Those producers are giving us competition in terms of both costs and product quality.

Alternate products like steel, concrete and plastic are becoming more and more aggressive, even using environmental arguments to discredit forest products. Serious studies prove that wood is the most environmentally friendly building material because it is renewable, recyclable and biodegradable. Similarly, environmental groups are putting pressure on the markets, criticizing our forest management practices and trying to create movements to influence buyers of our products.

What this means is that bigger and bigger challenges lie ahead for the lumber industry. The competition it has to deal with is worldwide and fierce. Market shares remain tenuous and continue to erode. Sawmill companies need those markets and the return on investment they generate in order to diversify their output, continue to modernize their mills and create jobs.

Forests management practices in harmony with the natural dynamic of forests

Located in the North, the boreal forest accounts for a large proportion (72 %) of Quebec's forest land. It is primarily composed of spruce, fir and jack pine. Forest fires, insect epidemics and windfall often lead to the creation of “even-aged” stands, that is, stands in which all the trees are more or less the same age and height.

Forests ecosystems in the boreal zone are well adapted to repeated occurrences of such phenomena. Following each wave of damage, vast new stands emerge. The natural dynamic is that many of these stands contain a single species. These young forests will gradually fill in the affected sites, and a variety of wildlife will return.

The hardwood forest in southern Quebec is made up of maple, birch, beech and oak. The hardwood forest typically comprises “all-aged” stands, that is, stands of trees of different ages and heights. The make-up of those stands varies considerably depending on the nature and extent of the damage.

Located in central Quebec, the mixed forest is dominated by fir in many places. All the softwood species are also present, however, as are most of the species of hardwood that are characteristic of Quebec forests. Regrowth in the mixed forests is often fuelled by an insect epidemic or a forest fire.

Professional forest managers make every effort to imitate nature. Management strategies are rooted in the life cycle of the forest, taking into account natural damage. That cycle varies, of course, depending on the type of forest.

In a hardwood stand, the trees are usually of different sizes and ages. Selection cutting is the most appropriate method in those situations. Harvesting trees of different ages helps improve the health and growth of the stand and provides room for smaller and more promising trees to grow. To preserve the age diversity of the stand and give future trees time to grow, another harvest of the same type is done a few years later and periodically after that.

Softwood forests, as stated earlier, are often the result of extensive natural damage. The trees in those vast tracts of forests are all more or less the same age and height. The method used in this type of stand is cutting with regrowth and soil protection.

As is the case with extensive natural damage, harvesting covers all mature trees. At first glance, the method resembles the clear-cutting that was done a decade and a half ago. When we look more closely, however, we see that the soil and young trees are protected, as that approach restricts the movement of machinery to specific paths. The preserved young trees are already adapted to the ground and often grow better than freshly planted trees.

In the years following the harvest, forest workers evaluate the presence and quality of regrowth. If the regrowth is inadequate, they will reforest or overplant. However, in Quebec, approximately 80 percent of forests that have been harvested grow back naturally and do not require any planting.

It should be noted that forestry companies submit to the government the results of their quality control measures. These data are used to verify compliance with the commitments made by the companies and their forest management plans. The government does field checks on a percentage of the data submitted in order to ensure that the results are accurate and the work is of good quality. Quebec forest management practices are subject to stringent regulations. On every parcel of land, everything is calculated, planned and reviewed in order to ensure that renewal of the forests is never jeopardized.

In public forests, harvesting of timber is controlled by the government. The government grants forestry companies long term timber allowances to supply their mills. These allowances are in line with what the forest is able to produce; the necessary calculations are redone regularly to make sure that they do. In return, the government requires companies to manage the forest so as to maintain or even increase its potential. These rights and obligations on the part of the government and companies are set out in timber supply and forest management agreements (TSFMA).

Only holders of a timber processing mill permit can be granted a TSFMA. The agreement has a term of 25 years and may be renewed every five years. It allows the holder of the rights to obtain, subject to very specific conditions, an annual permit to harvest timber in public forests in order to supply its mills.

One of the conditions the TSFMA holder has to meet is submitting long, medium and short term management plans and implementation reports to the government for approval. The plan must make it possible to meet the objectives for timber harvesting in production and environmental protection set by the government. The TSFMA holder must pay the government royalties based on volume, species and the quality of the timber at harvests.

The forests: the key to our future.

There is no question that Quebec has made great strides in forestry. More and more, large and small skilled forestry operations are guided by the principles of sustainable development. Of course, there is still room for improvements; forestry companies are working in that direction everyday. They are sensitive to the expectations and concerns of Quebeckers and will continue to preserve one of our greatest natural resources.

At the same time, the forest industry must also come to grips with growing demands on several fronts; that is why staying competitive has become a constant challenge.

• 1630

Mr. Jacques Gauvin: If you will allow me, Mr. Chairman, I would like to add one more conclusion which is not in my text. I would like to take advantage of this opportunity to refute the allegations that have been made about Quebec. In the last year and more often than not without any scientific basis or support, different groups have strongly criticized Quebec's forestry practices. As you know, some of these groups are active on the international scene. You have met some of them, who for political reasons, want to make their concerns known but can cause great prejudice to Quebec's forestry and economy. I therefore think it is important to set the record straight.

Thank you, Mr. Chairman. I would be happy to answer your questions insofar as I can and to speak with members of the committee.

Mr. Guy St-Julien: Mr. Chairman, I have a point of order.

Mr. Gauvin asked at the beginning if his entire brief would be made part of the record.

[English]

Yes or no?

The Vice-Chair (Mr. Julian Reed): I don't see why not. I was following the brief very closely, and with the exception of two paragraphs at the end, it was quite complete.

[Translation]

Mr. Guy St-Julien: Yes, but his brief is longer than the summary.

[English]

The Vice-Chair (Mr. Julian Reed): Okay. Yes, it can be taken as read.

Mr. Guy St-Julien: Okay. Thank you.

[Translation]

The Vice-Chairman (Mr. Julian Reed): Thank you very much.

[English]

We will proceed in the traditional manner. I see on my list Mr. Duncan.

Mr. John Duncan: Thank you, Mr. Chairman.

Thank you for the presentation.

Is Mr. Robitaille with your organization?

Mr. Jacques Gauvin: Yes. He is my boss.

Mr. John Duncan: I met him last week.

My understanding is that at the end of October your organization voted unanimously to oppose the renewal of the softwood lumber agreement, and your organization represents 90% of the lumber industry in Quebec, correct?

[Translation]

Mr. Jacques Gauvin: Yes. At the end of October, we held a special general meeting of all our members on this particular topic. It was decided unanimously to start representations—this was the mandate given the association—and to promote the necessary steps in order to establish a free trade mechanism with the Americans and in so doing abandon the quotas system.

[English]

Mr. John Duncan: One of the things that appears to be happening is that non-signatory provinces such as New Brunswick are shipping virtually all of their production to the U.S. and filling domestic production with signatory-province production. Is that in a sense a new market for Quebec?

[Translation]

Mr. Jacques Gauvin: The issue of timber markets is not my specialty. I know more about forestry practices. But I am told that it is in fact a new reality for some Quebec companies. I don't have any specific data in that regard but I believe the situation is the one you have described.

[English]

Mr. John Duncan: Yes. There's tremendous distortion in the markets.

You make a statement about alternate products, such as steel, concrete, and plastic, using environmental arguments to discredit forest products. Do you have any evidence that they are actually funding, let's say, other special interest groups to damage our industry?

• 1635

[Translation]

Mr. Jacques Gauvin: It isn't simple, but it is certainly a question that some people have raised. We have seen the enormous efforts made by certain groups, in the field of steel among others. There were very important campaigns, in the United States notably. Of course, we felt that the US was probably not unhappy to see that Canada's and Quebec's forestry and forest products were under attack. However, we have no evidence that funds were handed out by these groups to those who attack us directly or indirectly.

[English]

Mr. John Duncan: Has your industry or association been aware of any consumer questioning, for example, the steel industry about their environmental practices?

[Translation]

Mr. Jacques Gauvin: I don't know if the consumers are wondering about their practices, but efforts are being made right now in Canada, through the Canada Wood Council, but also through a very specific campaign which you may have heard about and whose slogan is "Wood is good". This campaign points out that wood is a biodegradable and green product with many interesting characteristics, that its production is less energy-consuming than steel, for example, and has less of an impact on the environment. It is a campaign that was launched recently and there is still a lot of work to do in that regard.

I have a feeling that consumers don't wonder about these things. Some of the campaigns to which I referred earlier were based, if I remember correctly, on the reasoning that using steel meant saving part of a forest. I do believe we should be doing more to counter a certain form of public disinformation.

[English]

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. Duncan.

Mr. St-Julien.

[Translation]

Mr. Guy St-Julien: I will let my colleague...

[English]

The Vice-Chair (Mr. Julian Reed): Oh, okay.

Mr. St. Denis.

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

Thank you, Mr. Gauvin, for being here with us today. Clearly, according to your presentation, forestry and all the jobs downstream from forestry are very important to the province of Quebec.

I'd like your comment on two items, please.

You referred obliquely to the film L'Erreur boréale. I was wondering if your industry made a focused response to that in any way or budgeted an amount to do some damage control, so to speak. We had a witness prior to you—maybe you heard him—Mr. Graham, who was sitting here saying there didn't seem to be much media response and public response to the film. So maybe it wasn't necessary, but I'm wondering if you did have a response.

On the question of certification, is that a forestry ring you have on there? Are you a forester yourself?

Mr. Jacques Gauvin: Yes.

Mr. Brent St. Denis: Yes, I see you have the ring.

On the question of certification, obviously our committee is most interested in the international view of Canadian forestry, forest practices, etc., to make sure we keep communities and workers working. Does the Province of Quebec work with industry at all in the area of certification? What is the status of certification within the province? I'll leave my question at that.

Thank you, Mr. Chairman.

[Translation]

Mr. Jacques Gauvin: Thank you. First of all, our industry did respond to the movie L'Erreur boréale and to all the activities of the Coalition sur les forêts vierges nordiques, whose representatives I believe you met. Our industry responded insofar as it felt compelled to do so.

Let's not forget that the film criticizes the whole of Quebec's forest industry: the government as manager of public forests, the industry as well as forest engineers. It even goes as far as attacking the faculty where Quebec forest engineers are trained. The film had many targets.

• 1640

Our industry decided to intervene. Our wish was not to replace the government; we decided to intervene when we felt that we had to do so and we tried to set the record straight. We had many opportunities to respond and we participated in many public debates on the radio, on television and in the papers. As provincial association and in co-operation with industry members, we took reporters on visits in the field throughout the province. We prepared documents so as to make our forest practices better known since it was in that regard that our industry had been criticized. Of course, we also monitored the impact of the movie on our markets because we did have certain concerns such as the one I mentioned earlier. We are still monitoring the situation in order to ensure we would know how to respond if ever the movie had an impact in Europe, even if the reaction over there has not been as strong so far.

We have noted that some groups such as the Crees whom I mentioned earlier are using the commotion created by the movie to claim that our forestry is not up to the highest quality levels, which, again, is not true.

We have therefore taken action at many levels. We have made representations in the field. We have made representations to important persons such as the elected representatives of the areas concerned who are being asked questions by their voters. We also contacted the municipalities who were quite concerned because, among the accusations put forth, it was said that the industry was going to work itself and the forest to death and that the communities would be impacted. We responded in the media, to the government and to the public. It was a collaborative effort which also involved advertisement. We participated in a TV campaign in co-operation with the Canadian Pulp and Paper Association which had already set up such a program. We addressed our concerns and described forestry such as it is practised in Quebec and in Canada. In summary, that is what we have done in relation to L'Erreur boréale.

Your second question dealt with certification, an important issue for Quebec, for most of Canada's regions and for many foreign countries and which you discussed at length in your previous meetings. The Quebec government has not been directly involved in this field except as member of various committees who sometimes address the issue of certification. However, I would say that it is more involved in this process than the Canadian government. As the previous witnesses mentioned, ISO-type certification processes are private; they are based on the involvement of a third party as certifier. Governments including the Quebec government are not presently involved in this field.

The Chairman: Thank you.

Mr. Cardin.

Mr. Serge Cardin: Thank you, Mr. Chairman.

You have raised many issues. Before becoming a member of Parliament, I was an accountant. I had a client whose business was to make hardwood handles. In the 20 years during which he was my client, I noted great fluctuations in the suppliers' prices as well as changes in supply. Suppliers would justify raising their prices by mentioning supply problems, by claiming that wood was becoming harder to come by.

You have told us today that with your forest practices, the forest is being constantly renewed and that the variety of wood species is ensured. You have told us that the forest is being renewed and that everything is fine. What does that mean for people who make wood products?

• 1645

Mr. Jacques Gauvin: I would tend to thing that the business you speak of needed hardwood from deciduous trees. It is true that there was a period in Quebec during which we were not very careful about the quality and the renewal of our forest in terms of quantity as well as quality.

Quebec forests are huge and mostly made up of softwood trees. The great northern forest of Quebec is a softwood forest. Our main species are softwood species and in the past, our industry has been generally driven by that reality. But there has long been and there still is an important hardwood sector which can be found mostly in the south of Quebec where these species are.

Unfortunately, there was a time when we perhaps did not ensure that the quality of this legacy was being preserved. When harvesting the hardwood stands, we unfortunately practised selective cutting, because we were naturally interested in harvesting the better-quality trees.

The forest that remained is the one we see today, because we are talking about quite a lengthy passage of time. I am referring to the new forestry practices in Quebec that have been implemented and that have changed radically over the past 15 years. Fifteen years, however, in the life of a forest, particularly in the life of a hardwood forest, is very short.

Several years ago we had already noted that we had a deficit, a deficit that we had to resolve, in quality species such as yellow birch, oak and different types of maples. Obviously, we have to put quality trees back in the forest. This forest still exists and is still supplying several plants. This is well known. However, we also know that many of our plants that work in the hardwood sector are turning to the northeastern part of the United States to find their sources of supply.

Consequently, I believe that Quebec has to make a special effort in this area. Nevertheless, we must remember that this reflects a reality that goes back many years, when our harvesting practices may, unfortunately, have caused a decrease in quality. We must confess that we have not taken all of the required precautions and, as a result, we have reduced the quality of our hardwood forests in Quebec.

Mr. Serge Cardin: You referred to the softwood forests, and I believe that more or less the same thing is occurring. You said that the forest is regenerating in the south, but you appear to be climbing further and further north and the Cree protests are occurring more and more frequently. Consequently, the public may be wondering whether or not your forest management practices are really helping to renew the softwood forests.

I will ask my final question right now before I'm interrupted by the chairman.

You said that the allegations made by certain environmental groups were, to some extent, attacks against the profession of forest engineering. As far as I know, however, there are forest engineers working for the forestry sector and for the environmental groups and there are still differences of opinion. We know that such differences of opinion also exist in economic issues: some economists advocate sovereignty whereas others are in favour of federalism. They do not agree.

Do the engineers from the environmental groups and your engineers ever sit down around the same table to assess the situation and to determine what direction you should all be heading in?

Mr. Jacques Gauvin: When you asked your first question, you alluded to the fact that harvesting was progressing more and more towards the more northern regions, and I would like to get back to this in two seconds. This progression does not presuppose that there is no regeneration occurring in areas that have already been harvested. The figures that have been audited recently by the departmental officials show that regeneration is occurring in appropriate fashion where there has been harvesting. When this is not happening, we proceed with reforestation operations in order to renew the forest.

• 1650

We shouldn't try to establish an equation and say that because we have gone further north that there are no more forests in the south. Indeed, we have growing forests, mature forests and forests that will be harvested a second time and which will then go through the normal cycle.

While talking about mature forests, I would like to deal with your question about the northern regions. From 1970 to 1972, Quebec established a forestry policy that called for harvesting under certain circumstances; namely, for economic reasons, for developing the forestry resource, as we did back in the 60s with our hydraulic resources.

And we strengthened this policy when adopting the Quebec forestry regime which is currently in place and which was for a long time called a new Quebec forestry regime. This regime said that we should use the forest for socio-economic development purposes in Quebec, obviously, while preserving our ability to support the forests, sustainable development, etc.

However, at that point we realized that there were some opportunities in that area in the northern zones which had yet to be exploited and a certain number which have yet to be exploited to this day. There are zones of mature trees and even over-mature trees, as we call them, that are not accessible by roadway and the lumber will be lost, from an economic point of view.

Therefore, the fact that we are now working in the North isn't a danger per se. It's a mechanism. Several Quebec cities are located in the northern zone of Quebec and some plants have settled there over time and created employment for people in these regions.

I think that there is a whole congruence of circumstances which have led us to use forest areas which were not exploited before. Therefore, I don't feel that this is necessarily bad news.

[English]

The Vice-Chair (Mr. Julian Reed): Thank you.

Monsieur Cardin, you're well over your time.

[Translation]

Mr. Serge Cardin: I know that my time has expired, Mr. Chairman, but the witness has yet to answer my last question.

Mr. Jacques Gauvin: That's true. I apologize.

[English]

The Vice-Chair (Mr. Julian Reed): This is very interesting.

[Translation]

Mr. Godin.

Mr. Yvon Godin: You told us that Erreur boréale basically attacked just about everybody. Perhaps people should have made a film on the fisheries, which has been sunk since specialists didn't do a very good job. We certainly have no reason to congratulate them. I just wanted to make this comment in passing.

Members of our committee and myself went to British Columbia, and I was very much in favour of the forestry practices in that province. Where a company cuts wood, it is up to them to reforest, or the government will take over the responsibility, hire the people who will reforest and send the bill to the corporation. I think that that is a wonderful practice that has been adopted by British Columbia.

What types of measures have we taken in Quebec to ensure that we do not wait, before acting, for the people or the environmentalists to make complaints because a company has not reforested? Has there been a system put into place in order to ensure that there will be regeneration and that we are not waiting for nature to follow its course, an excuse which some would want to use? In what you've said, you stated that nature would run its course. I believe however that it is not simply trees which grow in a forest. Yes, trees do grow again, but it's not necessarily the right type of tree.

I would like to hear your comments on this, if you please.

Mr. Jacques Gauvin: First of all, forest renewal is one of the most important requirements that we impose upon those holding forest management contracts in Quebec. They must ensure that there is renewal or regeneration of the forest. The obligations which are imposed upon corporations in British Columbia are exactly the same as those which are imposed in Quebec. If the company does not respect its obligations, the government intervenes and does so at the expense of the company at fault. It has been clearly established that forest renewal is one of the fundamental principles of the forestry policy in application in Quebec. It is an obligation.

The company must return some four years after cutting, if memory serves. It is easy to understand that we cannot go and do a check immediately after having cut trees, since you do need to leave the forest some time to regenerate. Now that's understandable. After four years, the company must return to take samples, test the soil, and if there is insufficient regeneration, the company must reforest in order to return it to its pre-existing state.

• 1655

Now, you are talking about natural regeneration as opposed to planting, but we in Quebec, have taken a different tack in forest management. We place a greater emphasis on natural regeneration, simply because it is more natural. The regeneration that is already there, that is already established, allows the trees to grow more quickly and goes along with what nature has prepared for the future.

Therefore, if we become involved in the forests, we cut mature trees, but we leave the others that were already there and we protect them to ensure a natural replacement of the forest. We believe that this process is far superior in terms of biodiversity and forest diversity as well as respect for the forest ecosystem.

This is a shift that has occurred in Quebec and that allows us to tell those who advocate biodiversity, and rightly so, and who sometimes compare us to countries that have resorted to heavy planting, but where there are biodiversity problems, that their trees look lovely all planted in a row but that their biodiversity no longer exists. In Quebec, our forest protection strategy has been the subject of widespread public consultations throughout the province. Our strategy is intended to protect the natural regeneration of the forests. I believe that many other organizations in the country as well as other provinces are watching us, because the best thing to do is to use nature herself, that is to say, the trees that are already growing there.

Mr. Yvon Godin: I have one final question, Mr. Chairman. Yesterday, Home Depot said that they favoured the FSC standard. That brought to mind a question that I would like to ask you. If people are eventually allowed to purchase forestry products, do you think that the industry in Quebec will agree to allow the federal or provincial government to play a role in bringing all of the stakeholders to the table so as to find solutions, be it the FSC standard or something else, something that will be recognized worldwide so that we might be able to solve our problem?

Mr. Jacques Gauvin: I don't believe that the governments should intervene directly in the certification process. I think the governments can monitor the situation so as to supply information. Moreover, we alluded earlier to certain analyses comparing the different certification systems.

I may be wrong, but I think that has already been done and I believe the Canadian government, through people from the Department of Natural Resources, and other non-industrial organizations, were involved in it. They sought to ensure that the governments would intervene in their own areas. Their help would be most valuable where this type of process is used to create non-tariff trade barriers so as to intervene on the markets by creating purchasing groups, etc.

We must turn our attention to best practices in forestry, on the respect that these entail, on elements of sustainable development, but not necessarily on trade wars with groups who are seeking to advance their own political agendas. This is how governments can become involved, by monitoring these trade practices and by helping us, but not by being involved in the processes themselves or in discussions that may take place with a view to coordinating the various processes.

[English]

The Vice-Chair (Mr. Julian Reed): Thank you, Mr. Godin.

Mr. St-Julien.

[Translation]

Mr. Guy St-Julien: I have a few questions. I want to come back to the James Bay and Northern Quebec Agreement, to the Cree and the Inuit. We know that Quebec is a trustee under the James Bay and Northern Quebec Agreement, as is the federal government. We also know that the Cree are permanent residents of the James Bay territory, either along the Némiscau or north of Matagami. We know that the Cree are reasonable people. They have never blockaded roads in an attempt to shut down logging operations. They seek justice before the courts, and we know that there is a dilemma at this time. The Cree have occupied that land for years. They are trappers and we know that it is not an easy life. When we, who are non-Native, travel through the area, we are just passing through, and then we leave. Do you think that some day there will be an agreement between the Cree and the industry? Do you think they will ever find a way to undertake logging operations while respecting the James Bay and Northern Quebec Agreement?

• 1700

Mr. Jacques Gauvin: Well, I wouldn't say that we are not abiding by the James Bay Agreement. I am not a specialist and therefore I would not presume to evaluate the content of the Agreement and its implementation.

One thing is certain, and it is something that is often said, that is that the corporations and the First Nations usually manage to arrive at some understanding in the field. This is also true for the Cree. There are agreements. There are even joint ventures, that have developed between logging companies in Quebec, for processing. There are already two sawmills, one in Abitibi, another in Waswanipi, and others will be established on the North Shore. I think this proves that when people sit down together and discuss things, they can eventually get along.

Of course, when we move up to what I would call a macro or a more political level, where issues revolve around legal concerns or claims, then at that point the governments tend to become involved. The stakes are higher at that level and the rules of the game are more complex than they are in the situations that our people experience in the field. I would say that as an industry, we have not reached that point.

I think that the Quebec forest industry is very open and very much aware of the needs of the First Nations. It is closer than anyone else to those who work the trap lines or who are elsewhere, people who live on the land. I think that if you have a good dialogue, you can find solutions. It may not always be the case, but often, it is.

Now when we have situations like the one we are experiencing in Quebec at this time, if we take a step backward, if we shy away from discussion and try to settle everything at once through confrontation, then there is no way to help. We are directly attacked, but we are removed from the people on the ground. We have moved to a global level, a level where the governments come into play. We can't become very involved, because it is difficult and quite complex.

The going gets really tough when we transpose this to the international scene, when we try to involve other countries or other groups in solving our own problems, and when things are said that are not necessarily true. We believe that this is extremely harmful. It is of no use to anyone and can even be very bad for Quebec and for Canada's image in general.

Mr. Guy St-Julien: It is estimated that about 2.7% of the land in Quebec is protected as compared to 9% in Ontario. Many people feel that it is necessary to increase the protection for the boreal forest, particularly the northern part.

Mr. Jacques Gauvin: You said 2.7%?

Mr. Guy St-Julien: Yes, 2.7% of the land in Quebec is protected as compared to 9% in Ontario.

I have two questions. What would be the consequences if we were to set aside a large part of the northern boreal forest for the industry? If there is a loss of access to the northern part of the boreal forest, could this be compensated through an increase in logging in the forests located further south?

Mr. Jacques Gauvin: That's an excellent question. Protected areas are an important issue.

It is unfair to make comparisons. First of all, with respect to the percentage that you have quoted, that is 2.7%, there are different percentages being bandied about, that take into account certain types of land that can or cannot be considered. The figures from the Department of the Environment, a department that obviously is greatly interested in this area, are closer to 3.4 or 3.5%, if memory serves. These are the lands that have official protection.

At present, provisions are being made for the setting aside of parts of the territory that could become protected areas. Their percentage could very quickly reach 6% or 7%.

Quebec is definitely developing a strategy so that protected areas represent a higher proportion. This does concern the boreal forest, among others. You mentioned the impact of such an action on Quebec's forest industry. We believe it is inevitable that protected areas will become larger. However, it should be done in an intelligent way, and we want to take part in that initiative.

• 1705

The Quebec Lumber Manufacturers Association is working with the Worldwide Fund for Nature, which has instigated the creation of protected areas in Canada and around the world through its Endangered Spaces Campaign. We are working with them because we think it is necessary to have more protected areas. These protected areas should be created on a scientific basis, using all tools and strategies available to reduce the impact on the economy. The Worldwide Fund for Nature agrees with us on that.

We are not the only ones who think that the economy of a region or a province is important, that jobs are important and that the enhancement of our forest heritage is important. They are of the same opinion. Of course, they are also concerned with biodiversity.

So we are working on that and we believe we will be able to find ways of reducing the impact. No doubt there will be an impact. It is still too early to assess it. We are talking about relatively large areas but we feel that we have good strategies and enough imagination to reduce the impact of these measures. It could be what we call intensive forestry through which we could get a higher return on our forests, among other things, and which would compensate to some measure for the areas which would become protected and where there will be no more harvest.

Mr. Guy St-Julien: Thank you very much.

[English]

The Vice-Chair (Mr. Julian Reed): Thank you.

Does anybody else have any questions?

Monsieur Gauvin, in thanking you for your contribution this afternoon, I want to tell you that it's very refreshing to hear from a professional forester who's on the ground and understands exactly what's happening. We're very grateful for your taking the time to spend with us today.

[Translation]

Mr. Jacques Gauvin: Thank you very much. It's been a very interesting meeting and I wish you good luck in your work.

The Vice-Chairman (Mr. Julian Reed): Thank you.

[English]

To the members of the committee, I would remind us all that we meet tomorrow at 11 a.m., in Room 362 in the East Block. I would make a personal request that you all assemble there in good time, because you're going to have to put up with me as chair.

Mr. John Duncan: Who's the witness tomorrow, again?

The Vice-Chair (Mr. Julian Reed): We have three people representing the IWA.

Mr. John Duncan: How could I forget? Now I know I'm tired.

The Vice-Chair (Mr. Julian Reed): This meeting is adjourned.