Proceedings of the Subcommittee on the
Boreal Forest
Standing
Senate Committee on
Agriculture and Forestry
Issue 5 - Evidence
OTTAWA, Monday, April 14, 1997
The Subcommittee on Boreal Forest of the Standing Senate Committee on Agriculture and Forestry met this day at 5:00 p.m. to continue its study on the present state and future of forestry in Canada as it relates to the boreal forest.
Senator Doris Anderson (Chair) in the Chair.
[English]
The Chair: This evening I would like to welcome witnesses from the Department of Foreign Affairs and International Trade. Mr. Ballhorn, I would ask you to begin.
Mr. Richard Ballhorn, Director, Environment Division, Foreign Affairs and International Trade: Thank you, Madam Chair.
The Department of Foreign Affairs and International Trade is not organized around industry but around issues. Therefore, the three of us are before you to address fully all forest issues that exist internationally.
My area of expertise is essentially environmental issues that relate to the forests. That includes things relating to criteria and indicators for sustainable management of forests and the International Forest Convention. We work closely with the Canadian Forest Service in all of these issues.
My colleague Graham Lochhead's focus is on communicating in the Canadian forestry record internationally and working with the Canadian industry and other bodies that are organizing certification standards. He also develops methods of assuring that there is sustainable forest management in Canada and internationally.
Mr. Jack Kepper's focus is on pinewood nematode, which is an ongoing pest problem in the forest.
That is our expertise. There are other things you could ask us about, but we are not organized around a sector. We are not all from the forest division. There is no such division in our department. We are from various divisions and we deal with aspects of international forest issues.
I would like to give you a sense of what we are involved with in the environment division. I have brought along a publication that was published as of last week for the UN Commission on Sustainable Development, which is the 1997 review of the Rio Conference on Environment and Development. It is an overview paper on Canadian performance called "Building Momentum". This is put out as an inter-departmental publication. We also have a publication specifically on forests, because that is the focus of this year's session.
To put the forests in context on the international side, at the Rio Conference in 1992 there was quite a difference of view on forests. There was a north-south split, with the southern countries being very sceptical or suspicious of any efforts to try to get some international rules or disciplines on how people manage their forests. Canada went into that session as very much a proponent of getting a forest convention, as a few other countries did, particularly the Europeans. At the end of it, we did not get a convention or even a launch of a convention, commitments or anything that was binding. We had what is called the Statement of Forest Principles. We were not totally happy with that because we thought it was a weak compromise, but there was at least some progress made on the issue.
This was the first time people had attempted to focus on forest practices at an international level.
Since then, there has been quite a bit of activity, both in Canada and internationally, on the concept of sustainable management of forests. Sustainable management and sustainable development are concepts that took on life after Rio. Sustainable development was a concept that was in the Brundtland report in 1990 and, as a concept, has not been around for a long time. However, it took on a life of its own at the Rio conference. Since then, we have been doing sustainable management or sustainable development, depending on the exact topic we talk about.
After Rio, Canada was facing a number of challenges at home and abroad. There was a forest strategy that was put in place in 1992, the same year as the Rio conference. At the same time, there was the process of getting model forests started in Canada. There was a criteria and indicators process, which was criteria for sustainable management of forests and development of indicators of measuring it. That process has been ongoing since roughly 1993-94. The first progress report will be issued next month, so we will have a sense of how that process has worked domestically.
There has been quite a bit of activity with the provincial and territorial governments and aboriginal communities on forest science and technology. I must stress that it is very much a cooperative effort between our department and the Canadian Forest Service and Natural Resources Canada, as we do not have any of the technical expertise. Our expertise is essentially international, knowing what the international community doing and is saying about us. We have negotiating skills and the knowledge of institutions and how to deal with international bodies, but the expertise on forest issues is in the Canadian Forest Service, not with us.
Because there is so much activity, we have worked very closely with the Canadian Forest Service on the issues as they have developed over the last five years. We have made some progress in that time.
At Rio in 1992, Canada announced that we were taking the domestic model forest concept into an international mode. Since then we have established two model forests in Mexico, one in the north and one in the south. Mexicans are sufficiently interested in the idea that they are trying to establish a third one in and around Mexico City, using mainly their own money.
We also have one in Russia in the Khabarovsk region of Siberia. It is a very large forested area. It was a challenge to get that started. Initially they could not even transfer money in there as there was no bank. People had to carry money in suitcases to get the project going because there was no way you could transfer money from Canada to that part of the world. However, things have developed since then.
In 1993, we were trying to do something with a criteria and indicators process on an international level. A conference was convened in Montreal under the auspices of the then Conference for Security and Cooperation in Europe. They brought in everyone with whom we could deal in that time that had temperate and boreal forests, at least on a European basis. We started a process of developing criteria and indicators for temperate and boreal forests outside of Europe, which subsequently has included countries in the southern part of South America, Australia, New Zealand, China, Korea, and a number of other countries. That is fairly comprehensive as far as the coverage of the major forests.
In 1994, we were still frustrated that we could not get any real dialogue going on forest issues internationally because of the bruising that people felt about the Rio process. We were talking with a country that had been most opposed to Canada at that time, which was Malaysia. We thought after two years we could sit down and talk about issues again, and at least get a process started. We were pleasantly surprised to find that the Malaysians were coming to the same view and that there should be a way of having a dialogue between the two, instead of being opposing sides on the forest debate.
We started a process in 1994 to have two meetings, one in Kuala Lumpar, the capital of Malaysia, and one in Hull, Quebec. These meetings involved not only governments, but the NGO community, both environmental and developmental, and intergovernmental bodies such as FAO and others who have expertise on forest issues. That, in turn, helped lay the groundwork for something called the Intergovernmental Panel on Forests, which was started in 1995 under the Commission on Sustainable Development of the UN. That process just terminated in March, after two years of work. This week they are submitting their report to the Commission on Sustainable Development in New York at its 1997 session. Much of this week and next will be spent negotiating the language that we develop on the outcome side of that, particularly on the question of whether we need a new international body to work on forests and whether we need an international convention on forests.
This will be headed into the 1997 special session of the UN on Environmental Development in the week of June 23, which many of the world leaders, including the Prime Minister of this country, will be attending. This will be a major session because it is the five-years-after-Rio meeting. It is called Earth Summit Plus Five and is a mini version of the Earth Summit that happened in Rio five years ago.
In the last two years we have been striving very hard for an international convention on forests. We have been pushing the concept of forests convention as the only way to deal with some of the issues out there. We do not have a good forum on forests right now.
The FAO has been in place for 50 years but has not done a particularly strong job on the organization of forest issues. They have been fairly good on science and those kinds of issues, but have not had a real strong mandate to coordinate issues or to push them along. It is a body that is dominated by agriculture ministers and the food issue. Forest and fisheries take a second place and get a very small percentage of the budget. Only 4 per cent of the FAO budget in Rome goes to forests. It has always been a frustration for us, but it is not something we have been able to make much headway on over the last number of years.
We need a definition of what sustainable management of forests really means, rather than everyone having their own definition. We need to figure out what it means and build on the criteria and indicators work that has happened domestically, regionally and internationally, including the Montreal process. There is an equivalent Helsinki process that covers the Europeans. We need to take that forward and work out what sustainable management of forests is and is not. So, if one actually says they are doing it, then everyone will be trying to do the same thing no matter what kind of forests you are dealing with in any part of the world.
This is the only way we can go. Otherwise, we will end up with 10 or 15 different definitions. You could never satisfy all the definitions that exist, particularly when people want to act on them. They would say, "You're not following my definition of sustainable management, therefore I won't let your product in my market." This has happened and, in some cases, has been threatened by non-governmental groups which have set up consumer boycotts, et cetera.
That is why we think we are very much in the forefront. There are a number of other reasons, including focus and getting a higher profile for financial resources, especially development assistance going into forests to help on some of the trade issues to make sure that we are not setting up a lot of barriers for trade. It is also a way that the non-governmental actors can have an influence on the process.
We hope that we will be so successful this year in our advocacy as to actually get a launch of a forest convention at the special session of the UN in June. That is certainly our goal. It is also the goal of several other countries and groups, including the European Union. Some countries who are less favourable to the concept, including the United States, which is probably the most conservative in this area of any country that we deal with. The United States, India and New Zealand are the only countries we are aware of that are actually opposed to a convention. Everyone else is either for it or they are not opposed but question the timing of it.
I would ask Graham Lochhead, who works on forest communications and the certification issue, to make his submission. Our two submissions particularly tie together because they deal with the environmental area. Mr. Kepper will deal with pinewood nematode and other European issues.
Mr. Graham Lochhead, Director, Office of Forestry and Environment, Foreign Affairs and International Trade: My particular activity in recent history has been to look at the market access trade side. That has dealt with two issues: forest certification and what is known as the International Forestry Partnerships Program, which is funded by the provinces. I will speak to these two things.
I would like to outline the case for the concept of certification of sustainable forest management. The concept of the process of certifying quality is that it provides an incentive to forest owners and managers to raise the standard of their stewardship for forests. It is one of several tools, the most obvious one being the legislative regulatory framework, which are available to ensure this.
There is definitely increased public awareness of the need to develop policies and standards. We are getting more and more customers and clients wishing to be assured that the forest products they buy come from sustainably-managed forests.
As the population increases and the demand for agricultural land and forest products increases, pressure increases on the global forest. This is where the momentum is coming from. Within a compatible legislative regulatory framework, certification can play an important role in advancing implementation of sustainable management practices.
The ISO 14001 standard, the International Organization for Standards, defines desirable environmental management practices. This is seen as a base for the development of a certification process. Appropriate to that are the ISO quality management standards which are already in place. There is a definite benefit downstream as both of these come into play, where there will be savings in the process of qualifying for 9000 and 14001.
From a trade perspective, forestry sits at the intersection of trade and the environment. This is the crossroads where society's economic and ecological interests have to be blended into mutually supportive trade and environmental policies.
The International Panel on Forests has recognized this and has made a particular point of highlighting the potential of a legally-binding instrument, which Mr. Ballhorn has referred to, as being a highest priority. In the process of looking at certification, they have also identified that this seems to have potential and they want to get it into perspective. There are a number of international initiatives in this area. From a trade perspective, it is seen to be extremely important.
I brought a few slides which demonstrate some of the aspects of the ultimate economic perspective.
The first slide shows global production at $418 billion. Fifty per cent of the total global production actually goes for fuel for cooking and heating, surprisingly enough. Approximately 27 per cent goes to domestic consumption. Only 23 per cent is in the export trade. That is our largest element of export trade for Canada from a Canadian perspective.
The important thing here is that this demonstrates the unfortunate reality that much of the environmental concern relates to the 50 per cent that does not enter trade. In other words, this is the north-south issue, the problem of the developing world. That is where their wood goes, and that is where the desecration is occurring. When we talk about forest certification, we are dealing only with that 23 per cent.
However, even that 23 per cent represents about 3 per cent of total international trade, $155 billion. Many economies in both the developed and the developing world are largely dependent upon the viability of this trade in forestry products. Canada is highlighted at 17 per cent, and there are a number of Asian and South American countries, with the Asians coming on strong.
In Canada, the forest products industry is a key player in international and regional economies. Its contribution to Canada's balance of trade increased in 1995. The value of our forest exports rose to $41.3 billion in 1995. In comparison, the automotive industry contributed approximately $12 billion.
Senator Spivak: What about telecommunications?
Mr. Lochhead: I cannot rhyme them off. I could find that out, but it is down there.
Senator Spivak: It is up there.
Mr. Lochhead: This is number one.
Mr. Ballhorn: This is in the goods area.
Mr. Lochhead: The industry directly employs 369,000 in wood products in western Canada and in pulp and paper in eastern Canada. There is a mix across the country, but that is primarily the western and eastern split. An additional 511,000 are employed indirectly by this industry which is an important source of jobs for the aboriginal peoples. Close to 350 communities are largely dependent upon this industry.
Mr. Ballhorn has outlined the quest for sustainable development. In forestry issues, on a worldwide basis, the period of the last decade has seen a dramatic number of new initiatives dedicated to the task of defining, testing and implementing plans and policies, all with the goal of achieving improved forestry management. Sustainable forest management is now identified as a leading global priority.
I have attempted to do a schematic on this next slide. The United Nations Conference on Environment and Development called for the formulation of scientifically sound criteria and indicators for the management, conservation and sustainable development of all types of forests.
The private sector, as well as governments, have risen to this challenge in a number of international initiatives designed to acknowledge the distinct and variable character of forests around the world. This was done through a series of processes which are documented in what is known as the International Tropical Timber Organization, Helsinki, Montreal, Dry-Zone Africa and several others.
As Mr. Ballhorn has mentioned, in Canada, after participating, we took a national approach. The Canadian Council of Forestry Ministers spearheaded efforts to take these scientifically-agreed criteria and indicators at the international level and apply them to Canada. This was done with experts from the academic community, industry, non-governmental organizations, the aboriginal community, environmentalists -- the whole spectrum. The best available scientific knowledge on sustainable forest management in a Canadian context was the end result of this.
The Canadian Standards Association then took this criteria, which had been blessed, across the country. They used it to develop their national standard for sustainable forest management. This was the basis of their concern. They used two bases.
The next slide demonstrates the common denominator of UNCED. This is an independent exercise where the ISO picked up the principles that evolved from UNCED, through their technical committee 207, and applied them to the development of ISO 14001, which is the environmental management standard. In turn, this is now at a final stage. We have a working group which is trying to apply the 14001 standards to forestry, because these are generic standards and go across all industries. That work is proceeding.
I thought it might be useful to examine the reasons we are spending so much time on the standards game. Standards play a fundamental role in the facilitation of international trade. The absence of accepted standards can retard trade. That is well known across all industries.
With the globalisation of trade, the existence of standards gives assurances of conformity to prospective buyers. They make the task of selling a product easier. They ensure the technical, quality, health, safety and environmental aspects of a product or service. They also benefit suppliers by attributing market advantage relative to competitors who do not comply with credible internationally-accepted standards.
In the knowledge that these standards are important in international trade, many forest organizations have already endorsed the quality standards of the ISO 9000 and they are looking to pick up the 14000 series when these are interpreted through the work of this working group.
I would like to talk about the credibility of the International Organization for Standards. It is a worldwide federation of national standards bodies. For example, Canada's representative on it is the Standards Council of Canada. There are 117 members. It involves 30,000 international experts. It has developed 9,000 international standards. These are all voluntary consensus standards. The main thrust is facilitation of trade.
I would like to comment briefly on the importance of standards as recognized in GATT Article 38 and the Agreement on Technical Barriers to Trade and the Code of Good Practice. It suggests signatory governments adopt international standards as a base for national standards.
The setting of standards normally provides a forum for discussion among all interested stakeholders. That includes consumers, governments, non-government organizations and industry. This balanced participation by a variety of interest groups is an important feature in the process of building and constructing international standards.
It is very important that all interested parties participate because in this way concerns can be discussed, accommodated and valuable ideas integrated in any standard.
Governments understand that a proliferation of standards, which is something that we are encountering in this area at the moment, each with their own inconsistent requirements, inevitably leads to worldwide restraint of trade. It is because of this that one of the WTO's current priorities is to reduce the barriers caused by a proliferation of differing standards.
The slide that I am showing now is a combination of the two previous slides that you could not read. Regrettably, I will have to simplify that. Essentially, the optimum role of the ISO and the environmental management of this key sector may only be fully realized when a formal link is established between the areas that we have discussed; the multilateral efforts to define criteria and indicators in various fora and the generic objectives of the environmental management standards of the ISO. The white block at the bottom is the process of forest certification, which can provide this link by adapting criteria and indicators for the local application as a gauge of the achievement in meeting the environmental objectives on the other side, and in using third parties and the proven mechanisms of the voluntary ISO process to verify this achievement.
The International Panel on Forests is aware that there has only been limited application of certification process to date and the related accreditation process. It has, therefore, suggested that countries considering the development of certification process take the following recommendations into consideration.
Certification should be applicable to all types of forests. It should not discriminate between forest owners, managers or operators. It should involve all interested parties, including the local community and aboriginal interests in the process of developing local standards. It should be transparent, credible and cost-effective. These are more or less the norms of the World Trade Organization.
The Canadian standard for sustainable forest management, which are CSA Z808 and Z809, appear to meet all of these criteria.
To summarize, several important benefits accrue from Canada's finalization of a national standard for sustainable forest management. Our action in developing the standard illustrates to the world our serious dedication to addressing global problems relating to sustainable development. It represents a substantial element of our response to commitments made at the UN conference on the environment in 1992, as elaborated in our national forest strategy.
The national standards have been constructed on strong and credible foundations; the national criteria and indicators identified and approved by Canada's forest ministers and the environmental management standards, the ISO 14001 process.
The common strength of both processes is their equal dedication to transparency and insistence that views be incorporated from a broad spectrum of interests. Adaptive management is used to achieve continual improvement by using locally selected indicators to measure on-the-ground performance in the forest over time and incorporating new plans and activities based on this information.
The standards are a contribution to stability in Canada's trade and represent, for those who adopt them, evidence of responsible stewardship.
The process of certification provides the practical link between multilateral efforts to define criteria and indicators and the environmental management systems of the ISO. It uses the proven mechanisms of the voluntary ISO process, for example, with respect to accreditation and third party audit. The close relationship between the CSA and the ISO standards will facilitate market access of our products in countries which may initiate barriers to trade based on environmental concerns.
The standards provide Canadian companies the opportunity of a professional in-depth and science-based response to charges of mismanagement which we have encountered overseas by some trans-national interest groups.
That is all I have to say about certification. If you would like me to continue on the Forestry Partnership Program, I could outline it for you. You may have already heard of this from Jacques Carette when he appeared before you.
Mr. Ballhorn: One thing on the certification issue to be aware of is that the Canadian government policy on certification is to be supportive of it, but it is not a Canadian government product. It is a product of private sector action. It is the Canadian Standards Association, which is a private body, and the Canadian Pulp and Paper Association, who basically got together and started a process in which the Canadian government was a stakeholder of a sort, a participant, but not the lead.
There are other processes out there, including from environmental groups. The one I am most aware of is that the Forest Stewardship Council has something analogous to this, but they have not followed a standards approach to it. They have taken their own approach to it. The Canadian government is necessarily less involved because it has decided not to involve government or the industry itself very much. Therefore, there is less of a role for the federal government and provincial governments, but there are some testing arrangements being made now with provincial and federal governments and testing of the concepts of the Forest Stewardship Council.
The Chair: We would like to hear your comments on the partnership program.
Mr. Lochhead: The Canadian Council of Forestry Ministry, the CCFM, was established as a mechanism for federal-provincial-territorial cooperation in forestry-related matters.
Early in the 1990s, there were several international campaigns by trans-national environmental groups against Canadian forest management practices and there were threats of boycotts and a few cancellations of product contracts.
The CCFM created the International Partnerships Program to address the situation on order to assume a proactive stance in responding with the facts relating to environmental criticism, to ensure that environmental trade barriers were not erected, to correct any misinformation that existed, to ensure continued access to world markets for Canadian forest products and to position Canada as a responsible steward of its forest resources.
The partnership part was to develop partnerships with other governments, industry, overseas clients and environmentalists to ensure their awareness of the latest developments in Canada to ensure sustainable forest management. In this regard, fact sheets, media communications, speaking programs and seminars were organized, along with incoming and outgoing missions of people from other countries to acquaint foreign interests of the realities of Canadian forest practices. There were a series of tours across Canada. The highlight of the focus for a period of time, of course, was Clayoquot Sound. A lot of people attended and that was highlighted in the press.
The results of this program appear to be positive, according to a recent independent analysis. There is good information flow between our embassies and headquarters and between the federal departments and the provinces and industry and their respective publics.
Incomplete or inaccurate information in foreign markets is effectively corrected as it arises, and Canada's international image with respect to forestry practices has improved, particularly in Europe, where much of this criticism originally was centred.
Many of the original issues were probably legitimate. There were concerns regarding chlorine bleaching of paper, the clearcutting at Clayoquot and protected areas, et cetera. Obviously, these issues still arise on a weekly, if not almost daily, basis.
However, we have made progress in terms of working together. There is a lot more sensitivity. Action has been taken across the country. As Mr. Ballhorn mentioned, we have taken a lead role in international fora, in the work of the panel, in the model forest program and in the work of the industry, which I have just outlined, in developing this first national standard for sustainable forest management.
Senator Spivak: How much money has Canada put into this program?
Mr. Lochhead: There was a total of $3.5 million budgeted at the beginning of the program, which was about three years ago.
Senator Spivak: Is that per year?
Mr. Lochhead: No, that is for the whole program. It has not been used up. There is still money in the kitty. The money side of it is administered by the Canadian Forestry Service on behalf of the provinces.
The Chair: Mr. Ballhorn, you were talking about the International Model Forest Program. You said that "we" have established these. Were you referring to Canada?
Mr. Ballhorn: The International Model Forest Program so far is still Canada. It started originally in my division in Foreign Affairs. We used money that was available under the Green Plan, which was started in 1990. Then in 1995, because we knew the Green Plan funding was coming to an end, we had it moved over to the International Development and Research Centre. They have been running it since early January of 1996.
We have just had some funding put into it so we can continue it for a few more years. They are looking at new sites in a number of parts of the world. We are hoping to get other people to start contributing money to it and to start funding it in various ways. One reason we put it in IDRC is because it was easier for them to run it as an international program than for our department to do so.
Senator Spivak: Mr. Ballhorn, you mentioned that the real expertise on environmental issues and forestry comes from the Canadian Forestry Service. When the Director of the Canadian Forestry Service was before us, he said that they do not have anything to do with that, that they are not concerned with environmental issues or with aboriginal issues involved with forestry.
Mr. Ballhorn: That is news to me.
Senator Spivak: That is what he said when he appeared before us.
Mr. Ballhorn: They run forest science. A great number of people who work in that organization are foresters who in turn liaise with the provincial governments. They have responsibility for their aboriginal forest programs on Indian reserves. There is a range of things they do.
Senator Spivak: Yes, he did say that.
Mr. Ballhorn:I am saying that we are not foresters. I am a lawyer. Other people are economists or have other specialties. We come at it from an international perspective.
Senator Spivak: Do you deal with the Department of Environment? They deal with forests on reserves. He did say that to us. He also said that they had nothing to do with companies cutting down trees on disputed lands and so forth.
Mr. Ballhorn: We can only operate in areas of constitutional authority. We have no rights to go into an area which has no federal jurisdiction.
The federal Department of the Environment takes no active role on forest issues other than in the area of bio-diversity, protected species and flora and fauna issues. They are not a player on forest issues and they choose not to play.
Senator Spivak: I do not believe that is exactly accurate. Environment is a shared responsibility. Many forestry practices have impinged on fish and navigable rivers. The federal government is a big player.
Mr. Ballhorn: They are a player in that, but they do not play, for instance, internationally on forests. They do not play domestically in the same way.
Senator Spivak: You are referring to the Department of the Environment?
Mr. Ballhorn: Yes. They do things that impact on forests. They have legislation that will have some impact on forest management in Canada. In particular, the strongest role would be in the area of emissions from facilities which affect air and water.
Senator Spivak: And fish and migratory birds.
Mr. Ballhorn: I would say that forest is incidental because the focus there --
Senator Spivak: No, it is not incidental.
Mr. Ballhorn: No, it is not incidental. If you let me finish, it would be appreciated.
They have certain things they do over there. They regulate on water and air quality, they deal with migratory species, they deal with flora and fauna issues and bio-diversity. That is where they interact with the forest area issues.
Quite frankly, they choose not to play a major role at the federal level on forests per se. They have a necessary impact on them.
Senator Spivak: Are you referring to trade?
Mr. Ballhorn: On trade, policy or anything, quite frankly. You should call them in, because we would look forward to them playing a more active role in forests. They do not do so.
Senator Spivak: We have heard from them. We have heard from the Director of the Canadian Forest Service.
Mr. Ballhorn: He is in Natural Resources Canada. He is not part of Environment Canada.
Senator Spivak: That is a very helpful suggestion.
Mr. Ballhorn: They do not play an active role. It is Environment Canada that has a role in the environment.
Senator Spivak: I understand what you are saying. With regard to the standards, it seems to me that the depletion of the forest is directly related to the number of conventions and words having to do with sustainable development. I say that because from looking at recent studies, for example, a study done in Britain by the Environmental Investigation Association, it seems that there has not been progress, but regress, in terms of the amount of forests that have been depleted. A lot of that is because of the huge impact of Asian companies which are very aggressive in many areas of the world.
I want to ask you a question regarding standards. We have had information about both the ISO process and the Forest Stewardship Council. There have been environmental sessions like Globe '96, for example. Also, in Winnipeg, the Commission on Sustainable Development debated the various merits of the two kinds of standards. These are all voluntary.
What is happening in Canada, particularly in the northern parts of the prairie provinces and areas in Eastern Canada, where there has been interest in the boreal forest for only five or ten years? These forests are all under the control of the provincial governments. The provincial government in my province, and certainly in Alberta and Saskatchewan, has cut enforcement officers to the point where there are none. There is really self-enforcement by the companies. Most of the companies are not Canadian. Many of them are international.
In some areas, governments have a stake. An example is the Orient Strand Board in Saskatchewan. Provincial policy in all of these provinces is not for sustainable development at all. It is quite the contrary. It is for sustained deals. They want to cut as much as possible. We have seen some of these facilities. They are monstrous and they work 24 hours a day.
Canada is committed to standards and so forth, which I think is admirable. However, where is the beef? How are you going to enforce these standards? Never mind what is happening in Asian countries where the ministries of the environment are busy destroying the forests because they own part of them and there is bribery and kickbacks and so forth.
What is the thinking in Canada as to how these standards might be made not just a marketing tool but an actual on-the-ground, verifiable, credible process?
Mr. Lochhead: Each province has a different forestry condition. Therefore, each province is responsible for defining its own annual allowable cut.
The forum where there is general discussion of these matters is the Canadian Council of Forest Ministers. They get together on a regular basis, with their senior officials getting together on an interim basis, and it goes down the line to the working level. At the working level, there is dialogue across the country through conference calls. There is a lot of discussion.
Reverting to the CSA process again, the actual technical committee that put together the CSA standard was composed of 32 representatives from a wide group, including the provinces. So, de facto, the provinces signed off on this as a national standard.This is one process.
I can quickly turn to what Mr. Ballhorn was telling you earlier on the international process. Clearly, the final arbiter will be an international convention or a code of conduct on forestry practice. That is what would get everyone involved.
Canada may not be perfect, but our industry is generally leading the world. It may not be doing enough, but there is a tremendous educational process taking place, especially compared to what was happening 10 to 15 years ago.
The eyes of the world became focused on Clayoquot Sound for a while, and the response of the British Columbian government was to introduce forest practice codes and regulations which are way ahead of anyone else. The scientific panel which studied the conditions there for two years was comprised of the best scientists we could produce. They made 125 recommendations, all of which are being implemented by the B.C. government.
I am sure you have all heard of the latest evolution, which is MacMillan Bloedel's arrangement with the local aboriginals.
We are breaking trail. If you stand far enough back from the daily issue, which pops up across the country and around the world, you will see that are making progress, although it may not be fast enough.
Senator Spivak: Perhaps I should rephrase my question. We have national standards in health care. Even though health is a provincial administration, the federal government clearly sees itself as a leader in health care and it has ways in which it can implement or enforce those standards in the provinces.
I do not hear that from you, as federal officials. I agree with you that there have been all kinds of progressive things happening, including education.
How do your ministers see their role in terms of ensuring that this is not just window dressing but is real? When you fly from Victoria to White Horse and see those huge clear-cuts, you must realize that did not happen ten years ago. It is are happening today. You must ask yourself whether this is good or bad. What is the federal role here?
Mr. Lochhead: My federal role is international trade.
Senator Spivak: But you are dealing with standards.
Mr. Ballhorn: It is useful to understand the standards you are talking about here. These are voluntary industry standards. They are not standards in the sense of government. Standards, in the lingo, as used, are inherently voluntary.
Senator Spivak: I understand that.
Mr. Ballhorn: The CPPA is working on a process of establishing standards which individual firms can apply to their operations which they can be judged on, as opposed to the government saying, "You must do this".
Senator Spivak: I understand that, but the federal government is encouraging this. My question is theoretical, not practical. I am not suggesting that you have a role in implementing this. I am asking what your thinking is.
It is fine to help industry have these voluntary standards. How are these going to be enforced?
Mr. Lochhead: Many people moved on this issue in response to market forces, not because they wanted to. There are threats, et cetera.
There is general concern for the environment. We have all become much more knowledgeable and sensitive to environmental problems over the last couple of decades. So there is a response from that. But there is also the threat of the marketplace; the idea that it is the first set of trenches. In fact, we can say that we have a national standard for sustainable forest management. It took us two years to build and we got every possible input we could. There were a lot of disputes and there was a lot of excitement, but we came through the process of consensus and we have produced a national standard. It is not perfect, but it is a step along the way, and it happens to be compatible with an international environmental management standard. This whole thing is evolving.
The schematic which I showed you was an attempt to depict that this is totally compatible with the generic discussions within the ISO; they are compatible with the multilateral dialogue within all of these different meetings -- Tarapoto, Helsinki, Montreal, et cetera. Mr. Ballhorn has worked with the international panel, and it is evolving as it should.
Senator Spivak: You have given me a very clear picture of how you see your role, which is what I wanted to know.
Mr. Ballhorn: What will drive this standard, like any other standard, will be the marketplace.
Senator Spivak: I would prefer to hear "public interest", not "the marketplace".
Mr. Ballhorn: But it will, because it is a standard that is only applied to trade. If public interest impacts retail, the wholesalers in turn will buy products that meet the consumers' standards. That is what has driven it in the U.K. and other places.
Senator Spivak: It is government that represents the public interest, not corporations. Corporations will work under any rules. In fact, we found in our tour that the corporations were ahead of the provincial governments in many instances, but they will not work to rules if no one forces them.
Mr. Lochhead: We are in international trade. I can send a message that there are a lot of strange things happening out there. They are starting to use market access. There are problems arising. There are buyers' groups evolving that are only going to buy FSC product. That is a problem and that is big dollars. If I did nothing else, I hope that I got across the message that it offends a lot of people in Canada.
Senator Spivak: Have you been out in the woods recently?
Mr. Lochhead: Yes, I have been in the woods. I live in the woods.
Senator Taylor: I want to follow up a little more on how you go about ensuring standards. You are saying that they are voluntary. What do standards consist of? Is it a stamp on a piece of wood? Does it have a maple leaf that says "CSA", or what is a standard?
When you buy a Mixmaster it is CSA approved and it has a stamp on it. What is on a piece of lumber?
Mr. Lochhead: You are opening a Pandora's Box of eco-labelling. Indeed, the whole subject of eco-labelling and environmental labelling is a matter which is also being addressed separately within the ISO process. There is a subcommittee, 14020.
Senator Taylor: So far there has been none?
Mr. Lochhead: It is not finalized yet, but much progress has been made.
Senator Taylor: There will eventually be a stamp of some sort that goes on?
Mr. Lochhead: I am describing progress made at the international level.
Senator Taylor: But right now none of this is being done, is it?
Mr. Lochhead: Oh yes. Nineteen companies in Canada have already subscribed.
Senator Taylor: How can a buyer in the market tell if he is buying from one of the 19 companies?
Mr. Lochhead: He will be able to.
Senator Taylor: But right now he cannot?
Mr. Lochhead: No, because this is not an instant standard. Time is the major thing here.
Senator Taylor: You are eventually going to get a stamp?
Mr. Lochhead: You will get a statement that this product or a percentage of this product came from a sustainably-managed forest.
Senator Taylor: How is clear-cutting measured? Has it been determined whether that means balding a whole mountain or only taking 20 acres out of the side? How would you tell by looking at the stamp?
Mr. Lochhead: That question is getting close to the technical end of things. That is a question for Mr. Carette.
There are a lot of questions out there. The matter of clear-cutting is still being debated by scientists. There are some eminent people who advocate this process. There are all manner of forestry techniques. Selective forestry is one of them and another is a reduction in the size of clear-cuts.
We can take a lot of guidance from what has happened in British Columbia where there is now a sensitivity to a profile of hills and mountains, the tourism dimensions, et cetera, and the biological diversity of wildlife treatment.
Senator Taylor: If a German housing contractor was worried because his customers did not want to buy houses made with lumber from Canada because they understood we were clear-cutting too much, could he get a stamp showing that particular lumber companies do not do that?
Mr. Lochhead: It should be noted that in Germany clear-cutting means cutting down every tree and paving the road, where never again will a tree appear. That is their interpretation of clear-cutting.
Senator Taylor: How do you assure them that this did not happen?
Mr. Lochhead: We have to point out to them that a process of reforestation takes place with the same species, some planted by man and some natural, and that there are corridors left. The whole science, if you like, is still in the early days. Tremendous progress has been made in this area. The best example in Canada is indeed the West Coast. There is much innovation and trial and error taking place in British Columbia, particularly on Vancouver Island.
Senator Taylor: This is still being worked out?
Mr. Lochhead: Yes.
Senator Taylor: The fur trappers have been dealing with this for 25 years.
Mr. Lochhead: It is a very emotional issue. However, I do think we are making much progress.
Senator Taylor: Does this type of certification extend as far as displacement of Indians?
Mr. Lochhead: I am afraid I cannot talk about that because land claims issues are another matter.
Mr. Ballhorn: As I said, the Canadian Pulp and Paper Association and the CSA develop the certification standards. I would ask that question of them.
Senator Taylor: It would not be just environmental?
Mr. Ballhorn: You are looking across the board. Included in there was the impact on aboriginal communities, but we are not the experts in that area. The people who led on that were the CPPA and the Canadian Standards Association.
Mr. Lochhead: One of the key elements in the CSA process is local dialogue. In other words, you sit down with the local people and talk about your plan for a defined forest area. These people define what the criteria and indictors will be. It is all worked out before you go into the forest and cut or, if you are introducing selective forestry, in accordance with these rules.
This is seen as the means toward that end. I looked at the MacMillan Bloedel decision last week as a guide for the shape of things to come.
Mr. Ballhorn: Virtually all these processes are quite new and young. In some cases, they are testing what they have developed to see whether it works and how they will have to adjust it.
Senator Taylor: No country in the world has made more progress than we have.
Mr. Ballhorn: Of the countries that are major producers and exporters, I would think we are as good as any.
Senator Taylor: The other factor is whether the timber has been cut from a plantation or from the original forest. Will that be considered as well? There is a question of bio-diversity.
Mr. Lochhead: The CSA standard is constructed around the approach of retaining the mix of species you started with. We all have images of the European approach to plantation forestry, but I do not think that is on in Canada. I do not think that is how it is being done. It is a mixture of natural regeneration with supplementary plant.
Again, you are into the technical aspects of silva culture, and I am not expert on that.
Senator Taylor: We are not either. I think it was President Truman who said that war was too important to be left for generals. We are finding that trees are too important to be left to forestry. Everywhere we go, people can tell us how fast a tree grows, how long it takes to cut it and everything else, but there has been no total bio-diversity.
The guys with the chain saws are doing all right while everyone is arguing about whether a tree is a provincial or a federal responsibility.
Mr. Ballhorn: The people who deal with the National Forest Strategy, with criteria and indicators nationally, know all about that. If you bring them before you, you can hear from it them.
Senator Taylor: We have heard from them and they took a different position than you. The representatives from the Department of Indian and Northern Affairs have another approach again. We are feeling that we are having a dialogue of the deaf. There are at least three areas here. It is not your fault because you were hired and told to do this, and they are hired and told to do that. There seems to be no total coordination.
Mr. Ballhorn: I think you are wrong. You have the wrong people before your committee. The National Forest Strategy is federal and provincial. You need the forest departments, and not just Mr. Carette but a whole range of people.
Senator Taylor: Three times I have heard you people sloughing off onto the silva culturists and forestry and saying it is not your responsibility.
Mr. Ballhorn: I am not saying that. I am saying that you should talk to the people who do the National Forest Strategy, the people who work on criteria and indicators on a national basis and the people who do model forests. They are all in the forest service. They can tell you what is going on. There are many more than one person in the forest service.
Senator Taylor: We have talked to approximately 50 witnesses. If there are more hiding in the woods, we will sure try to hear from them, if you will pardon the pun.
Mr. Ballhorn: Those are the people who know about the strategy and the criteria and indicators.
Senator Taylor: You have mentioned at least twice this evening that that was a provincial responsibility.
Mr. Ballhorn: I said that we on our side are not forest specialists, but the Canadian Forest Service works with the provinces.
Senator Taylor: Nor are you a constitutional specialist.
Mr. Ballhorn: I hope I am, otherwise I should not be here. The people who know forestry are in the Canadian Forest Service. They work with the provinces on various aspects of the forest, including the forest strategy. They work on criteria and indicators on the national level. They work on the model forests. There is a whole range of expertise over there.
Senator Taylor: That is what I am trying to get at.
Mr. Ballhorn: You must ask the forest service.
Senator Taylor: We have met with many people from the forestry service on all the things you are talking about. They can tell us everything there is to know about trees. That is not the problem. It is in your bailiwick constitutionally. There is no one controlling the cutting of forests. You say that is a provincial responsibility. Where do you get the understanding that it is a provincial responsibility when the courts have clearly shown through the years, on ecology and the environment, that for native self-sufficiency they have use of the forests? They can even hunt game out of season, as you know, on Crown property, either provincial or federal.
That being the case, if the province has the sole right to cut down trees on private land, where do you see native rights? How can there be any hunting or trapping if the province has the right to cut down trees?
Mr. Ballhorn: That sounds like a court case to me. The provinces obviously are the landlords of the forests. There is no dispute about that.
Senator Taylor: Are you sure? Did we give it to them in 1930?
Mr. Ballhorn: I would think so.
Senator Taylor: Is there not a caveat that if we ever needed it for land claims or settlement they had to give it back?
Mr. Ballhorn: That was only in the western provinces. It is clear that the provinces are the landlords of the land. I believe that at least 90 per cent of it is still in provincial hands across the country. Certainly the federal government has never contested that they control those forest lands. What they have, of course, is national parks in the territories.
Senator Taylor: You do not think the federal government should, though, because of the natives?
Mr. Ballhorn: You are asking me?
Senator Taylor: Well, you are a constitutional lawyer.
Mr. Ballhorn: I am not a constitutional lawyer.
Senator Taylor: I thought you said you were.
Mr. Ballhorn: I am a lawyer who works in Foreign Affairs. I am saying that we have to deal with the split of constitutional powers that exist. We do not change it. We have to work with what is there.
Senator Taylor: You talk about sustainable development. What have you factored into sustainable development? Have you factored into "forest products" things such as trapping, wildlife and tourism?
Mr. Ballhorn: By definition it has to be, because sustainable management or sustainable development is creating a balance between economic, social and environmental dimensions so that you can continue to do what you are doing. That is the concept.
Mr. Lochhead: That is referred to in both the standards and, hopefully, the international convention.
Senator Taylor: You are quite clearly of the opinion that when you are dealing with forests you are dealing with something, particularly in the three prairie provinces, that is owned by the provincial governments, and the provincial governments have the proprietary rights. The federal government has no right or lever to interfere with their cutting?
Mr. Ballhorn: It can impact on them in the sense of having federal powers.
Senator Taylor: Which would be what?
Mr. Ballhorn: That would be anything that relates to the Fisheries Act and protection of fisheries in rivers, and that would mean forests inasmuch as it involves them. I suspect it also includes air and water pollution. There has been federal legislation under the regulations of the Canadian Environmental Protection Act that deals with effluents from pulp mills. In some cases, at the same time there have been provincial regulations in the same area. Obviously it impacts on the forest.
Senator Taylor: Would they have any rights with regard to air pollution?
Mr. Ballhorn: That is not just a federal concept; it is also a provincial one. Forests are valued in climate change areas and that is why we want them. I am not sure how the federal government would impact on a province that said it wanted to do something else.
Senator Taylor: Is the same true with native rights; there is an impact but you do not know where or how?
Mr. Ballhorn: I am not the specialist, as I said.
Senator Taylor: That is where we are having trouble. We cannot find any specialists.
Mr. Ballhorn: It is a big area and it is a big industry. There will be all sorts of aspects to it. Certainly the aboriginal groups have made some progress in the courts and in the Constitution in asserting their rights and getting a stronger recognition of them.
Senator Taylor: The whole reason for this committee is the type of answers we are getting here. One group is looking after the environment and another is looking after trees, but there does not seem to be a correlated effort. As you say, there are a lot of questions to be answered, but that is not your area.
Mr. Ballhorn: There are probably more answers at the Canadian Forest Service than you have to date. Have you dealt with the person who deals with the model forests and the criteria and indicators program?
Senator Taylor: They are all dealing with growing trees, which is fine, but they did not want to wander into anything approaching fisheries or carbon zincs. We did get hear from some people on climate change. The Forestry Service considers itself to be in a narrow field, which led to the question. The Forestry Service has 800 people, which we found puzzling when they told us the provinces were in charge of forestry.
Mr. Ballhorn: They do forest science and they do forest policy.
Senator Taylor: Why would you be doing that for the provinces?
Mr. Ballhorn: Federally they have always done forest sciences.
Senator Taylor: I know they always have. But, as you know, we handed over most of the dealings on forests eight or ten years ago.
Mr. Ballhorn: It is much more recent than that.
The Chairman: Mr. Ballhorn, is there a distinction between sustainable development and sustainable management?
Mr. Ballhorn: Sustainable development is more of a general concept. When you bring it down to a sector, it is how you make real the concept of dealing with economic, social and environmental issues. It means that you have to manage in a sustainable fashion. The people in the forest sector like talking about sustainable management and sustainable development. Thus, we use it in the concept of sectors, the same way as they are using sustainable management in some of the other resource sectors. There is even a sustainable management strategy for the metals industry in Canada. They have actually published a document on the subject.
The Chair: Mr. Kepper, please go ahead.
Mr. Jack Kepper, Senior Trade Relations Officer, European Union Division, Foreign Affairs and International Trade: Thank you, Madam Chair. My area is somewhat removed from the much broader area of Mr. Ballhorn and Mr. Lochhead. It is the issue of European Union restrictions against Canadian softwood lumber entering the 15 European Union countries.
Since mid-1993, European Union plant health regulations have required that all softwood lumber -- this is mainly spruce, pine, fir, hemlock, balsam -- imported from Canada, except cedar, must be either kiln dried or heat treated. Since that time, Canada has considered this an excessive measure, given the negligible danger to European forests.
The motivating force behind this restriction is said to be the presence in Canada of a micro-organism. One needs a microscope to see a nematode. There are two or three million types of nematodes on the earth's surface, but this particular one likes to live in softwood lumber. This micro-organism exists in Canada, but does not harm Canadian forests by stunting growth or causing trees to die, because they are only active or cause problems at much higher temperatures than Canada experiences. We sometimes get temperatures of over 26 degrees, but not for long enough periods.
In areas such as the southern U.S. and southern points of Greece and Italy, you might get sustained temperatures high enough to get pinewood nematodes interested in being active. Any northern clime can have them in their forests, but there is no harmful effects from them.
Canada does not deny that these exist in Canada. They are prolific in China, Japan, and other parts of the world as well. However, Canada does object to the European Union requiring that Canada do much more expensive heat treatment, which pretty well pasturizes the product. They say that would make the product safe enough for European use. The difficulty is being competitive with untreated softwood lumber, given that European suppliers such as Sweden and Finland can ship goods all around Europe without using this treatment, which lowers profits between 5 per cent and 15 per cent more, depending on many things. That is the margin of competitiveness.
Canada has been effectively blocked out of the European Union market since mid-1993. A very detailed study was done as recently as last year. Samples were taken of all of the kinds of softwood lumber in British Columbia, the maritimes and Quebec, which are the three principal areas of production in Canada, and examined for the presence of pinewood nematode.
With the help of scientists from the Canadian Forest Service, we were able to make to the Standing Committee of Plant Health in the European Commission on June 21, 1996 a very detailed presentation on a Canadian program which would render our softwood lumber quite safe to be exported to Europe. This constituted a much tighter inspection program. We have called it the Enhanced Visual Inspection Program.
Much of this revolves around the integrity of inspection of any product going between countries, whether fruits, vegetables, grain or forest products. This was the reason the restrictions were introduced in 1993. European authorities were not satisfied with the documentation and the inspection and they felt they had issued sufficient warnings to warrant taking drastic action, which was to limit exports by forcing this extra treatment.
Many Canadian companies have shipped softwood lumber to Europe after they have kiln dried or heat treated the lumber. These are two different treatments. Heat treatment simply raises the temperature of the wood to a certain temperature that kills everything organic in it. Kiln drying is essentially the same process, but the high temperature is maintained for a number of hours which effectively reduces the moisture. That gives a value-added aspect to the lumber.
Either of those treatments are satisfactory to the European authorities. However, they both cost money. The forestry industry is against this requirement, which they say is quite unnecessary, because it renders us non-competitive in the European market.
It would take a bit of time to go through all of the statistics, and there is no particular need for it. However, under the program I mentioned, EVIP, salvage timber or salvage lumber would not be included in the production of any sawmill for destination to Europe. It was previously well known, but was scientifically authenticated through a survey by CFS last year, that the preponderance of pinewood nematode occurred in the very small per cent of trees that had, for any reason, been allowed to lay horizontal on the forest floor. That could be due to storms or just to cutting a lot of forest and not retrieving it soon enough.That is the reason such wood would not be exported to Europe.
The simple exclusion of salvage wood which was not in top shape removed some 90 per cent of this pest to the point that the probability of occurrence of pinewood nematode in lumber that was treated under the program of excellence inspection, and not including salvage wood, would be one in 16.4 million pieces of lumber. It is helpful to mention that number because in Canada's best year in the last 12 we shipped about 48 million pieces of lumber. That being the case, the likelihood is that in a 12-month period four of these little items would arrive, distributed between 15 different ports, many of them during winter. There is not a great chance of causing an epidemic in Europe with such a small amount of pinewood nematode.
We are now shipping 10 million to 15 million pieces of lumber to Europe. At that rate, you would get one instance of pinewood nematode in a 12-month period in one of 15 ports. That is so negligible that we are quite prepared to have the Minister of International Trade stand behind this.
If European authorities do not accept this proposal that Canada not heat treat or kiln dry softwood lumber, but be allowed to ship it with visual inspection at a higher standard to guarantee the 16.4 million risk-free pieces, Canada will have no choice but to resort to charging the European Union with an action that is in restraint of trade.
They are simply hiding behind this, saying that it could jeopardize their forests. We have clearly shown that the risk is negligible. In international fide-sanitary terms, "negligible" means that you cannot measure it. It is not a loose term. Philosophically, one cannot say that there is zero risk because of the nature of the word "zero", but negligible is the next thing to it.
We are currently waiting for an internal report, which has been prepared for a few months. We still have not heard that the report has been given to the committee. It should be soon. Then they will need a month or so to digest and develop it. We should get some word back in a series of meetings in May or June as to whether they accept the Canadian program for inspection and production of no-risk lumber. If they do not accept our proposal, we will have to consider whether it is propitious to put the issue before the World Trade Organization to establish a panel of experts to rule on whether the European Union is acting in the interest of trade.
Depending on lumber prices, this issue results in between $400 million and $500 million a year of lost exports to Canada.
Senator Taylor: Is that spread equally across the country or are exports mostly from the West Coast?
Mr. Kepper: British Columbia exports approximately two-thirds with the maritimes and Quebec exporting about one-third.
The Chairman: Did I understand you to say that this EVIP program involves examining the lumber more carefully?
Mr. Kepper: Yes, and that is done by the sawmill.
The Chairman: Is the salvage lumber not being exported at all?
Mr. Kepper: It certainly is, but there are other uses for that. That lumber can be used for burning or any number of things, but it is never sent to Europe.
The Chairman: Will the European Union buy lumber from Finland and Sweden?
Mr. Kepper: Yes, because they are a part of the European Union.
The Chairman: But they have this nematode also?
Mr. Kepper: No, it does not exist in Europe. Their main objection is that they do not want to have it established, even though they acknowledge that if it were there it would not be operational, the same as it is not operational in Canada, because it is too cold. However, in international fide-sanitary standards, one is allowed to keep out harmful items that could potentially be a problem 50 or 100 years in the future.
Canada is a signatory to this agreement. In fact, Canada was one of the designers of very careful standards to protect its citizens from any kind of imported pest or material. We certainly stand behind these standards and behave in the same way under them. Therefore, we cannot deny the European Union the right to defend their borders against potential problems.
Our point is the lack of pinewood nematode indicated by our program. It simply cannot be transmitted. Second, even if it were, it could not get established. Very particular conditions and large volumes are required to get these things established.
Senator Taylor: Does this apply to export to the U.S.?
Mr. Kepper: No, because the American exporters kiln dry everything. It is a different kind of industry and a different kind of volume. They have not been fighting this issue. They had an earlier one, and then decided that they would kiln dry everything and provide a certificate to that effect.
Senator Taylor: Is there nematode in the United States?
Mr. Kepper: Oh yes.
Senator Taylor: Does it raise the dickens in the southern states?
Mr. Kepper: When it multiplies it stunts the growth of trees. A tree that should grow to ten feet, grows to five or six feet. There is a loss of production. In extreme cases, the tree eventually dies.
The Chairman: Who is preparing the internal report to which you referred in the latter part of your presentation?
Mr. Kepper: That is the internal report of the European Union Standing Committee on Plant Health. They are taking a very long time in doing this. They have redone it two or three times, and we are getting quite impatient. It is any importing country's right to be very thorough. They can take as long as two years.
The Chairman: You are expecting it in June?
Mr. Kepper: I should not say we are expecting it. We expected it about a year ago.
Senator Taylor: We are going to be on very poor ground. We closed our borders to all pure-bred cattle stock from England a few years ago due to mad cow disease. Our case on that was probably just as tenuous as theirs on nematode.
Mr. Kepper: I will not comment on which is tenuous. It is the right of any importing country to be as careful as they need to be.
Senator Taylor: This is the pot calling the kettle black. They will not allow our bacteria in and we do not want their bacteria in either.
Mr. Kepper: The B.C. forest industry can state that there is negligible risk in shipping softwood lumber from Canada to Europe when the product does not contain enough nematode to start an epidemic.
Senator Taylor: I will have to send you a transcript of my meeting with the High Commissioner from the U.K. He used exactly that reasoning when he said that mad cow disease would pose no risk here. The odds in that case were even less than what you are stating for nematode.
Mr. Kepper: Comparing numbers is one thing, but mad cow disease happens to affect humans. Forestry products are not for human consumption.
Senator Taylor: Because our pure-bred stock is sold all over the world, we have some of the most restrictive rules for imports possible. We are going to have a tough time trying to convince the Europeans to go the other way.
You believe that it is strictly a non-tariff trade restriction?
Mr. Kepper: It has been until now. We did not have sufficient proof prior to last year to say that the product was risk free. But now the Plant Health Division of Agriculture Canada, which has to rule on everything coming into Canada and work on items that are leaving Canada, knows what the scientific standards are -- the presence of an item that could be propagated in a foreign clime. They deal with cut flowers, items coming from China, Christmas trees going to Mexico, and all sorts of things that could carry any kind of insect or micro-organism.
I have been working very closely with them for the last year and a half, and 16 million pieces does not allow any probability of it being transmitted across the ocean. According to the scientists and statisticians, the odds of the nematode becoming established are approximately one in 1.1 billion. We are fully respectful of the Europeans' efforts to keep things safe. We have the same concerns for Canada.
Senator Taylor: Mr. Ballhorn, how would NAFTA look at something like this? Mr. Kepper has mentioned that Americans kiln dry everything. If we break into a market by not kiln drying our lumber, would that not be a preferential treatment?
Mr. Ballhorn: Under both the NAFTA and the WTO there are agreements that deal with fide-sanitary or plant health areas. Obviously, a country can put in a restriction which importers must follow.
In Canada, those who are still shipping are kiln drying. Obviously, the Americans have made it more general. In that sense, it is up to us to determine whether that is a valid restriction at the border in the European Union.
Over the last number of years, Canada has worked to show that, based on science and risk, there is no reason for that restriction. Therefore, under the trade rules that exist for that area, we have a right to challenge the reason for imposing it.
Mr. Kepper was saying that we are getting closer to the day when we will have to make a decision on whether we are willing to let the matter stand or whether to challenge it through the WTO processes. My understanding is that the processes under the NAFTA would be very similar to that.
Mr. Kepper: It is the same process.
Senator Taylor: If Americans are kiln drying their lumber, does that not improve their own home market also?
Mr. Kepper: This is the whole point. When you kiln dry lumber, you change the product. It is like taking an old car and painting it. You are improving the product, so you will receive more money for it. That takes you away from the non-competitive basis, but you are then competing in a different market. You are selling kiln dried wood. When between 20 and 40 per cent of the moisture is removed from wood, depending on the kind of wood, it does not warp or change. I am sure that the table we are sitting at was cured in that way. That wood then costs more and competes against other wood, American wood, for example, that has been kiln dried as well.
Wood which is not kiln dried is sometimes called green or untreated. That wood is used for different items. It is not used for making doors and things that should not warp. It is used for much more basic construction such as outside fences, scaffolding and cement forms, and it might even be used more than once. You do not need exact dimensions with green wood, and you can allow it to warp, bend or whatever.
If you are kiln drying to escape the restriction, you are escaping it very well because you have changed the product and you recover your expenses for it. However, for those who do not want to compete in that market, which is around one-third of the construction market, it makes no sense to kiln dry something to be used outside for fencing, for example. There is a market for that to which Canada does not have access. It is not just the treatment; it costs more to produce it but it does not sell for the same uses.
B.C. produces a great deal of that kind of product to which those sawmills would like to have access.
Mr. Ballhorn: And it knocks a lot of small producers out of the market because they cannot afford kiln drying.
Mr. Kepper: That is true. They do not want to get involved in building a kiln or in the expenses of doing that.
The Chairman: Mr. Ballhorn, you mentioned that there are those in the wider forest community who do not support a forest convention at this time. You mentioned the United States, India and New Zealand.
Mr. Ballhorn: Yes. I am not sure why New Zealand takes that approach. I think it may be a function of their concern about plantation forests. Theirs is largely a plantation forest industry. They are worried that under a new convention that there may be requirements for bio-diversity which they would have difficulty meeting. They would not have to worry about the problem if there is no requirement or pressure on them.
Senator Taylor: They would not have to worry about the requirements.
Mr. Ballhorn: I am not quite sure that is the motivation. It was certainly the motivation at the time of Rio. The government is very cautious about new international agreements these days. They think it would have an impact on government having to take action on things, because that is the very deregulated nature of their government and their economy.
The Chairman: Was it this forest convention that Minister McLellan spoke about and reaffirmed Canada's support for at the UN on April 10?
Mr. Ballhorn: That is right. In fact, my presentation is very close to what she said. I helped to write hers.
The Chairman: Thank you very much for your appearance here this afternoon.
The committee adjourned.