Canada's approach to trade needs to adapt - Forestry struggles - Why is the military reorganizing?

0:00This is The Mornings with Simmy Podcast. On Today's show, we can talk on and on about this trade dispute with the United States. But in the end, Canadian businesses have to find a way to deal with and even adapt to this. So what can the government do to help them? What are those loopholes that Canadian businesses need to know about? We have an expert to tell us. And for the first time ever, every association in the forestry industry is in agreement on what needs to be done to prevent an outright crisis. So what is on that list? Plus, Canada's military is doing something that it has not done in more than 30 years. It is a huge undertaking and we're going to learn all about it. It's all coming up on The Mornings with Simmy Podcast. Let's get started. On September 29th, one of the executive orders at Donald Trump's sign this week is supposed to come into effect. And that is one of the ones that we've all been talking about.

1:01It has to do with a full US import ban on Canadian-made cheese, dairy products, and yes, alcoholic beverages. So we've talked to the BC wine industry. They feel like they could probably weather this. They want to focus on the Canadian market. But you know what? This is still going to have a big impact across the country. Joining us now to talk more about this is Barry Appleton, one of North America's legal architects of sovereign economic policy trade law and investment treaty arbitration at Appleton Law. Barry, thank you so much for being here. Well, thanks for having me, Simmy. What kind of an impact do you think this potential import ban could have? All right. Well, look, let's not underestimate the size, but let's also talk about how it's going to affect people in Burst, Colombia. So first of all, this is not a wall. It's a filter. So the US banned the bottles crossing, but they actually opened the tanks. Canadian alcoholic liquor can still cross the border.

2:02Well, what can't cross is a Canadian label on the Canadian bottle. And in BC, you can't use a tank. You can't use wholesale liquor. You can't ship an Okanagan shard naysouth in bulk, right? You can't bottle it in Washington state and then have a thing that anyone's going to buy in the US. The one exit that's here is available to the big bottlers like the Asia. It's not available to the Okanagan and BC just can't pass through it. So it's a very targeted thing that actually creates more value for the Americans and wiped out as much as possible the Canadians. So what you're saying that if the industry is big enough, if the company is big enough on this side of the border, they can ship in bulk. Right. So look, you know, I own Atlanta can. They have a beer called Moosehead. Moosehead. They do it all by bottle. They don't do it in cake sizes. If they could sell the kegs, they can't sell the bottles.

3:04In BC, we do everything by quality or not quality, but small. We don't do big. And so this is designed to wipe out the Canadian market and move it over to the US with the exception of bringing over the bulk and letting the Americans bottle and then make the money out of that. Is it possible for then a BC company to pivot and say, we now can do that in bulk. We will ship the cake. Yeah, we could, but remember that the money's in the bottling and the marketing. So that's going to be then generated on the US side, taxed on the US side with jobs in the US. So we're going to be transforming those Canadian jobs and moving them across. But yes, we, there is a life line, but it is not in the quality side. It is in the quantity side. It's designed to move the bottling through the south. But it can, I guess, this is a new horizon that is a new area barrier that we're going to have to explore that you can share focus on the quality side here at home, but on

4:08this at the same time, take advantage of the lower Canadian dollar and expand into the bulk product by moving it across the border. Well, you can, but you know, at the end of the day, look at what the BC one industry's been trying to do. For example, it's been working on trying to reduce inter-perventual trade barriers and it's finally going to get that opportunity to ship to customers in Toronto or Quebec in 2027. But they're going to get, they're going to lose their market in Seattle in September on the 29th. And so we're going to have this whole period between September 29th and February of 2027 when they can't actually sell on the rest of Canada and they can't sell the United States. Now, what's wrong about that? Right. So the easy thing for the federal government to do there would just be move up that date. You would think so, but it's not your best. It's the provinces too, but for sure. Why would we penalize Canadians in that situation like this? We should be getting people off their backs and fixing this.

5:09It's the quality BC ones have a market inside the country. How much of a difference buried you think it could make if we said, all right, if this really happens on September 29th and we are talking, lifting all of those alcohol barriers across Canada. How much of a difference do you think that could make? Well, the total market that right now is going across the border is over a billion dollars. So if we were able to just reallocate that and be able to sell it in the fact that I can't, you'd be saving a billion dollar industry. Think about that. I mean, daddy's just, this one's on us, right? So you'll look at what the America's doing totally unfair. Absolutely outrageous. But we can do something ourselves. Why aren't we doing that? Do you see any evidence or is it just not being considered? I have seen that. Nobody's thought about it, but boy, should we do this? Even though most for most BC wineries, this is a headline, but for, you know, there might be a dozen that this could still be a business.

6:09But I mean, we need to get the says and the provinces together to fix this. And the BC government should be on the phone right now with the other provinces saying, let's fix this up. Barry, what I find really interesting about what you're saying here, and we've been talking to a number of different experts on all different aspects of this trade law situation, the trade situation. There are opportunities. It feels like for BC, for Canada, if we just seize them. Do you think that's true? Oh, for sure. I think the answer for Canada is clear. And especially for BC, you build your way out of this. You don't cower down to what goes on. You don't have the ability to say no. If you don't have the ability to stand on your own two feet. So you build your way out. You build it domestically. You build it internationally. So last 15 or 20 years, it was just easy to just go to the US. It was closed. It was near. They spoke the same language. But we didn't have to be innovative. We didn't have to be productive. OK, wake up call Canada.

7:10Wake up call BC. Time to now do what we should have been doing for a long time. Not a nice way to do it. But now we can actually do something. But boy, it's a lot of cold water. This is a cold shower I can't. Right. So essentially we're being slapped around. But we're forced with the choice that we have to do this. Now, we've got the Prime Minister also pushing for closer ties to the European Union. Could that work for Canada's benefit if we do some of these things? It can. But remember, it's about not deals. It's about what you've got to sell. So you've got to have the things that want to sell. BC's got unbelievable fashion brands. They sell around the world because they're innovative because they know their market and they can do it. We have to do that everywhere. That's what wins. Not the treaty. It's the product. It's the people. And we have it in Canada. We have it in BC. We just need to reorient ourselves. It was just so easy to just go across the border. Right? Now we've got to think about it differently.

8:11But we can do it. We just have to really get off our butts to do this one. All right. Let's see if that happens. Barry, thanks so much for your time. Great shot. Thanks for having me. A lot of the news this morning about the forestry industry because the question is, is it on the verge of collapse? It increasingly sounds that way from the open letter that the industry has sent to premier David Eby. They say they need a crisis action plan within 30 days. And they all agree on what the crisis action plan is. So what is it? What would it take to save the industry? Well, Brian Manzies is the executive director of the Independent Wood Processors Association and joins us now. Brian, thanks so much for being here. Good morning, Simon. Now, can you first of all tell us about this letter, this action plan? What does it involve? Well, to begin with, it's kind of unprecedented for the whole industry to get together. It's the industry, the unions, First Nations Forestry Council and community, Forest Advocates. And we're all together.

9:12Like I say, in the industry, we don't agree often. This is unprecedented. What we're asking for is a crisis committee so that we can move ahead with some of the important things to get forestry happening here in the province. And are these things that you think are reachable? These are targets that are done that can be done by the provincial government? Well, if we went back a couple of years ago, Minister of Forest and his mandate letter was to increase the harvest level to 45 million cubic meters. Well, right now, we're only at 29 million cubic meters. The last time we were at this low as harvest in British Columbia was 1960. We need to get the harvest level up in order for all of us to get access to wood to make the products we need. I represent a group of value-added manufacturers. We're not looking for logs. We're looking for lumber to change that into something else. Kind of like all the nice stuff you have around your house, like flooring, and and sightings, and door frames and stuff like that.

10:15But we can't get access to wood if there's no harvesting taking place. And a lot of the regulatory rules that are in place or the slowdown in decision making is limiting the access to harvesting at a sustainable level. So can we do that, though? Like do you think that if the government were to say, fine, go ahead and do it. Companies would step up. Is there a market for this? Oh, certainly. For example, I saw the news release at the BC Construction Association warning that their plywood and other wood inputs would now cost about 3% to 5% more. Well, that doesn't make sense if we're buying Canadian wood here that they're having to pay more money. But that's the problem we're facing. The regulatory costs here, the new seeds that are coming in, and all these things that we're asking for government, just to, hey, stop doing this for now. Let's focus on the low hanging fruit to get the wood fiber out the door. Let's find ways to, for example, dust off the, we had this policy in place that made

11:22wood first in all government procurement so that any buildings in that were using BC wood in the first place. We need to go back to those days and use that wood and make it available. So is this something that are you feeling positive about this? Like for all of the industry to get together and agree on this plan? I mean, I think I need to explain to people how extraordinary that is. It is unprecedented. And I mean, I represent small companies. We want to fight with the big companies, you know, with the unions want to fight with all of us. So, you know, everybody is trying to look out their own interests. But we're all putting that aside saying, what can we do to preserve our industry to keep our workers working? We don't want to lose our employees, especially our employees. Once we've lost them, we can't retrain them to bring them back. It's too timely, too expensive. And it disrupts so many people's lives. What does the window do you think of opportunity here to actually make a difference before it's

12:26going to be too late? Well, right now the federal government is looking at ways of streamlining pipelines. I certainly think we can do the same thing here at BC. The window of opportunity is right now. We can't wait for whatever is happening to the south of the border here. We can't control that anymore. We really have to think about our own house about what we can do here. And I must say, at a time when, you know, when we're under attack like this, the best thing we can do for ourselves is work together and get things done and roll up our sleeves. And we're ready to do that on the industry side. We're just asking the government to come join us and do the exact same thing and let's get working on this. And not just in the ministry force, but across all ministries. And only the premier can drive this. Who wants our product, Brian? Like if we talk so much about the United States, but where else could we be taking this opportunity?

13:26Well, I mean, just domestically, yes, there's an opportunity, but we have problems here with affordable homes. We have problems here with government procurement, for example, using Brazilian forms, form plywood, importing those to make forms here when they can just purchase them here in the backyard. So that's one place. But yeah, you know what? We have to move, for example, to get into the European market more. As of the end of this year, they have some new regulatory challenges that we need to help our industry to get ramp up towards so that we meet their requirements so we can export into that market. And so we have to get focused on that right now as well. What are some of those regulatory challenges? Something called the EUDR, which is European Union for the forest-based and deforested lands. In order for wood to be imported, we have to show the origin of it that it's been properly

14:27harvested and managed in a sustainable way for which British Columbia is a world leader at. But at the same time, we have to prove that. And so cost money and resources to be able to identify that include that with every piece of wood that goes across into that marketplace. So we need some help getting that ramped up, for example. But you sound positive that if the premier was agreed to this meeting, you'll be meeting with them directly. And do you think if the Sunif it goes well, then yeah, this can make a difference. Look, the premier is not a good job in making sure that software lumber has, which is, you know, a big concern across Canada, but big for BC has been on as part of the negotiations for the federal government. And that's good. We've seen a response by the United States. It's not a positive response. But I think let's just focus on what we can do right now. Ultimately, there will be one day discussion to resolve these issues as the every dispute

15:27ends in that way. But right now, let's clean up our own house and get ready for that. Well, thank you so much for joining us to talk about it today. I appreciate that. I do appreciate you listening to us. Thank you. Let's talk about what the Canadian military is up to. The military is doing something that it hasn't really done in more than 30 years. It's doing some reorganizing. It is restructuring how it organizes itself, the size of divisions, how it responds to missions. Kind of sounds like modernizing. Well, what does this involve? What is this all about? David Perry is with the Canadian Global Affairs Institute and joins us now. Good morning, David. Hi, thanks for having me. How would you describe this process that the Canadian military is undergoing? I think in two ways, it's a pretty significant reorganization of the institution. And then in the other sense, it's an effort to modernize the way the Canadian Army is structured, looking to equip itself and orient itself for the future conflict that might be called

16:27the bond act on. OK, so how, if you could explain to the rest of us who don't follow this all the time, how big of a deal is this? It's pretty consequential, as you said in your opening, we haven't really done this in any kind of meaningful way in several decades. Military biocracies amongst the most reluctant to change for all kinds of reasons. And so the fact that the Army is doing this thing is a very positive thing. And it has worked out to time, align with pretty significant reorganization that the current government's focused on, which includes a bigger focus on Canada being able to act with more independence. And so this Army initiative is pretty well aligned with that, because it's going to give the Canadian government a think more options in the future than it's had so far. What do you mean, what kind of options are we talking about? Well, a big part of the genesis of this shift is that the Army's assessed that for the future conflict, they need to be able to work at a higher scale and scope that they have

17:27before. So on an organizational structure called the division in the Army Lingo. And that implies a couple of things. It's a lot more people than either two to three thousand force brigade battle group structure we've previously worked around. It also means that you bring together more parts of the armed forces together in one organization to be able to deal with modern conflict. So a smaller organization doesn't have as much of the kind of logistics support, sustainment, intelligence, some other, what's called enabling functions as a division level could. So it's both bringing together more just in quantity, but also bringing together some particular skill sets that we didn't necessarily have before in the previous structure. And what that's going to let them do, they're hoping is that move from basically the way we've worked before is that we would deploy some part of the Army internationally. You would have to basically plug into somebody else's bigger system because only until you get up to that divisional level, do you have the ability to really kind of organize and take care of yourself the way that we would want to if we want to be able to be a little

18:31bit more independent and how we act abroad. So is this taxable? Like can we do this? Do you think? I don't think the military is generally known for being easy to change, is it? No, so I give full credit to the Army leadership team in general right for initiating this. And the Army's really, our Army, especially, is a very interesting organization. Got a whole bunch of different constituent parts between the infantry, the different components of the infantry, the regiments, artillery, armor core that all tend to work in a lot of kind of independent and distributed ways. So trying to make this all work in a coherent fashion is not going to be super easy. But I definitely think it's doable what they've outlined. It's a reorganization they can focus on. And once they start getting the new equipment, which will probably still take another two to four or five years to start arriving, it should really allow the Army to be equipped to be more effective for the future. How do you think Canadians would notice this? What would we see?

19:32I think immediately, honestly, probably not that much, unless you're either super attentive or if you live close to one of the different Army installations across the country, there's some reorganization and renaming that's happening to give new, there's ceremony that's taken place to basically close down the old structure and reopen parts of an under a new name. I think the real thing, though, would be three to five years from now, that when this goes through, the reorganization part of this and the organizational change part of this, as well as the actual delivery of the equipment to make the Army effective, that Canadians would see an Army that's much more responsive and able to deploy and support a government policy. But it's going to take a while. Where is that equipment coming from? Coming from a number of places, depending on exactly what you look at, a bunch of it's going to be Canadian. Earlier this summer, there was an announcement that General Dynamics Land Systems Canada based in London, Ontario's been designated as a strategic partner for the

20:34Government of Canada. So basically, our supplier of wheeled armored vehicles. So that's the source of supply for those items. I think for the rest of it, we don't really have a lot of fidelity. There's some announcements coming out just this week actually about new drone capabilities and there's several Canadian companies that are part of that mix. It's in the word today already that one Canadian company, Volada Sero Space, is part of that. But some of it is going to come from overseas. I think we're going to have to wait and see what that exact composition looks like. But certainly, given the kinds of things the Army is looking to buy, tons of opportunity to have that modernization effort really make a strong contribution to the Canadian domestic industrial base. This sounds like this is all moved very quickly, doesn't it? How long does this spend in the works? Quick and government terms is pretty relative, I think, for normal people. The Army's been working on this for about a year and a half now. I mean, I would say that's pretty fast regardless to spend that kind of money that that almost seems innovative on the military's behalf. Yeah, I give them lots of credit for being innovative here. I mean, it would just say,

21:36like, it's not done yet. So it's a year and a half to get to this point and there's still a lot of work to do. But again, working within the Federal and the Military of Bureaucracy, give you the Army full credit for initiating this. Certainly by those dangers, it is moving pretty quick. Sounds good. David, thank you so much for your time. Hey, thanks very much. Thanks for listening to The Mornings with Simmy Podcast. Don't forget to subscribe to the show on Apple, Spotify, Amazon, Google Podcasts or wherever you get your podcasts. And you can always listen to us live in the morning, Monday to Friday from 5.30 to 9 on 7.30 CKNW.