Debates of March 11th, 1994

Customs Tariff

[The Speaker]

Pursuant to Standing Order 100, I do now leave the chair for the House to go into committee of the whole.

(House in committee on Bill C-5, an act to amend the customs tariff, Mr. Kilger in the chair.)

[The Assistant Deputy Chairman]

Shall clause 1 carry?

On clause 1:

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Chairman, I assume that at this stage we can put questions to the minister before the bill's single clause is passed. Clause-by-clause consideration should not take very long!

On second reading of Bill C-5 a few days ago, we expressed some reservations about this bill which mainly concerned two questions. Under the new GATT agreements, we will eventually have to reassess the preferential tariff for developing countries. The minister had said he intends to do this with the co-operation of the business community. The question we asked at the time, and which we are still asking, is: Does the minister intend to consult parliamentarians in any way, either in the House or at the very least in committee, either the Committee on Finance or the Committee on Foreign Affairs and International Trade?

[Doug Peters, Liberal, Secretary of State (International Financial Institutions)]

The general system provides for consultations with the business community on any issue at any time.

No changes are made in the general preferential tariffs unless there is consultation with the business community. Any time we receive anything from a group of businessmen or an association that questions the level of the general preferential tariff it can be referred to finance officials and considered at that time.

It is more important that the business community which is affected by that be consulted than individual members of Parliament. Of course any member of Parliament can bring their concerns to the attention of the minister or the Department of Finance.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Chairman, we would like to see parliamentarians consulted about any changes in the GPT, simply because of the political overtones and possibly the political consequences that these changes might have.

The reason I mention this-in fact, the hon. member for Louis-Hébert and I both brought this up in our speeches is that today, some countries that benefit under the GPT can no longer be called developing countries, and I am thinking specifically of Singapore and South Korea. If we reassess the relevance of granting these countries GPT status, I think this might eventually have a political impact on our relations with those countries.

We also expressed the hope that respect for human rights would be a consideration in the case of certain countries benefitting under the GPT. One example is the People's Republic of China which, at 33 per cent, I think, is the main beneficiary of this general preferential tariff. My question is therefore whether we should eventually reconsider granting the GPT status to countries that openly violate human rights.

I think parliamentarians should be able to consider any reassessment of the GPT status of the countries involved.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, those were very important questions. There was first the graduation of countries from the GPT. Some countries have been graduated and I am sure the hon. member means South Korea and Singapore. They have been graduated by the Americans for example and are no longer in that group of countries. Others such as Europe and Japan have not done that to these countries.

The question of whether these countries should be removed from this group which gets the advantage of the GPT is something we can look at at any time. If a member wishes to raise it for a particular country or if any standing committee of the

House decides it wants to examine any of these results that can be done at any time. It is not a closed situation at all.

The question of whether Canada should graduate the countries the hon. member mentioned is one which could be considered at any time. It is not difficult to make a change but we have to realize it has not been generally accepted to do that.

The other question was on the use of the GPT as a lever to human rights questions. That has been done on occasion. Where there is a general consensus usually through the United Nations or something similar that has happened. It is possible to do that.

With respect to China, I remind the hon. member that China is a major developing market and its record on human rights may have some questions. China is a major developing market for Canada. Canada has had a great interest in the opening up of China right from the very earliest times. We were one of the first western countries to recognize China and we have had very good relations.

It is extremely important that we retain our influence in China through the acceptance of the GPT to have the largest benefit from this. But there are a lot of other benefits on the other side as well in that Canadian companies have been opening up business there. The GPT helps Canadian companies in their general relations with China.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Chairman, I know that through the General Preferential Tariff, Canada maintains special trade relations with some 180 countries. I would like the Minister to remind me whether all those countries are in a single category or whether there are different categories of tariffs for different countries? Based on his answer, I will have another question.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, there are two categories actually. The least developed countries are zero rated. These are the poorest countries in the world. Then there are those in the less developed category which are subject to the general GPT. There are two categories.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Chairman, this is, in a way, a supplementary question based on the answer. On what criteria is a country selected for one category rather than the other? I am also asking this in the light of the comments by my colleague for Verchères, because in the least developed countries category, there are countries which are probably not among the least developed. So, what are the selection criteria? And would it not be better, in the future, to have a more gradual scale instead of just two categories?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, it would be possible to have any number of categories. We have used the United Nations classification which is generally accepted throughout the world. There is always some question as to whether we move from one category to another but clearly the United Nations categories are pretty well accepted throughout the world. That is why we use those categories.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Chairman, I would like to ask the minister whether there are any guidelines for or any monitoring done of the products brought in by these preferential tariffs to ensure that our consumers benefit from them and to ensure that they do not get lost in the retailing or the reselling after they have been imported by the importers. Could he comment on that, please?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, I do not think we could ever exactly tell where the imports go. They are generally part of the accepted items found in stores. We could turn over a plastic item in a hardware store and find it was made in China. If so, it probably came in under the GPT. We have to look at the source.

There is no way we could trace it. It is not of particular interest to trace it. It is a benefit to the Canadian consumer to have access to a particular good at that particular price, and a benefit to the country exporting it.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

I have a supplementary question, Mr. Chairman.

The Reform Party is quite favourable to freer trade, but we have to look at our manufacturers so that there is fair competition. I feel some kind of monitoring should be going on so that our consumers do not have to pay the price and a few importers get rich by making sacrifices on these tariffs. We have to be fair in this trade if we are to have this type of trade.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, every time a question is raised by a manufacturer we look at it. We rely on Canadian manufacturers of competing products to tell us that there is a problem.

As a matter of fact we search out people concerning tariff reduction. Whenever there is a particular tariff question we refer to manufacturers. A lot of them are intermediate goods, a lot of them come in at the behest of Canadian manufacturers to make their products more acceptable at a better price for production in Canada and for export abroad. There are substantial benefits to Canadian producers and manufacturers of these goods, not just at the retail level.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Chairman, a few minutes ago, the minister was saying that the classification used by the federal government is based on the United Nations classification. The question I am asking myself is whether we should consider South Korea or Singapore as less developed countries or as developing countries. Of course, the answer is crystal clear and self-explanatory: Singapore and South Korea are no longer developing countries, but newly industrialized countries.

I would have two short questions for the minister concerning what he told us earlier. Does the government intend to reassess the general preferential tariffs allowed to newly industrialized countries such as Singapore or South Korea? The minister was pointing to us, rightly so, that the United States, for example, had removed the general preferential tariffs allowed to those countries, but that Japan and the European countries had not yet done so.

Does the Canadian government intend to follow the United States or the wait and see policy of Japan and Europe? I would like him to inform us on that matter.

I also have a sub-question relating to the first one. The minister is somewhat leaving up to parliamentarians and committees the initiative of asking the government to consult them. I ask the minister and the government, through him: Does the government intend to directly submit the matter to parliamentarians, through the Committee on Finance or the Committee on Foreign Affairs and International Trade?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, I will answer the last question first. Any parliamentary committee can ask to have the question raised and can ask the minister to do so. At any point either the Standing Committee on Finance or any other standing committee can ask to have it referred.

The first question the hon. member asked was about reassessing the granting of the GPT to South Korea and Singapore. That is not under active consideration at the moment. Should there be some change, for example if Europe and Japan moved, I think we would bring it under active consideration.

It is not under active consideration right now to change the GPT rules for South Korea or Singapore.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Chairman, please allow me to ask my second question again. The minister has been implying since the beginning of our committee's proceedings that members of Parliament and committees can ask to be consulted on issues like that one.

Since the beginning of the present session, the government has been saying it wants to consult members in this House or in the various committees. As they said during the pre-budget conferences, they even claim they want to consult the population. Is it the intention of the government to consult members of Parliament on graduation from the GPT by certain countries, which profit from the General Preferential Tariff, as it is their intention to consult business people?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, the level of consultation is the basis of the hon. member's question. The level of consultation is quite high on these matters at any time. We have received a number of requests from businesses to consider certain products, certain countries and things like that.

A number of parliamentarian have written to the department over the years to ask whether it would consider particular tariff items. It is quite possible. Another method would be to have the standing committee merely ask that it be considered. If the standing committee asks that question it would be considered.

The avenues of consultation are rather high on this particular item. The GPT has been in effect for 20 years, so we have had 20 years of experience with consultation and it has worked rather well over that period.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Chairman, I would like to ask a question of the hon. minister. I see in my notes that on an annual basis we lose about $156 million in preferential tariff reductions. With expanded trade as a global community, has the minister done any projections on how much of an increase it will be? We are trading more and more with these countries. Is there any way he can project what kind of an impact it would have on our economy?

The more preferential products we bring in, the more we have to consume. They also reduce the revenue side for the government. I would appreciate it if the minister would give me a bit of a guideline on that point.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, this is a very interesting question. If we lower the tariffs on certain goods we can make a nice estimate as to how much money we will lose. However, if we had the tariffs in place we would not make money because the goods would not come in. We say we have lost $158 million, but it is $158 million we would not have had anyway because the goods would not come in with the ordinary tariffs.

It is a very difficult estimate to make. That is part of the key. This is a good deal for both the Canadian people and for developing countries. Developing countries have said that they

want trade, not aid. That was a good way of putting it. We can put forth any number as lost revenue, but it is not lost revenue. It is revenue we would not get in any case.

Making a projection into future years means, if we have higher revenue losses, that it is revenue we would not have received anyway. If we had put on the tariffs we would not get it. However it is a real benefit to Canadians and a real benefit to developing countries.

[Jake Hoeppner, Reform, Lisgar—Marquette, MB]

Mr. Chairman, I thank the hon. minister. When I look at the trade figures we have with other countries, not just underdeveloped countries, my concern is that the Canadian government seems to have been a very poor trader. We have deficits with the majority of countries. The United States is practically the only country with which we have a trade surplus.

The government should be vigilant. We should make trade deals with these countries that benefit us to some extent. We cannot be at the short end of the stick all of the time. With the $500 billion deficit we already have, we have to improve our trading practices to increase revenue.

I would ask the minister and the government to be very vigilant in improving our trading practices because we have to become better businessmen.

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, I take that admonishment with great sincerity. We are going to be very vigilant about our trading practices. I have written on the subject of our balance of payments deficit for 10 or 20 years and have said that we should be pursuing strong trading relationships, relationships that reduce our balance of payments deficit which is running around $25 billion a year right now. That is a high priority of this country.

I also remind the hon. member that it is two-way trade. We must remember there is only benefit to trade if it goes in both directions.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Chairman, I feel that up to a point this question of the GPT should be related to Canada's external policy. No doubt our policy is silent on that issue, but it seems we are facing a contradiction: When Canada takes part in bilateral aid programs with other countries, that is one country to another, we know that as it did in the past and is still doing today in some cases, Canada links such aid to the respect of human rights. With regards to the GPT, since it is also a process for helping developing countries and seing that we are still in the same country, Canada, as far as I know, why is it that Canada's external policy does not force partner countries to respect human rights?

[Doug Peters, Liberal, Scarborough East, ON]

Mr. Chairman, the member is asking how effective trade sanctions are in approving human rights in developing countries. The only way that trade sanctions can be effective is when they are done generally by a massive number of countries. That will have some impact.

Canada is far too small a market for almost any country to have an impact on its own. We are really only harming ourselves if we try do that sort of thing.

Trade sanctions, where it is possible to use them, and it has been done only very seldom, are only effective if at all effective when done in conjunction with, for example, the whole United Nations, the whole Commonwealth or something like that.

It is not really possible to have any impact on these countries with our very small market here in Canada.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Chairman, I do understand the minister's answer. However, I would like to point out that there have been precedents when Canada took the initiative of organizing a coalition. Such was the case in South Africa, with apartheid and human rights violations. We then saw how Canada played a role in setting up a dialogue among nations and forcing many countries to take a stand, which did have an impact.

Saying that we cannot do anything because these countries are too small and we hardly trade with them is not the way to go, I think. It seems to me that Canada should play an international role there too, by bringing other nations to boycott countries which violate human rights. I think that it could be just as efficient as it was against South Africa.