Debates of Nov. 6th, 2001
House of Commons Hansard #110 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was lumber.
- Order in Council Appointments
- Government Response to Petitions
- Veterans Affairs
- Committees of the House
- Questions on the Order Paper
- Canada National Marine Conservation Areas Act
- Canada Labour Code
- Business of the House
- Canada Labour Code
- Veterans Week
- Softwood Lumber
- Prayer for Peace
- Asbestos Region Hospital Centre
- Illicit Drugs
- Centrinity Inc.
- Airline Industry
- Veterans Week
- National Defence
- Jean-François Breau
- Financial Services
- Remembrance Day
- Down Syndrome
- Teknion Corporation
- Supplementary Estimates
- Softwood Lumber
- National Security
- Softwood Lumber
- The Economy
- Anti-Terrorism Legislation
- Foreign Affairs
- Employment Insurance
- Softwood Lumber
- Foreign Affairs
- National Defence
- Employment Insurance
- Airline Industry
- Public Service of Canada
- Airport Security
- Publishing Industry
- Industry Canada
- Firearms Registry
- Softwood Lumber
- Presence in Gallery
- Canada National Marine Conservation Areas Act
- Softwood Lumber
- Message from the Senate
- Softwood Lumber
Karen Redman Parliamentary Secretary to the Minister of the Environment
Mr. Speaker, I will be sharing my time with the member for Yukon.
I am pleased to have the opportunity to participate in tonight's debate on softwood lumber. Ensuring an equitable resolution to the softwood lumber dispute is a top priority for the Government of Canada. That resolution must ensure continued access to the U.S. market for Canadian softwood lumber exports, following the expiration of the softwood lumber agreement on March 31.
My constituency of Kitchener Centre does not have an abundant forest industry, but Kitchener does engage in a good deal of business with our southern neighbours. Through a vibrant and innovative technology sector, Kitchener contributes to technology exports, the fastest growing sector of our nation's overall exports. Certainly the high tech sector of Kitchener-Waterloo enriches our community and presents a greater range of opportunities for employment and economic growth.
In addition to providing better jobs and more opportunities for Canadians, trade finances the social system that Canadians cherish, reflecting our values of fairness, inclusion and equality.
Clearly all Canadians in all regions have a stake in our continued trade success. The far-reaching implications of the softwood lumber trade action have an impact on our Canadian economy and our local communities. The decision of the United States department of commerce to impose this additional 12.58% duty on our softwood lumber is punitive and unfair. It has a negative impact on Canadian jobs and on our competitiveness.
Just like the countervailing duties of last August, this decision to impose anti-dumping duties is unfounded. Moreover, the U.S. action is based on protectionism and politics. Canada's more efficient and more modern sawmills are a source of pride to our nation. Accusations of subsidies and dumping are an erroneous attempt to poke holes in Canada's vibrant softwood lumber industry. Just like countervailing duties of last August, this decision to impose anti-dumping duties is simply unfounded.
The Liberal government will continue to challenge U.S. laws and policies at the World Trade Organization. We will also pursue our discussions with the U.S. administration to find a durable, long term solution to this trade dispute. The rights of Canada's softwood lumber industry will be defended. Canada will continue to co-ordinate discussions with the industry and greatly appreciates the collaboration of provinces which are responsible for the management of natural resources.
Given Canada's strength in this industry with 21% of the international forestry market and 34% of the U.S. market, there is consensus among Canadian industry and governments that the move toward free trade is indeed a positive one.
I am confident that the rules based system of international trade will once again dismiss the U.S. claims and grant Canadian lumber industry its rightful access to the U.S. market. The Canadian-U.S. trade relationship has been mutually beneficial. Canada and the United States are each other's largest trading partners, moving about $1.8 billion worth of goods and services across the border each day.
In 2000 Canada exported $360 billion in goods to the United States and imported $268 billion in return. Service exports totalled $33.3 billion during the same period with corresponding imports of $39.4 billion. Fully 86.1% of Canadian merchandise exports are destined for the United States market.
Since the implementation of the free trade agreement in 1989, two-way trade has more than doubled. It is not surprising that a trade relationship of this magnitude has been plagued with challenges. The government is determined to continue to work with the United States to ensure the free movement of goods, services and persons across the Canada-U.S. border.
Canada is a trading nation. Clearly, without trade, without the opportunities it brings, without the demand it generates and the jobs it creates, our economy and our economic position would not be as strong as it is today.
We are committed to free trade and to fair trade. If we are to continue to generate the high standard of living, if we are able to continue to provide good jobs and bright futures for Canadians, we will need to work hard to promote the benefits of trade and ensure that Canada remains one of the greatest trading nations in the world.
For our part, the Government of Canada will continue to negotiate trade agreements, seek access to the most dynamic markets of the globe and ensure that our companies are treated fairly.
This is an issue where we have looked to the provinces to partner with us. We have responded and there are issues and structures in place that will allow us to take this to a higher court, which is the World Trade Organization. I would contend that we have taken a measured, balanced approach to this. We have in the past taken issue with some of the United States protectionism and we have won every case. I have every confidence that we will be victorious on this issue and we are taking the right approach.
I have appreciated this opportunity to address an issue that impacts on all Canadians.
Larry Bagnell Yukon, YT
Mr. Speaker, members from all sides of the House have been speaking tonight about this serious issue in our economy. I appreciate that we have all been working on this for the better part of this year. We need to because this is a major impediment in the Canadian economy.
Last spring I was a member of the parliamentary association that spoke with congressmen and senators. As on every occasion when we can talk about trade disputes, we raise the issue of softwood lumber. All members of parliament have been working hard on this. We need to raise it time and time again so that those people in the United States who are taking these unfair remedies realize our point of view and the facts of the situation.
I will speak, as I did the last time we had a special debate on softwood lumber, to any American friends who may be watching. I would remind them that because a few lobbyists have put this in place in the United States it increases housing prices, and, in this fragile time in the U.S. economy, this is the last thing to help the economy.
I urge Americans to speak to their congressmen and make sure that these trade remedies are removed and we can get back to free trade in lumber.
In my riding of Yukon, in the far north, this action by the U.S. hurts my constituents. We have a very small margin of profit in the north. We have some significant forest resources in the Liard basin and we have some very unique forest resources in lodgepole pine and white spruce. White spruce is a specialty market because it takes so long to grow. It is very fine grained and fine furniture can be made from it. However it takes a long time to mature, is expensive to harvest in the north and does not replenish itself quickly.
How can this be a threat to anyone when one thinks of the extra heating costs for production facilities, the wages for employees and the transportation costs in the Yukon? Most of our lumber is hundreds of miles from tidewater. With these costs of producing it is hard to imagine how anyone could think that we could hurt them or compete with them, but in this round, although it was not in the last round, Yukon lumber has also been attached to these duties.
We have to keep on fighting, as we have tonight and as we have all year, to ensure that a fair remedy is won through the World Trade Organization. We also have to educate the people in the United States so they realize what is happening and how important trade is between our two countries and how unfair this situation is.
Canada and the U.S. have the biggest trade in the world and free trade is important for both of our economies at a time like this, especially our fragile lumber economy in Yukon.
We will continue to fight and make sure that in the end a fair remedy is found.
James Lunney Nanaimo—Alberni, BC
Mr. Speaker, I am thankful for the opportunity to raise this critical issue in the House tonight and to enter into the debate along with my hon. colleague who has just spoken.
The softwood lumber crisis has really influenced my riding. We have thousands of mill workers down in my riding who are very concerned. They are concerned about when or if they will get back to work, if they will have a job to go back to, if they will have a livelihood and if they can pay their mortgage. This is a serious issue affecting thousands of lives in my riding.
The job losses in British Columbia are mounting. On the coast we have between 12,000 and 15,000 Canadians out of work. We have 21 of 35 mills that are closed and another 5 may be closed in the next two weeks.
The latest employment numbers are now out. British Columbia has been hard hit with joblessness growing half a per cent in just one month to 8.3% in October.
Growth for the province, once projected to be close to 4% for the next year, is now predicted to be less than half that number by most bank economists.
Lumber companies have been hit hard. Virtually every company in the sector will lose money next year according to analysts at National Bank Financial.
The total hit companies are going to take will be in the range of $362 million.
The direct losses in the lumber industry are compounded by job losses in the support industries. As Brian Zak, spokesman for the B.C. Coast Forest and Lumber Association, said:
It's easy to see [the effect] if you go to Vancouver Island...you've got all the equipment suppliers shut down, you've got all the fuel carriers shut down, you've got all the power-saw shops and truck dealers shut down.
Mr. Zak is right. In my riding of Nanaimo--Alberni, thousands of workers and their families have been directly affected by this problem.
I want to mention a couple of those workers to help put a personal face on this problem.
In my riding there is a gentleman who lives just a few miles from my home. He is a constituent who manufactures a specialty heat exchanger unit. The technology was honed on the logging and forestry industry over the past 10 years. His equipment is used in hydraulics and refrigeration, fluids, pulp mills, logging trucks and yarders.
Last year his business grew at a rate of 65%. Since the softwood lumber dispute, his business is down 98%. He had seven employees. He is now down to none.
He has an opportunity to supply heat exchangers for the latest U.S. military order for between 7,000 and 12,000 light trucks. He needs a patent to protect the type of heat exchanger that he would use in this order should it come through next year.
Should he last until next year, he would be able to hire 10 people on a full time basis, provide profitable sales for his company and retain the manufacturing rights for an invention which other engineers say is the best improvement in the industry in the last 10 years.
A second constituent, another gentleman in my riding, is a planer man at Coulson Specialty Mill. The Coulson sawmill has been down since the softwood lumber duty came into existence and accounted for 105 jobs.
The Coulson planing mill is now down and Darcy is one of an additional 75 people thrown out of pay. He has a mortgage he will not be able to pay. He has tried to run a B&B as a sideline but there will be no income from that until next summer. He has some EI benefits that he will collect but they will not meet his monthly bills.
I would also like to relate some of what the mayor of Port Alberni, Mr. Ken McRae, has been sharing with me. As the mayor of a town at the centre of the coastal lumber industry, he knows the situation all too well.
Mayor McRae says that 40% of the community is in the 30 to 40 age group and out of work and they are devastated. In the past, shutdowns were known to be for a certain period but this one is indeterminate. He also claims that there has to be leadership on the federal level but the appearance at this point is that there is none. He said that smaller companies who support the community will collapse. He says that we must stop the export of logs from private lands, a federal jurisdiction.
As well, the mayor said that western red cedar should be exempted from this duty. He says that it is not a trade irritant and is unfairly included in the products the duty applies to, simply for the purposes of increasing pressure on Canada to capitulate.
Mill workers in my riding are getting desperate. Many, including the mayor of Port Alberni, are calling for a ban on the export of raw logs to the United States. They are joined by several other municipalities, including Courtney, Duncan, Ladysmith and Tofino.
Jack McLeman, president of the IWA local, says “No more raw log exports”. In a two week period, October 9 to 23, there were 177,000 cubic metres of raw logs exported to the U.S. Jack has been doing his homework. That is enough to keep a sawmill with 400 employees busy for one full year. The problem is that sawmill is not in Canada. It is in the United States. Extrapolated, it will be one million cubic metres by year end. This is a substantial increase over what we have been exporting in the past. Normally there are three million cubic metres a year.
At a time when our mills are shut down, it is highly inappropriate and offensive to people to see U.S. mills gearing up to mill the logs with which our workers should be working.
The workers, the unions and the mayors hope to place pressure on U.S. mills to help reach a solution to this dispute. They believe our government needs to take a harder line.
A raw log ban is something that may have to be considered but there are three things the Government of Canada could do immediately before committing to such a move: get behind our industry with a guarantee for bonds, have the Prime Minister get personally involved and convene a national meeting of softwood stakeholders. We have been calling for that for some time. People at our end of the country do not understand why the government has been slow to move to this call.
I would like to focus on the third point for a moment. Last week we had a parliamentary secretary refer to some softwood producers as nervous Nellies. He claims to have apologized for that remark but in fact he did not. He then went on to say "We are calling on people not to play the east versus west divide game. That is what the United States is hoping we will do". I could not agree with him more.
With the second remark of the parliamentary secretary, we do want to present a united front to the Americans. If they are able to play off Canadian interests one against the other or Canadian provinces against each other we will surely lose. However, if the government really believes in presenting a united front, why not call a national stakeholders meeting that we have been demanding for many months now?
Unfortunately, the government will not do that. It tells us to trust it because it has the matter under control. The fact remains that we have had over five years to resolve this problem and we are no closer to free trade in lumber than we were the last time that the government caved in to American demands.
David Emerson, president of Camfor, which has just launched a $250 million lawsuit against the U.S. over the issue, has called on the Prime Minister to get personally involved. We have had some fine rhetoric from the Prime Minister but no action for five years.
The last hike in the countervailing duty smacks of desperation on the part of the Americans. They know we will beat them at the WTO just as we have beaten them at tribunals three times before. They know the commerce department will settle on a much lower permanent duty than the present countervail. However, to sustain our industry, we need the government's help.
We need a guarantee on bonding for our smaller producers. We need a national stakeholders meeting. We need strong leadership from the trade minister and from the Prime Minister.
Canadians, I am afraid, are losing faith in this government to do what needs to be done to protect Canadian jobs, Canadian families and Canadian interests. Perhaps they are right. Perhaps the government has been in power too long. Perhaps the nervous Nellies are actually those sitting on the government side of the House unwilling to lift a finger in case they may rock the boat.
I remember when the first countervailing duty was introduced and the Prime Minister said that he had telephoned President Bush, had talked tough with the president and had told him what our feelings were in Canada about free trade in softwood lumber. The president said to him, “Tell them you gave me hell”.
I heard the trade minister say just yesterday in the House that he was going to talk tough to the U.S. trade representative.
We need more than posturing. We need real action. Canadians are looking to the government to provide leadership on this issue. The government must bring us some resolution so that our mill workers can have a future and our families can have a Christmas to look forward to.
Cheryl Gallant Renfrew—Nipissing—Pembroke, ON
Mr. Speaker, it is with disappointment that I rise once again for an emergency debate on softwood lumber. The news that an additional 12.6% has been added to the already existing tax of 19.3% imposed in August of this year is bad news to the people in my riding of Renfrew--Nipissing--Pembroke. Canadian softwood lumber producers find a total of 31.9% slapped on in punitive duties.
What does this mean for the people of my riding and for many other people across rural Ontario? First, jobs are hard to come by in rural Ontario and the jobs we have are becoming increasingly harder to keep. It is not like my colleagues in big cities such as Toronto, Hamilton, Kitchener, Guelph and so on whose constituents have options and cash to tide them over. When my constituents do not work, the impact is manifold. When we draw those dollars out of a small community there is less to go around for everyone.
It is a case of the job multiplier in reverse. For every two jobs the federal government eliminates in eastern Ontario in the forestry industry, an additional job is lost for the people who supply and service the forestry business.
People in rural Ontario are frugal, proud and self-sufficient. Members from urban ridings are surprised to learn that people from rural ridings like Renfrew--Nipissing--Pembroke supplement their winter diet with game meat. They can see why we hate the Liberal gun law so much. The Liberal government is literally taking food out of the mouths of rural Canadians.
Renfrew county is the only county in Ontario that allows Sunday hunting in a majority of its small rural communities. This was done at the urging of the big lumber mill owners. In days gone by the wages paid by the mill owners barely allowed a man who worked in a mill the money to feed his family.
The man worked long and hard six days a week. The Sabbath which was supposed to be a day of rest was the only day available for the breadwinner of the family to go out and hunt game to put food on the family table. The tradition of being able to hunt on Sunday continues to this day, except the Liberal government has taken the job away in the forest and the ability to put meat on the table.
Ontario's softwood lumber producers, already furious over the existing 19.3% duty imposed by the U.S. department of commerce, are further angered by the additional U.S. duty of 12.6%. The U.S. commerce department has specifically targeted six companies, four based in British Columbia and two based in Quebec, alleging that they are dumping products into the U.S. market at below cost prices.
Those companies that have been identified will be required to post bonds of between 6% and 19.2%, while all other Canadian softwood lumber exporters, including Ontario producers that have not been targeted in this dumping of products, will be subject to a standard of those six charges which will average to about 12.6%. The Ontario softwood lumber producer will pay about 31.9% in duties with these new charges.
We have followed this route before in 1982, 1991 and 1996. A trade action was brought forward in 1982 and there was full adjudication. Canadian provinces were found not to be subsidizing. Ontario does not subsidize the lumber industry.
Through the sound forestry management practices introduced by Frank Cochrane, who was a provincial Conservative cabinet minister from eastern Ontario, and continued by the current provincial government, we have maintained government ownership of the majority of Ontario's forests and have made sure that the highest environmental standards are respected, harvested yield is sustainable and our forests are usable for the enjoyment of all citizens.
When I last spoke to this issue the first round of layoffs had just occurred among the lumber producers in my riding. This new duty will have the effect of catching those employers that may not have been initially affected but will now be affected as a consequence of additional duties or being in a spinoff industry or service trade.
For example I have Temple Pembroke MDF in my riding. This plant produces high quality softwood and medium density fibreboard. This product is used in furniture, mouldings and millwork. It can be used in kitchen cabinet doors, decorative baseboards and trim, and MDF laminated flooring because the panels can be machined into shapes,.
What is significant about this plant is that it brings an environmentally attractive solution for local softwood lumber mills. The MDF product is made with pine sawdust, shavings and chips. This mill waste was landfilled or burned in the past. This plant when fully operational consumes 480 tonnes of these raw materials every day and it uses 1,300 tonnes of bark residue daily as fuel to produce energy for board production and building heat.
With a current workforce of 119 employees and a local payroll of about $8.5 million, Temple Pembroke MDF is a significant local employer. Through local spinoffs it injects more than $50 million annually into the local economy. Access to product is paramount to keeping this plant running and keeping people employed.
The employees at this plant are already feeling the effect of the coming recession because there has been a cut in the number of running days at the plant. No product, and this plant shuts down which impacts on the jobs in the plant. There is also an impact on the small mills and the truckers who bring the product to the plant. We can see why the people in my riding of Renfrew--Nipissing--Pembroke are so concerned whenever softwood lumber is mentioned.
When we see the state of the art operation of this plant and the money Canadian mill owners have put into their operations, we see why the Americans are afraid to compete.
One of the side effects of the softwood tariff that was put into place in 1996 was the effort by our mill owners to modernize their equipment to low their costs and remain competitive. At the same time American producers, protected behind a tariff wall, had no need to increase their productivity, further widening the gap between our efficient softwood lumber producers and their inefficient American counterparts. This is a common occurrence when industry uses politics to shore up shortcomings in its business practices rather than in the marketplace.
We have heard the daily denials from the Prime Minister and his junior ministers that there is no relationship between Canada's response to the war on terrorism and the fact that the trade dispute regarding softwood lumber grows worse. The Liberal government would have Canadians believe it is a mere coincidence that a similar lumber dispute with Indonesia was quickly settled once that country firmly established where it stood in the war against terrorism.
Noted military historian Gwynne Dyer said recently in a speech in Pembroke that the price of free trade has been a loss of Canadian sovereignty.
The government has consistently taken the trading relationship we have with our largest trading partner for granted since 1993. If we were talking about cars or steel, the government would have settled long ago.
The Prime Minister is being entirely unhelpful to the cause when he suggests that somehow we have leverage in the sale of our other natural resources and that we could withhold things Americans need to get our way with the softwood lumber dispute.
I say to the Prime Minister that he should not make threats unless he is prepared to carry them out and he should not wish for something too much because he just might get what he wished for.
It has been the practice of the government to take our entire lumber industry for granted as part of its neglect rural Canada policy. Nowhere is that more evident than in the shortsighted decision to shut down the Petawawa National Forestry Institution, PNFI.
Since its establishment in 1918 the institute made substantial and recognized contributions to forestry research and development until its closure in 1997. The research forest at Petawawa had a variety of projects that included forest ecology, growth and yield, silviculture, forest genetics, remote sensing and forest fire ecology. There were over 1,000 annual visits by students, dignitaries and forestry colleagues from all over Canada, North America and the world who came to witness firsthand the work being done at PNFI.
Why did the Liberal government close PNFI? Was it because PNFI could not find enough high powered friends in government like the former president of Canada Steamship Lines, now the finance minister? Was it the same neglect of our softwood lumber industry at work in 1997 that created the crisis today?
This is a trade disaster that could have been avoided. Anyone who was paying the slightest attention to the softwood lumber trade relationship with the United States knew that when the current agreement was set to expire the American industry would push for countervailing duties. However the crisis and the lack of leadership rest with the government.
Andy Savoy Tobique—Mactaquac, NB
Mr. Speaker, a 12.6% duty was levied on October 31 on all Canadian softwood lumber producers including those in Atlantic Canada. Aside from Atlantic Canada the total duty imposed across the rest of Canada was upward of 30%. Based on an all others clause, six companies were investigated. An average was determined for those six companies and applied across Canada. It was very appropriate that this decision came down on Halloween. Certainly the U.S. is masking the real situation of the softwood lumber industry in Canada.
Canadian firms have adopted technology more readily than our friends to the south. They have been more innovative, productive and price competitive in the industry in North America.
I had the pleasure of working at Juniper Lumber, now Nexfor, in Juniper, New Brunswick, during a $7 million refurbishment program. In that program we looked at laser technology, computer technology, effective utilization of the entire log and efficiency. This process was carried out across Canada.
How important is softwood lumber to my riding of Tobique--Mactaquac? Exports have slipped recently from a high of 2.7 billion board feet in 1996 to 1.9 billion board feet in 2000. Canada exports $10 billion of softwood lumber and one in sixteen jobs are dependent on softwood lumber. In New Brunswick there are 29,000 jobs or one in eleven people who rely on softwood for their employment. In my riding of Tobique--Mactaquac that figure is one in six jobs.
Several communities are very dependent on softwood lumber. The small community of Plaster Rock is one example. The Nexfor sawmill employs approximately 400 people directly and indirectly.That represents about two-thirds of employment in this small town. The softwood lumber situation is critical. If the mill shuts down it would devastate the community.
Mills are struggling in my riding. Prices have recently fallen drastically and profit margins are very slim. Softwood lumber producers in my riding estimate a drop in profits from 5% to 7%. That percentage does not allow for a 12.6% duty to be imposed. If we look at 5% to 7% margins with a 12.6% duty being imposed, the long term viability of those mills is certainly in question. Ultimately we are concerned that mills will be shutting down.
New Brunswick has an historical free trade agreement with Maine dating back to the Webster-Ashburton treaty signed in 1842. This treaty guaranteed free trade in lumber along the New Brunswick-Maine border specifically where the Saint John River separates New Brunswick and Maine. This action breaks the spirit of that 159 year old agreement and is certainly a sad day for the citizens of New Brunswick including the constituents of my riding.
Let us look at the U.S. situation for a moment. The American department of commerce has caved into the interests of southern U.S. producers. The main reason the U.S. has been lobbying for this is that it cannot produce at the same cost Canada does. In the industry there is a saying that one innovates or one stagnates. I suggest that the profits in the southern U.S. have gone into the pockets of the lumber mills whereas the profits in Canada have gone into reinvestment in technology.
It is very ironic that in many instances there is no direct competition between U.S. southern pine and much of the softwood lumber produced in Canada, specifically eastern Canada. Atlantic Canada softwood is structural in nature due to its density whereas the southern pine is not strong enough and does not have the integrity to be used for structural purposes. Home Depot recently said that it could not stock its shelves with Canadian softwood and would have to go elsewhere. It mentioned Europe specifically.
There is a case for optimism. We are faced with a situation and we have an ally that we have never had before. It is the American coalition for affordable housing. In a recent visit to the U.S. with some of my colleagues we spoke to the American coalition for affordable housing for three hours.
It explained that it represented 15 or 16 organizations, such as the Canadian Manufactured Housing Association, the Consumer Products Safety Commission and Home Depot. It is involved in a campaign to educate the American consumer on the exact impact that these duties will have on the U.S. consumer.
For instance, the coalition estimated that the price of a new home could rise as much as $3,000. It said that hundreds of thousands of people would not qualify for first mortgages because of the increased prices. To the American economy, this represents a serious threat when housing starts to go down by that amount.
We have been through it three times. It is like the bully on the beach kicking sand in our face. In each situation we have come back and embarrassed them in front of their friends on the beach, which we see as the rest of the world. In this situation we will again come back and embarrass them in front of their friends, the world community.
The government is taking action in this area on two fronts. First, we are looking at the legal opportunities to pursue this with the World Trade Organization via NAFTA. Second, we have had discussions with the industry, industry associations, the provinces and, recently, with the U.S. in Vancouver. We have had discussions in Montreal, in Ottawa today, and we will be in Washington, D.C. on November 12. We are making strides in that effort.
In closing, this issue is my top priority. It is a top priority for Minister for International Trade and for our government. We are united in our condemnation of this unfair trade action. We are united in our position. We are united in our resolve to find a solution for all Canadian softwood lumber producers.
Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC
Mr. Speaker, I sought and obtained the permission of the Chair for this emergency debate on softwood lumber—and I take this opportunity to thank the Chair—because I had been struck by the very difficult situation and the judgment and firmness required of the federal government in dealing with the current offensive by the U.S. government.
As the House knows, March 31, 2001 marked the end of a five-year agreement, the ultimate purpose of which was to manage the softwood lumber trade, despite a free trade agreement which should have covered this sector. People realized that the agreement had particularly penalized Quebec with respect to the quantity of softwood lumber it was allowed to export. This is also true for other provinces of Canada. It must also be recalled that the maritime provinces were not affected by this agreement. The result was therefore an increase in exports in New Brunswick, particularly in ridings bordering on my own, which was due solely to the punitive aspect of the agreement for Quebec and for the other provinces concerned.
We therefore decided collectively that a return to free trade was necessary, that we had to develop a common collective stand in order to be sure to have a strong position against the Americans. We had foreseen the present situation, which is a very difficult one, particularly for regions like the one I represent, including the RCM of Témiscouata, where the lumber industry is the main industry.
There are many plants whose future is now very uncertain because of the 12.58% anti-dumping duties imposed by the Americans in addition to the countervailing duties of 19.3%, which had already been imposed. So we are talking about almost 32% in duties which have been added on top of the regular price. Companies are being asked to make a profit, pay their employees and run their operations cost-effectively all the same. If this were allowed to go on, it would be completely impossible for them to succeed.
There is light at the end of the tunnel. As regards the decisions the tribunals and quasi tribunals will have to make in this dispute, we have had considerable success in the past and we may well win on the essence of the issues. However, we are facing a difficult period now. The Americans are putting on maximum pressure with the means at their disposal. I heard Mr. Racicot, the representative of the American president, say he expected a solution by Christmas.
A solution by Christmas is probably what everyone wants. However, we want no unacceptable compromise. I think there are three options to determine who our allies might be.
The behaviour of the Americans is really very difficult to understand. First, it seems to be more of a lobby of businesses than of consumers. It is to the advantage of American consumers—and they are aware of it—to have Canadian and Quebec lumber available on the American market. It means, for example, that houses can be built for less, which allows for a better return on their investment in their house or construction of other sort.
However, the business lobby is very strong and very much present. We have seen it in the past. It is our opponent. We must present arguments to consumer associations, use support like we got from the owners of Home Depot, who, as major intermediaries in the sale of lumber, know that the entire American market benefits from having Canadian and Quebec lumber available.
The American position is even harder to understand given that the American economy needs a boost. At the moment, things are not exactly rosy in economic terms. Adding the anti-dumping and countervailing duties raises the price of Quebec and Canadian wood on the American market and, consequently, it costs more to build houses at a time when a hand is needed to get the economy back on its feet. This too is hard to understand.
This also means that there is a necessity to play on the American stage. If there is one thing that the Canadian government has not done enough of, it is intervening more aggressively with the president of the United States, via the Prime Minister, repeating what he has already said, but adding all other arguments required.
The consumers must also be approached, and as I have said, the American stakeholders, so that they will be even more convinced that they will not be successful in the end, and would be better off working at finding something acceptable. As far as acceptable things are concerned, I have drawn up three hypotheses about what can happen.
The first one is an agreement to restore what died on March 31, 2001, something that would, in my opinion, not be very beneficial to either Quebec or Canada. It would even be absurd for us to revisit that solution, after the pitched battle that we were involved in to win our case, and now to beat a retreat and again accept an export tax, either a permanent one or one that would be for five or ten years, as was the case previously, but without a return to free trade in the end. That, to my mind, is unacceptable.
The second hypothesis is that we must have a position that is firm enough to take us to the decision stage with a tribunal or quasi-tribunal, where we have a good chance of winning. At that point, we would revert to free trade.
The third hypothesis to be looked at is not necessarily the outcome of negotiation, but may have been nourished by the discussions over recent weeks and those yet to come in subsequent weeks, and that is a return in the long term to free trade.
If we could negotiate an agreement whereby, over the next five years, in a gradual manner, we could end up with free trade, and the U.S. would acknowledge the fact that, indeed, in the end, we would end up with free trade, we would have won a major victory for the softwood lumber producers of Quebec and Canada. We would also be able to guarantee jobs for the people back home.
I will end my presentation on that. Right now, it is the workers in the mills and the people in the forests back home who are paying the heaviest price in this fight for a free softwood lumber market between Canada and the U.S., and Quebec too, and it is these workers who are being asked to make a considerable effort of solidarity.
I think we should be able to expect the federal government to come up with support measures that do not contravene free trade when it comes to softwood lumber, but that would allow, for example, through the employment insurance plan, to qualify with a minimum of hours.
The Bloc Quebecois proposed setting the minimum at 420 hours, as is the case right now for all of the regions with high unemployment, while ending the discrimination against youth, those who are coming into the labour market for the first time.
We also asked that the maximum benefit period be extended by five weeks. The minister once told me that about one unemployed people in five uses the maximum benefit period to which they are entitled. Currently, because of the economic slowdown triggered by the September 11 events, in the regions affected by the softwood lumber crisis, there are many more than one unemployed person in five who will use the maximum benefit period. There could be two or three in certain regions.
Allowing these people to get five additional weeks of benefits and perhaps make it to the next production period should alleviate the reform's negative impact.
It is also important that the government use some of the money stashed in manpower training programs. A little over $250 million are available but are currently not accessible by the provinces under the manpower training agreements.
The federal government should make this money available to allow more people who have lost their jobs because of the softwood lumber crisis to get training in a different area.
In conclusion, the situation we are facing is not an easy one. We feel it is important for parliamentarians to be able to express their views, to be able to represent what their constituents want. I did the rounds in my riding on this issue. I asked plant workers if they agreed with the position we had taken to get the Americans to agree to free trade. We had fairly widespread support on this.
Now we must deliver the goods and ensure that workers, those who are losing their jobs, those who are penalized by the situation, have the necessary tools.
What I want is for the Government of Canada to continue to take a firm stand with the U.S. government for a return to free trade for softwood lumber, and to take into account as much as possible the particular situations in each province. In Quebec, we obviously showed, five years ago, that there were no unwarranted subsidies in this area.
I hope that the final solution will give the softwood lumber industry of Quebec and of Canada free access to the American market. I think this is what we deserve with our production and with all the efforts that have been made on this issue by all stakeholders.
Pierre Brien Témiscamingue, QC
Mr. Speaker, it is now my turn to take part in this debate on the American measures that are penalizing our forestry workers and those who earn a living working in sawmills in particular and in other components of the softwood lumber industry.
I will quote some figures tonight, not a lot of figures, but enough to make members understand what is at stake here. I will talk about Quebec since I am more familiar with the situation there.
There are 40,000 jobs linked to the softwood lumber industry in Quebec. The sawmill industry accounts for 20,000 jobs and the forestry industry, for 10,000. There are 250 municipalities in Quebec whose development hinges on forestry, including 135 towns and villages where all of the jobs are related to this industry. So it has a major impact. It is extremely important.
As a matter of fact, last weekend, I was in Taschereau, in my riding, where a company called Tembec is located. It is one of the companies targeted by the U.S. government in its decision to impose penalties for alleged dumping on the market. People were obviously concerned. To give you an idea of the situation, Taschereau is a small village, but over 400 people showed up to meet with the company president. Of course, there were other themes for discussion, but it showed that not only were people interested in their development, but they were also concerned about the softwood lumber issue and its impact on jobs in their community.
The company president was reassuring. That business can afford to absorb these measures over a certain period, but not in the long term. We must find a solution, and I will conclude with that later.
There is just one solution for us and it is a return to or the establishment of true free trade for softwood lumber.
A coalition was established across Canada and Quebec. A number of businesses gathered around an association, the free trade lumber association, to promote the establishment of real free trade for lumber. Regionally and throughout Quebec, businesses like Abitibi Consolidated, les Produits forestiers Alliance, the Landrienne mill, the Gallichan mill, Tembec, Kruger and many others are involved in this issue. At home, these are names well known by the public, since they create many jobs in our villages, and many people work in forestry.
In the current context of economic downturn, there was no need for this on top of the rest to further fuel the uncertainty that consumers must be feeling at the moment. The economy needs people's confidence. At the same time, it is hard to encourage them with a speech on confidence when they see the threats made by the U.S. government, which is being protectionist in this matter.
I recall the advent of free trade between the States and Canada. I am one of those who believes in the virtues of free trade. We promoted it and said to people “It is a good thing. We must support it”. The public, particularly in Quebec, followed. In the federal election it was the main issue. The party advocating it won the most seats in Quebec. At the time, some people opposed it. Today, I hear people saying “We told you. With the Americans, you can have free trade when it suits them”.
I must say that we sometimes run out of arguments because, where we wanted free trade everywhere, we ended up in a situation in which a few American producers felt disadvantaged compared to competitors in Quebec or Canada. They put pressure on their government, which decided to establish protectionist measures, such as charging duties of 19% and adding another of 12 %, claiming that dumping is going on. All this increases the cost of our products sold on the U.S. market by 30%.
Needless to say, this makes some people skeptical and leads to grassroots feelings that are not very favourable toward the U.S. government. People who lose their jobs and feel threatened by this decision are saying “Hold on, now”.
These same Americans are asking us to liberalize the energy field, for example, because they have a major energy problem. They turn toward Canada, Alberta and Quebec in particular, and say “Oh, you folks have a lot of energy, and we would be interested in greater access to it”. This is being discussed. The government does not always tell us when discussions are being held, but it is clear that there seem to be some in this area. So, in parallel, they would like to have access to our energy. They want to be humoured in that, but then when it comes to softwood lumber, they do not want to buy our products, or not in the context of free trade.
At some point, there has to be consistency. The government must be very firm with the Americans, and tell them “Now, people cannot talk out of both sides of their mouths at the same time. If you are in favour of free trade, then that is what we will have. Period”. That is what will be done for softwood lumber, and no other direction will be taken. The negotiations must not address anything other than the implementation of true free trade, so that this debate will not have to be started over again every five, six, ten or whatever number of years.
This is nothing new. Five years ago, we went through nearly the same thing. The rates may have changed a little, but it is the same American strategy, of imposing taxes on our imports, putting pressure on our industry, and putting us in a position where they can say “Accept a compromise or go all the way through a legal process, and all the time that there is uncertainty will be costly”. So here they are with their threats and attempts to intimidate us, so that we will accept on a more permanent basis to either reduce our exports or impose a rate on ourselves, saying “Yes, that's true. We will set our own export tax”.
We must not head down this path, because that is what we did five years ago. Four provinces were affected by a quota system. Exports from Quebec, Ontario, Alberta and British Columbia to the U.S. were limited. In this respect, the system can often be arbitrary.
When quotas have to be divided among businesses, it is difficult to come up with a process that satisfies everyone. Many members who live in forestry regions know people who would have liked to have export quotas for softwood lumber, but never received any. They had to export while paying the tax. It was a difficult situation. They were not on a level playing field with businesses that were given a quota to sell to the United States tax free. The other provinces were not affected, in the meantime.
So the market is hardly fair. There are frequently highly arbitrary factors, influenced by politics, that define how quota systems are generated. We accepted this, and five years later, we are starting the process all over again. The U.S. is using the same threats: a tax, countervailing duties, and accusations of dumping. They are pressuring us by saying, now we will negotiate. After clobbering us with taxes, they want us to sit down and negotiate.
We need to show them that it is not going to work. Yes, we will carry through to the end on the legal front. It must be understood that we are not just talking about five years. The United States has been complaining about our systems for twenty years, because they claim that we are indirectly subsidizing the market with deflated stumpage fees. That is essentially their argument in court. They have private forests, we have many public forests. This represents our different approaches and our different perspectives. They claim that their system is better and that ours provides direct subsidies to business.
However, whenever they have gone before legal bodies, they have always lost these disputes. So, we must go to the end of the process. When we negotiate about free trade, there is also a dispute settlement mechanism. When we are part of organizations such as the World Trade Organization, there is also a process to settle disputes, but we have to use it. These mechanisms are designed to protect the little ones from the big ones. We must use them. We must go to the end of the process. We must tell the Americans “We will not give up unless you immediately agree to go back to free trade”. Then we will stop. Otherwise, we will go to the very end of the legal process. We will settle this once and for all, we will not go through this every five years. This is what we must do.
I hope that in the discussions that are taking place right now with U.S. government officials, who came to Ottawa, or in the talks between the Prime Minister and the U.S. president, the government is very clear. I hope it is firm and clear. Yes, the government did raise its voice. We noticed it in the past few days. But we have seen this problem coming for a long time. I hope this is not the first time that the government raises its voice and that it has done so in private for quite some time with the U.S. government. We must say “Listen, this is not going to work. It cannot work like this”. We must be very firm. We are not negotiating. We are saying “We want to achieve free trade, nothing else”. We must be very clear and firm, because there is only one solution.
Many jobs are at stake. Forestry workers are watching us and they are concerned. Their jobs are at stake. This affects local economies. These economies are already fragile and they need all the help they can get to make it through the current crisis.
So much the better if the softwood lumber dispute is settled quickly and the U.S. government buys our arguments. Otherwise, the government must go all the way. With all the leeway it has, with its EI fund and so on, this government must come to the aid of the workers affected by the length of this dispute, which might take some months yet to sort out. If it does, the government must put measures in place to help those in the industry, go all the way, and not resume this debate every five or ten years.
That is what the Bloc Quebecois wants. I hope that it is what the government wants as well and that it is what it is going to do. Finally, I hope it is what we will ultimately obtain.
Andy Burton Skeena, BC
Mr. Speaker, I will be sharing my time tonight with my colleague from Delta--South Richmond.
I am pleased to take part in yet another emergency debate on the state of Canada's softwood lumber industry. It seems that this is becoming a habit and one I might add which we would all do well to kick. While we are all here still talking about the state of our industry, there are thousands of workers back in my riding of Skeena in northern B.C. and all over Canada who are waiting for the Liberal government to put an end to the talking and start taking some action.
Last week we received the news that the U.S. was imposing yet another duty on Canadian softwood lumber being shipped into the U.S. This now takes the amount of duty on Canadian softwood lumber to over 30%, 31.5% to be exact. The U.S. government is saying that this duty is being imposed because Canadians are dumping lumber into the U.S. market at cut-rate prices.
The head of Canada's largest lumber producer, Mr. David Emerson, has been quoted in several papers over the past week saying how bitterly disappointed he is at Ottawa's foot dragging. Imagine that, foot dragging. He is wondering why this has not been placed on the Liberal government's priority list when it is a situation that affects so many people and communities across Canada. Of course we all understand that after the attacks of September 11, both Canada and the U.S. have been focusing on national security. However it seems curious that the U.S. has put its lumber lobby back in motion and our government is unable to look at more than one problem at a time.
Mr. Emerson went on to wonder what if this were a problem that was facing the auto industry, the aerospace industry or perhaps even Bombardier or a split run magazine. Then would the government be on flights back and forth between the two countries getting the matter cleared up quickly? It is very likely. This is something I brought up in my very first take note debate which took place at the end of March. We in the official opposition were begging the Minister for International Trade and the Prime Minister to do something to protect Canadian interests before the agreement expired at the end of March. Yet here we are once again.
This is getting to be like a bad dream. It is sad to think that everyone else seems to see the urgency of this matter, everyone that is but the government. It seems willing to jump through hoops to help Bombardier win contracts to the point that it is given guaranteed loans and now has put us in trouble with the WTO.
Will the government help out with the lumber industry? All one has to do to see how much the federal Liberals are willing to help is look at comments made in the House of Commons. The latest slap in the face to British Columbians is when the member for London--Fanshawe stood up and had the audacity to call the British Columbia lumber industry nervous Nellies. It is really nice to have government on one's side although it is obvious that British Columbia will have to wait for that day to come and it will probably take a change in the members on the other side of the House.
I suggest that the government should take a look at its exports and see how much income lumber really does generate for the Canadian economy. Surely the government will fight these duties at the WTO and that is great, except that the World Trade Organization will take years before it will reach a ruling on this. We do not have that kind of time. While the WTO lumbers around taking a kick at the can, Canadians go jobless.
We understand that we have to go through channels, that any help that is given has to be done very carefully so that the U.S. does not misconstrue it as a government subsidy. God knows, we do not need further action to be taken against us but it would be nice to know if the Liberals here in Ottawa have any plan to help the workers that are depending on them now. Is there a plan to do anything to help them out when their mills get shut down?
It sometimes makes me wonder about trade laws. At the U.S. government website for the Department of Commerce there is a link that shows the cases the U.S. is charging with countervailing duties and anti-dumping. The cases are listed by country. In fact there are 29 of these cases against Canada alone. If that is not protectionism, then I do not know what is. There are 17 countries listed on that site and on the WTO site there are many more. Countries have made complaints to the WTO about this unfair protectionist law the U.S. has. We cannot go on like this any longer.
We are supposed to have free trade. We signed the agreement with the U.S. and are in talks to expand it to the hemisphere. What can we expect to come as new protectionist laws when the area is expanded? What will be the next target? Will the newly signed partners take a page from U.S. trade law? Not to be a fearmonger but it is very disconcerting when we think of what could or may happen.
This issue should have been dealt with from the beginning when NAFTA was signed. This is a point that cannot be made enough. Since we do not yet have the technology to go back in time, we will be unable to fix the situation that way.
The government should fix the mistakes made by the government of that day. The duties facing Canadian producers are crushing and they need help. We need a government that will stand up and help.
In British Columbia we are facing these duties, the shutdown of mills and the layoff of workers. To top it off, British Columbia lumber is threatened by an infestation of bugs. For those members who not know what these are, let me inform the House.
Over the past year the mountain pine beetle outbreak in the west central plateau of British Columbia has increased fourfold affecting just under 300,000 hectares of forest in that area. This tiny black insect, native to North America, burrows into lodge pole pine and transmits a blue stain fungi that can destroy the connective tissues within a tree and lower the grade of lumber. This in turn reduces the market value. All we have to do to see the vast destruction is to fly over the province. Where we see green below, those are healthy trees; where we see a red tinge, that is the work of the mountain pine beetle.
With the knowledge of the destruction these beetles cause, one would think the federal government would take some action, but in a recent report published by the Department of Natural Resources this topic only got a tiny mention, just one small paragraph, in fact 13 lines. When we thumb through the rest of the report called “The State of Canada's Forests”, we will find that the tall bugbane gets as much mention and the night snake gets a longer write-up than the mountain pine beetle.
This shows where the Liberal government places the forest industry on its priority list. Chalk this up as yet one more item the Liberals here in Ottawa are not putting any brainpower behind, but I digress.
I would be very interested to know what action our government is taking to help the four B.C. lumber companies and two Quebec companies that have been the target of these new duties and the industry as a whole.
From the time that the first duty was levied against us, which by the way excluded the Atlantic region, we have lost 18,000 jobs in the lumber industry in B.C. It is expected that with this new duty there will be an additional 12,000 layoffs before Christmas. Will that not make for a merry Christmas for families who work in forestry.
I think I speak for the majority of loggers, mill workers and owners and all those who are fighting this ridiculous situation that the Liberal government has allowed our forest industry to fall into when I say enough is enough, it is time to take some action. It is time for these two governments to sit down and get this worked out. How many people have to go jobless? How many mills need to be shut down? How many more times do we have to sit in this place and listen to the Prime Minister say he will talk to the president about this? How many more times are we the opposition going to have to stand and beg the federal government to help our citizens and our industry? How much more money do we need to give the U.S. lumber interests before our government, our protector, will start working to help Canadian citizens and our forest resource based economy?
This situation must be resolved. No more waffling. Our forest industry workers need an early Christmas present. The Prime Minister and the U.S. president need to get together and resolve this issue on a free trade basis now.
John M. Cummins Delta—South Richmond, BC
Mr. Speaker, it is unfortunate that we are having this debate this evening. It is unfortunate that our American neighbours are treating us so shabbily again. We recall that they have unjustifiably interfered with the free flow of trade in hothouse tomatoes in British Columbia, with mussels and potatoes in P.E.I., and again for the last few months with softwood lumber.
Many in the House have worn a pin with both the Canadian and American flags on it to show our solidarity with our American cousins over the events of the last few months. It is upsetting, to say the least, that in return for our generosity and support we would be treated by the American government in this way.
Having said that, it is unfortunate that the government has ignored this critical trade issue until it has become a crisis.
Recently, Gordon Gibson, a noted British Columbian, wrote an article. I will quote his comments because they are worth repeating. He said:
If scientists detected a small asteroid headed toward us with a high probability of taking out a continent-sized chunk of Planet Earth five years hence, chances are something would be done about it. No matter how hopeless the case, rockets would be launched and so on. It might or might not work, but by God, the world would try.
Unless of course the space rock was pointed only at Canada, in which case nothing would be done, if the current lumber export crisis is any example.
Our governments have seen the softwood lumber attack launched by the U.S. forest industry and its senatorial supporters coming at us for five years, and hey -- surprise -- here it is! Communities and companies are already forecast to lose 14,000 jobs in British Columbia alone. Double that for Canada, escalate for the longer term. If there is no solution, expect a further decline in the Canadian dollar, important loss of government revenue and an eventual humiliating capitulation to the Americans.
There are, in fact, no surprises here. All of the actors are playing their assigned roles as predicted. The trade asteroid that might have been diverted five years out is here now, and the only option is damage control. The politicians we pay to look after these things should be tarred and feathered sometime in the future, but for now we all have a problem.
Mr. Gibson notes a further decline in the Canadian dollar. It is interesting to speculate on why that is.
The B.C. Lumber Trade Council points out the significance of forestry to the British Columbia economy. It claims that it represents 17% of all output and about 14% of all direct and indirect jobs in the province. Tax revenues from B.C. forestry help fund vital services that B.C. and Canadian residents value, such as education and health care.
B.C. exports roughly half of all the country's softwood lumber to the United States, almost $4 billion Canadian in 1999. Used mainly in home building and renovation, softwood lumber products, spruce, pine and fir, represent Canada's single largest export to the United States. That is why this issue is so important not only to British Columbia, but to Canada.
Last March when the expiry deadline of the previous agreement was forthcoming, Diane Francis notes in a column that Jimmy Carter, the former U.S. president, had written an article on it, an op-ed piece, which she claims, and I think quite rightly so, is totally off base and smears Canada as an unfair trader. She notes that the comments of former President Carter are a combination of propaganda and mistruths. She suggests that the anti-Canadian campaign which has been waged for years is simply a thinly disguised attempt by American forest industry interests to subsidize their lumber business.
She points out the real facts of the matter, that Canadian lumber exports are not subsidized in the way that Mr. Carter suggests. She notes that the trees which are harvested are publicly owned trees, but that they must be replaced by law.
She notes that log prices, for example, and the taxes on them are on landed costs. The taxes may be lower in British Columbia due to the long distance the logs have to be taken to get them to market. They have to be hauled across and through challenging terrain.
She also notes that if taxes are taken into consideration, Canada is hardly a low tax regime. Corporate taxes and income, sales, royalty and other government compliance taxes or costs are routinely higher in Canada.
In closing, she notes that U.S. lumber interests, not Canadian ones, are often directly subsidized by their governments. It is not unusual for local or state governments to offer tax breaks to forest industries and she says that in the U.S. the companies ship on roads which are owned and built by the government, not privately.
How did we end up in this mess? I think the facts are quite clear. There is no free trade in lumber such as some would suggest. When the North American Free Trade Agreement was signed, lumber was not included, as we know. What we are facing is really just a clever form of anti-competition practice.
If we look at the history of the issue we notice that since 1982 Canada and the U.S. have been involved in three lumber countervailing duty cases. The softwood lumber agreement avoided a fourth one.
However, those agreements were not wins for British Columbia or for Canada. In fact they were not victories at all. The B.C. Lumber Trade Council makes that point very clearly and I would like to quote from a document it has printed because I think the comments are valid and worth noting. It stated: “Some have also argued that since Canada has previously won softwood lumber disputes with the U.S. at international trade tribunals we should pursue that strategy again. That reasoning demonstrates a fundamental lack of understanding of the dispute which has hit industry with the highest duties in history and has already resulted in the loss of 16,000 mill and logging jobs across B.C.”.
The council continued, stating that: “The previous wins were hardly victories for Canada and, in particular, for British Columbia. The cost of successfully defending against three earlier trade cases came after some two decades of constant litigation and restrictions on the free trade of B.C. lumber across the border. It cost industry over $100 million in legal, research and other costs. Finally, those so-called wins have handed us the largest duty in history at a whopping 32%. If that is victory one shudders at the notion of defeat”.
In conclusion, the council stated that: “Further, at the urging of the U.S. industry lobby, the United States has changed its trade laws this time around. They are more complicated and onerous than ever and the U.S. lumber industry has stated outright that if it loses this round at the World Trade Organization it will lobby again to have the U.S. rewrite its trade legislation to suit its own purposes. The U.S. industry believes it is not bound by international trade law but by domestic law. Its actions to date bear this out”.
The lumber trade council goes on to say that it is why it believes the only responsible approach for Canada is to negotiate a constructive long term resolution that will provide us with stable, free and unfettered access to the U.S. market, or in short, free trade.
It is interesting to look at some of the comments made in the United States on this issue. What are Americans saying about this dispute?
Federal reserve chairman Alan Greenspan suggests that anti-dumping suits and countervailing duties have often been imposed under the label of promoting free trade but oftentimes are just simply guises for inhibiting competition. Protectionist trade barriers could become “a great tragedy” for the country.
Other concerns are expressed by Americans as well which suggest that all is not well in the states, that not all Americans support this action by their government. The problem is that there is a powerful lobby in the United States and the issue was ignored by our government for the previous five years. It has done nothing to solve the dispute in time.
Odina Desrochers Lotbinière—L'Érable, QC
Mr. Speaker, I am very pleased to rise tonight to take part in this emergency debate, which was requested by my party and deals with the economic crisis affecting Quebec and my region because of the softwood lumber issue.
First, I would like to thank my colleague from Joliette for all the efforts he made over the last few months to try to prevent this crisis, as well as my colleague from Laurentides, who travelled to Washington twice to try to resolve this issue.
Personally, I made representations at the Canada-United States parliamentary association, particularly at the annual meeting that was held last May in Blue Rivers, British Columbia, and just recently, on Monday morning, in the presence of a representative from the U.S. congress.
Once again, despite all the diplomatic and political efforts, Quebec and Canada are facing economic turbulence. Once again, Quebec is facing a problem that was created by the U.S. government.
The Americans are increasingly protectionist, and I would even say increasingly selfish. They ignore the free trade agreement and impose economic measures that slow down softwood lumber production considerably.
In recent years, the U.S. government has become the killjoy of bilateral and multilateral agreements by not complying with trade rules.
I would like to address the Americans' attitude as far as agreements in the agricultural area are concerned. The U.S. has not even respected the GATT agreements by maintaining the heavy export subsidies and grants to sustain their domestic trade, which results in a market distortion. Most countries that do business with them are forced to constantly appeal to the WTO tribunals to get their rights respected.
While Canada is battling before the courts to win its case, thousands of jobs are being lost in Quebec.
As the member for Lotbinière—L'Érable, I have risen in the House on numerous occasions in defence of the economic interests of my region. Today, the decisions of the U.S. government on softwood lumber are jeopardizing hundreds of jobs in my riding.
When they were already reeling under the 19% countervailing duties, the U.S. government last week delivered the final blow to companies directly or indirectly connected to softwood lumber, by adding anti-dumping duties of 12.5%.
In our riding of Lotbinière, a number of companies were already severely affected by the U.S. countervailing duties. In Daveluyville, Doucet Machineries has experienced a considerable drop in purchases and orders. Since the countervailing duties have been introduced, the company has been operating on a job-sharing basis.
In Plessisville, countervailing duties have had an impact on the For-Min group, which includes Carbotec and Vibrotec, which is also slowing down production. Forano U.S.N.R is also suffering as a result of the U.S. government's decision.
The Government of Canada must demonstrate much stronger leadership when dealing with the Bush government, which is not at all shy about interfering with all kinds of economic measures to slow our economy. The Prime Minister needs to tell President Bush clearly that he is wrong on the softwood lumber issue.
It is American consumers who are directly affected by their government's attitude. In fact, as we know, our softwood lumber is of better quality, and costs less to produce than the lumber from U.S. mills. American families who want to build a house are being penalized because they are being denied access to our 2x4 lumber.
On behalf of the thousands of employees whose jobs are threatened, I urge the Government of Canada to demand that the Bush government return to free trade for softwood lumber, and that the U.S. respect its signature.
Softwood lumber producers cannot afford to wait for 10, 20 or 40 days. The U.S. government must immediately suspend the countervailing duties that are choking our provincial and regional economies.
The Bush administration knows that it is wrong. I am asking the Minister of International Trade to settle the issue quickly and efficiently, not through negotiations that will drag on interminably. Time is of the essence. Quebec's economy, the Canadian economy, and regional economies are already suffering in the wake of the attacks of September 11. Quebec, and Lotbinière—L'Érable cannot afford to wait. The United States has the power and the responsibility to act immediately. And it must.
The softwood lumber crisis has become cyclical. We need to come up with a permanent solution for this issue.
The Minister for International Trade should not be going it alone here. He should immediately call all stakeholders to a meeting in order to hear what they want and to work out a common strategy with them in order to resolve this issue for once and for all.
In the last few minutes, I have been critical of the U.S. government in this issue. I would now like to address the Minister of Human Resources Development, who seems unaware of the softwood lumber crisis in our regions. She too must do her job.
In fact, the minister has the authority to relax the EI rules by removing the waiting period, and increasing the number of eligible weeks and the amount of benefits. This would show her solidarity with workers affected by the softwood lumber crisis.
Every time a crisis hits the regions of Quebec, the Minister of Human Resources Development drones on about Bill C-2, which made only small improvements to the EI system, which is leaving our regions poorer every year.
Again this afternoon, the auditor general pointed a finger at the current EI system, which is building up a surplus year after year. The minister therefore has the financial leeway to take action now.
A treasury board document shows clearly that, since 1998, the surplus in the EI fund has grown at the rate of $7 billion a year. So, over the past three years, this surplus has grown to $21 billion. Despite this huge amount, the minister is still waiting.
Perhaps we should ask the person who decides everything in her department, the Minister of Finance, why the government is doing nothing.
Again, I call on the Canadian government to find a speedy and permanent solution to the softwood lumber issue. Quebec, the second largest producer of softwood lumber in Canada, with over 25% of Canadian production, must receive massive and tangible support from the Canadian government in order to end what I would describe as these unjust and unfair actions by the U.S. government, which are now paralyzing a vital sector of our economy.
Jean-Yves Roy Matapédia—Matane, QC
Mr. Speaker, the current dispute between Canada and the United States about softwood lumber is nothing new. Whenever an agreement expires, the U.S. industry tries by every possible means to slow down, if not to destroy, the Quebec and Canadian industries.
Yet, we have a free trade agreement with the United States. As their neighbour, we have had a most conciliatory attitude toward them. In Quebec particularly, our industry and government have done everything to eliminate any subsidy. It can be stated that, in Quebec, our industry is not subsidized and is not in any way competing unfairly with the U.S. industry.
The free trade agreement that we signed with the United States must be respected, and the government must act vigorously, and much more so than it has done since the beginning of the dispute, to ensure that this agreement is truly respected. All that the minister will say publicly is that discussions are taking place and are progressing well.
The time for discussions will have to end soon. It will have to stop soon. The time for action must come. Thousands of jobs are at stake at home, in our regions.
In the lower St. Lawrence region, where I come from, the softwood lumber industry includes some 38 companies that employ about 2,052 plant workers, and over 1,810 forestry workers. This illustrates how importance that industry is in our region. The attitude of the U.S. is jeopardizing the whole economy of that region. In the Gaspé Peninsula, which is another region that I cover, there are some 17 sawmills that employ 716 plant workers and 1,120 forestry workers. For a region of a little over 100,000 people that was hit hard by the moratorium on groundfish and was also hit very hard by the employment insurance cuts, any new loss of jobs is a real tragedy.
Moreover, people from both the Matapédia and Gaspé regions do not trust the current government at all to help them in a crisis situation. If the past is any indication of what the future holds, it is obvious that we cannot trust the current government.
As we know, Quebec is the second largest producer of softwood lumber in Canada, with 25.5% of the total production. In Quebec, some 40,000 jobs are related to this industry. The softwood lumber industry injects over $4 billion a year into the Quebec economy. This shows the importance of that industry in our province.
Add the fact that 250 municipalities in Quebec depend for their livelihood on the lumber processing industry, which provides all the manufacturing jobs in 135 towns or villages in Quebec. These towns and villages are at risk because of the attitude of the Americans. I point out that we have a free trade agreement with the United States, which was signed under the Mulroney government and must be honoured.
We in the Bloc Quebecois have defended this from the outset. We demand the full return of free trade. We want the Americans to honour their signature and to stop harassing us and our industry, our towns and our cities. We want this government to stop its palaver and two bit statements and get on with it.
On October 31, the 12.5% anti-dumping duties were added to the countervailing duties of 19.3% imposed last spring. Something vigorous must be done quickly. We also think it is time for a meeting of all stakeholders to examine Canada's strategy in the matter.
We are not satisfied and we are not alone. We also want the government to implement measures to come to the assistance of the considerable number of workers who have lost or will lose their jobs. By way of example, we propose the implementation of the unanimous recommendations of the Standing Committee on Human Resources Development on employment insurance.
We also ask that the Prime Minister intervene vigorously with the American president to get the anti-dumping and countervailing duties suspended until such time as the WTO has reached a decision in the matter Canada brought before it.
We want the Government of Canada to undertake a vigorous advertising campaign in the States so Americans will understand the consequences of their government's protectionist attitude, especially the fact that American consumers are bearing the brunt of the dispute.
Grant McNally Dewdney—Alouette, BC
Mr. Speaker, I want to begin my intervention tonight by asking the government 10 questions on softwood lumber.
First, why has the Prime Minister and the Minister for International Trade allowed the softwood lumber trade crisis with the United States to drag on so long without taking serious steps to bring a resolution to this problem quickly?
Second, 345 people have lost their jobs in my riding. In British Columbia 1,600 people have lost their jobs. A total of 30,000 Canadians have lost their jobs due to the softwood lumber crisis. Does the Prime Minister not realize this is a local, regional and national issue which demands immediate action?
Third, the Prime Minister says he talks to President Bush every two or three weeks and perhaps speaks to him at occasional photo ops at international meetings. Does he not realize this is not working and he is not getting the job done?
Fourth, why does the Prime Minister refuse every solution offered by the coalition and opposition members, such as stakeholder meetings, appointment of a special envoy or immediate high level meetings on the softwood lumber trade dispute with the United States?
Fifth, the government acted quickly on a Brazilian ban on Canadian beef, on split-run magazines and on Bombardier aircraft conflicts, yet has still not solved the softwood lumber trade dispute with the United States after six months. Why does the Prime Minister not simply get on board his Challenger jet and get this issue solved with President Bush now?
Sixth, the Prime Minister has raised the spectre of linkage, of providing energy to the United States with the ongoing softwood lumber trade dispute, on two separate occasions and most recently in this place a few days ago. Why does the Prime Minister talk tough here and potentially threaten our energy industry, while accomplishing absolutely nothing on obtaining a settlement with the softwood lumber trade dispute?
Seventh, the Prime Minister and trade minister knew the softwood lumber deal would expire during the five year life of the deal, yet have demonstrated an inability to prepare any contingency plan to solve the problem the day after the deal expired at the end of March. Why was the Liberal government so woefully ill-prepared to anticipate this potential outcome on softwood lumber?
Eighth, the Minister for International Trade and Prime Minister have failed in their responsibility to save Canadian jobs in the softwood lumber trade dispute with the United States. Why should Canadians trust the government to solve any major problem adequately on any issue, given its disastrous handling of the softwood lumber trade dispute?
Ninth, given the fact that the softwood lumber dispute has affected so many jobs across the country, does the Prime Minister or the Minister of Finance have a contingency plan for dealing with the devastating consequences of secondary industry loss and related business losses and the economic impact these losses will have on local economies and the entire national economy?
Tenth, the lumber industry is the number one industry in Canada, accounting for billions of dollars in exports and thousands of jobs for Canadians. How can the Prime Minister possibly defend the “don't worry, everything will be fine” approach to the softwood lumber crisis, while Canadian families move to the ranks of the unemployed and will now be unable to provide for the basic needs of their families?
Those are very important questions. I am waiting for some answers from the government on those important questions.
I would now like to turn my attention to the local impact that this trade crisis is having on people within my own community.
Last Friday two mills were closed down in the major city of Maple Ridge, the biggest town in my riding of Dewdney--Alouette. That has put 345 people out of jobs. This will have a devastating effect, not only for the families and individuals who were employed in those mills, but for the entire local economy.
These job losses occurred because of the economic need of International Forest Products to close these mills because of the devastating impact of the over 30% countervail duty on their products.
The Albion cedar mill and the Hammond cedar mill employed many people with high paying jobs. The Hammond cedar mill was Maple Ridge's largest private employer. It operated under the first countervail of 19.3% levied back in August, but the new 12.6% levy was the final nail in the coffin, so to speak.
Its vice-president, Mr. Jack Draper, said “We cannot do business. It is impossible”. One of the employees, a Mr. Bill Westmacott, said:
For some it's going to be very difficult because their skill set is as a mill worker. This mill has worked throughout thick and thin. It's been tough through everything. Most guys have been lulled into the feeling that it would be here forever. People are still hopeful it won't be that long. But as far as I'm concerned, the federal government is sleeping at the wheel. It's typical. The west is suffering because of the indifference of Ottawa.
These local mills add $500,000 to the local tax base in municipal taxes, which has a spinoff effect in the local economy of Maple Ridge, Pitt Meadows and surrounding areas.
The IWA local union president has also expressed his concern that the Americans are simply waiting to pick off our raw log exports and mill them in the United States. We hope that is not the case. Unless the government gets on its feet to solve the problem there will be a devastating impact not only on the union president, the jobs and the individuals he represents but on many other people in my riding.
If one travels along the Lougheed highway which runs parallel to the Fraser River, one sees many mills throughout the communities of Maple Ridge, Pitt Meadows, Albion, Whonock, Ruskin and many others. This very important issue must be dealt with and the government is simply not responding in an appropriate way to solve the problem immediately.
I want to read into the record some of the previous interventions I have made on behalf of my constituents on this issue. On at least four or five occasions I have asked questions on this issue in the House previous to this date.
I have written to the Minister for International Trade on behalf of my constituents. I am afraid that it has become a bit prophetic. I wish that had not been in the case. In my letter dated August 16 I wrote:
The recent ruling by the U.S. Commerce Department to impose a 19.3% countervailing duty on Canadian softwood exports will have a devastating effect on local companies operating in my riding of Dewdney--Alouette.
The forest industry accounts for hundreds of jobs and millions of dollars in our local economy. It is predicted that the countervailing duty will cause almost immediate mill closures and layoffs in this sector. Needless to say, my constituents who may be out of work as a result of this countervailing duty need to see decisive action from the Government of Canada, and they need to see it now.
I have read media reports that indicate the Government of Canada is continuing to argue Canada's case, and intends to appeal the decision of the U.S. Commerce Department in the U.S. courts. While these are necessary actions, they could take months or even years before they are successful. In the meantime, thousands of jobs could be lost, and hundreds of mills shut down. This could cost Canadian producers billions of dollars.
The people in the forest industry need an immediate solution and they need to see their government fighting for their interests in an unprecedented way. It is my belief that the resolution of this trade dispute must become the Government of Canada's number one priority.
I look forward to receiving a response at your earliest convenience.
I am waiting for an answer. People in my riding certainly are waiting for an answer from the government on this very important issue so that they might have a solution to a problem that is affecting them to such a huge degree. I want to talk a bit about what is happening in the United States.
These countervailing duties do not just happen on softwood lumber. They also happen in other areas of commerce. However, these duties are now affecting our softwood lumber.
What happens is that the U.S. industry lobbies the U.S. commerce department to impose a duty on Canadian products. In the case of softwood lumber, the U.S. commerce department has complied with the request. Basically, it is what we might call back door protectionism.
Canada has a very important free trade agreement with the United States that allows it free access to American markets in this industry. However, with the Americans' approach to the U.S. commerce department's countervailing plan, it works at cross purposes. It not only hurts Canadian jobs and the Canadian industry, it also hurts American consumers who have to pay a higher price for their product, even if it is from Canadian producers who are able to withstand the burden of the high tariffs and still get their product to market in the United States while receiving this blow to the head duty on their product.
It would make sense to get this issue solved quickly for the survival of our forest industry which is so vitally important in British Columbia and across the country, as other members from other regions have said. It also has a huge impact in other areas.
The softwood lumber issue cuts to the heart of many. Some of us have been in this place for years now while the softwood lumber agreement was in place. We talked to the government about having a contingency plan for when the softwood lumber agreement expired. The response was inappropriate. It responded by saying that we would have free trade. We would have hoped for that but to not have a contingency plan in its hip pocket, when it had already been through similar trade disputes in the past where the Americans slapped on countervailing duties, was woefully inappropriate and showed a lack of foresight and a lack of vision on the government's part not to have anticipated this dispute.
Because the government did not anticipate this dispute and did not have a plan in its hip pocket to deal with this countervailing issue, thousands of people are losing their jobs. What are we to say to them? Do we tell them not to worry because we will take care of them? How can we ask people to trust the group that put the deal in place and allowed it to go on for five years without having a plan to combat a countervail at the end of that plan to solve the problem? It is a bit like Lucy pulling the football away from Charlie Brown. The football is there, Charlie Brown goes to kick it, Lucy pulls it out and Charlie keeps coming back to kick the ball every time.
In many ways the government is like Lucy holding the ball and asking Canadians to come and kick the ball. Eventually they are going to stop believing the ball will be there to kick because they have seen the way in which this government has handled this issue and many others, which simply demonstrates how woefully unprepared it is to do so. There is absolutely no excuse for that.
It is very frustrating when members of the House come to this place with solutions about how to anticipate these problems and they are rejected out of hand.
They are not only rejected out of hand but no alternative solutions are being proposed by the government. We even heard the Parliamentary Secretary to the Minister for International Trade refer to those who are concerned about this issue as nervous Nellies. He has apologized somewhat for that comment, and I commend him for that, but it sends the wrong message. It sends the message that the government is out of touch with the impact this trade dispute is having on real people, on their lives, on local economies and on our national economy at a time when we are already in a downturn due to the change in economic climate, as well as the events of September 11. By adding this trade dispute on top of everything else is a disastrous recipe and there is no concrete response coming from the government.
In the last few days my party and other parties have raised this issue in question period. At the most, we get 35 second non-answers or flippant responses. There was joking in the House today on the government members' side when this issue was brought forward rather than a concrete plan or set of concrete actions that could be put in place. We have asked the Prime Minister to initiate high level discussions, working with the president of the United States, to come to a resolution of this problem immediately. We are past the stage of simply waiting for an answer. There is too much at stake.
Speaking of local economies, some constituents from the travel agency business sector came to my riding office last week. They are facing the impact of the downturn in the economy, particularly the events of September 11. Their commissions have been cut because of their inability to sell tickets and they have had to lay people off. That is another sector of the economy that has been affected by the events of September 11 and the downturn in the economy. Close to 400 jobs have been lost.
I bet there will be very few people, after losing their jobs, who will be looking for a flight to visit a family member in some other part of the country or are able to afford to take a holiday with their families. It is affecting local business. It is affecting Ernie Day and his colleagues who run a travel agency in Maple Ridge. They have asked that the government be responsive to the issue, which is why I have mentioned it in this debate. The government does not have a response or a comprehensive set of ideas, solutions or suggestions on how to handle the impact of not only the events of September 11 but this particular issue of softwood lumber.
I wrote another letter to the Minister for International Trade on the issue of the shake and shingle industry which has also been lumped into the trade dispute when it should not be. I am awaiting a response from the minister on that issue too.
There is a proposal in the U.S. congress called the softwood lumber fair competition act that has been referred to the committee on ways and means. It is a way to include the shake and shingle producers in the same softwood lumber issue. It is having a potential effect on that sector of the lumber industry when it should not be. It is again another example of the Americans' protectionist stance when they claim to be free traders.
In closing I simply want to encourage the government one more time to take some concrete actions in this place today. I am urging the Prime Minister to go to Washington for some high level meetings with President Bush because this is the most important industry in terms of dollars that we have in Canada. If we do not show the people of our nation that we are willing to commit with our actions to the words we say we believe in, then our words are not worth much. We need to get this solved and we need to get it solved now.
Reed Elley Nanaimo—Cowichan, BC
Mr. Speaker, I will be splitting my time with the hon. member for Calgary Southeast. It is an honour to speak on behalf of the citizens of Nanaimo--Cowichan who are so deeply affected by the softwood lumber dispute. Unfortunately the very slow reaction of the government has caused and continues to cause many businesses and entire communities in my riding incredible harm.
It is another sad day in the country when we must describe in detail the glaring errors, the lack of intestinal fortitude, and the inability of the minister and the government to resolve the softwood lumber issue with the United States.
The government should not be surprised by the current softwood lumber debate. For over two years the official opposition has been telling it in very clear terms of the need to resolve this issue on a long term basis.
Since I was first elected in 1997 I have put out 11 press releases and asked many questions in the House regarding softwood lumber and the government's inaction on the file. I have heard from and spoken with countless employees in the timber industry, toured numerous logging sites, and met with union officials, mill management and owners and private landowners on numerous occasions.
This is certainly a diverse group of stakeholders by any definition. All the stakeholders would rarely agree on the issues and the potential solutions, but let me tell every member of the House that they all agreed the government had failed to resolve the issue surrounding softwood lumber. They agreed that solutions must be found and should have been found long ago.
The Minister for International Trade held meetings today with Marc Racicot from the United States. Yesterday he said that he would be giving Mr. Racicot an earful about how every decision made in Washington has been punitive and injurious to our industry. He said that would be loud and clear.
I am sure my colleagues would be very interested in knowing Mr. Racicot's reaction to this earful. Did he say that the minister was absolutely correct and that he would cease all these unfair trade practices immediately? Did he admit that the Americans lost all past attempts to show that Canada practises dumping with regard to softwood lumber? Did he qualify himself as acting largely on behalf of a powerful lumber industry from the American southeast?
Canadians and in particular British Columbians would be interested in hearing the minister's comments on the matter. If the minister followed through with his commitments of yesterday then I would be the first to applaud him. However it is unfortunate that to date he has not taken a strong stand in defending Canadian interests. He has known for many years that the softwood lumber agreement would be expiring.
If the minister wants to play in the big league with the Americans he had best be prepared to play hardball. Playing hardball means standing and putting the interests of Canadians first.
The Prime Minister mused recently about linking the energy sector to softwood lumber. The official opposition has been advocating this for a long time. I am pleased that the Prime Minister is finally following our lead on this matter.
Members will recall the shortage of electricity last summer in California and its rolling blackouts and the need for oil and gas to heat homes in Chicago last year. Now is the time to play hardball.
It is inconceivable that the government could leave so many Canadians unprotected, and yet here we are. The government is quick to offer support on many other issues but on this issue it has been slow, protracted and untenable. The lack of action is completely unacceptable, particularly for the people of British Columbia.
Many members of the House, and certainly the Minister for International Trade and the Prime Minister, do not have any concept of the devastation that the lack of a softwood lumber agreement is having in British Columbia. Yesterday the IWA told my office that there are at least 16,000 forestry workers on temporary or long term layoff across British Columbia.
Today I spoke with the vice-president of Norske Skog, a pulp and paper mill which is an important employer in my riding employing about 1,200 people. He told me that it will be shutting down four pulp and paper mills temporarily on Vancouver Island and the Sunshine Coast, laying off approximately 5,000 employees.
There are four mills temporarily closed in my riding alone, one of them permanently. The remaining four lumber mills are down to one shift. Now we hear about this pulp and paper mill that will be laying off another 1,200 workers, bringing the total to around 4,000 people in my riding who are directly affected by layoff and the problems with the softwood lumber agreement.
This is absolutely devastating in my riding of Nanaimo--Cowichan, all across British Columbia and in many areas across Canada. The ramifications of the government's inaction on this file are immense. As a stone thrown into a pool of water sends ripples in all directions, the economic and social effects of the government's failures are far reaching.
The obvious first impact is on employees. According to current numbers approximately 20,000 British Columbians are at least temporarily unemployed. Many have no hope of returning to work unless significant strides are made to ensure free trade for softwood lumber. Some 20,000 men and women are not bringing home a paycheque. Some 20,000 families cannot meet their mortgage payments or put food on the table. I wonder if the minister would like to send a message to those people explaining his inaction on this file.
The mills and companies are obviously greatly affected by the closures. The companies involved range from single mill owners to large multinational corporations. Each has different resources to draw on, some small and some large. Either way they will have less profit and will be paying less in municipal, provincial and federal taxes. Norske Skog, for instance, supplies approximately 76% of the tax base to one municipality in my riding.
The next set of economic ripples extends to the communities. As the paycheques dry up so do the purchases. I have heard reports from my riding that there has been a major slowdown in everything from car sales to appliances and a general downturn in sales of virtually every other commodity.
The economic effects caused by the softwood lumber tariff are almost unimaginable. When a town is based singly or largely on one industry anything that upsets the industry has an immediate effect on the economic well-being of the town. One need only point to small towns such as Youbou or Gold River to see the repercussions. Both these towns are facing a rather grim future.
Perhaps the most deeply disturbing effect of these economic sanctions is their impact on families. As the financial strains literally hit home many families cannot endure the pressure. The inevitable end result is some form of breakdown within families. This simply is not acceptable.
There is an additional aspect to the issue that has not been spoken of in the House, at least not for a long time. American companies are buying our raw logs, shipping them south to their own mills and cutting the timber there. This amounts to nothing less than the export of jobs.
This has had a direct effect on my riding. I have spoken with forestry workers who have watched as truck after truck of raw logs has been driven past the mill they used to work at, a mill which is now closed, and has disappeared across the American border.
This is fundamentally wrong. To export raw logs at the expense of our timber industry is wrong. To export jobs to the United States is wrong.
On August 27 in the midst of this dispute with the United States I recommended we place a 19.3% tariff on the export of raw logs. If the Americans want to buy our timber let them pay a premium to do so. This is an issue we will have to deal with in the future but it is all part of the huge problem we are having now.
Yesterday during question period I invited the Minister for International Trade and his parliamentary secretary to join me in my riding to see firsthand the effect of the softwood lumber problem. I was and remain very serious about this. Yesterday afternoon I formally invited them to join me in Nanaimo--Cowichan. I trust I can look forward to a positive response from them and will be able to take them to see firsthand the devastating effects of the softwood lumber problem in my riding.
My time is drawing to a close, the hour is getting late and the Speaker wants to go home as much as I do. I will close quickly.
I strongly urge the government to make softwood lumber a high priority. The Prime Minister needs to be involved at the highest level, clearly and concisely expressing the will of the Canadian people to the president of the United States. This must be done quickly and with finality.
Jim Abbott Kootenay—Columbia, BC
Mr. Speaker, the U.S. department of commerce has been ruthlessly misled by a small and influential group of U.S. landowners who refuse to compete in a free marketplace. ILMA president Gary Crooks said it is like having a fist fight with the wind. It is a deliberate set up to protect special interests. It is pure and simple political manoeuvring that flies in the face of free trade agreements intended to provide benefits to consumers.
Let us remember it is home builders and buyers in the U.S. who will see their house prices skyrocket while our skilled and dedicated workers are forced to sit on their hands.
Every business in my constituency that uses wood in its product, whether or not it directly manufactures dimension lumber or boards, is being unfairly targeted. There is a large industrial manufacturer in Golden with 400 employees. Its product is not subject to CVD or anti-dumping duties but it trades logs with companies that are subject to the U.S. tariffs.
Our forests are not one uniform species or grade. The 400 workers in Golden trade fir, balsam and spruce and utilize specific grades of wood. The corresponding lumber mills use other species and grades. Each company must have an outlet for species and grades they cannot use. If the lumber operations are shut down where would the industrial wood fibre come from?
Companies in my constituency from Revelstoke to Wynndel and Erickson to Galloway are all faced with the necessity of making irrational choices. If they lay off their skilled workers, will their employees stay in the business or look for employment outside the lumber industry? If they shut down, will it be for weeks, months or years? What happens if the tariffs are not retroactive? What happens if they are? What will their U.S. customers do? Will they wait or turn to lumber from former Soviet satellite countries?
This punitive and punishing penalty is not just an economic issue. It is an environmental tragedy looking for a place to happen.
British Columbia has an enviable environmental record. In the past 10 years we led the way. Our commercial forestry practices are models of sustainable development. Our commercial forests are growing. That is not a play on words. We are adding to the commercial forests by planting twice as many trees as we are harvesting.
What about the forests of the former East Bloc? First, they are boreal. Their basic wood source is from a fragile base. Second, their forest stripping practices are similar to irresponsible strip mining and are referred to as rape and run in the lumber business. Forcing U.S. home builders to access large volumes of lumber from the former east bloc is to explode an environmental bomb that will have future global implications.
Let us look at what it means environmentally in Canada. Business after business in my constituency has responded to the challenge and opportunity by turning to trim ends, waste wood and low grade lumber. My constituency has proudly built remanufacturing, finger jointing and finishing businesses that not only employ more people with the same amount of logging but upgrade low value wood fibre.
British Columbia is growing nice new forest at twice the rate at which it is harvested. We use every part of the tree. With cogeneration we clean up after ourselves while substantially reducing consumption of non-renewable fuel sources. However the punishing penalties inflicted on Canadians by narrow private interests in the U.S. have all but stopped this responsible use of low grade or waste fibre.
Where punitive tariffs were assessed against the input costs of these remanufacturing operations they are now assessed against the finished product. Given the high labour costs and tight margins of the process a 30% mark up would price the finished product out of the market.
I am aware of the value that is added by prime coating and painting boards. Can members guess what? After businesses invested in buildings, equipment, production line and employee training they were forced to curtail their volumes due to the countervailing duties.
What about having to turn perfectly good wood into chips for pulp? If companies cannot sell utility or number three grade wood what else can they do with it? Let us remember they cannot upgrade the product, so what options do they have? Is permanent storage an option?
The major employer in my constituency is Tembec. Along with the other forest companies it accounts for 25% of the wealth created in Kootenay--Columbia. Here is how it is affected.
Tembec is one of six Canadian companies singled out by the U.S. It has to produce not thousands, but tens of thousands of invoices to the U.S. It is forced to reveal every detail of its business proving the average cost of every board that they sell. The U.S. then discards every invoice where the selling price exceeds the production cost. The invoices with the lower grade wood under the average production cost are retained and the anti-dumping levy is assessed on them.
Let me explain it this way. If the average cost of every car produced by General Motors was $20,000, the $70,000 Cadillac or the $30,000 Buick invoices would be ignored. Under this zeroing principle the small compact cars would attract anti-dumping levies. The $14,000 Sprint could not be produced or sold. Even that example is flawed. GM has a choice about whether it wants to produce a low cost vehicle.
To use a cow as another example, T-bone steaks are $10.00 per pound and soup bones are worth $1. If the average cost is $3, forget brisket, soup bones and chuck steak. Under this bogus U.S. system we would have to take them to the dump.
Low grade wood comes in the package known as a tree and the company has to do something with it. What about responsible forest practices? Loggers work to a prescription set by government professional foresters. How will they use a low grade wood that is part of the natural forest? Chips for pulp come from wood production where fibre cannot be recovered. That is good. However conversion of lumber to chips is an irresponsible use of fibre, yet what are the company's choices other than to chip low grade wood?
For Tembec it gets even more bizarre. The U.S. will not allow Tembec to sell any product in the American market under their Canadian selling price. However, because the U.S. has imposed their countervailing duty and anti-dumping tariff, the Canadian market has discounted the lumber sales to reflect the 30% penalty. In a low market like today Tembec could only dream of a 30% profit margin.
The U.S. constructs a cost by adding 18% to Tembec's actual average cost. The so-called dumping penalty is levied on the difference between the sale price in the U.S. and the fabricated constructed costs. Now as complicated as the U.S. has made this, the issue is simple.
Kootenay--Columbia residents are being held as economic hostages. They are highly skilled, industrious, dedicated and hard-working people. Narrow U.S. economic interests treat companies with solid business ethics and responsible environmental practices with disrespect.
U.S. home builders and buyers are paying a higher price for an inferior product from the eastern bloc. The world shudders at the environmental practices carried out in the eastern bloc. If only the Liberals had taken this issue seriously two years ago, they could have taken this message to the U.S. to get the U.S. consumer on side.
Over the last two year period specifically, we have been pushing for the trade minister and the Prime Minister to get to the U.S. consumer. It is only the U.S. consumer interest, understanding the perspective of that country, that would be able to stop this group of small anti-trade very closely held landowners from being able to inflict this kind of damage on my constituency, on our country and on the consumer of the U.S.
There is however one small light in the tunnel. President George W. Bush has assigned former Montana governor, Marc Racicot to work as his envoy in the softwood dispute. The governor has the attention of President Bush and is a personal friend of the president. It is an indication that Bush wants this issue resolved.
I had a minor working relationship with Governor Racicot on the shared interest of Lake Koocanusa that backs into Kootenay--Columbia behind the Libby Dam in Montana. His office was communicative, co-operative and was run with intelligence. In the meetings I had with the governor, I judged him to be the source of his office's intelligence. I believe he understands the issues because he takes time to listen.
We must find a resolution to this never ending Canada-U.S. irritant. We can only hope that the Canadian government finally has the matter on the front burner. My constituents deserve nothing less than the full time attention of the Prime Minister to resolve this issue now.
November 6th, 2001 / 10:50 p.m.
Stéphan Tremblay Lac-Saint-Jean—Saguenay, QC
Mr. Speaker, I wish to dedicate this speech to all the workers in the lumber industry, in the Scierie Martel, the Scierie Tremblay, the Scierie Lac-Saint-Jean, the Scierie Lachance and many, many other companies. In short, my thoughts are with those who will be affected by the present litigation, because litigation is what it is.
It will be remembered that when the agreement expired early last April, the American industry filed complaints against the Canadian industry, accusing it of receiving subsidies and dumping—yes, dumping—its product on the U.S. market. The U.S. department of commerce handed down a preliminary ruling in early August. It concluded that the industry was receiving subsidies and accordingly imposed temporary duties of 19.31%.
The October 31 ruling and the preliminary anti-dumping ruling by the department of commerce imposed a duty of 12.58%.
Since I have dedicated this speech to the workers in my riding, it would perhaps be appropriate for me to explain to them and to the public, because it is now almost 11 p.m., what countervailing duties and anti-dumping duties are.
A countervailing duty is a special duty imposed by a country to protect its domestic industry from the negative impact of imports which have received subsidies. In this case, the American government is saying that the Canadian government subsidizes its softwood lumber industry.
It must be remembered that basically, economic rules require that companies engaged in international trade must not be subsidized. If one of the companies engaged in international trade is subsidized by its government, and another company in another country is not, it can say that trading with this company is unfair because it is subsidized.
This is where there is an imbalance with respect to international trade. It is in this connection—I remind the workers who are the victims in this dispute—that the Americans have said to Quebec producers “Your stumpage, the cost of development and many other factors make it extremely advantageous for the Canadian industry to export softwood lumber compared to the American softwood lumber industry”.
That, Mr. Speaker, is the softwood lumber issue in a nutshell.In fact, I address my remarks to the Chair but, at this hour, I feel much more like I am speaking to the citizens affected by this dispute, to workers in the forestry industry.
This happened a few months ago. We will recall that, a few weeks ago now, another duty, an anti-dumping duty that is quite high, 12.5%, was imposed.
What is the anti-dumping duty? Dumping is selling goods on a foreign market at a price that is lower than the price asked for selling similar products on the domestic market or at a price that is lower than the cost of production.
The accusation made by the U.S. government is that, to enter the U.S. market, the Canadian softwood lumber industry is trying to reduce its prices to the maximum to be more competitive. To arrive at this anti-dumping duty, the U.S. government studied certain Canadian companies, including Abitibi Consol and Tembec. According to some assessment grids, it considered that it should impose a duty of 13.6% to 10.7% respectively and that by averaging these, it would arrive at 13%.
All this to say that, when a company, for example, from L'Ascension in my riding carries a two by four and sells it to the United States, if this product cost $10, the company must leave $3 at the U.S. border.
One will understand that after spending thousands or even millions of dollars this amount of money is extremely difficult to absorb for Canadian companies. I say extremely difficult because last weekend I called the forestry companies and sawmills in my riding to know what the impact was. The answer is, in the main, that the impact will be major and devastating. The profitability margin has become so small that companies have to lay people off, and this has a direct impact.
When a company lays off an employee who earns very good wages, it is the whole economy of my riding and, of course, of many regions throughout Canada that is affected. I believe this is why we must absolutely respond to this situation.
In view of this American position, the Bloc Quebecois thinks the time has come to hold a meeting of all stakeholders to take stock of the Canadian strategy on this issue. It is time for a meeting of all lumber producers, for greater dialogue, and for the development of a strategy to be able not to negotiate, but to hold talks with the Americans and help them understand our position. Everybody will agree that the Americans are great free traders, but only when it suits them. In the present situation, it seems it does not suit them. They decide overnight to break all the rules of free trade. This is unacceptable.
In the U.S. congress, some divisions are apparent. On one side, we have the American industry accusing Canada of subsidizing its industry and calling for a more stringent agreement. On the other, we have consumers and other American users of lumber, like Home Depot, which is well known here, suggesting that the Canadian industry is not subsidized and that free trade is in order.
The U.S. government should realize that, as a matter of fact, the Canadian lumber industry is not subsidized. In this context, we would like the international trade minister to discuss these issues with his American counterpart.
Of course, some things are harder to control, given that we do not exactly have any power over American policies. However, there are some policies that the Government of Canada can control, entirely. I am referring to measures that could be used with employment insurance.
Given that we are dealing with a crisis, many workers are going to be affected. In my opinion the Minister of Human Resources Development, who is sitting on a huge surplus from the employment insurance fun, should react quickly by relaxing the requirements for employment insurance so that workers who are affected by this thoughtless American act could be compensated with social security measures such as employment insurance.
The minister must make employment insurance more accessible to the forestry workers who are being so heavily hit. We are therefore asking her to broaden the eligibility requirements for employment insurance and extend its benefit period. The time has come to implement these measures.
Unfortunately that is all of the time that I have. I am going to have to ask my colleague from Verchères—Les-Patriotes to finish the speech for me. I sincerely hope that the Canadian government will be able to discuss this issue in a firm and unswerving manner with the U.S. government.