Mr. Speaker, the current dispute on the softwood lumber has existed for nearly 20 years and is clearly the most important trade issue between Canada and the United States. It is commonly known as “lumber dispute four”.
The issue centred on what is called stumpage fees, the amount charged by the Canadian government to lumber companies to harvest timber from public land. The U.S. lumber industry claimed that the stumpage fees were too low, thereby amounting to unfair trade subsidies.
In 2001 the U.S. government responded by imposing duties on Canadian softwood lumber entering that country. To date these duties, illegally collected from our forestry sector, have amounted to over $5.4 billion. The Washington-based Coalition for Fair Lumber Imports further claimed that Canadian firms were dumping product into markets at less than fair value.
Until the Conservatives came to power, the Government of Canada consistently and continually defended our forestry management regime, denying that it was subsidizing the lumber industry or that softwood lumber was being dumped into the U.S. The issues have been litigated seven different times through the U.S. courts and NAFTA and WTO trade panels, and Canada has won all seven decisions.
These decisions favourable to Canada mean that we are not guilty of subsidizing, we are not harming the U.S. industry and we are not dumping.
Let us think back to the January 2006 election campaign and the Conservative promise to demand that the U.S. government play by the rules on softwood lumber, repeal the Byrd amendment and return more than $5 billion in illegal softwood lumber tariffs to Canadian producers.
Let us move forward a mere three months to April 2006, when the Prime Minister announced, with great fanfare, that he reached an agreement on the softwood lumber issue. Although the details were missing, it was readily apparent that the Conservatives had broken their campaign promise to the lumber producers and to Canadians.
With the proposed agreement, the Conservative government has abandoned the Canadian position and has thrown away all the precedent-setting decisions favourable to Canada. This will negatively impact future disputes on the softwood industry when we become engaged in “lumber dispute five”, which I have no doubt will come in the not too distant future.
The implications reach beyond the softwood lumber trade, to all trade sectors with the U.S.
The credibility and integrity of this dispute resolution process of NAFTA and the series of rulings based on trade provisions have effectively been washed away. The dispute settlement chapter of NAFTA, chapter 19, just went out the window. So much for the rule of law, so much for justice and so much for fair play, let alone free trade.
The Conservatives should hang their heads in shame for this sellout. Not only has the Conservative government acquiesced into a settlement adverse to our forest industry, it has undercut Canada's rule-based trading relationship with the U.S. which will now encourage other U.S. sectors to ignore trade rules and, instead, seek political decisions in their favour, which will lead to more trade uncertainty. And for what? For 24 months of trade peace on the softwood industry; two short years.
The members opposite have chortled that it is a seven year agreement, with an option for two more years. However, the devil is in the details. They want Canadians to overlook the escape clause that allows either party to get out after 24 months. There is a stipulation that no retaliatory action can take place for one further year after this, but does this Conservative government really think that a government or a forestry industry, which refuses to respect the decisions in seven separate trade disputes, will respect these provisions? It is not likely.
Twenty-four months; two years. Members can be the judge. No, the Canadian people will be the judge in the next election.
What about the $5.4 billion of illegal tariffs that have been collected from our lumber companies? One billion dollars, or nearly 18% of these illegal tariffs, will be left on the U.S. table instead of being returned to the rightful owners in the Canadian forestry industry.
The ultimate insult is that $500 million of this will go to the coalition for U.S. lumber imports, the very organization that has led the charge against our softwood industries, the very lobby group that started this trade war. It is a sweet deal for it. Effectively, we reimburse it for its legal fees and expenses, even though it has consistently lost the decisions, and we also provide the coalition with a slush fund for future legal and political attacks to fight “softwood lumber five”. It is a sweet deal, indeed.
Canadians are a generous and accommodating people, but this is simply ludicrous. This is simply incomprehensible.
A further sum of $450 million will go, not to the U.S. treasury, but to the U.S. administration for yet unnamed meritorious initiatives.
What does this mean? I heard one trade lawyer at committee speculate that it will go to buildings and bridges and other goodies offered in a U.S. election year. Is that preposterous? Perhaps not. I will tell members what it is. It is simply ludicrous and incomprehensible. Canada should not be interfering in U.S. elections.
The whole issue confirms that the U.S. is a trade bully. It is prepared to play by the rules only when it feels like it and when it is to its advantage.
However, there is another bully in this game: the Conservative government and its Prime Minister. Members opposite will say that the majority of the forestry industry has agreed to this agreement, so why all the fuss? The reality is that no one in the forestry industry claims that this is good deal but the industry is on the ropes. Keeping in mind flagging lumber prices, a rising dollar and soaring energy costs, in addition to five years of illegal duties, which realistically represents their profits, they cannot afford to fight any longer. An 80% dollar is better than bankruptcy in anyone's eyes.
We also must keep in mind the Prime Minister's ultimatum to accept the deal or the reluctant lumber companies will be on their own in any subsequent legal battles. By the way, the government is withdrawing the loan guarantees provided by the previous Liberal government, loan guarantees that would have kept our lumber companies afloat financially while they reclaim 100% of their money through the legal process.
The lumber industry has been subjected to tremendous pressures, with ministers phoning large companies and MPs phoning small mills with a consistent and blunt message: “take it or leave it, take it or else”.
If this were not enough, the Conservative bullies have imposed a 19% levy on all refunded duties deposited on any holdout company. When faced with such punishment from their own government, it is no wonder the majority of the forestry industries are prepared to sign on to this agreement. They have no choice but to give in to such objectionable tactics.
Where do we go from here? As I understand it, the illegal 10.8% combined anti-dumping and countervailing duties levelled by the U.S. will be replaced at current price levels by a 15% Canadian export tax. Can anyone believe that? The export tax is higher than the current U.S. duties under today's market prices. The system is designed to protect U.S. producers from Canadian lumber exports at times of low market prices, when American mills are least able to compete.
Are members baffled by the Conservatives' squeals of delight that this is a great deal for Canada? I am and so are Canadians.
The deal would also cap Canadian exports at 34% of the U.S. lumber market. Our producers now have a quota when there was none before. This will effectively prevent any Canadian growth in the U.S. market. Our very efficient Canadian sawmills that have kept up with technological improvements cannot reap the reward of being on top of their game. So much for free trade.
The Conservative softwood lumber deal will have a negative impact on industry, which will also impact some of the over 55,000 workers in that industry, as well as the resource based communities in which they live. Who will stand up for the nation's forestry workers and these communities?
There is much to criticize in the proposed softwood lumber agreement. The Liberal Party's role is also to offer alternatives.
Our commitment to the softwood lumber industry in a supplementary aid package would have included: $200 million over two years to enhance the forestry industry's competitive position, improving its environmental performance and taking advantage of the growing bioeconomy; $40 million over two years to improve the overall performance of the national forest innovation system; $30 million over two years to improve the competitiveness of the workforce to promote upgrading of workplace skills and to provide assistance to older workers impacted by forest industry layoffs; $100 million over two years to support economic diversification and capacity-building in communities affected by job losses in the forestry industry; $30 million over two years to develop new markets for Canadian wood products; and $200 million over two years to fight the spread of the pine beetle in B.C. forests.
Notwithstanding strong concerns from the softwood lumber industry, provincial governments, forestry sector workers and resource based communities, the government has rushed into this agreement solely for its own political interests and not for the interests of those adversely impacted by this agreement.
This is why I will be supporting the amendment put forward by the member for Beauséjour to eliminate the punitive tax measure imposed by the bill, as well as the subamendment proposed by the member for Burnaby—New Westminster.