Bill C-24 (Historical)

Softwood Lumber Products Export Charge Act, 2006

An Act to impose a charge on the export of certain softwood lumber products to the United States and a charge on refunds of certain duty deposits paid to the United States, to authorize certain payments, to amend the Export and Import Permits Act and to amend other Acts as a consequence

The purpose of this enactment is to implement some of Canada’s obligations under the Softwood Lumber Agreement between the Government of Canada and the Government of the United States, by imposing a charge on exports of certain softwood lumber products to the United States and on refunds of certain duty deposits paid to the United States and by amending certain Acts, including the Export and Import Permits Act. The charge on exports will take effect on October 12, 2006 and will be payable by exporters of softwood lumber products. The enactment also authorizes certain payments to be made.

Softwood Lumber Products Export Charge Act, 2006

[The Acting Speaker, Royal Galipeau]

It is unfortunate that I must interrupt the hon. member but the time allotted for government orders has now expired. When we next return to the debate on Bill C-24 there will be four minutes left for the member.

The House resumed consideration of the motion that Bill C-24, An Act to impose a charge on the export of certain softwood lumber products to the United States and a charge on refunds of certain duty deposits paid to the United States, to authorize certain payments, to amend the Export and Import Permits Act and to amend other Acts as a consequence, be read the second time and referred to a committee, of the amendment and of the amendment to the amendment.

[The Speaker, Peter Milliken]

When the debate was interrupted, the hon. member for Brant had the floor. I understand there are four minutes remaining in the time allotted for his remarks. I therefore call on the hon. member for Brant.

[Lloyd St. Amand, Liberal, Brant, ON]

Mr. Speaker, I was referring to various components of the Liberal Party supplementary aid package for the industry, and I listed three of those components.

Fourth, we propose the provision of $200 million over two years to fight the spread of the pine needle in forests in British Columbia.

Fifth, we propose the provision of an additional $30 million, again over two years, to develop new markets for our wood products.

Last, we propose the provision of $30 million over two years to improve the competitiveness of the workforce, to promote the upgrading of workplace skills and to provide assistance to older workers who have been impacted by forestry industry layoffs.

With respect, the Prime Minister is incorrect when he asserts that we will get full and free access to the U.S. lumber market. In reality, under the terms of this negotiated deal, our market share is capped at 34%. Other countries, to which we have already lost market share since the imposition of duties and tariffs in May 2002, can export lumber to the United States completely duty free.

As have others, I wonder about the haste with which this deal was negotiated. Obviously one hopes that our so-called new government is not playing politics with the livelihoods of thousands of Canadians who expect to have positions in the industry here in Canada for many years to come, not just two years to come.

The deal has been trumpeted by the Prime Minister and members opposite as an achievement which eluded the previous government. Some achievement, a capitulation to the bullying tactics of the U.S. industry and the U.S. government.

The large question remains. Over $5.2 billion was taken illegally from our producers by the U.S. government and the deal which our government wishes to accept would put $4 billion back into the pockets of our producers, $5 billion taken over the last few years and that amount with interest remains owing. How is it at all logical that we would accept $4 billion only?

The government wants us to believe that the only logical, rational outcome is to give away $1.2 billion of Canadians' hard earned money. Members opposite are sniping at the Senate for not passing, quickly enough in their view, the much vaunted accountability act. I am suggesting that the government should focus on its accountability, the accountability to the taxpayer to ensure that $1.2 billion does not go missing from the pockets of our Canadian producers.

[Betty Hinton, Conservative, Parliamentary Secretary to the Minister of Veterans Affairs]

Mr. Speaker, I listened with great interest to what the member opposite said. There are a couple of things I would like to clarify for him, since he seems to be a bit confused. There is actually $1 billion allocated to pine beetle and $200 million of it will go out within the next two years. The $1 billion itself will go out over a 10 year time period.

He suggests someone is playing politics. I suggest he look in the mirror. The politics that are being played in this room today are being played at the expense of the lives and the livelihoods of communities and industry workers. This is beyond contempt to do this sort of thing. The Liberals had a long time when they were government to implement something that would be helpful, and they failed to do it.

Is it true that the member opposite does not understand that this is a seven year minimum deal, that there is $1 billion on the table and that $5 billion Canadian will come back? The statements he just made are very contrary to the facts.

[Lloyd St. Amand, Liberal, Brant, ON]

Mr. Speaker, as others have said, and it is beyond dispute, my understanding is correct. According to every tribunal which has ruled on it, $5.2 billion has been imposed improperly by the United States government. As I understand it, we are getting back some $4 billion. Therefore, $1.2 billion is not being returned. In my judgment, that is the essential unfairness of the deal.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I thank my colleague for the comments on the sell-out that we have been watching.

I heard the Conservative member from British Columbia talk about how great this was for communities. If she had visited the communities in my region in the northwest, she would clearly have seen that the last 10 years have been one devastation after another. There have been huge consolidations and massive layoffs of the workforce. What certainty she has talked about is certainty that can be torn up in a moment by one party alone. In particular, the Americans can simply claim that some unfair and unjust practice has taken place in Canada and walk away from the deal.

Bullying tactics may have worked. I know the hon. member works hard on community support. However, I have a question about all those years when massive consolidations were going on across the industry. Small operators, in particular, were crying out for loan guarantees so they could improve their operations while we were being hammered by tariff after tariff. Those cries for those types of guarantees, which the Liberals had the capacity, the knowledge and the wherewithal to do when they were in power, fell upon deaf ears.

It is extremely difficult to suggest that the Liberals have any significant and strong support for those communities when all those loan guarantee requests, and lo and behold they even came from the Conservatives, were simply not answered.

[Lloyd St. Amand, Liberal, Brant, ON]

Mr. Speaker, I am very aware of the member's concern for environmental issues in particular and how well he advances those issues.

The Liberal Party wishes to move forward. We are not wanting to spend a lot of time revisiting the past 12 years or 13 years.

I will repeat for the benefit of the member opposite and others that our proposal would inject loan guarantees into the equation for our lumber producers. That is what is relevant and that is what we are endeavouring to focus on.

[Jay Hill, Conservative, Prince George—Peace River, BC]

Mr. Speaker, it is miraculous how the hon. member and his colleagues suddenly have this epiphany when they all of a sudden end up on the opposition benches. They had 13 years, by his own admission of a few seconds ago, which he does not care to revisit. There is no doubt he does not want to revisit it. That 13 year tenure was disastrous. It was a disaster in Canadian history.

Earlier in response to one of my colleague's questions, the Liberal member stated that he was unaware about the split in the money that would be kept in the United States under this deal and what would be returned to Canada.

Is he telling me he is unaware that his party, the Liberal Party, the 13 year history of the party that he does not want to revisit, was about to sign a deal that was vastly inferior to the deal we are debating today? How do we know that? Because the Minister of International Trade for the new Conservative government, who negotiated this deal, was at the table. He knows what the Liberals were about to sign, and it was vastly inferior to this.

[Lloyd St. Amand, Liberal, Brant, ON]

Mr. Speaker, the terminology used by the hon. member is subjective in the extreme, extremely inferior and vastly inferior. He may refer to it as he wishes. We, on this side, feel that the details of the deal on the table are, indeed, vastly inferior to what we were prepared to negotiate as a government and what we now wish to see move forward.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am very pleased to have the opportunity to enter into the debate on the softwood lumber deal.

Speaking on behalf of the people whom I represent, I want to say that we believe firmly in our hearts that this deal is bad for Canada. It was poorly negotiated. It undermines our interests. It serves only to protect American interests. Therefore, we have to speak profoundly against it.

It is part of a worrisome trend. I can quote the Vancouver Sun, which published the details of a leaked letter from the Bush administration to the U.S. lumber lobby. In that letter in the Vancouver Sun article, the American administration confirmed that the objective was to, in the administration's words, hobble the Canadian industry.

Nor does this sellout end there. Of the $1.2 billion in illegal duties they left on the table, $450 million will go to the Americans to grease the re-election wheels of the protectionist American government that is facing tough fights in the upcoming mid-term congressional elections. So Canada's timber industry will be subsidizing the ongoing illicit attack on itself. We are going to subsidize and pay for their renewed ability to keep attacking us. We know they are protectionist and that is what they will continue to do.

There is more. When the industry balked, the Conservative government began its bullying tactics, which now have become familiar tactics. The Globe and Mail quoted a senior government official warning that opponents to this deal “should prepare themselves for the consequences of rejecting it and they might want to start contemplating a world where Ottawa is no longer in the business of subsidizing softwood [trade] disputes”.

It makes us wonder whose side the Conservatives are on. On whose behalf were they negotiating? I have negotiated a lot of collective agreements in my former life as a union leader, and I can say that this could not have been hard bargaining. Our negotiating stance was flawed from the premise. Our negotiating stance was on our knees. It was saying, “Please, please, U.S., leave us with some of our dignity and our respect and allow us to maintain our industry”. When we go in with a bargaining stance on our knees, we are going to come out with a bad package.

They have put together here a softwood deal that will be managed of the people, by the people and for the people, but it is the American people. In fact, this is one of the most shocking things about this deal, which I have come to learn recently. As a fiercely proud Canadian nationalist and if for no other reason, this is a good enough excuse to vote against this deal.

It turns out that as an aspect of this deal there is an unprecedented clause that requires provinces to first vet any changes in forestry policy with Washington. In other words, if the Province of British Columbia wanted to substantially change perhaps its rate of harvest because of a pine beetle infestation or some such thing, it will be duty bound to consult Washington first--in other words, get permission--or else it will be in breach of this deal. The Americans then can unilaterally state that the deal is broken and they can carry on with their illegal tariffs.

I keep coming across good reasons why any patriotic Canadian would not participate in what I call economic treason of this sellout in the softwood industry.

A lot of people may not remember this, but this is the second time a Conservative government has snatched defeat out of the jaws of victory on this lumber file. In 1986, the GATT, the World Trade Organization predecessor, issued a preliminary finding on the legality of U.S. lumber duties against Canada. Brian Mulroney's government at the time, hell-bent on negotiating a free trade agreement with the U.S., aborted the challenge.

We were about to win it and the Mulroney government aborted the challenge just before it came down in Canada's favour. The Conservatives wanted to make the argument that they needed the free trade agreement because the current regime was not working. These findings were not published until after the free trade agreement came into effect.

It seems like a pattern is developing here. The Conservatives are willing to undermine the best interests of Canadians to make some ideological victory in their own minds or to pander to the demands of the Americans.

The same is true of the assault on the grain industry with the government's overt attack on the Canadian Wheat Board. In fact, there are real parallels between the sellout on the softwood deal and the assault on the Canadian Wheat Board. Both are in the interests of and at the service of the Americans.

We know that the Americans began gunning for the Canadian Wheat Board before the ink was even dry on their initial signature on the free trade agreement in 1989. We know that. Since then, the Wheat Board has been subjected to 11 separate U.S. trade attacks. In the same pattern as the lumber duties and tariffs, the U.S. is claiming unfair subsidies.

The U.S. does not just want to eliminate one of its competitors in the world wheat market for its multinational agribusiness, but it wants its agribusiness to capture the price advantage enjoyed by superior Canadian wheat. It really comes down to that. The Americans' opposition to the Wheat Board is not even ideological, although they do allege that it is socialism, realized by the fact that we act collectively in getting the best price for our farmers through single desk selling. Really, it is the price advantage that we enjoy and earn because our wheat is superior. Our product is superior.

This is another issue in this worrisome pattern that has become the defining characteristic of the new Conservative government, a pattern which seems to be to integrate Canada's security, defence and foreign policies with the U.S. and shred our competitive advantage against the U.S. in the matter of lumber and wheat. It is a worrisome motif that we sense in many of the things the Conservative government is doing. Free trade is one thing, but this is not free trade.

While I am on the subject of the Wheat Board in relation to the softwood lumber deal, let me tell the House what Terry Pugh, spokesman for the National Farmers' Union, said about this. He said that a dual market kills the CWB because its monopoly seller position is precisely what earns farmers premium prices in global markets. The empirical evidence is established to prove that.

We are acting in the best interests of someone else if we are advocating the dismantling of the Wheat Board. Let me tell members the effect this would have locally for my area of Manitoba. The Canadian Wheat Board's demise would affect not just farmers but would also have a ripple effect across the Canadian economy, closing the Port of Churchill in my home province of Manitoba and probably seriously impacting Thunder Bay and even the Ports of Vancouver and Prince Rupert, we can predict.

Do we know why? Because Canadian grain would go south and be mixed with American grain and shipped through American ports. Canadian wheat as a distinct commodity would disappear even though it is valued around the world as the best in the world. For pasta and other products, it is the highest calibre. It is the standard that other people use to measure their wheat.

John Morriss, editor and publisher of the Farmers' Independent Weekly, says that a dual market is a chimera, a word I had to look up. He asks farmers to recall the voluntary Central Selling Agency run by the pools in the 1920s and the voluntary Canadian Wheat Board which began in 1935. Both had spectacular bankruptcies, likely the two biggest business failures in Canadian history.

The voluntary Canadian Wheat Board, a model of which is being advocated now by our current Minister of Agriculture, lost $62 million in 1938-39. We can imagine what that would be in dollars today. That model failed. That model was built for failure. That model cannot succeed.

The reason a dual market will not work is that if the open market is higher than the initial payment, the board gets few deliveries, and if the initial payment is higher than the market, it gets the deliveries but has to sell at a loss. If members cannot understand that, they have no business advocating the dismantling of the Canadian Wheat Board, because that sums it up in a nutshell. Still, there is this zeal, this unreasonable ideological passion, for dismantling the Wheat Board.

I used an analogy earlier. It is commonly said that a beaver bites off its testicles when it is threatened. If that is true, the beaver is certainly an appropriate symbol, if not for Canada then for two successive Conservative governments, because when faced with ceaseless bullying and browbeating by the Americans, the Conservatives react by carving off pieces of Canada as a nation.

They carve off significant pieces and important pieces such as our sovereignty in regard to being able to unilaterally set our own independent forest policy without having to consult with Washington, D.C. and getting permission, and pieces such as having our own Canadian Wheat Board establish single desk selling for the best interests of Canadian farmers. The Conservatives either do not understand this or they understand it and are serving some master other than the best interests of the Canadian people.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I enjoyed many of the member's remarks, but I was interested in his comments on the Canadian Wheat Board. This is similar to what has happened under the softwood lumber agreement, where we have won all the legal challenges but the government has decided that even though we have won it wants to go to a negotiated settlement. The Americans are basically operating in a way where they are saying they know we have won by the rules, but now they do not like the rules and so they want to change them. And the Government of Canada caves in.

The same situation is really true for the Canadian Wheat Board. We have won 11 challenges, I believe, from the United States as they relate to the Canadian Wheat Board, but what the government is proposing to do by doing away with single desk selling is basically to sell out to American interests that have, since time eternal, tried to undermine the Canadian Wheat Board through the legal process. They have never been successful in doing so.

Could the hon. member explain to us whether he sees that there would be advantages to the Americans as a result of the government proposal to take away single desk selling? What would be the loss to Canadian farmers as a result?

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, with the bit of time I have left after that question, I can say I agree that Canada tossed away a significant victory, a victory not before some useless North American Free Trade Agreement panel but before the U.S. court of international trade.

On April 7, the court ruled that U.S. duties on Canadian softwood were illegal. That is just about the time our high priced negotiators were down selling out Canada in Washington. We were winning significant rulings and we were poised to win two more. We were that far away. The government snatched defeat right out of the jaws of victory and now claims it is saving money by not having to spend the legal fees to win the case we were going to win. It is unbelievable.

My colleague's question is connected. Directly related is the Wheat Board issue. The polls show that 73% of western wheat farmers support the board. The Conservative government, just as it is in lumber, is preparing to do the Americans' dirty work. The Americans do not like the Canadian Wheat Board.

The Canadian Wheat Board gives good service to Canadian farmers, to prairie farmers. It gets them the best prices. It makes us a real competitor against the American multinational agricultural business. The Americans want it dismantled and the Conservatives are willing to do their dirty work.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Speaker, it is a pleasure to speak on the softwood lumber agreement as negotiated by the new Conservative government and the Minister of International Trade.

I am not quite sure how the NDP member who just spoke and the question from the Liberal benches got on to the topic of the Wheat Board in discussion of the softwood lumber agreement. The member from the NDP said that the Wheat Board enabled farmers to get the highest price possible. I am certainly not the expert on the Wheat Board, but my understanding is that producers cannot sell their wheat outside of the Wheat Board. Therefore, they do not have the option of going for the highest price possible. As a matter of fact, they may have to sell their wheat for less money than they could have received if they had sold it independently.

This debate should stick to the facts. If we stick to the facts this is a clear debate and I think there would be unanimity from all parties. There would be nothing but massive support for the bill and for the positive change it will bring to the lumber industry in Canada.

There are a number of issues that I want to talk about. I want to deal directly with a number of statements made by my Atlantic Canadian colleagues in the Liberal Party and in the NDP who have criticized this agreement. This is a good agreement for Atlantic Canada. To spread false arguments based on no criteria except rhetoric, based on no facts, only rhetoric, and the belief that if they say something enough times people will believe them, is not credible. It diminishes the work we do in this chamber.

To begin my debate I would like to read a quote from the Minister of International Trade who spoke in the House yesterday. His opening statement was very cognizant of the issue. It spoke directly to the issue and it is worth repeating:

Softwood lumber for Canadian softwood lumber producers has been an industry that has been plagued by trade disputes--

I do not think anyone would disagree with that:

--border measures and various types of trade harassment for basically a quarter of a century.

After 24 years of nothing but harassment from our American neighbours on the softwood lumber file, we have finally put it to rest. We are talking about organized trade, about clear rules, about definite boundaries. We do not have a quota system in place. We have trade that flows north and south across the long border between us and the United States.

The minister went on to say:

The agreement will provide stability and a dispute-free market access to the United States market. It will provide stability for a period of at least eight to nine years...it will provide a trajectory for the evolution of the softwood lumber industry to a world of complete free trade.

Obviously, complete free trade is what everyone would prefer to have, but we cannot diminish the agreement that we have before us and somehow try to discredit it by telling falsehoods about it.

The member for Beauséjour spoke against this agreement. He has sawmills in his own riding. I asked him about the hypothetical agreement the former Liberal government supposedly was desperate to have signed prior to Christmas and prior to the election. What was it about that agreement that was supposedly better than this agreement? Put it on the table; table it. I did not get an answer to that question.

I would be very interested in comparing the two. As an Atlantic Canadian, the member for Beauséjour would know that the difference in the agreements is that the Liberals were willing, as unbelievable as this may sound, to give up Atlantic Canada's free trade with the United States. We were countervail free prior to this last trade action. We were anti-dumping free. We had free trade with the United States. The Liberals were willing to give that up in order to get a trade agreement with the United States. It is unbelievable.

There are a number of issues that we know are factual. The Americans are protectionists. Is that a big surprise? Nothing has changed. The Byrd amendment makes it almost impossible for our exporters to work on an equal footing. The idea that somehow the next court case would have changed it is absolutely fictitious. The next court case would not have changed it. As long as the Byrd amendment is in place in the United States and the American industry feels it is being treated unfairly, feels there is a subsidy in the Canadian marketplace, the American industry can bring that action to the American trade board and can claim countervail or anti-dumping duties. There is no next legal action that is going to prevent that. If the Byrd amendment, which should not be there, was not there, then the avenue of going to the courts to have it settled once and for all would be open.

This softwood lumber agreement is supported by Atlantic Canadian mills. I have had letters from the majority of mills in Atlantic Canada, from the Maritime Lumber Bureau.

I would like to take a moment to recognize the work that the Maritime Lumber Bureau has done on this file. When the previous government was not looking out for the interests of Atlantic Canada, Atlantic Canada looked out for its own interests. We saw over a period of time a shift from east-west trade in lumber that used to go to Europe to north-south trade with the United States. Some of that was market driven; some of that was driven by the American dollar which was extremely high, but it was driven by circumstance.

We in Nova Scotia, Newfoundland, P.E.I. and New Brunswick, with the primary lumber producers being Nova Scotia and New Brunswick, got shut out of the European market. That billion dollars in trade, $900 million in softwood lumber trade that Nova Scotia used to do with Europe suddenly became trade with the United States. There was a dramatic shift. There was a dramatic shift in Europe because of non-tariff trade sanctions by the Europeans. The non-tariff trade barrier that the Europeans put in place was the pinewood nematode. They came up with an excuse that insects would somehow infest the pine forests of Europe.

Of course, after 500 years of trade with Europe and no insect infestations from pinewood nematode, we thought we had a scientific argument to actually prove that would not happen. However, we could not have that argument heard clearly by the Europeans and much of that market was lost, unless the lumber was pressure treated or kiln dried.

I want to continue for a while longer on my Atlantic Canadian colleagues' non-acceptance of this treaty. This is a good agreement with the United States. It is a great agreement for Atlantic Canada. More important, the members opposite yesterday were saying that we need to read the agreement. Unfortunately, they had not because the one small change that needed to be made to this agreement to ensure Atlantic Canada's continued exemption from countervail and anti-dumping duties actually was the fact that we have been exempt. That exemption had unfortunately been neglected in the bill and all of the Liberals who were stating that they had read it so closely obviously had not. The member for Cumberland—Colchester—Musquodoboit Valley actually picked up on it, spoke directly to the minister and was able to have that exemption guaranteed.

It is a matter of dealing with the facts, not falsehoods, not fiction, not fantasy, but only the facts.

[Blair Wilson, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Mr. Speaker, I listened intently to the words of the hon. member across the way and I have three questions for him based on what he just said.

First, I want to ask the member if he is aware that on October 1, if this deal goes through, the Conservative export tax of 15% is going to be greatly higher than the current U.S. duties of 10.8% that are imposed right now.

Second, I would like to ask the hon. member if he is aware that the 19% penalty tax will now come into effect and that any softwood lumber company that does not sign on to this agreement will now have a 19% penalty tax imposed on its exports.

Third, I would like to ask the hon. member if he is aware of the dangerous precedent that this deal is setting and that the Americans are in the process of appealing Canada's recent win on the Byrd amendment which will open up the door for other U.S. industries to attack Canada.