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

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, I am very pleased to speak to the House about this agreement, which I feel is inadequate and does not represent the best interests of Canadians everywhere.

When we entered into a free trade agreement with the United States, we did so with certain reservations. Indeed, we were negotiating with a country whose economy is so much larger than ours, a country that is much more powerful and that tends to be very protectionist within its borders.

There are certain advantages, however. We have the advantage of access to enormous markets. We are producers and exporters, and our primary markets are in the United States. We therefore entered into the agreement.

We now see that, rather than defend that agreement, defend ourselves and our producers, we are being forced to sell out to American interests.

We are upholding our responsibilities in the agreement. We must still sell them oil and other products on which a dependence has developed. We must live with that agreement on our side, but the advantages are suddenly disappearing. It begins with losing these advantages concerning forestry and we fear just how far it can go.

What other industry must we sacrifice in an agreement so that the Prime Minister might one day be invited to the presidential ranch in Crawford? What other sector of our economy are we going to abandon?

The government boasts about the number of entrepreneurs, mills and producers who have signed on to this agreement. The inquisition boasted that all the witches they burned at the stake had also signed some declarations of guilt, but they were forced to do that.

We see that in this case. Industries and provinces have told us that they have been coerced into signing an agreement that does not advantage them. They say that it is not a good deal and that they do not like it. In April they started a process that they could buy into, where there was a framework agreement and they could have discussions. All of a sudden, producers were left out of those discussions.

A few had discussions. The minister ensured that a few large ones were taken care of, the ones he has an interest in and has had an interest in the past, like Canfor. If organizations represented mills or producers in more than one province, they were not part of those discussions. Most of the producers were left out.

We have entered into an agreement where we maintain our responsibilities and give the U.S. $1 billion for partial access to its market. It is our money, money that tribunals at the WTO and NAFTA have agreed belongs to Canadian producers. We give it to the Americans and while we can continue to sell in their market, it is under their terms. There will be quotas, there will be taxes and it will cost us.

How do these taxes work? When the price goes down and producers are squeezed, they have to start paying an export duty at a time when they can least afford it. Everyone understands, as I do, that accelerates the risk of bankruptcies, closures and foreclosures.

If for some reason the Americans do not like it, they can step away from the deal, but they keep our money. That is about the equivalent of a kidnapping. We catch the kidnappers with the victims, we bring them to court, go through a preliminary hearing and trial and all the evidence is in our favour. However, right before the jury comes into the room, we strike a deal and say that they will not be found guilty and they can keep the ransom money. If at any time they are not happy, they can come back, get the victims and ransom them again. This is the deal that has been struck, and we are proud of that.

We have seen once again that there are giants in the forestry sector. Canfor is a giant, and the minister of Canfor understands that, and there are smaller ones. There are shrubs, little bushes. There are people like the Prime Minister, a shrub who will do anything to have an agreement with the U.S. President. He will profit. I have no doubt he will get to the ranch and he will be happy, but where will we be left?

How have these mills been coerced into signing? They are in debt. They have been through a long battle at NAFTA and WTO. They have had restricted access and have had to pay ransom money to the Americans. They are in trouble and the banks have been backing them. If the mills sign on, the banks will get their money back. Therefore, the bankers are putting the squeeze on these mills and they are signing on. The bankers are going to get their money and the mills are going to be okay for a little while.

We see the downturn in the U.S. economy. Eventually we are going to hit those magic numbers, and I think it will be immediate, where they have to start paying ransom or where there is limited access. Do members think the banks will be supportive and allow the mills to go into debt again? The banks will realize there is no more money they can get back from the Americans and support from the federal government will not be there. Therefore, we will have an accelerated round of closures in our Canadian softwood industry.

Again, that plays into the hands of the gentleman and his friends from Crawford. The Americans will have $1 billion of our money. We will have a lot of softwood capacity, the best in the world, that will be on the market, some of the medium sized and smaller ones, which I am sure they will be very happy to buy at discount prices. We are abandoning that industry.

Mr. Speaker, you might ask as an astute observer why a member from Atlantic Canada would not support this deal. Atlantic Canada is not included in the agreement. From the very beginning, there was an understanding on the U.S. side that because Atlantic Canadian forests are largely owned by the private sector and individuals, and the cost of cutting the wood is higher, that there is no level of subsidization. No argument was made. The Americans said we would be exempted from any restrictions.

The Americans might do that because they think we are fine little people who cut their trees without making noise and saw them ecologically, and get them to the market in a very nice way, or the Americans could be trying to divide our industry. The Americans could be trying to put a wedge in the industry, where they have one part of the country working against the other, where it makes it difficult to have a national forward looking policy, approach or lobby of all the producers in this country.

Immediately, we have a disagreement because there is a slight advantage for Atlantic Canada because we continue to have access and we have some stability in the market. Our producers know where they are going. They know they are not paying duties and they know they will not be paying duties to have access to the U.S. market and so that is quite good.

However, what will happen when we start having all the closures and downsizing in other parts of the country? What will happen when the access is restricted or they cannot financially export to the other parts of the country and we start having increased competition in the niche markets that we have in Atlantic Canada? Will this be good for Atlantic Canada? I do not think so.

I think Atlantic Canada is the most important part of the country of course, but it is a part of this country. Atlantic Canada does well when the country does well. We depend on trade with the U.S. in many areas, from high technology, repair in the military of the IMP in Halifax, to fisheries products in my riding, tires in the three large Michelin manufacturing plants that we have, oil and gas exports, oil and gas manufacturing, ship manufacturing, and ship repairs. We depend on exports and we depend on our markets in the U.S.

If we start looking at NAFTA and start tearing it apart, start taking away the Canadian advantages and only keeping the Canadian responsibilities, our region is no longer advantaged. All of sudden we will see that we cannot ship into that market. We will see our oil and gas and our primary resources going into that U.S. market. We would be forced by this agreement to send it there without advantage.

I believe for Atlantic Canadians, like for all Canadians, that it is important that we study this deal very seriously, that we look at it, that we see what it means, and that we not support this agreement.

Futhermore, however I see that I am running out of time, so I will return tomorrow for questions and comments.

The House resumed from September 26 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 Deputy Speaker, Bill Blaikie]

At the time the debate adjourned last night, there was a five minute question and comment period left after the 10 minute speech given by the hon. member for West Nova.

The hon. member for Burnaby—New Westminster.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, we found out yesterday that the Liberals on the international trade committee moved to kill softwood hearings that were scheduled in northern Quebec, in the Saguenay, and in Thunder Bay in northern Ontario, which is the epicentre of what will befall this industry if the Conservatives succeed in pushing through this bungled legislation.

Also, in British Columbia they did the same. In British Columbia in particular we know that half of that $1 billion giveaway is from British Columbians. British Columbia communities are being forced by the Conservative government to give up half a billion dollars in illegally taken tariffs. That is B.C.'s money.

The Conservatives, under the direction of the international trade minister, who has no opportunity of being elected even as a dog catcher in his riding of Vancouver Kingsway because he is so detested for his betrayal of his constituents, have abandoned British Columbia. Other Conservatives from British Columbia are simply following along. It is pretty clear that no Conservatives will be elected west of the Rockies in the next election.

What I cannot understand is why the Liberals would move to kill hearings in northern Ontario when there are supposedly Liberal members who supposedly represent northern Ontario. Twenty per cent of the mills will close and 20% of jobs will be lost in northern Ontario as a result of this deal. This information comes from testimony we heard at committee this summer, yet the Liberals have moved to kill the hearings. This is absolutely despicable.

My question is quite simple. Why did the Liberals kill hearings that would have allowed people in northern Ontario, British Columbia and the Saguenay in Quebec the opportunity to voice their concerns about this sellout, this bad deal?

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, I do not sit on the committee. I am not a member of the committee. Members decide their own fate and their own agenda. I know that we have had excellent work done by the member for Beauséjour, the member for Sydney—Victoria, and other members from our party. They sat through most of the summer recess. They heard from many witnesses on the question and voted against the resolution and are voting against the bill because we understand that this is not good for Canada.

We understand, and I believe, that forestry workers, whether they be harvesters, working in the sawmills, the added-value market, the transportation market or are associated with the industry in one way or another in the spin-off industries, will understand what the people of Vancouver Kingsway know. They will understand that the minister will sell them out at a moment's notice for very little interest to himself. For the value of a car and driver he crossed the floor. For his links with one company in particular, I believe that is why he went ahead with this deal.

He had presented to forestry workers and the industry a framework agreement in the spring that was worthy of discussion, that did have interest in all sectors. However, rather than going through consultations, rather than discussing with the industry and ensuring that we had an agreement that had advantage for Canadians, with one quick trip by our little bush, by the shrub, by the little bush of a Prime Minister, who had to meet with his patron saint in Washington and came back with an agreement that was a sellout of our Canadian industry.

We understand that strongly and that is why this side is not supporting the bill before Parliament at the present time.

[Helena Guergis, Conservative, Parliamentary Secretary to the Minister of International Trade]

Mr. Speaker, I would like to point out to the hon. member from the Liberal Party that the Minister of International Trade and our Prime Minister's focus has been on the communities, families and industry that have been devastated by this dispute, which has gone on for 24 years. This last legal battle has been five years alone.

We were focused on returning the duties back to the industry. Some 81% of the duties that have been paid will be returned to the entire industry across Canada. I also remind the hon. member that over 90% of the industry supports the deal. All of our major softwood lumber producing provinces support the deal.

He talked about the member for Beauséjour, who sits on the trade committee. All of the industries in his riding have asked him to support the deal, yet he has chosen to ignore it. I suggest it is just because the Liberals are bitter because our government achieved something that they were not able to achieve after 13 years.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, that is preposterous. Hearing after hearing and tribunal after tribunal at the World Trade Organization and at NAFTA found that 100% of the duties belong to Canadian producers and we are settling for 81% and leaving the interest there.

As to the claims of 90% support, there has been force bordering on extortion, forcing these people to sign on saying that if they did not they would not get their money back. The bankers have billions of dollars in loan guarantees, loan extensions or lines of credit for these people. They are forcing them to sign on because they know they do not have the support of the Conservative government.

The industry and the communities know that they do not have the support. If they were supportive they would have followed the truth. They would have assisted the communities. They would have given loan guarantees. They would have assisted in the challenges at the international level in the American courts, so that we would ensure that we protect our North American Free Trade Agreement for the benefit of all Canadians and for future sectors.

In a very few months, we will see a round of bankruptcies like we could never have predicted because of the actions that the government has taken. It is inaction and it is a sellout to the American sector. It is a sellout of Canadian jobs.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, it is great to have the opportunity to speak to Bill C-24, the softwood lumber products export charge act, that implements the softwood lumber agreement between Canada and the United States. This agreement is very important to people in my constituency in Burnaby, B.C. and to people all over British Columbia and all over Canada, so I am very glad to stand today to discuss it.

The bottom line is that this is a bad deal. It is a bad deal for Burnaby. It is a bad deal for British Columbia and it is a bad deal for Canada.

We have heard from various corners of this House over the last few days the various rationalizations of this bad deal. From the corner over here where the Bloc sits, we have heard that it is an imperfect deal. When I heard some of the members from the Bloc speaking to this, I saw people who were bowed, who caved, and who did not feel comfortable about their own position. To say that it is imperfect is a huge understatement.

I heard from the government's corner, members from British Columbia who said that this was the best possible deal. That sure falls short of saying it was a good deal, but it also again belies this real discomfort with the kind of legislation that we are dealing with and it masks the fact that it is a bad deal. It is a bad deal, plain and simple, and it is a sellout of Canada.

This deal came at a time when Canada was on the verge of winning after a long legal process. We had won every single step of the way, holding the Americans to agreements they signed with Canada. What could be more important than to stand up for those agreements that had our signatures and their signatures on them?

The Tembec case, for instance, was subject to only one final appeal and the extraordinary challenges committee judgment would have come out in August. We were in a position to win both of them. There was no question about that. In fact, members do not have to believe me, they just need to listen to the testimony of the Canadian ambassador to Washington, Michael Wilson, who this summer pointed out before the Standing Committee on Foreign Affairs and International Trade that there were no appeals on the extraordinary challenges committee judgment and there is no appeal on the Tembec case after the ruling was made.

Rather than a victory, we have this deal. I have heard it said in this corner of the House that this is the government snatching defeat from the jaws of victory. How does this represent Canada at all? We were winning every step of the way and now we have this bad deal, and such a deal it is.

A key feature of this deal is that Canada has to give up $1 billion in illegally collected levies to the United States. All the way through the legal process, it was shown that these duties and levies were illegally collected and now with this deal, we give that $1 billion to the United States. This $1 billion was collected from Canadian companies, causing them incredible hardship. It is money that was also taken from Canadian workers, Canadian families and Canadian communities, and B.C. communities have been extremely hard hit through all of this.

Why, when Canada was on the verge of victory, would the Conservatives sign off on the important principles at stake and give the Americans $1 billion to boot? We have lost the principle about the importance of our trade agreements with the United States. We have lost the principle about using the mechanisms that hold us to account on those agreements. We have lost the argument about protecting our softwood lumber industry, and we give the Americans $1 billion to boot.

We have to consider too, how is that money going to be used? We know for a fact that $500 million of it, half of it, is going directly to the US Coalition for Fair Lumber Imports. Who are they? They are the very people who initiated and pursued the attack on the Canadian softwood lumber industry. They initiated all of this in the first place and now we are giving them $500 million. We know they ran out of money and now, thanks to the Conservatives, we are refilling their war chest, funding their litigation and lobbying for years to come.

Do we really think they will not use it? The question is when, not if, they are going to use it. Will it take two years? Will it take nine years? There is no question that they are going to use that money again against our industry.

Given that tendency, which industry is next? Now that we have caved on softwood lumber, we know that other industries are in the sights of the Americans. What aspect of our trade policy will they attack next? What protectionist is planning an assault on another Canadian industry? Which of our natural resources will they seek to scoop up next?

I think some of us in this corner believe that the Wheat Board is the next thing that is in the sight of the Americans. We know and we have heard from farmers all across Canada about the importance of the Wheat Board and the fact that they feel that it is the next thing in the sights of protectionist Americans. We have to stand up and fight for the Wheat Board. It has brought stability and a stable income to Canadian farmers.

It is ironic that we sit here today discussing an agreement that would give U.S. lobbyists a half a billion dollar fund for legal challenges to our industries two days after the Conservative government announced that it was cutting the Canadian court challenges program. This is a modest $5.6 million program that allowed the most vulnerable and disenfranchised in our society along with disadvantaged Canadians and minority groups the ability to challenge decisions and policies of the Canadian government.

We have seen in the past the importance of this for language rights in Canada, for equality rights for the gay and lesbian community, for citizenship rights, and for other minority rights in Canada. Now the program is gone.

It seems that the Conservatives cannot help our own people ensure their place in Canadian society, but we can give 80 times the money that was in the court challenges program to the Americans who want to circumvent the trade agreements that they have signed with Canada and want to ruin Canadian industry.

The Conservatives cut Canada's human rights related court challenges program and they fund a new half a billion dollar court challenges program for Americans to use against Canada. It is a shame. It does not make sense. If for no other reason this bill should not be supported on that basis.

Let us look at the other half a billion dollars that the Conservatives are allowing the Americans to keep. Where does it go? It goes directly to the White House for the use of President Bush. The official agreement says that this money will be used for:

(a) educational and charitable causes in timber-reliant communities;

(b) low-income housing and disaster relief;

(c) educational and public-interest projects addressing:

(i) forest management issues--

That sounds great.

Let us hear what Frances Russell said about this $450 million in the Winnipeg Free Press. She said:

Fully $450 million of the $1.3 billion in illegal duties the Americans will get to keep will grease re-election wheels for protectionist Republicans facing tough fights in upcoming midterm congressional elections. Canada's timber industry will thus be forced to subsidize an ongoing, illicit, attack on itself. All with the explicit consent of the Canadian government.

Well, the Conservatives may consent to this, the Bloc may consent to this, but New Democrats will not.

American negotiators have taken care of American workers. Let us say that even if the $450 million was used in a completely altruistic fashion and went as the agreement indicates, where is the support for Canadian companies, Canadian workers, and Canadian communities devastated by this agreement? It is not to be found in this deal.

There is $4 billion coming back to Canada, but there is no requirement for reinvestment in Canadian communities, reinvestment in the Canadian industry, and there is a fear that much of that money will go to fund investment by those same companies in investment in the United States. That is not acceptable either.

Even the Bloc members, who are concerned about the displacement of workers because of this crisis, are left to raise over and over again, pleading with the Conservatives to announce something that will assist them because it just is not in the deal. I do not think anyone needs a second reason to vote against Bill C-24, but there it is.

Two days ago I was in the House to hear my colleague, the member for Burnaby—New Westminster and our representative on the international trade committee, speak to this issue. He outlined many of the key problems with this deal. They include that the U.S. only has to allege non-compliance with Canada to get out of the deal.

In clause 10, the imposition of a 15% export tax as of October 1 amounts to double taxation above and beyond current anti-dumping and countervailing duties.

In clause 18 there is a new special punitive tax originally designed to hit those companies that are standing up for Canadian rights and responsibilities under NAFTA and who will choose to continue litigation, but now everyone faces that tax. When added to the export development charge, all companies will end up paying 37% and they will have to pay up front.

Clause 48 imposes a six year burden of record keeping on companies, increasing their administrative burden.

Clause 77 states that warrants are no longer needed to enter softwood businesses when issues of enforcement of the act are pursued. These are harsh measures against companies. I think they violate fundamental rights.

In clause 89, it is as blank cheque to the minister to demand payment from companies with no appeal mechanism. What happens in the event of a calculation problem? Too bad. There is no appeal.

In clause 95, directors of companies will now be individually responsible and there is no appeal process. It goes on and on.

Let me just finish by giving the final word for the Prime Minister. In the House on October 25, 2005, he said:

Most recently, the NAFTA extraordinary challenges panel ruled that there was no basis for these duties, but the United States has so far refused to accept the outcome and has asked Canada to negotiate a further settlement. Let me repeat what I have said before, and let me be as clear as I can. This is not a time for negotiation. It is a time for compliance.

At the time, we thought he meant the Americans had to comply with the court decisions. Unfortunately, it appears that he really meant that Canadians had to comply with the whims of the American industry and the whims of American protectionists.

It is just not acceptable. It is a bad deal. We must vote against the legislation.

[Yvon Lévesque, Bloc, Abitibi—Baie-James—Nunavik—Eeyou, QC]

Mr. Speaker, I heard my colleague from Burnaby—Douglas say that it was his understanding that certain members of the Bloc Québécois felt uncomfortable about supporting the bill as it stood. I would like to clarify our position.

We are not really uncomfortable. We know that this is a bad agreement. However, just as forest companies in British Columbia need to sell off their wood because the situation is urgent, for Quebec, as well, we can no longer put off this agreement. By not offering loan guarantees, the current government and the previous government refused to help businesses stay afloat during negotiations and while awaiting the final court rulings regarding the cases pending. Otherwise, it would have been possible for businesses—whether in Quebec, British Columbia or Ontario—to stay afloat, and to challenge the American government and its lobbyists in order to definitively obtain justice.

We now have an opening, since we are told that the agreement signed will not necessarily last seven years, as originally planned. In fact, anyone can put an end to this agreement, including British Columbia, or I believe so, in any case. Thus, once British Columbia has sold off its wood, will it change tactics and demand that the agreement be reopened? We would then find ourselves in negotiations once again, maybe nearly as long as these have been. Perhaps the future government called upon to debate the case will resolve it for good.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, it has been really difficult listening to folks from the Bloc as they struggle to articulate their position on this important legislation. I think they are embarrassed about the position they have had to take. They feel backed into a corner like Conservatives and like the companies often have felt, that they did not have any choice around this legislation.

I am used to hearing something a little more principled and a little more demanding from that corner of the House. It is not like people in that corner of the House to give up an important principle so easily. I think that is what has happened, especially when we were on the verge of winning this case.

Also, it is clear in this agreement that provinces lose sovereignty over establishing their own provincial forestry policies. It is very clear that the United States will have the opportunity to vet any changes in provincial forestry policies. How that could be acceptable to members from the Bloc Québécois, given their position on the sovereignty of Quebec, is beyond me. It is not acceptable to me, as a member from British Columbia.

Steve Hunt, one of the western Canadian directors of the United Steelworkers said it very clearly. He said:

This deal doesn’t need tweaking, it needs a complete rewrite....part of a “sell-out strategy.” If this is what Bush-Harper talks have achieved, then we’d prefer continued litigation, rather than a Softwood Lumber Agreement that might only last a few years and gives up provincial sovereignty over forest policy.

It is not acceptable to the steelworkers. It is not acceptable to the forestry workers of British Columbia.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, l listened to my NDP colleague and to my Liberal colleague, who spoke earlier, and I simply do not understand their position.

I am on the international trade committee. I worked at the committee throughout the summer. I heard the testimony from witnesses and I read their testimonies. Softwood lumber companies are in favour of this agreement, overwhelming so. Some 90% of our industry is in favour of this, but there is more.

The premiers of the key softwood lumber producing provinces are also in favour of the softwood lumber agreement. In fact, the premier from the member's province is in favour of it and he has asked, actually almost begged, the member to support the softwood lumber agreement to help forestry workers and to help the lumber industry in British Columbia.

What is my colleague saying to the softwood lumber companies that are endorsing the agreement? What is the message he is giving them, that he happens to know better than they do what is good for them, better than the people who are in this industry?

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, the member says we do not understand the deal. He will never understand the importance of the deal, the problems with it and the fact that many Canadians think this is a bad deal. He will not be travelling with the committee across the country to hear testimony from Canadians on this issue.

The committee in the summer decided to visit the Saguenay, Thunder Bay and Vancouver to hear from Canadians and companies about this deal. The committee agreed to set up that kind of tour. Then yesterday, on a motion from two Liberal members, the member for Welland and the member for Sydney—Victoria, it revisited that decision and cancelled the hearings.

That is unacceptable. Canadians must have the chance to express their views on this important agreement. Thanks to members, like the one who asked me the question, they are not going to get that opportunity. That is not appropriate.

[John Maloney, Liberal, Welland, ON]

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.

[Helena Guergis, Conservative, Parliamentary Secretary to the Minister of International Trade]

Mr. Speaker, much of the hon. member's speech was inaccurate. I could in fact come right out and say that it was not true. However, in part of what he said he actually acknowledged what we on this side of the House have known and what that side of the House should know because this dispute has gone for 24 years, which is that the United States and the lumber coalition will never stop with litigation. In fact, they have told us that without this deal they will launch another lawsuit. It could go on forever and ever. With this deal we would have security. We would have seven to nine years with no litigation. Eighty-one per cent of the duties will be returned to the entire industry.

The member also talked about NAFTA. He was at committee when Gordon Ritchie told us that the United States had never intended softwood lumber to be under NAFTA. Perhaps that is why we have had this dispute for so long.

We now have an agreement and within this agreement there is a dispute mechanism that takes it out of U.S. trial law and brings it into international law, which will benefit the industry. We will also work on a binational council for the next seven to nine years to build trust and build a stronger North American softwood lumber industry.

I have a quick question. We know the NDP had the opportunity to do the Liberal-NDP budget and to negotiate with the former prime minister. Could you please let us know whether the NDP actually asked to have anything done on the softwood lumber file?

[The Deputy Speaker, Bill Blaikie]

I might just remind the parliamentary secretary that she cannot ask a member a question directly. She has to ask the member through the Chair.