Bill C-2 (Historical)

Canada-EFTA Free Trade Agreement Implementation Act

An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation

This enactment implements the Free Trade Agreement and the bilateral agreements between Canada and the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation signed at Davos on January 26, 2008.
The general provisions of the enactment specify that no recourse may be taken on the basis of the provisions of Part 1 of the enactment or any order made under that Part, or the provisions of the Free Trade Agreement or the bilateral agreements themselves, without the consent of the Attorney General for Canada.
Part 1 of the enactment approves the Free Trade Agreement and the bilateral agreements and provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional aspects of the Free Trade Agreement and the power of the Governor in Council to make orders for carrying out the provisions of the enactment.
Part 2 of the enactment amends existing laws in order to bring them into conformity with Canada’s obligations under the Free Trade Agreement and the bilateral agreements.
Part 3 of the enactment provides for its coming into force.

Canada-EFTA Free Trade Agreement Implementation Act

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, I can only deduce that many of the members of the Conservative Party do not have shipyards in their ridings. If they did, they would have a better understanding of the issue.

I remember when they were in opposition. I remember the Reform Party in 1997. I remember that the Alliance and the Conservative Party, before they were in government, used to stand up for shipbuilding in this country. Now it seems they are sitting down.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to take part in this debate on Bill C-2, which should lead to the implementation of the Free Trade Agreement between Canada and the European Free Trade Association. The Standing Committee on International Trade has already studied it and I am glad to be able to add my thoughts to the current debate.

The Bloc Québécois has already indicated that it is generally in favour of this agreement. We think that it is a good agreement, especially for the Quebec economy. There are attractive opportunities for us in the countries that are signing it. Whether in pharmaceuticals, nickel mining or aluminum exports, Quebec is very well positioned and will surely benefit from its advantages. This does not mean, though, that the agreement is perfect. We have serious concerns, especially in regard to the inclusion of shipbuilding. The Bloc expressed these concerns in the supplementary opinion it attached to the committee report, and I would like to take this opportunity to draw this issue again to the attention of the members.

The future of our shipyards is very important to Quebec and especially eastern Quebec. This region lies along the shores of the St. Lawrence River, the largest navigable waterway in the world, and shipbuilding is an important part of its economy. This free trade agreement will therefore have a direct impact on the people of my region in a few years. That impact will be positive or negative depending on the choice that the government makes today.

Shipbuilding has suffered for many years from a flagrant lack of government support. Our shipyards have fallen well behind the Norwegian ones, and Norway is one of the signatories of this agreement. While Norway has been investing massively for years in modernizing its shipyards, it is sad to say that the federal government has long been ignoring our shipbuilders. There is no real marine sector policy in Canada today, and the results over the next few years could be very bad.

Under the existing agreement, the most sensitive shipbuilding products will enjoy a gradual reduction in tariffs for a period of up to 15 years in some cases. After that adjustment period, no tariff protection will be allowed, and vessels from Norway, for example, will enter the Canadian and Quebec market to compete on par with our ships. This would not be a problem, except that we lag far behind in this area. If our borders were to open wide tomorrow morning to the competition, our shipyards would disappear. And that would be very unfortunate, since our shipyards are essential for economic, strategic and environmental reasons. Now the question remains: how will our marine industry look 15 years from now?

If the past is any indication, we have every reason to be extremely pessimistic about the survival of this industry, given the increased foreign competition. Clearly, if the federal government continues to ignore the needs of our shipyards and refuses to take action to support them, we will definitely see them gradually deteriorate over the next 15 years. That is why the Bloc Québécois presented an important recommendation to the Standing Committee on International Trade in advance of this agreement taking effect. The recommendation reads, “The Canadian government must without delay implement an aggressive maritime policy to support the industry, while ensuring that any such strategy is in conformity with Canada's commitments at the WTO”.

That was the only recommendation made in the report. The Conservatives never see any problems with their policies and the Liberals, as usual, failed to propose any recommendations. The NDP, in its predictable opposition to free trade, opposed the agreement altogether.

The Bloc Québécois recommendation, which finally received the committee's support and was included in its report, meets the expectations of many shipbuilders in Canada and Quebec. Even though they have no hope of seeing their sector excluded from the agreement, they do expect the government to act quickly and forcefully. We read in the report that, according to representatives of shipbuilders and marine workers:

...without combined access to the SFF and ACCA, the impact of the agreement would be devastating to the industry and would lead to job losses. In their view, this additional government support was critical if the Canadian industry was to survive increased competition from Norwegian producers.

Some will say that Norway has announced that it has stopped subsidizing its shipbuilders and that that will enable Canada to compete on a level playing field with that country. But what are we doing to make up for all the years when there were no subsidies here, while Norway was achieving the high level of competitiveness it enjoys today, thanks to generous government support? Quite simply, there needs to be a dramatic shift in the federal approach to the marine industry, which means abandoning the laissez-faire policy the Liberals and Conservatives have followed to date.

I am happy that we are holding this debate on the trade agreement with the European Free Trade Association, because it reveals how fragile our marine industry is in the face of foreign competition and forces us to take a stand on these issues quickly. It is not the agreement that is bad, but our policy. That is why a change of direction is imperative. In 5 or 10 years, it will be too late. We must act now. With a few targeted measures, our shipyards can become modern, productive, financially healthy and extremely competitive. The biggest problem to date has been the lack of political will to change things, and it is high time that changed too.

Of all the aspects of this free trade agreement, this one concerned me the most. The other aspects of the agreement, including agriculture, seem to be well handled and in line with Quebec's interests. I would just like to add, as some of my colleagues have already pointed out, that this free trade agreement may open the door to a future agreement with the European Union. We must seize the opportunity when it arises and, more importantly, be ready to compete.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, because the tariff will be reduced to zero over 15 years, with the phase-out to begin after a three-year waiting period, the recommendation by the Standing Committee on International Trade suggested that the government adopt a vigorous policy to promote the development of the shipbuilding industry. In fact, the government should adopt that kind of policy, to be implemented as quickly as possible.

It must be recalled that for the 10 years that negotiations went on, particularly in 2000, the Shipbuilding Association of Canada did not agree with the government’s policy. The tariff reduction period was much shorter still. Ultimately, the Association agreed to the reduction in the tariff, but over a 15-year period, and after a three-year waiting period. When representatives of shipyards appeared at the committee, they asked that priority be given to two measures: allowing purchasers of Canadian ships to take advantage of accelerated depreciation and adopting a structured financing facility.

My colleague can tell you this, because I will give him an opportunity to reiterate it: the Bloc Québécois is making many more recommendations than this; there are numerous others. These are things that should be adopted as quickly as possible to assist the shipbuilding industry. I would therefore ask that my colleague elaborate a little on all of the proposals made to the Conservative government by the Bloc Québécois.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I thank my colleague for giving me the opportunity to explain the recommendations made by the Bloc Québécois in the report. Because of the high cost of these products, the industry is calling for special financing arrangements for the shipbuilding industry so that it can purchase equipment of that value. Precisely because of the value of these products, which often comprise the bulk of the purchaser’s assets, the industry needs special tax rules in order to be competitive. Again, because of these major investments, the industry needs to share the risk it assumes at the research and development stage, in particular to facilitate access to credit.

Another very important measure involves offering financing to cover a large portion of the value of the contract, 87.5%. That is what we are calling for. To conclude, all these measures should be available both to Canadian purchasers and to foreign purchasers.

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

Mr. Speaker, I listened very carefully to the speech by the member for Rimouski-Neigette—Témiscouata—Les Basques. If I understood correctly, he is against the agreement and deplores the repercussions it will have on the shipbuilding industry in Quebec and elsewhere in Canada.

We are well aware that with the loss, at least temporarily, of 1,100 jobs at the Davie shipyards, the shipbuilding industry is presently in crisis.

My question is very simple. The Bloc Québécois has already made the mistake of supporting the softwood lumber agreement, which led to the loss of thousands of jobs. We cannot blame Guy Chevrette for recommending the agreement. It was a bad agreement for Quebec and it led to the loss of thousands of jobs. At present, we know that hundreds of jobs will be lost, especially in Quebec, because of this bill and that it will be disastrous for shipbuilding throughout Canada.

Is the member prepared to vote against this bill?

We cannot act like the Liberal Party that always speaks against an issue but then always votes with the Conservative government. It is time for the Bloc Québécois to stand up, to follow the lead of the NDP and to vote against this bill. Is it prepared to do so?

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I would have been very surprised had my NDP colleague not mentioned the softwood lumber crisis. He had to do it, he just could not help himself.

The Bloc Québécois believes that this agreement with the European Free Trade Association is a good agreement. However, in order to accept it, Canada needs to have a true policy for the development of its shipyards. The Bloc position on this agreement is very clear.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, to allow my colleague from the Bloc Québécois an opportunity to continue to present his views on the shipbuilding industry, in reply to the question from the NDP, which was a little biased, it must be noted that is indeed sad, it is heart-breaking, that there have been job losses in Quebec in the shipbuilding industry. But we must also set the record straight: the accord has not been adopted yet.

So this is not a trade issue, it is an industry issue. What is happening now relates to the industry. The accord is not what is having an effect on the job losses in Quebec, which I hope are temporary. Rather, it is a matter of industrial policy, it is a matter of the shipbuilding industry, which neither the Liberal government of the day nor the Conservative government of today wants to address.

So it is relatively simple. We need appropriate measures to promote the development and modernization of the industry, and I believe firmly in the abilities of the workers in the shipbuilding industries, in their skills and potential, but to do that, the Conservative government has to provide the tools. We know this is a laissez-faire government, but in times of economic crisis such as we are experiencing today it is even more important that it adopt policies. And we have policies to offer. I am sure my colleague could list a few more for you.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, as one of the measures that should accompany this policy, we have talked about loans and loan guarantees for shipyards that have to invest so they can provide a financial guarantee in order to bid on new contracts. That takes capital, and the government should provide support so they can do that.

The tax rules for financial lease agreements absolutely have to be improved, and these people have to be given additional tools so they can sign contracts. We are talking about refundable tax credits for shipbuilders. Again, this is a measure to make their lives easier.

We believe that all these measures should be included in a genuine policy for our shipyards, in both Quebec and Canada. This would enable them to deal with free trade, particularly under the agreements with Norway that are part of the agreement with the European Free Trade Association.

[The Acting Speaker, Barry Devolin]

The hon. member for Burnaby—New Westminster has the floor for a very short question.

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

Mr. Speaker, in a sense, this is a supplementary.

I asked a direct question but did not get a direct answer. We know that the bill will have a negative effect in Quebec. Are the hon. member and his caucus prepared to follow the NDP's lead and vote against this bill, yes or no?

[The Acting Speaker, Barry Devolin]

The hon. member for Rimouski-Neigette—Témiscouata—Les Basques has the floor for a short answer.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, as I said earlier, the Bloc Québécois is in favour of the free trade agreement with the European Free Trade Association. What we are saying is that this agreement has to be accompanied by a policy providing real support to the shipbuilding industry.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Speaker, I would like to give a preamble. My comments about the bill are not about protectionism. My comments about the bill are about the future of our children and our jobs in this country. I cannot hope to reach the eloquent level of the member for Sackville—Eastern Shore but I will certainly try.

The House might be wondering why someone from northern Ontario is standing up to talk about the shipbuilding component of the bill. Aside from being a forestry centre for Canada, Thunder Bay is also one of the shipbuilding and ship repairing centres in Canada.

Members in the House may not know that but I would just like to point that out because we are a shipbuilding city. We have skilled workers, we have a seagoing harbour, and we have high tech companies, like Pascal Engineering, that build and repair ships.

Unfortunately, when it comes to shipbuilding in this country as we have seen over the years, awarding contracts for shipbuilding is not done on any logical basis. It is really done on a political basis. What I am hoping is, when I finish speaking today, that someone from the government side will stand up and tell me that shipbuilding centres in Canada like Thunder Bay will not be forgotten if any money every does come forward to build ships. They can build them small, they can build them large and we would certainly like to be part of that. I would like someone on the government side to get up and assure the people in Thunder Bay and northwestern Ontario that this is going to happen.

The people in Thunder Bay in the shipbuilding sector do not believe that shipbuilding is a sunset industry. The government and indeed the Government of Ontario say that they believe that shipbuilding just like forestry is a sunset industry.

My major concern with the bill are the provisions regarding shipbuilding. The bill reduces tariffs on ships from 25% to 0% over a period of 10 to 15 years depending on the type of products. Nothing happens in the first three years. One category of ships goes right down to zero and these are the very large ships, the very kinds of ships that can be built in Thunder Bay.

The government has dropped the ball on other trade agreements. I do not want to go into great detail about that, but what we are talking about is a situation that is very real with real jobs disappearing.

We understand the ideology of the government on free trade agreements. An economist 15 or 20 years ago in the United States wrote a book and said that they are good things. Unfortunately, the way they have been arranged is that they are mostly selling out.

In support of my argument I would like to give the House a couple of quotes. The first one is from George MacPherson who is the president of the Shipyard General Workers' Federation of British Columbia. He said:

The Canadian shipbuilding industry is already operating at about 1/3 of its capacity. Canadian demand for ships over the next 15 years is estimated to be worth $9 billion in Canadian jobs. Under the FTAs with Norway, Iceland, and now planned with Korea, and then Japan, these Canadian shipbuilding jobs are in serious jeopardy. In these terms this government plan is shear folly, and an outrage.

As well, Les Hollaway, who is the Atlantic Canada Director of CAW, stated, “Your committee should not recommend this free trade agreement without first recommending that the federal government first address the issues facing the shipbuilding industry that would allow the industry to compete in a fair and equitable manner with our trading partners”.

What is the shipbuilding issue? During the last 20 years Norway, Canada's EFTA main competitor in this sector, built a strong shipbuilding industry by initially protecting its market and by heavily subsidizing production. Now, Norway is able to compete in the zero tariff environment. During all that time Canada had kept the 25% tariff on ship imports without a shipbuilding policy of any kind and no money to support the industry. The so-called generous 10 to 15 year phase-out terms simply mean a stay of execution for Canada's shipbuilding industry.

Andrew McArthur from the Shipbuilding Association of Canada made a compelling case on behalf of Canadian shipbuilders to have that industry explicitly excluded from the Canada-EFTA agreement, as it is from NAFTA. He noted that Norway's world class shipbuilding industry is not subsidized today, but it owes its present competitiveness to the serious government support it received in the past years. Andrew McArthur said:

So our position from day one has been that shipbuilding should be carved out from the trade agreement. We butted our heads against a brick wall for quite a number of years on that and we were told there is no carve-out. If the Americans, under the Jones Act, can carve out shipbuilding from NAFTA and other free trade agreements, as I believe the Americans are doing today with Korea, or have done, why can Canada not do the same?

It is precisely this type of policy that has allowed Norway to become a world class player that it is today and this is precisely what the federal government failed to do by completely gutting Canada's shipbuilding industry.

Canada has the largest coastline in the world. It has no strategy for its shipbuilding industry. This situation is absolutely unacceptable. When the tariffs come down in 15 years Canada's industry will be unable to cope with Norwegian competition. The current state of Canada's shipbuilding industry is directly related to the absence of a vigorous industrial development policy by successive federal and Conservative governments. Canada's shipyard industry is only a shadow of its former self, roughly one-third to one-quarter of where it was 10 or 15 years ago.

Recently, the Harper government and the B.C. Campbell government again refused to stand up for our shipbuilding industry. I do not want to go into too much detail, but we all know the story of the B.C. Ferries. The first ship arrived last December. The Harper government has refused to commit to put toward--

[The Acting Speaker, Barry Devolin]

Order. The member knows that he cannot refer to members of Parliament by their given names.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Yes, Mr. Speaker, I apologize to the House. Hon. members might want to ask a couple of questions on that.

Even those in the business community who have a vested interest in supporting the acceleration of EFTA, such as the Canadian Shipowners Association, justify their support on the basis that Canada has forever lost its ability to build ships, but we do not share that pessimism. With proper and intelligent support from the federal government, Canada's domestic shipbuilding industry could be rapidly up and running. All that is missing is the political will of the federal government.

The U.S. has always refused to repeal the Jones act and it has been mentioned a couple of times today. I would like to remind the House of what that act says. The legislation has been in place since 1920 and protects the U.S. capacity to produce commercial ships. The Jones act requires that commerce between U.S. ports on the inland and intercoastal waterways be reserved for vessels that are U.S. built, U.S. owned, registered under U.S. law and U.S. manned. The U.S. has also refused to include shipbuilding under NAFTA and has implemented in recent years a heavily subsidized naval reconstruction program.

Therefore, the shipbuilding sector must be excluded from this agreement and the federal government should immediately help put together a structured financing facility, SFF, an accelerated capital cost allowance for the industry, and an effective buy Canada policy for all government procurement.

As I said at the beginning of my remarks, I am not talking about protectionism. I am talking about fair play and I am talking about looking out for the future of our children, our families, and our capacity to produce goods which are needed in Canada and around the world. We have that capacity.

In closing, I would like to invite some questions from the government side and the opposition. I know there are probably a couple.