International Trade Committee on June 5th, 2006

[The Chair, Conservative, Leon Benoit]

Yes.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

Just for clarification on the independent arbitrator who's outside the dispute.... I have a constituent who has a small flooring company, and he's being charged 20.24% duty by the Americans under the softwood deal. He's very upset, because he gets most of his wood privately on the open market, often from non-stumpage-based logging, and he also buys from a lot of small, single-man mill operators and pays much higher prices for the raw wood. And he's being charged on the finished product--it's milled, it's mitred, it's formed.

So would it be best for him to go through the arbitration process, or is there some other means to get resolution to this? Because he's having to pass the costs on to his American customers.

Who pays the cost, and is that under the budget? And if the dispute mechanism is cumbersome and doesn't seem to work.... Are we funding it to $2.991 million, or is that billion? I'm not quite sure what the numbers mean.

[David Emerson, Conservative, Vancouver Kingsway, BC]

I'm not sure what you're asking on this.

[Catherine Bell, NDP, Vancouver Island North, BC]

It's on the NAFTA secretariat section, under vote 65.

[David Emerson, Conservative, Vancouver Kingsway, BC]

I'll come back to that.

On the NAFTA secretariat, there are staff who are working on NAFTA-related issues. We're always working on definition issues, on concepts of what we call rules of origin. There's a whole lot of administrative and analytical work that goes into just running the North American free trade agreement, and those are staff expenditures related to that. That's not related to dispute resolution.

On your flooring manufacturer, you have a letter there. I presume it's from the constituent. If you could give that to us it would be helpful. There are a number of producers of value-added products who have been brought into the case recently and are facing quite substantial duties. We're trying, as part of the negotiation, to wrap this up. We're trying wherever we can to get some of these producers excluded, or at a minimum more fairly treated. Perhaps you could pass that along to me. We're looking at a number of companies in that regard. In some cases we may get them out entirely, we just don't know, but we need the information. And that person should give it to us.

[Catherine Bell, NDP, Vancouver Island North, BC]

He may have sent you a letter, I'm not sure, but I'll pass it on anyway.

[David Emerson, Conservative, Vancouver Kingsway, BC]

Who is the producer?

[Catherine Bell, NDP, Vancouver Island North, BC]

Woodland Flooring, Steve Roscoe.

[David Emerson, Conservative, Vancouver Kingsway, BC]

Okay, pass it along.

[The Chair, Conservative, Leon Benoit]

I have two minutes if you have more questions.

[Catherine Bell, NDP, Vancouver Island North, BC]

Where is the dispute mechanism resolution funded from?

[David Emerson, Conservative, Vancouver Kingsway, BC]

That wouldn't be included in these estimates. This would have to be included on a go-forward basis. I'm not quite sure where the funding will come from for that; it's something we will have to work through as part of the finalization of the negotiations. It may actually be something that would be paid for out of some of the duties that are retained outside of the return of deposits to producers. I'll let you know.

[Catherine Bell, NDP, Vancouver Island North, BC]

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Bell.

Mr. Temelkovski, for five minutes.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you very much, Mr. Chair.

Thank you, Mr. Minister.

International Trade Canada was requesting $173 million, including $130 million to forgive certain debts to African countries in November, or in the fall budget of 2005. It looks like the department has not requested that through government warrants. It's not clear that the funds for the debt relief are in the 2006-07 budget. Did the department find another mechanism to forgive the debts for the countries in the supplementary estimates, especially for the Congo, Cameroon, and so on? If not, what is the status of these countries' debts today? Perhaps you could comment on that too.

[David Emerson, Conservative, Vancouver Kingsway, BC]

My understanding is that this initiative is still in play, but it's under Foreign Affairs and/or CIDA and not in International Trade. They were the kinds of costs that could not be covered by warrants. As you perhaps know, special warrants require a very high standard in terms of what is legal as a special warrant. It has to be urgently and immediately required in the public good, and you couldn't make that argument with those particular payments.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you.

According to the main estimates, the IT Canada bilateral relations program is no longer in existence. This activity received $54.2 million in the 2005-06 main estimates. Why has this program actively been discontinued? How has the funding committed to this activity been spread across the four other areas?

[David Emerson, Conservative, Vancouver Kingsway, BC]

I do not have the answer to that question. It would appear my officials do not have the answer to that question. Could we give you a written response?

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Absolutely.

If I could, I have one more question. This is with great help from our research analysts, by the way, who we have to give some credit. On February 6, 2006, the government announced that International Trade Canada and Foreign Affairs Canada would be reintegrated. How much will this cost? And will International Trade Canada still report separately from Foreign Affairs Canada in the future?

[David Emerson, Conservative, Vancouver Kingsway, BC]

I dealt with the cost issue in an earlier answer. It will cost about half a million dollars, and it will be absorbed in the departmental budget from other cost savings elsewhere in the system. Going forward—and I think this will be picked up in the supplementary estimates—international trade and foreign affairs will be merged into common votes as part of the reintegration.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Temelkovski.

I think we have time for two more questions before we go to the question on the estimates.

Monsieur Paquette, and then Mr. Miller, and then if someone moves the motion, we'll proceed to votes on the issue.

[Pierre Paquette, Bloc, Joliette, QC]

I'd like to come back to the Canadian International Trade Tribunal's ruling on safeguard measures. It's generally acknowledged that safeguard measures are a temporary initiative to give the industry time to recover. I toured the Raleigh plant in Waterloo. They now use robots to do welding, but it all takes money, and time. In my view, it is reasonable to give this industry a chance to compete against Vietnamese and Chinese industries.

You've decided to side with distributors, and that's your choice.

The furniture manufacturing sector is now lobbying for safeguard measures of its own. What message are we conveying to this industry? Regardless of whether you successfully argue your case before the CITT, these measures will never actually be enforced. In fact, no single safeguard measure recommended by the CITT has ever been enforced. We might just as well say that Canada does not apply the international rules that it could to temporarily protect its industries. You're sending a very negative message to our manufacturers.

I for one was extremely disappointed with this decision. Obviously, it's never very pleasant to take safeguard action, but I would imagine that furniture manufacturers are quite worried about the prospect of having to hire and pay for legal counsel, knowingly full well that ultimately, even if they win their case before the CITT, it's unlikely any safeguard measures will ever be applied.

What would it take for you to follow through with a Canadian International Trade Tribunal ruling? Your answers will always be truthful. Enforcing the ruling will mean higher prices for consumers wanting to purchase a bicycle and distributors won't be happy. The same holds true for the furniture sector. Clearly, distributors enjoy the wide variety of products available from China. So then, what would it take for the government to implement safeguard measures?

[David Emerson, Conservative, Vancouver Kingsway, BC]

I don't want to second-guess what others ministers and cabinet may decide. I've met with the furniture manufacturers—at least some of them. I've talked to them about their issues and concerns. I've encouraged them to continue to file another request to the CITT. We'll look at the circumstances of that particular request when it comes in, and we will make our recommendation into the cabinet process. Mr. Gero was there when we met with them.

So I have had a meeting and tried to help them to put a case together, and we'll see where it goes.

[Pierre Paquette, Bloc, Joliette, QC]

If I were in their shoes, I admit that I wouldn't be overly optimistic.

I have another question for you, this time one sent to us by representatives of the softwood lumber industry. All of the groups with whom we have met have asked that legal victories be acknowledged, one way or another, in the agreement.

Do you think it's possible to find some way of doing that, in order to avoid having to start all over again when the agreement expires seven or nine years down the road, as if the NAFTA panels had never handed down any rulings.