Thank you, Mr. Chairman.
I appear before you today to represent approximately 2,000 skilled members of the Shipyard General Workers' Federation of British Columbia who work in the shipyards, in marine manufacturing and supply industries, and in metal fabrication shops in British Columbia's coastal communities. Except for a few medium-sized shipyards, the majority of marine and metal manufacturing plants in B.C. are small operations supplying capital goods to the local market.
I'm here to echo what many other representatives from the transportation and metal manufacturing industries have said before me, and that is that we are strongly opposed to yet another free trade agreement that seriously threatens to undermine the viability of our manufacturing industries in our province and country.
First, I would like to once again say that we are very appreciative of the undertaking of your committee to conduct extensive hearings on the implications of the free trade agreement currently being negotiated between the Government of Canada and EFTA, and we appreciate this opportunity to make this presentation.
One of the objections we have to Canada-EFTA negotiations is the complete absence of any prior consultation with our industry representatives before the formulation of Canada's trade agreement proposals. We also object to these negotiations proceeding before there's been a full impact assessment, with participation by labour unions and civil society groups, of the economic and social impacts of the standard FTA model on workers in Canada. One would be led to believe, from reading the documents on the government's website concerning these EFTA negotiations, that there's nothing but positive results from such an agreement. But we all know from our experience with NAFTA and subsequent FTAs that this is just not the reality and that there are all kinds of serious negative consequences, especially for Canada's struggling manufacturing industries, our workers, and our communities.
Our marine and metal fabricating industries in British Columbia have been already seriously undermined by NAFTA through elimination of the 25% tariff on ships imported from the United States and Mexico. Norway has become one of the world's leaders in ship construction with the help of their government, and U.S. shipyards have had a significant unfair advantage from Jones Act protection in recent years, a heavily subsidized naval reconstruction program.
In addition, we have suffered the serious loss to a German shipyard of four B.C. Ferry corporation contracts to build large new car and passenger ferries for B.C. coastal waters. Choosing to enter into a similar FTA with EFTA, the Government of Canada will drive yet another stake into the heart of a viable Canadian shipbuilding and marine manufacturing industry. But this stake, in comparison to others in the recent past, has all the signs of being the fatal one.
For our sector, the issue is not about forcing the Canadian shipbuilding industry to become more competitive so that it's able to compete in an export market for new or rebuilt ships. Canada has never been a significant exporter of ships and never will be. Without the current 25% tariff on imported ships, Canadian shipyards will never be able to compete with Norwegian, Korean, Japanese, and Chinese shipyards for the supply of vessels to the Canadian maritime industry. Therefore, for us the issue is about sustaining a viable heavy manufacturing industry in this country to supply just the domestic market and to protect it from the destructive forces of competition from subsidized major exporters of marine transportation equipment. If our government does not do this in these EFTA negotiations, our industry will be all but dead in a matter of a few years.
The Canadian shipbuilding industry is already operating at about a third of its capacity. Canadian demand for ships over the next 25 years is estimated to be worth $40 billion. Under the proposed FTAs with Norway and Iceland, and the planned FTA with Korea and then Japan, these Canadian shipbuilding jobs are in serious jeopardy. In these terms, this government plan is an absolute outrage.
As stated by the president of the Shipbuilding Association of Canada, it is impossible to envision anything positive for the Canadian shipbuilding sector in a Canada-EFTA unless significant changes are made to the Canadian government's shipbuilding policies, both federal and provincial. Without tariff protection, Canadian-built government procurement policies, a comprehensive industrial strategy, and other domestic industry supports, an FTA with Norway, Iceland, Korea, and Japan will totally undermine all of the cooperative efforts of the Canadian shipbuilding participants of the past two and a half decades to bring the Government of Canada to a point of implementing a comprehensive strategy with a viable long-range plan for the sector.
For over two and a half decades, all parties in the industry have been calling on the Government of Canada and demonstrating the need through numerous studies and submissions to develop a strategy for the development of a viable, modern industry available to meet future Canadian requirements. Finally, in June 2001, then Minister of Industry Brian Tobin gave his reply to a March 2001 report of the industry-labour shipbuilding National Partnership Project Committee, which had appealed to the minister to take practical and feasible steps to assist in the revitalization of the shipbuilding and marine fabrication industry across Canada. In his reply to the national partnership committee report, Minister Tobin acknowledged that Canada's shipbuilders systematically encountered competition from production subsidies, generous financing, market protection, state ownership, and, in Canada's largest potential market, the United States, the Jones Act, which excludes them from large parts of the commercial market.
Among the 36 recommendations by the national partnership committee, one addressed the hidden subsidy to vessel purchasers from shipyards in South Korea and China through the mechanism of very low wages and intolerable working conditions imposed on their workers. In some countries the workers themselves are subsidizing their industry by working for low wages and in conditions that would not be tolerated in Canada. By deliberately suppressing labour and social rights, some foreign shipbuilders are effectively filling their order books at the expense of their workers. In light of this reality, the national partnership committee believes that an international social clause governing labour standards in the shipbuilding industry should be developed and promoted by the Canadian government.
In his June 2001 announcement of a new policy framework for the Canadian shipbuilding and marine industry, Minister Tobin stated that the Canadian industry is recognized as an important contributor to the national and local economies, and that a viable competitive domestic ship maintenance and repair capacity is important to Canadian operational needs. However, since that announcement, each succeeding government has stepped further back from Minister Tobin's modest commitments to the industry.
Canada has coasts that face three oceans. It has the longest coastline in the world and has maritime responsibilities extending over an ocean area greater than its land mass. The St. Lawrence Seaway transportation route is longer than the Atlantic Ocean is wide, yet we have a maritime transportation manufacturing industry that has been floundering for over 30 years because of a failure of the government to recognize and act in the interest of a vital and strategic sector.
The governments of all great shipbuilding countries in the world, including the U.S., Norway, Japan, Korea, and, more recently, China, have long recognized the strategic importance of domestic shipbuilding and have built up their industries through all manner of procurement policies, subsidies, tax relief, loan guarantees, infrastructure development, and tariff protection. Canada is the only large maritime union that hasn't had a plan and a development strategy for the industry for the past 50 years.
To have to confront the European Free Trade Association under a standard FTA under these circumstances will result in disaster for our country, for our industry. We call upon the government to exempt the shipbuilding industry from this agreement until the following has been done: all manufacturing industry parties have been consulted on the trade agreement model best suited for entering into an FTA with EFTA; comprehensive economic and social impact assessments have been conducted under alternative FTA models, with participation by labour unions and civil society groups in Canada; and a comprehensive industrial strategy has been developed by the government for the Canadian transportation manufacturing industry that has, as its primary objective, the long-term stability and viability of the shipbuilding and marine fabrication industry on the east and west coasts. Finally, we call upon the federal government to immediately implement an enhanced structured financing facility and accelerated capital cost allowance for the industry and an effective “buy Canada” policy for all government procurements.
Thank you, Mr. Chairman.
