Mr. Speaker, it is my pleasure to rise today and speak in support of Bill C-57. I am not going to discuss agricultural issues today. I want to discuss the implications of this bill with respect to a major segment of Canadian industry, the petrochemical industry.
I am speaking in one sense out of self-interest because the petrochemical industry happens to be the largest industry in my riding. It came about as a result of chance when oil was first discovered about 20 miles outside the city of Sarnia in the mid-1850s. Oil was brought into the city by truck and train and later by pipeline to the point that Sarnia became an oil town. Out of that evolved the petrochemical industry which now plays a major role in the economy.
The demand for oil and oil related products particularly following the second world war led to an expansion of petrochemical companies throughout Canada but in particular in my riding.
We saw during the post-war period, after the second world war through to the eighties, massive expansion, massive demand for petrochemical related products. We saw that the income of those who worked in this particular segment of the economy was probably the highest per capita income of Canadians.
However, in the eighties, in the downturn, the petrochemical industry suffered a number of economic set backs. There has been a decrease in demand since 1988 due to the recession. There has been an increase in competition in particular in the Asian rim. Changes in government regulations have had a negative impact on an industry that remains very vital to our Canadian economy.
I would point out that in the province of Ontario the provincial government has imposed a number of environmental regulations which are driving business out of this part of the economy. In my riding alone there have been more than 5,000 jobs lost since 1988. Still, it is a vital part of the economy employing something like 17,000 people.
There are 17 petrochemical facilities in my riding. There are the Imperial Oils, the Shell Oils, the Duponts, the list goes on and on. There are 10,000 people directly employed in it and another 7,000 people working in related fields. It is interesting to note that employees in the petrochemical industry earn two and one-half times the annual salary of the average Canadian worker.
We realize that trade liberalization is a key to continued development in this industry. That is why passage of Bill C-57 is essential for the economic well-being of a large number of my constituents. To understand why that is the case, we only need to consider the chemical industry or the petrochemical industry in Canada.
Canada's chemical manufacturing sector has annual sales of over $10 billion and employs some 30,000 Canadians. It provides the basis for a broader chemical and chemical product sector which employs another 90,000 Canadians. This industry is Canada's third largest manufacturing sector and is also third in terms of value added. The chemical industry depends on international markets for its survival. Exports account for well over 50 per cent of annual production in Canada. In some facilities, especially in southern Ontario in my riding, it is well over 80 per cent that is exported.
That is why the normalization of tariffs achieved by the WTO is so important. If we consider for one moment the size of world trade in this industry, we will know that in 1993 total exports of chemicals worldwide were some $313 billion U.S., or 9.2 per cent of total world exports. For the same year total world production was over $1.25 trillion in U.S. funds.
Bill C-57 represents a significant step forward for the chemical manufacturing industry in my riding, throughout Canada and particularly in Alberta. By joining the World Trade Organization Canada and its major trading partners, including the European Union, Japan and the U.S. as well as other industrialized nations have agreed to harmonize a broad range of chemical tariffs at low rates of duty. Any Canadian tariff that is currently below the harmonization levels will remain unchanged.
Also included in the agreement are new global rules for the protection of intellectual property rights, including a set of standards in the area of copyrights and trademarks which commit each government to protect and enforce intellectual property rights. That is very important for Canadians where we have invented a number of procedures of a chemical nature that have been given protection as intellectual property.
This agreement will also result in several benefits for Canada in general. Once again I speak in favour of my riding which will benefit from it.
The reduction and harmonization of most favoured nation tariffs will improve market access for Canadian exports of chemicals and chemical products and plastics to niche markets. This improved access will be particularly beneficial for the export oriented petrochemical and synthetic resin industries located in Canada.
For Canada the strength of the World Trade Organization and the GATT lies in their broad country participation. The disciplines that will apply to developing countries will improve our access to these markets. By providing more open international markets the World Trade Organization agreement will assist the Canadian industry to become better oriented to global markets.
The traditional Canadian branch plant structure is giving way to one that is increasingly world competitive. International manufacturing mandates and research development mandates for Canada will be facilitated by this agreement. The World Trade Organization will also provide an improved dispute settlement regime for a more effective alternative to trade wars.
I would like to talk briefly about the future. Market access for petrochemical products is essential to the continued growth of the industry. It is vital for economic renewal, notwithstanding in whose riding it may be. To be globally competitive means to have real access to global markets. In ratifying this agreement we as a country are taking an important first step. We must continue our efforts if we are to ensure continued growth in this very vital sector of our economy.
Canada's trade negotiations are, in my opinion, to be commended for their accomplishments during the Uruguay round. They were successful in getting the key target markets of Korea, Singapore and Hong Kong to agree to most of the tariff lines. These markets are of particular interest to the petrochemical sector in Canada.
However, other countries-there is no question this is something that must be worked on-must be encouraged to join in in harmonizing their chemical tariffs in the future. In particular I am thinking of China, because China has a chemical industry that is two and a half times the size of Canada's in terms of production. The Chinese industry is growing at the rate of 15 per cent a year and we must convince the Chinese to harmonize their chemical tariffs and discipline restrictive border measures for chemicals so that their borders are also open to our products.
Briefly in conclusion, we have to realize that we are living in a world in which economies of scale are the determining factors. At the present time in Ontario and most Canadian manufacturers of petrochemicals are sized for the national and regional markets but they are not of international scope in size. To be truly competitive these facilities must be world scale in size. To be world scale in size they must be able to freely enter world markets without barriers in place. The larger our market the more efficient and competitive Canadian industry can be. That is obviously a truism.
Our world scale plants in the manufacturing of petrochemicals such as ethylene located in Joffre, Alberta and in my riding of Sarnia, add substantially to our balance of trade with other countries, especially the United States.
As Pacific rim countries attempt to break into the marketplace we are still in a position of strength. Recent studies clearly show that the workforce required to operate these petrochemical facilities is the second most educated and trained workforce today in Canada, second only to the software industry but in many respects virtually identical.
To ensure that there is a place for our technical graduates we as a country must constantly strive to ensure open markets for our goods. Quite simply many of our Asian competitors do not have the skilled employees needed to operate such facilities effectively or efficiently.
We must also remember that the production of petrochemicals ranks highest in Canadian manufacturing in adding value to raw materials. We have the raw feed stock in abundance, one need only visit the gasfields of Alberta to realize the volume of the gas stocks have. We have gas stocks in Ontario also. We must now ensure that we pass this bill in order to ensure that we have
the markets to which we can ship Canadian products. We can use these raw stocks and we can add great value to them in the end.
Finally, without the passage of this bill we will slowly but surely strangle this important segment of our industry in our economy.