Debates of Feb. 18th, 1994

Customs Tariff

[Doug Peters, Liberal, for the Minister of Finance]

moved that Bill C-5, an act to amend the customs tariff, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to introduce for consideration by the House Bill C-5, an act to amend the customs tariff.

The legislation I am introducing today seeks to extend the general preferential tariff, commonly referred to as the GPT, for another 10 years. The GPT is a tariff preference granted to developing countries for goods originating in those countries.

Let me give some of the history of this preferential tariff. In the mid-1960s there was widespread recognition that special and differential tariff treatment for developing countries was a means of fostering growth and well-being of those nations. Consequently in 1968 it was agreed at the United Nations conference on trade and development that a system of trade preferences should be implemented for developing countries.

In June 1971 this decision was accepted by Canada and other signatories to the General Agreement on Tariffs and Trade. Members of the GATT agreed that developing countries would be permitted to award more favourable treatment to products imported from developing countries than to similar products from developed countries. It was also agreed that the preferential tariff would be generalized, non-discriminatory and non-reciprocal.

Canada introduced its general preferential tariff scheme on July 1, 1974 for a 10-year period. The GPT was subsequently extended for another 10 years until June 30, 1994.

With this history in mind I would like to outline for the benefit of the House some of the essential features of the GPT. The GPT provides for a reduction in tariffs of up to one-third of the most favoured nation rates on certain types of goods from developing countries.

In the case of the least developed developing countries, that is the poorest countries known as the LDDCs, the tariff reduction is even larger. These countries are entitled to duty free treatment on all of their GPT eligible exports to Canada.

In all, more than 180 countries and territories are entitled to zero or low tariffs on a wide range of products, primarily manufactured and semi-manufactured goods.

In order for particular items to qualify for GPT they must comply with the rules of origin and other regulations. More particularly goods would only qualify for the GPT if at least 60 per cent of the factory price of the goods exported to Canada originated from one or more GPT countries. In the case of the LDDCs, the poorest countries, the content requirement is 40 per cent.

In order to ensure that GPT products do not have an adverse impact on Canadian producers, a safeguard system is authorized by the Minister of Finance to withdraw GPT treatment for particular goods.

The question before us is simple: Should the GPT be extended? It is the government's view that the GPT should be continued. The legislation I have tabled proposes to extend the GPT for another 10 years to the year 2004. The government's decision to extend the GPT is being made at a time when most developed nations have already extended their preferential tariff schemes. In other words we are in the mainstream.

The reasons which justified the introduction of the GPT 20 years ago still remain. While the GPT has supported growth in the export sectors of many developing countries, they still have a long way to go. Indeed many developing countries still need preferential access to the markets of the developed world in order to improve their economic status. By allowing developing countries preferential access we continue Canada's tradition of assisting the developing world. Moreover, the massive weight of evidence from 50 years of trade liberalization supports the principle that export expansion contributes to general economic growth.

The GPT does not only benefit developing countries. As a result of lower tariffs on goods from the developing world, Canadian consumers enjoy access to imported goods at competitive prices. Also Canadian producers who rely on goods from GPT countries as inputs also benefit from the reduced tariff. Accordingly the GPT contributed to the economic development

of the beneficiary countries while allowing Canadians to benefit as well.

At the same time, and as noted earlier, in order to ensure that goods from GPT countries do not injure domestic producers, there exist legislative and quasi-judicial mechanisms for withdrawing GPT status to goods that are injurious to domestic producers. I wish to assure the House that where a reduced tariff injures Canadian producers, the government can move to disqualify such goods from the lower tariff. For example, rubber footwear and rubber inner tubes have for a number of years been excluded from the GPT scheme under temporary safeguard measures recommended by the Canadian International Trade Tribunal. The government has now decided to remove these products permanently from the scheme.

Finally, in recent years we have seen considerable change in the international economic and trade situation. Many developing countries are now enjoying significant economic growth while others need more assistance because their economic situation has deteriorated over the past several years. We have recently ratified NAFTA and the Uruguay round of the GATT has just recently concluded. These trade arrangements will result in reduced tariffs on many products. These changes have significant implications for the GPT.

I also wish to tell the House that the government is studying the ramifications of these developments with a view of making changes to the GPT tariff structure in the next year or so. The objective is to make the GPT an even better tool to assist the developing world. During this year consultations will be held with interested parties on possible expansion of GPT product coverage and reduction of GPT rates, particularly for the least developed countries. In addition, we will be examining the desirability of maintaining the GPT for those countries that have already achieved the high level of economic development.

To conclude I call on all members of the House to support this bill. Such support will show Canada continues to contribute to economic growth within the developing world.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, perhaps I may start by greeting my colleague, the Secretary of State for International Financial Institutions, who tabled this bill on January 31 on behalf of the Minister of Finance. Aside from the debate on the motion presented by the Reform Party last week, when I had the pleasure of making a presentation which dealt partly with international financial institutions, and in fact just before the secretary of state gave his speech, this is the first time he and I will have an opportunity to work together in the House.

He will be pleased to hear that we are probably on the same wave length regarding the general implications of the bill before the House today, and I hope this will be only the first of many such occasions.

I would now like to comment more directly on Bill C-5 which the House is being asked to consider and on the context that makes it so important, namely, export development assistance for developing countries.

This is a very short bill. It contains only one section, whose purpose is to extend for ten years-until June 30, 2004-the expiry date for the general preferential tariff applied by Canada to developing countries. Since the various provisions of the GPT have already been explained in detail by the secretary of state, I do not think I have anything to add in that respect. The bill amends section 45 of the Customs Tariff, under which the GPT was to expire on June 30 this year.

However, the government reserves the right to change subsequently, by order of the Governor in Council, the expiry date of the extension, the rate of duty provided under the GPT and the treatment given certain goods and certain countries.

Although not impressive in size, Bill C-5 has a considerable impact through what it actually does.

I may recall that in the early seventies Canada, like all industrialized countries, introduced preferential tariff treatment for developing countries. The purpose of this measure was to promote the economic growth of these countries by developing their trade with Canada.

Every 10 years, parliamentarians are asked to consider another ten-year extension for a measure that costs little and provides a form of indirect aid to developing countries. In this respect, the Bloc Quebecois reiterates its support for measures that promote international development.

The provisions of this bill ultimately provide an attractive market for the products of developing countries, removing the dependency that conventional development aid will sometimes create. This is positive aid that helps these countries develop goods for export and promotes their integration and participation in international trade, which is expected to intensify in the years to come. That is why the Official Opposition intends to support this bill.

Canada has acquired an excellent reputation for development assistance, through the expertise and activities of non-governmental organizations dedicated to international development. We must continue this tradition, and I want to take this opportunity to say that a sovereign Quebec will be guided by the same concern for international equity.

All of us have been exposed, from time to time, to the usual series of statistics that point to wide gaps in economic development and in the availability of basic resources ensuring a minimum quality of life, which is the case in many countries on this planet. More than one billion people or one-fifth of the world's population earn less than one U.S. dollar per day, comparable to a wage level that existed in Europe and the United States at the end of the eighteenth century. In the eighties, the per capita income of developing countries in Latin America and Sub-Saharan Africa declined, in real terms.

However, there is light at the end of the tunnel, and there are some indications that development programs can produce substantial positive results.

The average per capita income in developing countries, for example, has doubled over the last three decades, which is a rate of growth higher than in Great Britain during the industrial revolution, or in the United States in the 19th century, or even in Japan between the two world wars. Turkey, for instance, doubled its per capita income over a period of 20 years, from 1957 to 1977. Brazil made it in 18 years, from 1961 to 1979; South Korea in 11 years, from 1966 to 1977; and China in 10 years, from 1977 to 1987.

Infant mortality has been reduced by half and life expectancy has been pushed ahead 10 years on average. A child born in Shanghai is less likely to die before reaching one year of age and more likely to learn how to read and to live longer than a child born in New York.

Despite these very encouraging statistics, major differences and unacceptable inequalities continue to exist and in some cases to increase. It is therefore necessary to maintain our efforts in order to promote development in the countries which do not enjoy the great conditions we have here.

Clearly, magic formulas to achieve development in the Third World exist by the million.

Just think of the drastic measures advocated by the World Bank or the International Monetary Fund in order to bring structural changes to the macro-economic policies of these countries, even though they are very often accompanied by a worsening of already serious social problems.

Some experts insist on growth of local savings, while others favour a massive involvement of government in some sectors of the economy.

Others advise a total or partial closing off of the country to imports, in order to generate economic growth from the inside.

Finally, there are some who believe that opening the economies of developing countries to the world is, in the long run, the best way to achieve development. The abolition or reduction of tariff and non-tariff barriers and the adoption of measures to promote exports would be some of the roads to development.

Such measures would only ensure these countries do not remain mere observers of this tremendous phenomenon called market globalization. As for us, we must realize that we have everything to gain from a reduction of the dependence of these countries and from their involvement in, and contribution to the increasing world trade.

Therefore, I believe that one of the ways we have to encourage development in these countries is to open up our markets to their goods and services. This is why, in my opinion, Bill C-5 is a valid contribution to developing countries.

Some of these countries have already made the strategic choice of promoting export growth to improve their economic development. Results have been outstanding in most cases.

This strategic choice was made in the sixties by South Korea and Taiwan, and in the seventies by Thailand. These countries are living proof of the value of such a strategy.

Originally, the three countries had the social and economic characteristics we observe in several developing countries and those are a large and growing population, a low level of investment and an economy largely based on agriculture.

In less than three decades, they achieved an absolutely stunning rate of growth, along with some other countries in the region.

This phenomenal success is the result, among other things, of two strategic choices, one that I just mentioned, which is the implementation of export-driven policies, and manpower training as a major priority.

In this regard, Quebec is particularly sensitive to the importance of implementing a manpower policy which is consistent, flexible, structured and effective.

At the beginning of the sixties and until the early seventies, South Korea and Taiwan launched a very aggressive strategy of economic growth based on export promotion. A lot of incentives were made accessible to industry in areas that, today, we call soft sectors, for example textiles, clothing and shoes.

Following the difficult 1970s, these two countries emerged with leading annual growth rates of nearly 10 per cent between 1985 and 1991. They also succeeded in diversifying their production in favour of goods with a higher value added.

An interesting parallel can also be drawn with certain Latin American countries. Before the 1980s, countries of Latin America would have been hard pressed to pass for champions of free trade. Quite the contrary, in fact.

Most of them had adopted trade policies aimed at protecting their domestic market from foreign competition, instead of policies which would have allowed domestic firms to exploit their comparative advantages on foreign markets.

However, in the early 1970s, a number of Third World countries and many Latin American countries such as Brazil, Mexico and Peru, experienced a debt crisis. Consequently, with the blessing of the International Monetary Fund and the World Bank, these countries were compelled to adopt outward-looking policies, lowered tariff barriers, introduced import permits and quotas and adopted export promotion measures.

During the 1980s, several Latin American countries rid themselves of dictatorial regimes and replaced them with democratically elected governments. Contrary to all expectations, these governments managed to survive and, in most cases, are still around today.

Conditions in several countries in this region, chief among them Mexico and Chile, appear favourable to very significant economic growth. It comes as no surprise, then, that the adherence of other Latin American countries to NAFTA has aroused considerable interest.

It should be noted, however, that the world trading system still has some shortcomings which impede the economic growth of developing countries.

According to the OECD, sectors such as agriculture and textiles which represented the strength of many developing countries after World War II, have in no time become the target of protectionist measures imposed by industrialized countries.

As paradoxical as it may seem, the beneficial effects of development assistance policies implemented by industrialized countries have often largely cancelled out by the protectionist trade measures theses very same countries have adopted.

Under GATT, agriculture was excluded de facto from the usual applicable rules, thereby allowing industrialized countries to protect their domestic market through the imposition of tariffs and quotas.

Moreover, industrialized countries have not hesitated to subsidize their agricultural surpluses around the world, pulling the rug out from under developing countries in the process and often rendering the latter's domestic production uncompetitive. With your permission, I would like to quote an excerpt from an OECD report released last year which states the following: "Exports of Latin American agricultural products have also been affected by the high levels of agricultural production within OECD countries as well as by the ever-increasing level of subsidies. In some cases, agricultural exports from developing countries have been squeezed out of profitable markets by highly subsidized exports from industrialized countries".

Furthermore, the tariff system in place in industrialized nations penalizes imports of processed products by giving the advantage to raw materials and other unprocessed products. Developing countries would be at a disadvantage if they wanted to diversify their economies and begin producing value added products.

The success of the recent GATT negotiations should make life easier for exporters in Third World countries, particularly exporters of agricultural products, clothing and textiles. The elimination of tariff barriers on a growing number of products from tropical countries, along with the dismantling in ten years' time of the Multi-Fibre Arrangement, which will be included under the GATT rules, should also be a boost to Third World countries.

However, over the last decade or so, we have been witnessing, unfortunately, a resurgence in trade protectionism. New forms of protectionism, such as orderly market sharing agreements, voluntary restrictions on exports and other quota measures, have been introduced. Automobiles, semi-conductors and steel have been targeted, along with other industries which successfully lobbied for protectionist measures.

These measures add to those already in place for textile, clothing and agricultural products. Anti-dumping measures, so-called temporary safeguard measures and accusations of unfair trade practices are popping up everywhere these days.

Canada, as we know, is certainly not immune from this insidious and looming return to protectionism, particularly from its main trade partner, the United States, which is the market for almost 80 per cent of its exports. Our trade problems with the United States, especially with beer, steel, magnesium, softwood lumber and agricultural products, constantly remind us that free trade benefits are fragile and that we must watch our trade partners' practices more closely.

Economic development formulas vary between countries. Export promotion strategies are not, by themselves, a panacea. Although they are important, there is no question that other measures must also be contemplated.

People's happiness is not necessarily contingent on increased individual purchasing power. We must allow societies to develop at their own pace without forcing them to conform to the economic development model dictated by market forces. It is a decision that these societies must make for themselves. It is, however, important and even essential to contribute to these countries' economic growth by giving them preferential access to our markets.

Promoting the growth of developing countries' exports to industrialized nations is therefore a most commendable goal. The Bloc Quebecois does not deny it, of course. But if I may, I would like to outline a number of concerns we, on this side of the House, have about the practical application of the general preferential tariff.

We must first of all recognize that the countries that currently benefit the most from the general preferential tariff are newly industrialized countries, mainly the new economic powers of Southeast Asia. These are not, strictly speaking, third world or developing countries.

Furthermore, China and Indonesia, for instance, which are the beneficiaries of 38 per cent and 3 per cent respectively of Canadian preferential tariffs, are regularly censured for their repeated violations of human rights.

As the purpose of the general preferential tariff is to help real developing countries to grow, without hurting the Canadian economy in the process, we should be entitled to a more in-depth study of products and countries benefiting from the general preferential tariff.

This brings us to question the relevance of maintaining the general preferential tariff for developing countries that have since become newly industrialized nations. As a result, we must determine if these countries still meet the criteria allowing us to define what is a developing country, which, we agree, can be very complex.

In the cases concerning us, we should ask whether newly industrialized countries such as Hong Kong, South Korea, Taiwan and Singapore should still get preferential treatment. If all industrialized countries decided to take away from these countries preferential tariffs generally extended to developing nations, this could impact on their treatment by international financial institutions such as the International Monetary Fund, the World Bank or regional development banks.

One must know that the United States no longer gives preferential tariff treatment to South Korea and Hong Kong. Japan, Canada and the European Community, for their part, have still not made a decision on this issue.

The federal government has already announced its intention to study how desirable it would be to continue to extend the general preferential tariff to countries that have reached a high level of economic development. In fact, such a study is unavoidable in preparation for the meeting of the United Nations Conference on Trade and Development to be held in 1995, precisely about the general preferential tariff. Now that the Uruguay Round is over, the government has also announced its intention to review, and probably reduce, the extent of the general preferential tariff.

In addition, we know that the government intends to consult with Canadian manufacturers before making any decision on the general preferential tariff, a move that we wholeheartedly endorse.

It goes without saying, however, that any change to the general preferential tariff as it applies to any product or country could have major political repercussions.

Taking the general preferential tariff away from South Korea or any other newly industrialized country could lead to a deterioration in our trade relations with them since they may not like what Canada is doing.

The case of China, which has nearly 40 per cent of Canada's preferential tariffs, could also arise. Like the United States, which is wondering whether it should now deny most favored nation status to China, mainly because of the repeated violations of human rights in that country, Canada could show how important it considers human rights to be by also considering withdrawing the general preferential tariff from all countries that blatantly violate these rights.

In that the government has said many times that it intends to involve Parliament in Canada's foreign policy, and since any change in the scope of the general preferential tariff is likely to have political repercussions, would the government agree to consider the possibility of consulting parliamentarians, as well as Canadian manufacturers, before changing any component whatever of the general preferential tariff and if necessary amend this bill along those lines?

Such a consultation could proceed in a flexible and efficient manner through the Standing Committee on Finance or the Standing Committee on Foreign Affairs and International Trade.

Be that as it may, I eagerly await the government's response to this suggestion, which I am making as a request, in view of the importance which the government claims to attach to the opinion and judgment of parliamentarians.

I close by reiterating our total support for the basic principles underlying the extension of the general preferential tariff for the so-called developing countries. At the same time, I also reiterate my concerns and questions about applying this tariff to the newly industrialized countries and to developing countries which openly violate human rights.

I trust that the government will follow up our request for prior consultation with parliamentarians before any change is made to the general preferential tariff structure.

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, I appreciate the opportunity to be involved in this debate. First, I would like to thank the hon. parliamentary secretary for the extensive outline of not only the benefits but the concerns with regard to Bill C-5.

I would also like to thank the Minister of Finance for the co-operation of his staff in providing information to us as a caucus, not only on this bill but on other bills as well. The staff responded very quickly and briefed us well in an open manner and presented us with a very good case for and against the bill and we were able to make a judgment as a caucus.

As we well recognize, the purpose of Bill C-5 is to extend Canada's general preferential tariffs for developing countries from June 30, 1994 to June 30, 2004. That is a major commitment we are making as Canadians to the needs of other countries in terms of industrial and social development, in our attempt to bring their economic base closer to what we enjoy as Canadians. In terms of a world responsibility as Canadians we are to be well commended for taking that approach.

The Reform Party, after examining this bill and going over the presentations that were made to us, supports the bill. We feel that it is right in principle and that it is an obligation we should take on as Canadians.

There were some very positive qualities of the general preferential tariff that we felt should be noted at this time in our presentation to the House. First, it will lower import barriers, a concept we support as the Reform Party. Second, the lower tariffs will stimulate economic growth in developing countries. Third, it is very wide ranging in terms of its unconditional nature as to how it can assist these countries. More than 180 developing countries and territories qualify for lower Canadian tariffs. That is certainly a benefit.

Another reason for our support is that while in a sense Canada loses in terms of bookkeeping some $156 million because of the lower tariffs, we recognize as Canadians that we benefit because the general preferential tariff will also enable us to have lower prices in terms of goods as consumers in this country. That certainly is a direct benefit in that sense. However, we do have some concerns.

First, while businesses in our country can benefit from lower input costs under this system, there are some questions with regard to savings that may actually be passed on to consumers.

We would be remiss in our responsibilities if we moved into the marketplace and said that we should implement some type of legislation to prevent that. I think more supervision by government, more public servants to do that which would cost us as taxpayers more money, or more interventionist actions are certainly not the way.

We must have confidence that the forces of the marketplace will take care of that concern. It may not in all cases but I think if we let the marketplace work properly, it certainly will.

Second, while this system will help developing countries, I believe we should go one step further by using this opportunity to encourage a responsible government in those nations. We certainly want to give disadvantaged nations a chance to grow economically.

However, we want to ensure, and I am sure we all feel this as parliamentarians, that these countries uphold a major standard of human rights such as we enjoy here in Canada. It is part of the obligation and part of the message that I think we want to send indirectly through this bill to those nations that are benefiting from our compassion here as Canadians.

Third, we should ensure that rebates to developing countries are not part of the deal. The government should ensure that countries only benefit from the reduced tariffs. I am sure the government will keep a watchful eye in that area.

Fourth, we as a government must prevent any kind of dumping of cheap imports into other countries as that may strain relations with our trading partners. For example, a commodity should not be imported into Canada at a reduced tariff and then dumped into the United States to cause a distortion in the American marketplace.

In summary, as I said before, we support the bill and encourage the government to move quickly in this direction. It was explained in our briefing sessions that if changes need to be made quickly, regulations can be changed and are in place and they can be amended to protect any industry that may be adversely affected by these tariffs.

Those industries have the right to appeal and to make presentations. If the government in its wisdom following those presentations sees that there is a negative effect which affects our industries or our businesses, it can act very quickly by changing those respective regulations. I think that is a good addendum to this bill.

If we take these points into consideration I believe we will be upholding Canada's trading interests, a goal that we certainly want to strive for. I encourage Parliament to support the bill and proceed with it as quickly as possible.

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Speaker, I will cover five points in my remarks. To help my colleagues follow, here is the plan. I will start with underdevelopment and the poverty gap. I will then set Bill C-5 in context. I will talk about Canadian official development assistance. I will reiterate the Bloc Quebecois position as stated by my colleague and, finally, I will describe a certain number of concerns.

Out of a world population of five billion, four billion people are living in developing countries, one billion of whom in total deprivation.

The United Nations has reported that the gap between have nations and have-not nations has doubled over the past 30 years. The economic growth rate of developing countries has been dropping steadily, particularly in Africa and Latin America. In the Bruntland report, the World Commission on Environment and Development stated, and I quote: "Deteriorating terms of trade, rising debt-service obligations, stagnating flows of aid, and growing protectionism in the developed market economies caused severe external payment problems. The increased cost of foreign borrowing, at a time when exports were depressed, also helped to plunge many developing countries into debt crises. Growth was cut back and many social objectives fell by the wayside, including those having to do with employment, health, education, environment, and human settlements".

The United Nations development program authorities estimate that protectionism in industrialized countries will deprive the South of $500 billion a year in export income, or ten times more than it receives annually in development assistance. At the same time, due to structural adjustment programs imposed on them, developing countries are forced to abandon any form of tariff protection and what not.

This means there can be no sustainable development without fair and equitable reform and restructuring of international financial, trading and policy systems. Less trade protectionism on the part of industrialized countries would be a first step in a true financial reform.

Just recently, we have heard the president of the GATT general assembly warn industrialized countries against reintroducing protectionism on the basis of preserving human rights and the environment.

In that context, industrialized countries have taken steps in the seventies, with the general preferential tariff, to promote a reduction of duties for developing countries. In 1974, Canada established the GPT under the Customs Tariff Act. Since then, the tariff has been extended every ten years.

The purpose of this bill is to support the economic growth of developing countries by promoting exports from these countries to Canada through tariff reduction.

The general preferential tariff is beneficial in many other ways as well. First of all, the GPT is a unilateral tariff reduction program, and Canada remains free to change tariff preferences without breaking any commitment under the GATT agreement.

The Canadian GPT would be one of the best in the world as it would not be used to put financial or political pressure on developing countries, as is the case in other countries.

Canada also made sure that imports under the GPT caused no injury to domestic producers. That is why the GPT does not apply to all products imported from developing countries, but only to those products which do not adversely affect the competitiveness of Canadian producers. Also, safeguard measures have been developed to protect Canadian businesses affected by the importation of goods under the GPT. Two such safeguards are presently applied to rubber soles and inner tubes.

It should be pointed out that, in 1992, gross imports under the GPT yielded approximately $90 million, or 5 per cent of Canada Customs' revenues.

Bill C-5 extends the general preferential tariff for another ten years. The Bloc Quebecois supports this government bill with reservations, but we will get into that later.

Canadian development assistance has been drying up for a few years. Difficult economic conditions in Canada have often been set forth to explain or justify this drying up. Budget cuts in official development assistance have reduced contributions to the assistance program to 0.4 per cent of the Canadian GDP.

To put things in perspective, Norway spends 1.16 per cent of its GDP on international assistance, Denmark and Sweden 1.03 per cent, the Netherlands 0.86 per cent, France 0.63 per cent, and Finland 0.62 per cent. In other words, although Canada is generous in absolute terms, it is not in the lead group and it is rather far from the internationally recognized standard of 0.7 per cent.

The reality is that, in the nineties, we almost gave up any measure which could have enabled us to reach that level. More recently, the April 1993 budget restricted to 1.5 per cent, as of 1994-95, the budget increase for Canadian international assistance.

A large part of Canadian development aid is provided through bilateral assistance and it covers more than 150 countries. Projects implemented are the subject of agreements between Canada and each beneficiary country. However, Canada also looks after its own interests, since 80 per cent of goods and services targeted for this bilateral aid come from our country. Tied aid, as it is called, has the effect of considerably reducing the value of the help provided to beneficiary countries.

For all intents and purposes, bilateral aid is a disguised form of subsidy to Canadian exporters. This creates a danger in that profiteering could play havoc with the priorities of assistance programs, by giving too much importance to commercial interests.

In 1993-94, bilateral aid is distributed in this fashion: Africa and the Middle East get 45 per cent, Asia 37 per cent, and Latin America 18 per cent. It must also be noted that this form of support represents 44 per cent of total Canadian aid to developing countries.

In spite of some flaws, preferential customs tariffs are an important tool of Canadian development aid. In an increasingly global economy, foreign trade, and this is particularly true for Canada, plays a vital role in the creation and retention of jobs.

It is precisely because Canada is free to classify developing countries, from the poorest to the most developed, that the GPT could be a flexible tool to direct aid to those who need it most.

The Bloc Quebecois agrees that promoting export growth of developing countries is a very commendable objective. However, we do have some reservations.

First, a large number of those countries which benefit the most from the GPT are newly industrialized countries, especially Brazil and the dragons and tigers of South-East Asia to which the hon. member referred. Those countries can no longer be considered as genuine third world nations. Yet, they are the main beneficiaries of that tariff.

Moreover, importing certain products from these countries, such as auto parts, could adversely affect the setting up of manufacturing plants for those parts close to auto builders in Canada, to use the same example.

Also, some countries like China and Indonesia, which largely benefit from preferential tariffs, are known for repeatedly violating human rights. If the Canadian government was consistent in the implementation of its foreign policy, it would have some reservations about favouring countries which do not respect human rights, as it does in the case of its development aid policy which, as you know, is conditional upon the respect of those basic rights.

Since the general preferential tariff is designed to help the growth of developing countries without causing a prejudice to the Canadian and Quebec economies, we would be justified to ask, at this time, for a more in-depth study on countries and products benefitting from the GPT.

This leads me to the classification of developing countries into newly industrialized countries. Does the government think that the general preferential tariff program still meets its objective, which is to promote the growth of developing countries, considering that some of the beneficiary countries have already reached high growth levels? And since newly industrialized countries are entitled to this tariff, does the hon. member think it is appropriate for the national treasury to forgo millions of dollars in annual revenues which is being not collected by customs services?

How to determine which countries no longer meet the criteria used to define developing countries is a complex issue. But we have to wonder if countries like South Korea, Taiwan, and others should still be entitled to a preferential treatment concerning customs duties.

Since my colleague already mentioned it, I just want to remind the hon. members that the United States have already withdrawn the benefit of a number of preferential tariffs.

It seems that the Canadian government wants to wait a little longer before taking a stand on this issue. However, it would be important for Canada to determine its position before the 1995 meetings of the United Nations conference.

In short, the Bloc Quebecois believes that we should reflect on the possibility of linking the general preferential tariff to some criterias, such as the industrialization level of the beneficiary, the human rights situation in that country, the alignment of its foreign policy with that of Canada, compliance with established rules of public international law, such as non-violence in its international relations and peaceful resolution of conflicts in which the beneficiary is involved.

As you see, before extending the benefit of the general preferential tariff, Canada should take into account these principles which should influence our foreign policy. But Canada should also consider the restrictions of its trade policy. For example, withdrawing the benefit of the general preferential tariff from any product originating in China could jeopardize trade relations with this country or other countries. However, since development assistance should be provided to the people who most need it, the list of beneficiaries of the general preferential tariff should be revised.

The Bloc Quebecois believes that such decisions should flow from consultations and discussions within the Canadian Parliamentary system, including the Standing Committee on External Affairs and International Trade.

Unfortunately, under the Customs Tariff Act, the government is under no obligation to undertake such consultations. On the contrary, the government may, on the recommendation of the Minister of Finance, by order in council, amend the list of beneficiaries to the general preferential tariff without any consultation. We, in the Bloc Quebecois, think it is unfortunate that the House of Commons does not have any say in the matter.

The Bloc Quebecois urges the government to undertake consultations with its Parliamentary partners, at least for the review of its position on the general preferential treatment before the 1995 meetings of the United Nations Commission on Trade and Development, as well as discussions on its general policy concerning the classification of countries.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, I listened carefully to the speech of my colleague from Louis-Hébert. First of all, I want to congratulate and to thank him. His speech was very interesting because his arguments confirmed those I developed in my own speech, arguments to the effect that the general preferential tariff can be profitable for developing countries.

Of course, Canada considers this general preferential tariff to be part of its assistance program to developing countries. However, the question is this: Can this tariff have an adverse impact on the Canadian market? I said a moment ago, and the minister has made the same point before, that the government intends to consult Canadian manufacturers on their position so that they do not find themselves at a disadvantage because some products have easier access to the Canadian market thanks to the general preferential tariff.

Of course, the general preferential tariff represents a plus, an important asset, for developing countries that would like to export their production overseas, particularly to Canada.

Here is my question: What are the advantages or disadvantages of this general preferential tariff for Canada?

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Speaker, I do not think that there are really any disadvantages, because under the customs tariff, products from developing countries against which Canadian products can compete are excluded from the general preferential tariff when imported into Canada.

As for the advantages, I will say that since it is a well established fact that Canada often ties its development assistance to trade with developing countries, it is a major beneficiary of those imports. So, as I said, there are no real disadvantages because of the safeguards included in the legislation.

[Louis Plamondon, Bloc, Richelieu, QC]

Mr. Speaker, I would like to congratulate my learned colleague for his brilliant speech. He talked about reviewing the list of countries benefiting from general preferential tariffs and about developing countries, but he added that we should examine the issue of assistance given to countries which are not necessarily at the developing stage but where such assistance would have important commercial impacts and therefore could also impact on our future relationships with them.

Could the member tell us what countries he had in mind by that? And since, according to what we saw this last month, the government seems ready to hold debate after debate, and yesterday was even prepared to create a special committee on national defence, would it not be appropriate to have that list of countries and the assistance given through preferential tariffs reviewed by a committee, be it a new one or an existing one, where members of all parties would meet and where they could also think of ways of increasing the assistance given to developing countries?

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Speaker, it is true the general preferential tariffs are applied to more than 150 countries, 180 to be exact. Evidently, these countries are not all at the same development stage. Some are at the first stage, others are more advanced. In fact, tariffs are adjusted according to three categories.

Given that tariffs are renewed for ten-year periods, we should think about this gradation and try to determine if it still appropriate to classify certain countries as underdeveloped when in fact they have experienced dazzling growth, as some Asian countries have.

We must keep in mind however that if we are to strike a country off the most advantageous list, we will have to do so with considerable tact and diplomacy because such a measure could have an impact on our commercial relationships with that country or other ones.

I think it will be important to proceed in co-operation with the House, so the House should be aware of these data. Indeed, the House has a tool in the Standing Committee on Foreign Affairs and International Trade. I feel it would be quite in order that issues of such importance no longer be determined by order in council on a simple recommendation of the minister. In keeping with the spirit of the red book, the government should allow all members of the government and of the opposition to participate in the review of these questions which could affect the very image of Canada.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

Mr. Speaker, I rise on a point of order. I think there may be a disposition to deal with this bill immediately at second reading, in committee of the whole, and call it for third reading immediately thereafter with unanimous consent.

[The Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

(Motion agreed to, bill read the second time and, by unanimous consent, referred to committee of the whole.)

[The Speaker]

It being 11 o'clock a.m., pursuant to Standing Order 30(5) the House will now proceed to statements by members pursuant to Standing Order 31.

The Budget

[Karen Kraft Sloan, Liberal, York—Simcoe, ON]

Mr. Speaker, I have received a number of phone calls, letters and faxes from constituents in my riding of York-Simcoe expressing a great deal of concern about the possible taxation of health and dental benefits and a reduction of the RRSP contribution limit.

I urge the Minister of Finance to be sensitive to the views of these and all Canadians. We must take a fair and balanced approach when tackling the very difficult financial challenges we face as a nation.

Official Languages

[Gaston Leroux, Bloc, Richmond—Wolfe, QC]

Mr. Speaker, since May 1993, members of all other parties in the House have presented petitions against the federal government's official language policy.

I deplore the attitude of Liberal and Reform members who table these petitions in the House and thus support Canadian extremists who want to ban the use of French by the federal administration. I also want to condemn members who table these petitions while claiming they do not support them.

I would ask my Liberal and Reform colleagues to stop this hypocrisy. If they believe English should become the only official language of the federal government, let them say so.

Members of the Bloc Quebecois support maintaining the use of both official languages in federal departments and crown corporations, and I would ask all members to show the same flexibility and tolerance.

Winter Olympics

[Bob Ringma, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, members of the Reform Party would like to congratulate, on behalf of all Canadians, the young athletes who won medals at the 17th Winter Olympics in Norway.

We congratulate Edi Podivinski, Isabelle Brasseur and Lloyd Eisler, Jean-Luc Brassard and our latest gold medal winner, Myriam Bédard.

These athletes are shining examples of hard work and dedication to their sport. We are very proud of them and wish them every success in their future endeavours.

Home Buyers Plan

[Carolyn Parrish, Liberal, Mississauga West, ON]

Mr. Speaker, I rise in the house today, literally in the 11th hour, to make an appeal to the Minister of Finance and the Minister of Public Works and Government Services to support the extension of the RRSP home buyers plan.

I am presenting a list of almost 1,000 names of residents of the greater Toronto area and Mississauga who have made the effort to mail in letters in support of the continuation of this plan.

It is a federal program that has helped thousands of Canadians to achieve the benefits of home ownership without requiring direct financial assistance from the federal government.

To date, the plan has assisted more than 200,000 Canadians in buying a home and has generated substantial economic activity across the country.

Supporting the extension of this program beyond the March 1 deadline will be invaluable for the many Canadians who would not otherwise be able to achieve the dream of home ownership.

Multiculturalism

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, I rise to recognize multiculturalism week in my home province of British Columbia, as proclaimed by the Hon. David Lam, Lieutenant Governor.

From February 13 to February 19, British Columbians will take part in events and activities throughout the province, affirming the diverse cultural heritage that is integral to life in our province.

I thank all those groups participating in this week's festivities. Their active involvement in the lives of our communities is crucial. It enhances understanding of the different and vibrant cultural traditions of Canada.

I am proud that the federal government is a willing partner in this effort. We will initiate measures to promote Canada's cultural heritage.

I hope all Canadians and all levels of government will support these initiatives to bolster our cultural institutions and shared citizenship values.

Today our culture and identity as Canadians are threatened. More than ever, Canadians across the nation need to renew their commitment to cultural development and linguistic duality.

I extend my gratitude to the people of British Columbia for taking the lead this week.

Lisa Campeau

[David Berger, Liberal, Saint-Henri—Westmount, QC]

Mr. Speaker, an article in the February issue of Vogue magazine tells the story of a young constituent of Saint-Henri-Westmount named Lisa Campeau.

Miss Campeau, who is 24 years of age, has spent the last two years working at great personal risk on a UN relief operation in Sudan. She has developed a reputation as one of the toughest relief workers in Africa.

When the leader of a group of 2,000 Sudanese people told her to give them food or someone will come in the middle of the night and kill her, she replied: "It is pointless, if you kill me it will stop the relief flights in this area".

Despite the tremendous danger of her job and even the murder of several fellow relief workers, Lisa Campeau continues her mission. She wants to make a career in development and has ambitions of shaping the program she now helps administer.

Lisa Campeau is an example of how many young Canadians are working daily to make the world a better place. All Canadians should take pride in their commitment and idealism and support them in their initiatives.

Winter Olympics

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Speaker, speaking on behalf of my colleague from Charlesbourg, on my own behalf and on behalf of all Quebecers, I wish to draw the attention of the House to the exceptional performance of Myriam Bédard at the Winter Olympics in Lillehammer.

This morning, Ms. Bédard won the gold medal for the 15-kilometre biathlon and joins our two other athletes from Quebec who won a medal, Jean-Luc Brassard and Isabelle Brasseur.

I may recall that Ms. Bédard won the bronze medal at the Games in Albertville and the gold and silver at the 1993 world championships.

The Bloc Quebecois salutes the courage and perseverance of this fellow Quebecer and outstanding athlete. As we know, Ms. Bédard has had to overcome many problems throughout her career, which were caused by Biathlon Canada. We hope the Minister of Canadian Heritage will take steps to deal with the many problems faced by athletes from Quebec.

Cfb Edmonton

[Hugh Hanrahan, Reform, Edmonton Strathcona, AB]

Mr. Speaker, I wish to express the feelings of many Edmontonians, particularly those in Edmonton-Strathcona, regarding Canadian Forces Base Edmonton.

While I recognize that some restructuring of our military must be considered in terms of fiscal responsibility, I would ask that the Minister of National Defence consider the following regarding CFB Edmonton.

It is the largest supply and service depot in western Canada. It has recently undergone a $10 million expansion. It contains the fourth largest runway in the world.

What concerns me most is that the department is considering these base closures before it has determined the new role of the Canadian military. It would seem logical to first conduct such a review and then decide what bases should be closed.

CFB Edmonton is the gateway to the north and it is extremely well suited to serve Canada's needs in the next century.

Royal Bank

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, today the Royal Bank branch in the village of Lynden in my riding is closing its doors after 92 years of continuous operation. It is a move that will seriously affect the small businesses in the community, for the branch draws hundreds of people every week from the surrounding farms.

Royal Bank officials have admitted that the branch is profitable. Their decision to close was based on what they said was poor growth potential in the area.

They have turned a deaf ear to petitions, protest marches, extensive coverage in the local media and letters to both the bank chairman and president. They have insisted that bank customers remove themselves to a new drive-in branch in the city of Brantford.

It is ironic that this government yesterday declared a moratorium on closing rural post offices in order to preserve rural communities.

The Royal Bank received its original mandate, its charter, from the people of Canada. It is a pity that now it chooses no longer to listen to them.

Small Business

[Alfonso Gagliano, Liberal, Saint-Léonard, QC]

Mr. Speaker, many small and medium-sized businesses find it difficult to get financing from major banks.

And this, in spite of the fact that only 13 out of 1,000 loans to small businesses are not paid back. In other words, 98.7 per cent of borrowers are creditworthy. Under the present circumstances, 98.7 per cent is a rather impressive average we cannot ignore.

Given the fact that there are more than 900,000 small businesses in Canada and that they account for more than 4 million direct jobs, banks must be encouraged to become their partners instead of their adversaries.

Small and medium sized businesses, which are the driving force of the economy, must have guaranteed access to capital in order to develop new technologies and find new markets. Let us not forget that today's small businesses could be tomorrow's multinationals. Let us help them prosper.

Child Poverty

[Beryl Gaffney, Liberal, Nepean, ON]

Mr. Speaker, I would like to announce today to this House and to Ottawa residents watching at home the second annual gala for child poverty here in Ottawa.

This successful event is sponsored by the Fund for a New Generation, a group of young people from the public, private and university sectors determined to bring hope to Ottawa's poor children.

On February 26 at the Canadian Museum of Nature this group of young people hopes to raise $5,000 more than last year's target of $10,000 for the Ottawa-Carleton Child Poverty Fund.

The proceeds contribute to communal meal and early education programs.

This is why I am calling for your support. There is a hotline number. Please call 769-5012 for tickets or other information.

I issue the challenge to local Ottawa businesses to help these young people. I commend these people for their initiative and hope that it serves as an example of what we can do together to improve our children's future.

Davis Inlet

[Roger Pomerleau, Bloc, Anjou—Rivière-Des-Prairies, QC]

Mr. Speaker, we have just heard an unconfirmed report that a statement will shortly be issued by the Minister of Indian Affairs concerning relocation of the population of Davis Inlet, in Labrador. That relocation has been sought for much too long by the community, which has suffered greatly because of government indifference and negligence.

Once again, we wish to express our concern about government inaction and our hope that the minister is really prepared to respond to repeated requests by the Inuit of Davis Inlet and to give them the promised lands, which are better suited to a decent life, something to which all Quebecers and Canadians are entitled.

The minister was thus responding to repeated pleas by the Bloc Quebecois to improve living conditions for native peoples.

Consumers Paper Corporation

[Paul Forseth, Reform, New Westminster—Burnaby, BC]

Mr. Speaker, I provide today another example from my riding of New Westminster-Burnaby why government spending is out of control.

The Western Economic Diversification Fund previously announced it would provide $5 million to Consumers Paper Corporation to build a tissue paper plant in Redcliffe, Alberta. This was to create 150 new jobs. In reality it was to subsidize an ill-advised venture that would be in direct competition with Scott Paper of New Westminster.

There are already about 100 brands of tissue paper on the market with over-capacity of production. The new scheme would just add to the excess. If the mill made it, jobs would be lost elsewhere. If the plan failed, taxpayers would again foot the bill and families in Redcliffe would be victims of a bad government decision.

Government intrusions of this type create dependency. Why should taxpayers' money be put at risk on questionable ventures in a time of record federal deficits?