Mr. Speaker, I rise to support Bill C-66, an act to amend the Western Grain Transportation Act, the WGTA. The bill received first reading on December 15, 1994, just prior to the House rising for its Christmas break.
I would imagine all hon. colleagues are well advised that the minister has been consulting with all sectors of the agri-food industry and all political colleagues in neighbouring provinces on these major reforms to the WGTA.
As I mentioned earlier, Bill C-66 deals with three issues. I intend however to speak only to the issue of exports to Mexico, which is very important to NAFTA and other trading arrangements Canada has recently entered into.
On April 4, 1994 the Government of Mexico launched a countervail duty investigation of both Canadian WGTA wheat shipments to that country and U.S. exports under its export enhancement program or its EEP. At that time Mexico had concerns that wheat imports from Canada and the U.S. were affecting its domestic market. It believed that the WGTA was a subsidy which along with U.S. EEP subsidized wheat sales into
Mexico. This was affecting the price of wheat received from Mexican farmers and grain companies.
Over the following months our federal government participated in the investigation of the Government of Mexico and wanted to ensure that all facts were brought forward explaining Canada's grain marketing system. After much discussion the federal government reached a negotiated resolution to Mexico's concerns about the impact of Canadian WGTA supported wheat exports to that country. Under the agreement Canada will refrain from making payments under the WGTA on Canadian wheat shipped to Mexico. In return, Mexico's current countervailing duty investigation of Canadian wheat exports will be terminated.
The federal government has always indicated its preference for a negotiated solution to this matter rather than run the risk of having excessive countervailing duties in place.
I know there are some people in Canada, indeed some in the House today, who will cynically see the agreement as a loss. These people will point to it as an example of Canada making concessions while receiving nothing in return. As usual this is not the case.
First, the agreement will in no way interfere with or limit the amount of high quality wheat Canada can export to Mexican customers. The Canadian Wheat Board has already indicated to the federal government that it will continue to have a major presence in the Mexican market even with the voluntary withdrawal of WGTA.
Second, perhaps the greatest benefit is that the U.S. has voluntarily agreed to withdraw use of the export enhancement program from Mexico. Mexico was not included in the recently issued list of countries eligible for U.S. EEP allocations for the 1994-95 marketing year. In the previous year, 1993-94, Mexico's EEP allocation for wheat was some 1.4 million tonnes. This move by the U.S. to rein in its EEP restores a level playing field in that market with the result that prices will increase to North American levels.
Should the U.S. at some point decide to revert to its trade distorting subsidy program and resume using EEP on a large scale in the Mexican market, Canada will use NAFTA provisions to request the Government of Mexico to resume its countervail duty against the EEP.
The hon. Minister of Agriculture and Agri-Food has often referred to the EEP as "the most trade distorting program on the face of the earth". Anyone who is even remotely familiar with Canada's recent bilateral agri-food trading relations with the U.S. will attest to the accuracy of the remark. By agreeing to remove WGTA payments on wheat to Mexico, Canada has in effect restored a level playing field or contributed to such in the Mexican market. I might add that this is a growing and promising market for Canadian wheat in the future.
Bill C-66 will permit Canada to continue to sell wheat into the Mexican market without having to worry about possible excessive countervailing duties. It will also be able to do this without having to worry about competing against EEP and the billions in the U.S. treasury.