Mr. Speaker, it is my pleasure to speak to the private member's bill introduced by the member for Fundy Royal, Bill C-311.
I must confess that I do have a bit of a sweet tooth, so I can assure the member that I support the thrust of his bill. I am certainly not interested in seeing the Canadian sugar industry damaged in any way, especially not through unfair trade restrictions on the part of Americans. I know of the concern of all parties in the House regarding the possible damage to our sugar producers and I commend the work of the sugar caucus in this regard.
I can imagine though that the bill comes at a rather awkward time for the government, since the Americans are taking us to task for tariffs we have put on that have precisely the same origin as the one the bill is attacking. I have to wonder if during the negotiations on the GATT we were outmanoeuvred and outnegotiated in this area when we allowed the Americans to expand the category for sugar into refined products as well.
I would like to give a bit of background. On January 1 of this year all countries that signed on to the Uruguay round of the GATT were required to replace existing import quotas with tariff rate quotas that would provide similar protection to vulnerable industries, with the proviso that these tariff rate quotas would eventually be reduced and dismantled.
For those members who do not know what tariff rate quotas are, if they do not know the difference between a TRQ and an O Henry bar, I would like to tell them. A tariff rate quota is a cutoff level. Up until that cutoff level has been reached no tariff is payable. After the TRQ is reached a tariff comes into play, which is usually so sizeable that it discourages imports altogether.
On January 1 the Americans put into place a TRQ of 64,000 tonnes on all products containing sugar, such as drink mixes and
gelatin desserts. At the same time, TRQs of 8,000 tonnes until the end of September and 22,000 tonnes from October to December were put in place for refined sugar. Since Canada is not the only country that sells sugar and products containing sugar into the United States, our share of the TRQ will be substantially below that level.
It is ironic that the GATT, which was intended to provide gradual expanded access, has actually led the Americans to restrict access in this regard. This is grossly unfair and totally contrary to the spirit of the Uruguay round. Furthermore, the Canadian Sugar Institute informs me that the Americans have taken advantage of the GATT tariffication by expanding this category to include items that were previously unrestricted. The Canadian Sugar Institute predicts that these restrictions could potentially lead to the loss of 2,400 direct and indirect jobs. It is a very serious matter.
I know that the hon. member who initiated the bill is concerned about the closure of one Canadian refinery, resulting in 700 immediate jobs. He predicts an additional 1,700 jobs will be lost through the reduced production of products containing sugar.
The hon. member proposes in his bill that consultation take place between Canadian and American governments to determine whether previous levels of access can be restored. If after 60 days no satisfactory resolution is reached, American access to Canadian sugar and the sugar products market will be restricted in direct retaliation. More precisely, the American share of the Canadian market will be reduced by an amount equivalent to the Canadian market share of the American market.
Research indicates that prior to these restrictions the Canadian share of the U.S. market was quite small. It was said earlier that it was about 3 per cent. At the same time the American percentage of our market share is 23 per cent. Presumably, American imports would be held to 3 per cent, a reduction of some 20 per cent, if we took this step. This would allow for some of the displaced Canadian sugar to find a domestic home. That is the kind of thing we have to do. We have to give protection to our Canadian producers.
The American sugar industry is highly protected. The U.S. government guarantees producers prices that are up to double the world market price and it maintains these high prices by restricting imports. The American government also provides loans to U.S. producers, loans which are guaranteed by their sugar crop. If prices fall too low and producers cannot repay the loans, the farmers simply forfeit a part of their crop or all of their crop, leaving Washington holding millions of tonnes of unwanted sugar. That is exactly what we were trying to stop through the Uruguay round of the GATT.
Not too long ago Washington assigned allotments or quotas to domestic producers, which could now force a lot of the excess sugar northward across our border. It is entirely possible, as the U.S. border closes to our Canadian sugar products, that our market could be flooded by the same American sugar products that are highly subsidized and trying to find a new home. In the past the Americans have sold Canada twice as much sugar as they buy from us, running up surpluses of some $230 million.
Another fact worth noting is that the industry in Canada is extremely efficient and only about 10 per cent of it receives deficiency payments when prices drop. I am referring to the refined beet sugar industry in Alberta.
Even though I support the bill I wonder whether another approach might not be just as good, if not better. Since the American industry is heavily subsidized, I wonder whether instituting a countervail action might not be a more honourable way to proceed. We do not need to let the Americans get away with this underhanded action, yet it would be preferable if we could take the high road and not stoop to the same level. It is just a thought. I guess we need to bring the Americans to the table and negotiate an end to the situation.
I support the bill. Should it become votable I will vote in favour. I certainly do not want anything to disrupt my supply of bonbons.
In conclusion, I would ask the House for unanimous consent that Bill C-311 be given votable status and that it be voted on, on Thursday, October 5, 1995.