Mr. Speaker, on February 29 I asked the Minister for International Trade why Canada chose to conclude an agreement in principle with the United States on matters relating to softwood lumber rather than take this dispute to a NAFTA dispute resolution panel.
This is the process we chose in 1994 after the U.S. imposed a duty on imported Canadian lumber. The duty was overturned by a bilateral panel which ruled that Canada stumpage fees do not constitute an unfair subsidy as was claimed by a U.S. lumber lobby. The U.S. appealed the decision to an extraordinary challenge committee which again ruled in Canada's favour.
According to the minister, the U.S. congress looked on these defeats and simply changed the laws. Rather than go through the uncertainty involved in another NAFTA panel process, the Government of Canada, several provinces and the lumber industry chose to make a deal with the Americans.
The crux of the matter is that NAFTA does not prevent United States' industries from using protectionist countervailing duties to harass Canadian exporters. It only provides that a binational panel can review U.S. governmental determinations to see if U.S. law has been applied correctly.
Obviously this is a serious flaw within the NAFTA. There are no clear cut rules on subsidies, nor are there any real definitions of what constitutes a subsidy. These are shortcomings that must be remedied as soon as possible.
In the meantime in appears we are engaged in a war of attrition with American protectionist forces, which is only intensified during an election year in the United States. The minister knows the Americans have applied to set up a NAFTA panel to rule on the legality of Canada's set of tariffs on supply managed commodities, which were negotiated during the last round of GATT. The United States is also signatory to this agreement. According to its reading of events Washington now claims that NAFTA takes precedence over the GATT agreement and that Canada's tariffs must be eliminated.
I am confident that Canada will emerge victorious from this most recent NAFTA panel decision. The fact remains there is nothing to stop the United States from launching an extraordinary challenge or from changing its laws again. What does Canada do then? Do we continue to stand by the principles of NAFTA, flawed as they may be, or do we simply throw in the towel on our dairy, egg and poultry producers? I am sure the Minister for International Trade will agree with me that this case is shaping up as the largest trade dispute ever between Canada and the United States.
However, even if Canada wins the case, and I am sure we will, under the current atmosphere of rising American protectionism this battle could drag on for several more years for the reasons I have just alluded to.
Let us be clear what is at stake here. According to a study conducted by economic forecasters, if the United States succeeds in knocking down the tariff wall that covers Canada's dairy, egg and poultry producers, by the year 2000 the opening border will wipe out 28,000 Canadian farms, farming and food processing jobs. This would result in $3.4 billion in lost sales and would cost the government $2.7 billion in lost taxes.
Obviously if the upcoming NAFTA panel decision on the legality of Canada's tariff levels were to go against Canada we would have a very serious problem on our hands. What I would like to know, and perhaps the Minister for International Trade can tell me, is in the event of a Canadian victory what steps will he take to ensure these GATT negotiated tariffs are not simply bargained away through a special deal with the protectionist minded Americans? Will the minister go to the wall for Canada's dairy, egg and poultry producers?