Mr. Speaker, my party has agreed to this truncated form of debate because, like the government, we would like to see
this bill get into committee where it can be properly dealt with. We do support it in principle. There are a couple of stickers in it that are worthy of further discussion. We will get to them in committee and at third reading.
As everyone here knows, the origins of this treaty were at the summit of the Americas in Miami in 1994 where the leaders of Canada, the U.S., Mexico and Chile announced their intention to pursue Chilean ascension to NAFTA.
Chile looked rather briefly at this possibility however, since the Clinton administration was unable to convince the U.S. Congress to fast track a treaty to a pass or fail vote without amendment. Chile therefore backed away from the risk of entering into an agreement that could be further modified after it was signed.
This treaty as everyone knows, although it will have bilateral advantages to Canada and to Chile, certainly is mostly about what the Department of Foreign Affairs likes to refer to as building bridges. The Department of Foreign Affairs and International Trade sometimes calls the Canada-Chile FTA an interim bilateral free trade agreement because it is hoped that the agreement will ultimately lead to incorporating Chile into NAFTA, or FTAA as it is sometimes called now, a free trade agreement for the Americas.
It appears that the U.S. Congress' stubborn refusal to fast track Chile's entry into NAFTA will be to our gain. Mexico already has an FTA with Chile and the Americans will eventually have to get on board through the free trade agreement for the Americas initiative.
One of the advantages of leading by example is that we do get a head start. Chile has strong trade links throughout the southern hemisphere, in particular through its association with Mercosur, the common market between Argentina, Brazil, Paraguay and Uruguay. Chile is not a full member of that trading bloc. Therefore even though it has this easy access, it was able to give us certain considerations which are a little better than it is giving to its neighbours.
For example our agricultural products will get much better treatment. Many Canadian companies are already finding that Chile is an excellent gateway or an open door to the other markets in Latin America.
The deal in its immediate consequences provides Canadian exporters with significantly improved access to the Chilean market through the elimination of the 11 per cent duty on about 75 per cent of the goods which we ship into Chile. Since 80 per cent of Chilean exports into Canada are already duty free, it is reasonable to expect that the adjustment phase for the Canadian market will be very moderate.
In the agricultural sector which is of particular concern to me Canadian durum wheat which accounts for 35 per cent of Canadian agricultural exports to Chile will benefit from an immediate removal of the 11 per cent duty currently imposed. There is similar treatment slated for barley and pulse seeds.
Duties on Canadian exports of a variety of processed agricultural products will be reduced to zero over five years. The exception for a long phase out period is for Chile's most sensitive product, milling wheat, but in 17 years that will be duty free as well. On the Canadian side we will phase out a limited number of tariffs over six years primarily for horticultural products. Canada's over quota most favoured nation tariffs for dairy, poultry and eggs are excluded from tariff elimination and will continue to be protected.
However it is not all wine and roses. Some Canadian producers are afraid of the Chilean $15 a day average farm wage, cheap land and flexible government regulations, all of which lower the cost of production for Chilean agricultural goods. Fortunately most Canadian horticultural produce will be available during our summer and fall and Chilean produce will fill in the winter-spring gap of our growing season. So Canadian and Chilean producers will mostly complement each other rather than compete head to head.
Apples however are another story. This is a very significant worry. B.C. fruit growers have expressed concerns about the six year phase out period of the FTA's anti-dumping regulations. Chilean apples have been entering Canada duty free for years with no problems apparent. However Canadian orchardists are uneasy over the precedent that the agreement sets when Chile eventually gets into the general NAFTA agreement for this reason: A few years back the price for red delicious apples was driven below the cost of production when Washington state growers dumped their product in the B.C. market. The Okanagan apple producers eventually won damages under the anti-dumping laws in the Canada-U.S. FTA.
Should Chile eventually be admitted to NAFTA and the phasing out of anti-dumping regulations be extended to all NAFTA partners, Washington producers could dump their apples in Canada again and drive down domestic prices. So it is not Chile they are afraid of, it is the U.S.A. which is sitting in the wings watching this.
We must be cautious. I hope that this will be addressed in committee. The only remaining recourse for Canadian growers in the scenario that I have outlined would be an appeal to the Canadian International Trade Tribunal, a safeguard action. The CITT could apply immediate tariffs on a temporary basis and probably for one season. It would be a mirror image of our never ending softwood lumber dispute, only in this case the plaintiffs would be north of the border instead of south of it.
Let us proceed with a moderate degree of caution. In general, this treaty is a good deal for both Chile and Canada but like all
treaties, it is not perfect and I would not want to see British Columbia apple growers sacrificed for the general benefit of our trade relations.