Mr. Speaker, it gives me great pleasure to enter the debate on softwood lumber and to be sharing my time with the eloquent member for Parkdale--High Park.
People are probably wondering why a member from Durham, a riding with not much forest industry but a lot of agriculture, would be interested in the debate but, of course, Liberal members can actually visualize this country from sea to sea to sea.
I was very fortunate to travel to British Columbia back in 1994. I actually sat down in Cranbrook with representatives from Crestbrook Forest Industries, which is now called Tembec, one of those few unfortunate companies that has been hit not only with a countervail duty but with additional duties due to trade restrictions.
I was able to go back to B.C. in 1998 and once again get involved in the issue of trade disputes. At that time it was the harvesting of the old growth forest in the lower mainland of British Columbia. Once again our lumber exports were being restricted not only in the United States but also in Europe, and inappropriately so. As we got involved in that debate we discovered that in fact it was not based on logic. It was based on a lot of emotion and so forth.
The debate today has been going on for well over 20 years. I will elaborate on some of the background history.
Forty per cent of Canada is covered by forests and 10% of the world's forests are in Canada. Softwood lumber accounts for 3.1% of our gross domestic product. Canada exports $23 billion or 15% of its softwood lumber products. The forestry industry accounts for 311,000 direct jobs and 446,000 indirect jobs.
When the opposition members say that the government does not care about those jobs, they are totally wrong. We certainly feel for the people out in British Columbia and in other parts of our country who have lost their jobs, especially with Christmas coming and so forth. Our hearts go out to them tonight. We are trying to resolve this problem. Unfortunately, the opposition has used this as a matter of confrontation when what we should all be doing is getting behind this and trying to solve the problem.
Seventy per cent of our softwood lumber is exported and 75% of that is to the United States. Softwood lumber accounts for half the manufacturing in British Columbia and in New Brunswick.
In Canada 80% of our forests are owned by provincial governments. This is the problem. Only 11% is owned by the federal government. In the United States it is totally the reversed: 70% is owned by private industry and only 20% by the federal government.
Here is where the problem starts to come in. In 1952, Canada exported to the United States three billion board feet or 7% of the U.S. market share. By 1998 it was 18 billion board feet or 33% of the total U.S. market share. I think what we are starting to see is that Canadian companies are able to go down and compete effectively with their American counterparts in the United States and as a consequence have taken a market share.
What is the historical problem? What we are trying to do is stop Canadians from importing lumber from the United States. That is the first desire of those people who have a vested interest in the forestry sector in the United States.
The first allegation is that we are unfairly subsidizing our forestry industry with the use of stumpage fees. We have been through this whole issue a number of times, as I say, over 20 years. It has never been proven that the cost of stumpage fees is an undue subsidy or even a subsidy in fact to the forestry industry. This is pretty much a bogus thing. Once again we have to go back to the World Trade Organization.
Why is it that we have to go through this process? In some ways the process is successful for the Americans for one particular reason: it embargoes trade for a brief period of time, maybe two or three years, before this all gets resolved, people get back to duties and so forth, but the reality is that it has been hurt.
The reality is that Canadians were not been able to access that market during that period of time. In reality, embargoing our trade, while perhaps not legal, is very successful and very profitable for these companies in the United States.
The second issue is export restrictions. This is the concept where the province of British Columbia, for instance, does not allow the export of raw logs from provincially owned lands.Many other provinces have the same legislation. On federal government lands in the United States, it does the same thing. Why is that? Essentially, it wants to create jobs in Canada. In other words, obviously exporting raw logs does not particularly create a lot of jobs in Canada. There is nothing inherently wrong with that. Clearly, Canadians do not want to be hewers of wood and carriers of water. They want to have good, solid jobs to live in their area. As I said, half of the economy of British Columbia is dependent on the forestry sector.
It has been mused that somehow these export restrictions cause an undue subsidy by governments, that in some way, by creating these export restrictions, if the logs were sold directly they would cost more money or something. Once again there has been no economic theorist or any other person who has been able to substantiate that the export restriction in fact creates a subsidy.
We should actually start looking at the pure economics of it. Why is that there has been this great market growth in the United States and why is that Canadians have been so able to capture that market? I think we should look at some of the other basics.
From 1952 until now, the Canadian dollar has shrunk in half. Would someone not think that would be more of a competitive issue? The Canadian dollar dropped in half and all of a sudden Canadian imports into the United States are significantly cheaper. I do not know why we are sitting here talking about subsidies and so forth because just the change in the Canadian dollar alone would tell us that Canadian softwood lumber is going be cheaper freight on board the United States than it was back in 1952.
My colleague who spoke before me mentioned that American mills have not kept up with capital improvements and have not kept their operations efficient. This is actually symptomatic of the United States.
We are having the same problem in steel. We all know that Bethlehem Steel went into receivership recently, mainly because it had not kept up with capital improvements. It ran its company on the basis that it was going to fail. When I say running a company on the basis it is going to fail, I mean that a company does not keep adding to its capital stock and making the company inefficient. If that is done over a long period of time, competitors become more efficient, are able to price their product more efficiently and, as a consequence, the company cannot compete.
In the United States it is cheaper to hire lobbyists to stop or impede trade than it is to put new capital equipment in plants. In reality, this is a perverse situation of which the Americans, quite frankly, should be ashamed. The great purporters of free trade and capitalism create a situation where it has inefficient industries and now it is dealing with legislation to impede efficient industries in Canada.
By the way, Weyerhaeuser bought out MacMillan Bloedel. Twenty per cent of the Canadian forestry industry is owned by Americans. Some people might ask whether they are trying to cripple our industry so they can buy more of it. I am not alluding to that as a conspiratorial theory but it certainly is plausible.
As I conclude my remarks, this issue really needs to seen in an American perspective. We seem to be on the receiving end of this constantly. I think it is time the Americans woke up and realized what their own government is doing to them.