Mr. Speaker, a 12.6% duty was levied on October 31 on all Canadian softwood lumber producers including those in Atlantic Canada. Aside from Atlantic Canada the total duty imposed across the rest of Canada was upward of 30%. Based on an all others clause, six companies were investigated. An average was determined for those six companies and applied across Canada. It was very appropriate that this decision came down on Halloween. Certainly the U.S. is masking the real situation of the softwood lumber industry in Canada.
Canadian firms have adopted technology more readily than our friends to the south. They have been more innovative, productive and price competitive in the industry in North America.
I had the pleasure of working at Juniper Lumber, now Nexfor, in Juniper, New Brunswick, during a $7 million refurbishment program. In that program we looked at laser technology, computer technology, effective utilization of the entire log and efficiency. This process was carried out across Canada.
How important is softwood lumber to my riding of Tobique--Mactaquac? Exports have slipped recently from a high of 2.7 billion board feet in 1996 to 1.9 billion board feet in 2000. Canada exports $10 billion of softwood lumber and one in sixteen jobs are dependent on softwood lumber. In New Brunswick there are 29,000 jobs or one in eleven people who rely on softwood for their employment. In my riding of Tobique--Mactaquac that figure is one in six jobs.
Several communities are very dependent on softwood lumber. The small community of Plaster Rock is one example. The Nexfor sawmill employs approximately 400 people directly and indirectly.That represents about two-thirds of employment in this small town. The softwood lumber situation is critical. If the mill shuts down it would devastate the community.
Mills are struggling in my riding. Prices have recently fallen drastically and profit margins are very slim. Softwood lumber producers in my riding estimate a drop in profits from 5% to 7%. That percentage does not allow for a 12.6% duty to be imposed. If we look at 5% to 7% margins with a 12.6% duty being imposed, the long term viability of those mills is certainly in question. Ultimately we are concerned that mills will be shutting down.
New Brunswick has an historical free trade agreement with Maine dating back to the Webster-Ashburton treaty signed in 1842. This treaty guaranteed free trade in lumber along the New Brunswick-Maine border specifically where the Saint John River separates New Brunswick and Maine. This action breaks the spirit of that 159 year old agreement and is certainly a sad day for the citizens of New Brunswick including the constituents of my riding.
Let us look at the U.S. situation for a moment. The American department of commerce has caved into the interests of southern U.S. producers. The main reason the U.S. has been lobbying for this is that it cannot produce at the same cost Canada does. In the industry there is a saying that one innovates or one stagnates. I suggest that the profits in the southern U.S. have gone into the pockets of the lumber mills whereas the profits in Canada have gone into reinvestment in technology.
It is very ironic that in many instances there is no direct competition between U.S. southern pine and much of the softwood lumber produced in Canada, specifically eastern Canada. Atlantic Canada softwood is structural in nature due to its density whereas the southern pine is not strong enough and does not have the integrity to be used for structural purposes. Home Depot recently said that it could not stock its shelves with Canadian softwood and would have to go elsewhere. It mentioned Europe specifically.
There is a case for optimism. We are faced with a situation and we have an ally that we have never had before. It is the American coalition for affordable housing. In a recent visit to the U.S. with some of my colleagues we spoke to the American coalition for affordable housing for three hours.
It explained that it represented 15 or 16 organizations, such as the Canadian Manufactured Housing Association, the Consumer Products Safety Commission and Home Depot. It is involved in a campaign to educate the American consumer on the exact impact that these duties will have on the U.S. consumer.
For instance, the coalition estimated that the price of a new home could rise as much as $3,000. It said that hundreds of thousands of people would not qualify for first mortgages because of the increased prices. To the American economy, this represents a serious threat when housing starts to go down by that amount.
We have been through it three times. It is like the bully on the beach kicking sand in our face. In each situation we have come back and embarrassed them in front of their friends on the beach, which we see as the rest of the world. In this situation we will again come back and embarrass them in front of their friends, the world community.
The government is taking action in this area on two fronts. First, we are looking at the legal opportunities to pursue this with the World Trade Organization via NAFTA. Second, we have had discussions with the industry, industry associations, the provinces and, recently, with the U.S. in Vancouver. We have had discussions in Montreal, in Ottawa today, and we will be in Washington, D.C. on November 12. We are making strides in that effort.
In closing, this issue is my top priority. It is a top priority for Minister for International Trade and for our government. We are united in our condemnation of this unfair trade action. We are united in our position. We are united in our resolve to find a solution for all Canadian softwood lumber producers.