Mr. Speaker, the U.S. department of commerce has been ruthlessly misled by a small and influential group of U.S. landowners who refuse to compete in a free marketplace. ILMA president Gary Crooks said it is like having a fist fight with the wind. It is a deliberate set up to protect special interests. It is pure and simple political manoeuvring that flies in the face of free trade agreements intended to provide benefits to consumers.
Let us remember it is home builders and buyers in the U.S. who will see their house prices skyrocket while our skilled and dedicated workers are forced to sit on their hands.
Every business in my constituency that uses wood in its product, whether or not it directly manufactures dimension lumber or boards, is being unfairly targeted. There is a large industrial manufacturer in Golden with 400 employees. Its product is not subject to CVD or anti-dumping duties but it trades logs with companies that are subject to the U.S. tariffs.
Our forests are not one uniform species or grade. The 400 workers in Golden trade fir, balsam and spruce and utilize specific grades of wood. The corresponding lumber mills use other species and grades. Each company must have an outlet for species and grades they cannot use. If the lumber operations are shut down where would the industrial wood fibre come from?
Companies in my constituency from Revelstoke to Wynndel and Erickson to Galloway are all faced with the necessity of making irrational choices. If they lay off their skilled workers, will their employees stay in the business or look for employment outside the lumber industry? If they shut down, will it be for weeks, months or years? What happens if the tariffs are not retroactive? What happens if they are? What will their U.S. customers do? Will they wait or turn to lumber from former Soviet satellite countries?
This punitive and punishing penalty is not just an economic issue. It is an environmental tragedy looking for a place to happen.
British Columbia has an enviable environmental record. In the past 10 years we led the way. Our commercial forestry practices are models of sustainable development. Our commercial forests are growing. That is not a play on words. We are adding to the commercial forests by planting twice as many trees as we are harvesting.
What about the forests of the former East Bloc? First, they are boreal. Their basic wood source is from a fragile base. Second, their forest stripping practices are similar to irresponsible strip mining and are referred to as rape and run in the lumber business. Forcing U.S. home builders to access large volumes of lumber from the former east bloc is to explode an environmental bomb that will have future global implications.
Let us look at what it means environmentally in Canada. Business after business in my constituency has responded to the challenge and opportunity by turning to trim ends, waste wood and low grade lumber. My constituency has proudly built remanufacturing, finger jointing and finishing businesses that not only employ more people with the same amount of logging but upgrade low value wood fibre.
British Columbia is growing nice new forest at twice the rate at which it is harvested. We use every part of the tree. With cogeneration we clean up after ourselves while substantially reducing consumption of non-renewable fuel sources. However the punishing penalties inflicted on Canadians by narrow private interests in the U.S. have all but stopped this responsible use of low grade or waste fibre.
Where punitive tariffs were assessed against the input costs of these remanufacturing operations they are now assessed against the finished product. Given the high labour costs and tight margins of the process a 30% mark up would price the finished product out of the market.
I am aware of the value that is added by prime coating and painting boards. Can members guess what? After businesses invested in buildings, equipment, production line and employee training they were forced to curtail their volumes due to the countervailing duties.
What about having to turn perfectly good wood into chips for pulp? If companies cannot sell utility or number three grade wood what else can they do with it? Let us remember they cannot upgrade the product, so what options do they have? Is permanent storage an option?
The major employer in my constituency is Tembec. Along with the other forest companies it accounts for 25% of the wealth created in Kootenay--Columbia. Here is how it is affected.
Tembec is one of six Canadian companies singled out by the U.S. It has to produce not thousands, but tens of thousands of invoices to the U.S. It is forced to reveal every detail of its business proving the average cost of every board that they sell. The U.S. then discards every invoice where the selling price exceeds the production cost. The invoices with the lower grade wood under the average production cost are retained and the anti-dumping levy is assessed on them.
Let me explain it this way. If the average cost of every car produced by General Motors was $20,000, the $70,000 Cadillac or the $30,000 Buick invoices would be ignored. Under this zeroing principle the small compact cars would attract anti-dumping levies. The $14,000 Sprint could not be produced or sold. Even that example is flawed. GM has a choice about whether it wants to produce a low cost vehicle.
To use a cow as another example, T-bone steaks are $10.00 per pound and soup bones are worth $1. If the average cost is $3, forget brisket, soup bones and chuck steak. Under this bogus U.S. system we would have to take them to the dump.
Low grade wood comes in the package known as a tree and the company has to do something with it. What about responsible forest practices? Loggers work to a prescription set by government professional foresters. How will they use a low grade wood that is part of the natural forest? Chips for pulp come from wood production where fibre cannot be recovered. That is good. However conversion of lumber to chips is an irresponsible use of fibre, yet what are the company's choices other than to chip low grade wood?
For Tembec it gets even more bizarre. The U.S. will not allow Tembec to sell any product in the American market under their Canadian selling price. However, because the U.S. has imposed their countervailing duty and anti-dumping tariff, the Canadian market has discounted the lumber sales to reflect the 30% penalty. In a low market like today Tembec could only dream of a 30% profit margin.
The U.S. constructs a cost by adding 18% to Tembec's actual average cost. The so-called dumping penalty is levied on the difference between the sale price in the U.S. and the fabricated constructed costs. Now as complicated as the U.S. has made this, the issue is simple.
Kootenay--Columbia residents are being held as economic hostages. They are highly skilled, industrious, dedicated and hard-working people. Narrow U.S. economic interests treat companies with solid business ethics and responsible environmental practices with disrespect.
U.S. home builders and buyers are paying a higher price for an inferior product from the eastern bloc. The world shudders at the environmental practices carried out in the eastern bloc. If only the Liberals had taken this issue seriously two years ago, they could have taken this message to the U.S. to get the U.S. consumer on side.
Over the last two year period specifically, we have been pushing for the trade minister and the Prime Minister to get to the U.S. consumer. It is only the U.S. consumer interest, understanding the perspective of that country, that would be able to stop this group of small anti-trade very closely held landowners from being able to inflict this kind of damage on my constituency, on our country and on the consumer of the U.S.
There is however one small light in the tunnel. President George W. Bush has assigned former Montana governor, Marc Racicot to work as his envoy in the softwood dispute. The governor has the attention of President Bush and is a personal friend of the president. It is an indication that Bush wants this issue resolved.
I had a minor working relationship with Governor Racicot on the shared interest of Lake Koocanusa that backs into Kootenay--Columbia behind the Libby Dam in Montana. His office was communicative, co-operative and was run with intelligence. In the meetings I had with the governor, I judged him to be the source of his office's intelligence. I believe he understands the issues because he takes time to listen.
We must find a resolution to this never ending Canada-U.S. irritant. We can only hope that the Canadian government finally has the matter on the front burner. My constituents deserve nothing less than the full time attention of the Prime Minister to resolve this issue now.