Mr. Speaker, it is unfortunate that we are having this debate this evening. It is unfortunate that our American neighbours are treating us so shabbily again. We recall that they have unjustifiably interfered with the free flow of trade in hothouse tomatoes in British Columbia, with mussels and potatoes in P.E.I., and again for the last few months with softwood lumber.
Many in the House have worn a pin with both the Canadian and American flags on it to show our solidarity with our American cousins over the events of the last few months. It is upsetting, to say the least, that in return for our generosity and support we would be treated by the American government in this way.
Having said that, it is unfortunate that the government has ignored this critical trade issue until it has become a crisis.
Recently, Gordon Gibson, a noted British Columbian, wrote an article. I will quote his comments because they are worth repeating. He said:
If scientists detected a small asteroid headed toward us with a high probability of taking out a continent-sized chunk of Planet Earth five years hence, chances are something would be done about it. No matter how hopeless the case, rockets would be launched and so on. It might or might not work, but by God, the world would try.
Unless of course the space rock was pointed only at Canada, in which case nothing would be done, if the current lumber export crisis is any example.
Our governments have seen the softwood lumber attack launched by the U.S. forest industry and its senatorial supporters coming at us for five years, and hey -- surprise -- here it is! Communities and companies are already forecast to lose 14,000 jobs in British Columbia alone. Double that for Canada, escalate for the longer term. If there is no solution, expect a further decline in the Canadian dollar, important loss of government revenue and an eventual humiliating capitulation to the Americans.
There are, in fact, no surprises here. All of the actors are playing their assigned roles as predicted. The trade asteroid that might have been diverted five years out is here now, and the only option is damage control. The politicians we pay to look after these things should be tarred and feathered sometime in the future, but for now we all have a problem.
Mr. Gibson notes a further decline in the Canadian dollar. It is interesting to speculate on why that is.
The B.C. Lumber Trade Council points out the significance of forestry to the British Columbia economy. It claims that it represents 17% of all output and about 14% of all direct and indirect jobs in the province. Tax revenues from B.C. forestry help fund vital services that B.C. and Canadian residents value, such as education and health care.
B.C. exports roughly half of all the country's softwood lumber to the United States, almost $4 billion Canadian in 1999. Used mainly in home building and renovation, softwood lumber products, spruce, pine and fir, represent Canada's single largest export to the United States. That is why this issue is so important not only to British Columbia, but to Canada.
Last March when the expiry deadline of the previous agreement was forthcoming, Diane Francis notes in a column that Jimmy Carter, the former U.S. president, had written an article on it, an op-ed piece, which she claims, and I think quite rightly so, is totally off base and smears Canada as an unfair trader. She notes that the comments of former President Carter are a combination of propaganda and mistruths. She suggests that the anti-Canadian campaign which has been waged for years is simply a thinly disguised attempt by American forest industry interests to subsidize their lumber business.
She points out the real facts of the matter, that Canadian lumber exports are not subsidized in the way that Mr. Carter suggests. She notes that the trees which are harvested are publicly owned trees, but that they must be replaced by law.
She notes that log prices, for example, and the taxes on them are on landed costs. The taxes may be lower in British Columbia due to the long distance the logs have to be taken to get them to market. They have to be hauled across and through challenging terrain.
She also notes that if taxes are taken into consideration, Canada is hardly a low tax regime. Corporate taxes and income, sales, royalty and other government compliance taxes or costs are routinely higher in Canada.
In closing, she notes that U.S. lumber interests, not Canadian ones, are often directly subsidized by their governments. It is not unusual for local or state governments to offer tax breaks to forest industries and she says that in the U.S. the companies ship on roads which are owned and built by the government, not privately.
How did we end up in this mess? I think the facts are quite clear. There is no free trade in lumber such as some would suggest. When the North American Free Trade Agreement was signed, lumber was not included, as we know. What we are facing is really just a clever form of anti-competition practice.
If we look at the history of the issue we notice that since 1982 Canada and the U.S. have been involved in three lumber countervailing duty cases. The softwood lumber agreement avoided a fourth one.
However, those agreements were not wins for British Columbia or for Canada. In fact they were not victories at all. The B.C. Lumber Trade Council makes that point very clearly and I would like to quote from a document it has printed because I think the comments are valid and worth noting. It stated: “Some have also argued that since Canada has previously won softwood lumber disputes with the U.S. at international trade tribunals we should pursue that strategy again. That reasoning demonstrates a fundamental lack of understanding of the dispute which has hit industry with the highest duties in history and has already resulted in the loss of 16,000 mill and logging jobs across B.C.”.
The council continued, stating that: “The previous wins were hardly victories for Canada and, in particular, for British Columbia. The cost of successfully defending against three earlier trade cases came after some two decades of constant litigation and restrictions on the free trade of B.C. lumber across the border. It cost industry over $100 million in legal, research and other costs. Finally, those so-called wins have handed us the largest duty in history at a whopping 32%. If that is victory one shudders at the notion of defeat”.
In conclusion, the council stated that: “Further, at the urging of the U.S. industry lobby, the United States has changed its trade laws this time around. They are more complicated and onerous than ever and the U.S. lumber industry has stated outright that if it loses this round at the World Trade Organization it will lobby again to have the U.S. rewrite its trade legislation to suit its own purposes. The U.S. industry believes it is not bound by international trade law but by domestic law. Its actions to date bear this out”.
The lumber trade council goes on to say that it is why it believes the only responsible approach for Canada is to negotiate a constructive long term resolution that will provide us with stable, free and unfettered access to the U.S. market, or in short, free trade.
It is interesting to look at some of the comments made in the United States on this issue. What are Americans saying about this dispute?
Federal reserve chairman Alan Greenspan suggests that anti-dumping suits and countervailing duties have often been imposed under the label of promoting free trade but oftentimes are just simply guises for inhibiting competition. Protectionist trade barriers could become “a great tragedy” for the country.
Other concerns are expressed by Americans as well which suggest that all is not well in the states, that not all Americans support this action by their government. The problem is that there is a powerful lobby in the United States and the issue was ignored by our government for the previous five years. It has done nothing to solve the dispute in time.