Mr. Speaker, I will be sharing my time this evening with the member for Durham. I am pleased to rise this evening to speak in this take note debate on the softwood lumber trade dispute. In fact this is the second time that I have had the opportunity to participate in debate on this issue. We had an emergency debate a couple of weeks ago on this issue.
At first glance members might wonder why the Parliamentary Secretary to the Minister of Canadian Heritage would participate in this debate and what I, being an urban member, could possibly know about this issue. Let me begin by saying that I know this is an issue that is important to all Canadians, rural Canadians and urban Canadians. We heard my colleague, the member for Mississauga South, speak to us about how this issue is affecting home building in his riding.
I also want to say that as a former chair of the subcommittee on international trade, trade disputes and investment in the last session, we considered this issue years ago when we did our cross-country hearings on the WTO. Also, as a lawyer I have a very strong interest in international trade issues and I think it is also very important that Canadians try to understand and learn about this trade issue.
The last time I rose I took the opportunity to outline Canada's case before the WTO. Tonight I would like to actually inform Canadians about what the leading advocates in the United States are saying about these trade actions.
Again, while we are pleased that Canadian and American officials are meeting regularly to discuss a long term solution to our softwood lumber, at the same time it is very important to highlight some concerns that have been raised about protectionism in the United States and the U.S. trade action. I want everyone to realize that I will speak about what the Americans are saying about Americans in the United States.
The first and foremost concern is something that has not been mentioned by the U.S. lumber producers, that is, U.S. consumers are hurt by protectionism. The United States National Association of Home Builders estimates that at least one-third of any tariffs would be passed along to U.S. consumers. Estimates indicate that duties on Canadian softwood lumber exports would increase United States house prices by up to $3,000. While some families would have to pay a few months' mortgage to justify lumber duties, hundreds of thousands of others would in fact be priced right out of the market for new homes.
Other groups that are looking into the negative impact that duties will have on U.S. consumers include: the coalition American Consumers for Affordable Homes, the United States Census Bureau, and the Cato Institute, a U.S. think tank that has been following the Canada-U.S. softwood lumber dispute.
The second concern about the Canada-U.S. dispute is the reality about the United States industry. Softwood lumber production in the United States has fluctuated around 31 billion board feet yearly between the years 1991 and 1996. United States production increased to a peak of 35 billion board feet two years ago.
What U.S. companies and the U.S. lumber lobby will not say is that the supply of timber in the United States is increasingly constrained. Lumber from federal lands, which accounts for only 10% of the total U.S. harvest, is dwindling and subject to increasing environmental protection. In the south the industry is almost totally dependent on private lands for supply and yet annual harvests from private lands are exceeding replanting rates. All in all, U.S. producers cannot meet their own demand for lumber. Canadian producers helped build this market demand by providing up to 35% of lumber to U.S. consumers.
What is it the Americans are saying? What does Alan Greenspan, the U.S. federal reserve chairman, say about U.S. protectionism? He recently said to a congressional committee:
There is no question in my mind that as the economy slows we must accelerate our endeavours toward free trade. If we were to move in the direction of protection, that would create some very significant problems for the American economy...It would have been a great tragedy were that process stopped or reversed...The evidence has become increasingly persuasive that opening up trade to significant international competition is a major force in economic growth and rising standards of living wherever it occurs.
What else are Americans saying? What does Mark Suwyn, chairman and CEO of Louisiana-Pacific, one of the largest forest products companies in the U.S. and a former key member of the U.S. industry coalition, say? Mr. Suwyn has noted that U.S. producers find it difficult to compete with Canada because “...Canadian mills have modernized at a faster rate than producers in the United States”.
He further says “mills in the U.S. can't compete in today's market no matter what the stumpage fees in Canada are”.
What does Auburn University in Alabama say about Canadian forest practices? The university study reported that:
—Canadian lumber producing provinces rank at the top of a list of provinces and lumber producing states protecting their lands from commercial development. States in the U.S. south fall at the bottom of this ranking.
The American Coalition for Affordable Homes notes that affordable housing continues to be a cornerstone of the American dream, yet limiting trade substantially increases the cost of producing new housing or remodeling existing housing and excludes many Americans from home ownership. There are a million more jobs in the U.S. that depend on availability of reasonably priced lumber than there are jobs in domestic lumber production.
Current restrictions on domestic timber harvests means that the U.S. cannot increase lumber inputs significantly. The number of jobs in lumber production, about 200,000 for logging and lumber mines combined, will continue to decline.
In refuting U.S. industry claims and preliminary U.S. department of commerce findings, the U.S. congressional research service reported that “the evidence to demonstrate this possible disparity between U.S. and Canadian stumpage fees is widespread, but inconclusive”. It also noted:
—other factors also affect stumpage fees. For example, the management responsibilities imposed on the timber purchasers differ. In Canada, licensees are generally responsible for reforestation and for some forest protection. In U.S. federal forests, timber purchasers generally make deposits to pay for agency reforestation efforts and some of those deposits are typically reported as part of the stumpage fees.
Finally, it noted:
Economic theory suggests that U.S. restrictions on imports of Canadian lumber have probably raised U.S. lumber prices above what they would have been with no restrictions.
The Consumers for World Trade have said:
Just jacking up the price of lumber hasn't solved this problem in the past and it won't solve it in the future.
While I could go on to quote a number of other industry organizations and individuals, I think the above quotes have epitomized what the real problem seems to be. Let us look at what the leading U.S. media have reported.
In a lengthy article, entitled “Logjam--U.S. should drop lumber threats against Canada”, the Dallas Morning News reported:
Americans need affordable shelter. That's why they (the U.S. Department of Commerce) should resist U.S. lumber producers' heavy-handed attempts to reduce imports of cheaper Canadian softwood lumber.
The article goes on to say:
The department should avoid a bitter, protracted and probably fruitless battle. Canada's real sin (if sin it be) is to have a different system.
I think this is the key. When we look at the WTO and we go there, just because it is different does not make it wrong. That is what the Americans need to learn and I think that is what the paper was saying.
I am pleased that both countries sat down to discuss the root problem of our differences and I hope a reasonable conclusion can be achieved. If not, history will prove us right again and for the fourth time in 20 years the U.S. industry's allegations will not be sustained.