Debates of Nov. 6th, 2001

Softwood Lumber

[Jean-Yves Roy, Bloc, Matapédia—Matane, QC]

Mr. Speaker, the current dispute between Canada and the United States about softwood lumber is nothing new. Whenever an agreement expires, the U.S. industry tries by every possible means to slow down, if not to destroy, the Quebec and Canadian industries.

Yet, we have a free trade agreement with the United States. As their neighbour, we have had a most conciliatory attitude toward them. In Quebec particularly, our industry and government have done everything to eliminate any subsidy. It can be stated that, in Quebec, our industry is not subsidized and is not in any way competing unfairly with the U.S. industry.

The free trade agreement that we signed with the United States must be respected, and the government must act vigorously, and much more so than it has done since the beginning of the dispute, to ensure that this agreement is truly respected. All that the minister will say publicly is that discussions are taking place and are progressing well.

The time for discussions will have to end soon. It will have to stop soon. The time for action must come. Thousands of jobs are at stake at home, in our regions.

In the lower St. Lawrence region, where I come from, the softwood lumber industry includes some 38 companies that employ about 2,052 plant workers, and over 1,810 forestry workers. This illustrates how importance that industry is in our region. The attitude of the U.S. is jeopardizing the whole economy of that region. In the Gaspé Peninsula, which is another region that I cover, there are some 17 sawmills that employ 716 plant workers and 1,120 forestry workers. For a region of a little over 100,000 people that was hit hard by the moratorium on groundfish and was also hit very hard by the employment insurance cuts, any new loss of jobs is a real tragedy.

Moreover, people from both the Matapédia and Gaspé regions do not trust the current government at all to help them in a crisis situation. If the past is any indication of what the future holds, it is obvious that we cannot trust the current government.

As we know, Quebec is the second largest producer of softwood lumber in Canada, with 25.5% of the total production. In Quebec, some 40,000 jobs are related to this industry. The softwood lumber industry injects over $4 billion a year into the Quebec economy. This shows the importance of that industry in our province.

Add the fact that 250 municipalities in Quebec depend for their livelihood on the lumber processing industry, which provides all the manufacturing jobs in 135 towns or villages in Quebec. These towns and villages are at risk because of the attitude of the Americans. I point out that we have a free trade agreement with the United States, which was signed under the Mulroney government and must be honoured.

We in the Bloc Quebecois have defended this from the outset. We demand the full return of free trade. We want the Americans to honour their signature and to stop harassing us and our industry, our towns and our cities. We want this government to stop its palaver and two bit statements and get on with it.

On October 31, the 12.5% anti-dumping duties were added to the countervailing duties of 19.3% imposed last spring. Something vigorous must be done quickly. We also think it is time for a meeting of all stakeholders to examine Canada's strategy in the matter.

We are not satisfied and we are not alone. We also want the government to implement measures to come to the assistance of the considerable number of workers who have lost or will lose their jobs. By way of example, we propose the implementation of the unanimous recommendations of the Standing Committee on Human Resources Development on employment insurance.

We also ask that the Prime Minister intervene vigorously with the American president to get the anti-dumping and countervailing duties suspended until such time as the WTO has reached a decision in the matter Canada brought before it.

We want the Government of Canada to undertake a vigorous advertising campaign in the States so Americans will understand the consequences of their government's protectionist attitude, especially the fact that American consumers are bearing the brunt of the dispute.

[Grant McNally, Canadian Alliance, Dewdney—Alouette, BC]

Mr. Speaker, I want to begin my intervention tonight by asking the government 10 questions on softwood lumber.

First, why has the Prime Minister and the Minister for International Trade allowed the softwood lumber trade crisis with the United States to drag on so long without taking serious steps to bring a resolution to this problem quickly?

Second, 345 people have lost their jobs in my riding. In British Columbia 1,600 people have lost their jobs. A total of 30,000 Canadians have lost their jobs due to the softwood lumber crisis. Does the Prime Minister not realize this is a local, regional and national issue which demands immediate action?

Third, the Prime Minister says he talks to President Bush every two or three weeks and perhaps speaks to him at occasional photo ops at international meetings. Does he not realize this is not working and he is not getting the job done?

Fourth, why does the Prime Minister refuse every solution offered by the coalition and opposition members, such as stakeholder meetings, appointment of a special envoy or immediate high level meetings on the softwood lumber trade dispute with the United States?

Fifth, the government acted quickly on a Brazilian ban on Canadian beef, on split-run magazines and on Bombardier aircraft conflicts, yet has still not solved the softwood lumber trade dispute with the United States after six months. Why does the Prime Minister not simply get on board his Challenger jet and get this issue solved with President Bush now?

Sixth, the Prime Minister has raised the spectre of linkage, of providing energy to the United States with the ongoing softwood lumber trade dispute, on two separate occasions and most recently in this place a few days ago. Why does the Prime Minister talk tough here and potentially threaten our energy industry, while accomplishing absolutely nothing on obtaining a settlement with the softwood lumber trade dispute?

Seventh, the Prime Minister and trade minister knew the softwood lumber deal would expire during the five year life of the deal, yet have demonstrated an inability to prepare any contingency plan to solve the problem the day after the deal expired at the end of March. Why was the Liberal government so woefully ill-prepared to anticipate this potential outcome on softwood lumber?

Eighth, the Minister for International Trade and Prime Minister have failed in their responsibility to save Canadian jobs in the softwood lumber trade dispute with the United States. Why should Canadians trust the government to solve any major problem adequately on any issue, given its disastrous handling of the softwood lumber trade dispute?

Ninth, given the fact that the softwood lumber dispute has affected so many jobs across the country, does the Prime Minister or the Minister of Finance have a contingency plan for dealing with the devastating consequences of secondary industry loss and related business losses and the economic impact these losses will have on local economies and the entire national economy?

Tenth, the lumber industry is the number one industry in Canada, accounting for billions of dollars in exports and thousands of jobs for Canadians. How can the Prime Minister possibly defend the “don't worry, everything will be fine” approach to the softwood lumber crisis, while Canadian families move to the ranks of the unemployed and will now be unable to provide for the basic needs of their families?

Those are very important questions. I am waiting for some answers from the government on those important questions.

I would now like to turn my attention to the local impact that this trade crisis is having on people within my own community.

Last Friday two mills were closed down in the major city of Maple Ridge, the biggest town in my riding of Dewdney--Alouette. That has put 345 people out of jobs. This will have a devastating effect, not only for the families and individuals who were employed in those mills, but for the entire local economy.

These job losses occurred because of the economic need of International Forest Products to close these mills because of the devastating impact of the over 30% countervail duty on their products.

The Albion cedar mill and the Hammond cedar mill employed many people with high paying jobs. The Hammond cedar mill was Maple Ridge's largest private employer. It operated under the first countervail of 19.3% levied back in August, but the new 12.6% levy was the final nail in the coffin, so to speak.

Its vice-president, Mr. Jack Draper, said “We cannot do business. It is impossible”. One of the employees, a Mr. Bill Westmacott, said:

For some it's going to be very difficult because their skill set is as a mill worker. This mill has worked throughout thick and thin. It's been tough through everything. Most guys have been lulled into the feeling that it would be here forever. People are still hopeful it won't be that long. But as far as I'm concerned, the federal government is sleeping at the wheel. It's typical. The west is suffering because of the indifference of Ottawa.

These local mills add $500,000 to the local tax base in municipal taxes, which has a spinoff effect in the local economy of Maple Ridge, Pitt Meadows and surrounding areas.

The IWA local union president has also expressed his concern that the Americans are simply waiting to pick off our raw log exports and mill them in the United States. We hope that is not the case. Unless the government gets on its feet to solve the problem there will be a devastating impact not only on the union president, the jobs and the individuals he represents but on many other people in my riding.

If one travels along the Lougheed highway which runs parallel to the Fraser River, one sees many mills throughout the communities of Maple Ridge, Pitt Meadows, Albion, Whonock, Ruskin and many others. This very important issue must be dealt with and the government is simply not responding in an appropriate way to solve the problem immediately.

I want to read into the record some of the previous interventions I have made on behalf of my constituents on this issue. On at least four or five occasions I have asked questions on this issue in the House previous to this date.

I have written to the Minister for International Trade on behalf of my constituents. I am afraid that it has become a bit prophetic. I wish that had not been in the case. In my letter dated August 16 I wrote:

The recent ruling by the U.S. Commerce Department to impose a 19.3% countervailing duty on Canadian softwood exports will have a devastating effect on local companies operating in my riding of Dewdney--Alouette.

The forest industry accounts for hundreds of jobs and millions of dollars in our local economy. It is predicted that the countervailing duty will cause almost immediate mill closures and layoffs in this sector. Needless to say, my constituents who may be out of work as a result of this countervailing duty need to see decisive action from the Government of Canada, and they need to see it now.

I have read media reports that indicate the Government of Canada is continuing to argue Canada's case, and intends to appeal the decision of the U.S. Commerce Department in the U.S. courts. While these are necessary actions, they could take months or even years before they are successful. In the meantime, thousands of jobs could be lost, and hundreds of mills shut down. This could cost Canadian producers billions of dollars.

The people in the forest industry need an immediate solution and they need to see their government fighting for their interests in an unprecedented way. It is my belief that the resolution of this trade dispute must become the Government of Canada's number one priority.

I look forward to receiving a response at your earliest convenience.

I am waiting for an answer. People in my riding certainly are waiting for an answer from the government on this very important issue so that they might have a solution to a problem that is affecting them to such a huge degree. I want to talk a bit about what is happening in the United States.

These countervailing duties do not just happen on softwood lumber. They also happen in other areas of commerce. However, these duties are now affecting our softwood lumber.

What happens is that the U.S. industry lobbies the U.S. commerce department to impose a duty on Canadian products. In the case of softwood lumber, the U.S. commerce department has complied with the request. Basically, it is what we might call back door protectionism.

Canada has a very important free trade agreement with the United States that allows it free access to American markets in this industry. However, with the Americans' approach to the U.S. commerce department's countervailing plan, it works at cross purposes. It not only hurts Canadian jobs and the Canadian industry, it also hurts American consumers who have to pay a higher price for their product, even if it is from Canadian producers who are able to withstand the burden of the high tariffs and still get their product to market in the United States while receiving this blow to the head duty on their product.

It would make sense to get this issue solved quickly for the survival of our forest industry which is so vitally important in British Columbia and across the country, as other members from other regions have said. It also has a huge impact in other areas.

The softwood lumber issue cuts to the heart of many. Some of us have been in this place for years now while the softwood lumber agreement was in place. We talked to the government about having a contingency plan for when the softwood lumber agreement expired. The response was inappropriate. It responded by saying that we would have free trade. We would have hoped for that but to not have a contingency plan in its hip pocket, when it had already been through similar trade disputes in the past where the Americans slapped on countervailing duties, was woefully inappropriate and showed a lack of foresight and a lack of vision on the government's part not to have anticipated this dispute.

Because the government did not anticipate this dispute and did not have a plan in its hip pocket to deal with this countervailing issue, thousands of people are losing their jobs. What are we to say to them? Do we tell them not to worry because we will take care of them? How can we ask people to trust the group that put the deal in place and allowed it to go on for five years without having a plan to combat a countervail at the end of that plan to solve the problem? It is a bit like Lucy pulling the football away from Charlie Brown. The football is there, Charlie Brown goes to kick it, Lucy pulls it out and Charlie keeps coming back to kick the ball every time.

In many ways the government is like Lucy holding the ball and asking Canadians to come and kick the ball. Eventually they are going to stop believing the ball will be there to kick because they have seen the way in which this government has handled this issue and many others, which simply demonstrates how woefully unprepared it is to do so. There is absolutely no excuse for that.

It is very frustrating when members of the House come to this place with solutions about how to anticipate these problems and they are rejected out of hand.

They are not only rejected out of hand but no alternative solutions are being proposed by the government. We even heard the Parliamentary Secretary to the Minister for International Trade refer to those who are concerned about this issue as nervous Nellies. He has apologized somewhat for that comment, and I commend him for that, but it sends the wrong message. It sends the message that the government is out of touch with the impact this trade dispute is having on real people, on their lives, on local economies and on our national economy at a time when we are already in a downturn due to the change in economic climate, as well as the events of September 11. By adding this trade dispute on top of everything else is a disastrous recipe and there is no concrete response coming from the government.

In the last few days my party and other parties have raised this issue in question period. At the most, we get 35 second non-answers or flippant responses. There was joking in the House today on the government members' side when this issue was brought forward rather than a concrete plan or set of concrete actions that could be put in place. We have asked the Prime Minister to initiate high level discussions, working with the president of the United States, to come to a resolution of this problem immediately. We are past the stage of simply waiting for an answer. There is too much at stake.

Speaking of local economies, some constituents from the travel agency business sector came to my riding office last week. They are facing the impact of the downturn in the economy, particularly the events of September 11. Their commissions have been cut because of their inability to sell tickets and they have had to lay people off. That is another sector of the economy that has been affected by the events of September 11 and the downturn in the economy. Close to 400 jobs have been lost.

I bet there will be very few people, after losing their jobs, who will be looking for a flight to visit a family member in some other part of the country or are able to afford to take a holiday with their families. It is affecting local business. It is affecting Ernie Day and his colleagues who run a travel agency in Maple Ridge. They have asked that the government be responsive to the issue, which is why I have mentioned it in this debate. The government does not have a response or a comprehensive set of ideas, solutions or suggestions on how to handle the impact of not only the events of September 11 but this particular issue of softwood lumber.

I wrote another letter to the Minister for International Trade on the issue of the shake and shingle industry which has also been lumped into the trade dispute when it should not be. I am awaiting a response from the minister on that issue too.

There is a proposal in the U.S. congress called the softwood lumber fair competition act that has been referred to the committee on ways and means. It is a way to include the shake and shingle producers in the same softwood lumber issue. It is having a potential effect on that sector of the lumber industry when it should not be. It is again another example of the Americans' protectionist stance when they claim to be free traders.

In closing I simply want to encourage the government one more time to take some concrete actions in this place today. I am urging the Prime Minister to go to Washington for some high level meetings with President Bush because this is the most important industry in terms of dollars that we have in Canada. If we do not show the people of our nation that we are willing to commit with our actions to the words we say we believe in, then our words are not worth much. We need to get this solved and we need to get it solved now.

[Reed Elley, Canadian Alliance, Nanaimo—Cowichan, BC]

Mr. Speaker, I will be splitting my time with the hon. member for Calgary Southeast. It is an honour to speak on behalf of the citizens of Nanaimo--Cowichan who are so deeply affected by the softwood lumber dispute. Unfortunately the very slow reaction of the government has caused and continues to cause many businesses and entire communities in my riding incredible harm.

It is another sad day in the country when we must describe in detail the glaring errors, the lack of intestinal fortitude, and the inability of the minister and the government to resolve the softwood lumber issue with the United States.

The government should not be surprised by the current softwood lumber debate. For over two years the official opposition has been telling it in very clear terms of the need to resolve this issue on a long term basis.

Since I was first elected in 1997 I have put out 11 press releases and asked many questions in the House regarding softwood lumber and the government's inaction on the file. I have heard from and spoken with countless employees in the timber industry, toured numerous logging sites, and met with union officials, mill management and owners and private landowners on numerous occasions.

This is certainly a diverse group of stakeholders by any definition. All the stakeholders would rarely agree on the issues and the potential solutions, but let me tell every member of the House that they all agreed the government had failed to resolve the issue surrounding softwood lumber. They agreed that solutions must be found and should have been found long ago.

The Minister for International Trade held meetings today with Marc Racicot from the United States. Yesterday he said that he would be giving Mr. Racicot an earful about how every decision made in Washington has been punitive and injurious to our industry. He said that would be loud and clear.

I am sure my colleagues would be very interested in knowing Mr. Racicot's reaction to this earful. Did he say that the minister was absolutely correct and that he would cease all these unfair trade practices immediately? Did he admit that the Americans lost all past attempts to show that Canada practises dumping with regard to softwood lumber? Did he qualify himself as acting largely on behalf of a powerful lumber industry from the American southeast?

Canadians and in particular British Columbians would be interested in hearing the minister's comments on the matter. If the minister followed through with his commitments of yesterday then I would be the first to applaud him. However it is unfortunate that to date he has not taken a strong stand in defending Canadian interests. He has known for many years that the softwood lumber agreement would be expiring.

If the minister wants to play in the big league with the Americans he had best be prepared to play hardball. Playing hardball means standing and putting the interests of Canadians first.

The Prime Minister mused recently about linking the energy sector to softwood lumber. The official opposition has been advocating this for a long time. I am pleased that the Prime Minister is finally following our lead on this matter.

Members will recall the shortage of electricity last summer in California and its rolling blackouts and the need for oil and gas to heat homes in Chicago last year. Now is the time to play hardball.

It is inconceivable that the government could leave so many Canadians unprotected, and yet here we are. The government is quick to offer support on many other issues but on this issue it has been slow, protracted and untenable. The lack of action is completely unacceptable, particularly for the people of British Columbia.

Many members of the House, and certainly the Minister for International Trade and the Prime Minister, do not have any concept of the devastation that the lack of a softwood lumber agreement is having in British Columbia. Yesterday the IWA told my office that there are at least 16,000 forestry workers on temporary or long term layoff across British Columbia.

Today I spoke with the vice-president of Norske Skog, a pulp and paper mill which is an important employer in my riding employing about 1,200 people. He told me that it will be shutting down four pulp and paper mills temporarily on Vancouver Island and the Sunshine Coast, laying off approximately 5,000 employees.

There are four mills temporarily closed in my riding alone, one of them permanently. The remaining four lumber mills are down to one shift. Now we hear about this pulp and paper mill that will be laying off another 1,200 workers, bringing the total to around 4,000 people in my riding who are directly affected by layoff and the problems with the softwood lumber agreement.

This is absolutely devastating in my riding of Nanaimo--Cowichan, all across British Columbia and in many areas across Canada. The ramifications of the government's inaction on this file are immense. As a stone thrown into a pool of water sends ripples in all directions, the economic and social effects of the government's failures are far reaching.

The obvious first impact is on employees. According to current numbers approximately 20,000 British Columbians are at least temporarily unemployed. Many have no hope of returning to work unless significant strides are made to ensure free trade for softwood lumber. Some 20,000 men and women are not bringing home a paycheque. Some 20,000 families cannot meet their mortgage payments or put food on the table. I wonder if the minister would like to send a message to those people explaining his inaction on this file.

The mills and companies are obviously greatly affected by the closures. The companies involved range from single mill owners to large multinational corporations. Each has different resources to draw on, some small and some large. Either way they will have less profit and will be paying less in municipal, provincial and federal taxes. Norske Skog, for instance, supplies approximately 76% of the tax base to one municipality in my riding.

The next set of economic ripples extends to the communities. As the paycheques dry up so do the purchases. I have heard reports from my riding that there has been a major slowdown in everything from car sales to appliances and a general downturn in sales of virtually every other commodity.

The economic effects caused by the softwood lumber tariff are almost unimaginable. When a town is based singly or largely on one industry anything that upsets the industry has an immediate effect on the economic well-being of the town. One need only point to small towns such as Youbou or Gold River to see the repercussions. Both these towns are facing a rather grim future.

Perhaps the most deeply disturbing effect of these economic sanctions is their impact on families. As the financial strains literally hit home many families cannot endure the pressure. The inevitable end result is some form of breakdown within families. This simply is not acceptable.

There is an additional aspect to the issue that has not been spoken of in the House, at least not for a long time. American companies are buying our raw logs, shipping them south to their own mills and cutting the timber there. This amounts to nothing less than the export of jobs.

This has had a direct effect on my riding. I have spoken with forestry workers who have watched as truck after truck of raw logs has been driven past the mill they used to work at, a mill which is now closed, and has disappeared across the American border.

This is fundamentally wrong. To export raw logs at the expense of our timber industry is wrong. To export jobs to the United States is wrong.

On August 27 in the midst of this dispute with the United States I recommended we place a 19.3% tariff on the export of raw logs. If the Americans want to buy our timber let them pay a premium to do so. This is an issue we will have to deal with in the future but it is all part of the huge problem we are having now.

Yesterday during question period I invited the Minister for International Trade and his parliamentary secretary to join me in my riding to see firsthand the effect of the softwood lumber problem. I was and remain very serious about this. Yesterday afternoon I formally invited them to join me in Nanaimo--Cowichan. I trust I can look forward to a positive response from them and will be able to take them to see firsthand the devastating effects of the softwood lumber problem in my riding.

My time is drawing to a close, the hour is getting late and the Speaker wants to go home as much as I do. I will close quickly.

I strongly urge the government to make softwood lumber a high priority. The Prime Minister needs to be involved at the highest level, clearly and concisely expressing the will of the Canadian people to the president of the United States. This must be done quickly and with finality.

[Jim Abbott, Canadian Alliance, Kootenay—Columbia, BC]

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.

[Stéphan Tremblay, Bloc, Lac-Saint-Jean—Saguenay, QC]

Mr. Speaker, I wish to dedicate this speech to all the workers in the lumber industry, in the Scierie Martel, the Scierie Tremblay, the Scierie Lac-Saint-Jean, the Scierie Lachance and many, many other companies. In short, my thoughts are with those who will be affected by the present litigation, because litigation is what it is.

It will be remembered that when the agreement expired early last April, the American industry filed complaints against the Canadian industry, accusing it of receiving subsidies and dumping—yes, dumping—its product on the U.S. market. The U.S. department of commerce handed down a preliminary ruling in early August. It concluded that the industry was receiving subsidies and accordingly imposed temporary duties of 19.31%.

The October 31 ruling and the preliminary anti-dumping ruling by the department of commerce imposed a duty of 12.58%.

Since I have dedicated this speech to the workers in my riding, it would perhaps be appropriate for me to explain to them and to the public, because it is now almost 11 p.m., what countervailing duties and anti-dumping duties are.

A countervailing duty is a special duty imposed by a country to protect its domestic industry from the negative impact of imports which have received subsidies. In this case, the American government is saying that the Canadian government subsidizes its softwood lumber industry.

It must be remembered that basically, economic rules require that companies engaged in international trade must not be subsidized. If one of the companies engaged in international trade is subsidized by its government, and another company in another country is not, it can say that trading with this company is unfair because it is subsidized.

This is where there is an imbalance with respect to international trade. It is in this connection—I remind the workers who are the victims in this dispute—that the Americans have said to Quebec producers “Your stumpage, the cost of development and many other factors make it extremely advantageous for the Canadian industry to export softwood lumber compared to the American softwood lumber industry”.

That, Mr. Speaker, is the softwood lumber issue in a nutshell.In fact, I address my remarks to the Chair but, at this hour, I feel much more like I am speaking to the citizens affected by this dispute, to workers in the forestry industry.

This happened a few months ago. We will recall that, a few weeks ago now, another duty, an anti-dumping duty that is quite high, 12.5%, was imposed.

What is the anti-dumping duty? Dumping is selling goods on a foreign market at a price that is lower than the price asked for selling similar products on the domestic market or at a price that is lower than the cost of production.

The accusation made by the U.S. government is that, to enter the U.S. market, the Canadian softwood lumber industry is trying to reduce its prices to the maximum to be more competitive. To arrive at this anti-dumping duty, the U.S. government studied certain Canadian companies, including Abitibi Consol and Tembec. According to some assessment grids, it considered that it should impose a duty of 13.6% to 10.7% respectively and that by averaging these, it would arrive at 13%.

All this to say that, when a company, for example, from L'Ascension in my riding carries a two by four and sells it to the United States, if this product cost $10, the company must leave $3 at the U.S. border.

One will understand that after spending thousands or even millions of dollars this amount of money is extremely difficult to absorb for Canadian companies. I say extremely difficult because last weekend I called the forestry companies and sawmills in my riding to know what the impact was. The answer is, in the main, that the impact will be major and devastating. The profitability margin has become so small that companies have to lay people off, and this has a direct impact.

When a company lays off an employee who earns very good wages, it is the whole economy of my riding and, of course, of many regions throughout Canada that is affected. I believe this is why we must absolutely respond to this situation.

In view of this American position, the Bloc Quebecois thinks the time has come to hold a meeting of all stakeholders to take stock of the Canadian strategy on this issue. It is time for a meeting of all lumber producers, for greater dialogue, and for the development of a strategy to be able not to negotiate, but to hold talks with the Americans and help them understand our position. Everybody will agree that the Americans are great free traders, but only when it suits them. In the present situation, it seems it does not suit them. They decide overnight to break all the rules of free trade. This is unacceptable.

In the U.S. congress, some divisions are apparent. On one side, we have the American industry accusing Canada of subsidizing its industry and calling for a more stringent agreement. On the other, we have consumers and other American users of lumber, like Home Depot, which is well known here, suggesting that the Canadian industry is not subsidized and that free trade is in order.

The U.S. government should realize that, as a matter of fact, the Canadian lumber industry is not subsidized. In this context, we would like the international trade minister to discuss these issues with his American counterpart.

Of course, some things are harder to control, given that we do not exactly have any power over American policies. However, there are some policies that the Government of Canada can control, entirely. I am referring to measures that could be used with employment insurance.

Given that we are dealing with a crisis, many workers are going to be affected. In my opinion the Minister of Human Resources Development, who is sitting on a huge surplus from the employment insurance fun, should react quickly by relaxing the requirements for employment insurance so that workers who are affected by this thoughtless American act could be compensated with social security measures such as employment insurance.

The minister must make employment insurance more accessible to the forestry workers who are being so heavily hit. We are therefore asking her to broaden the eligibility requirements for employment insurance and extend its benefit period. The time has come to implement these measures.

Unfortunately that is all of the time that I have. I am going to have to ask my colleague from Verchères—Les-Patriotes to finish the speech for me. I sincerely hope that the Canadian government will be able to discuss this issue in a firm and unswerving manner with the U.S. government.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, I would like to say, as is my wont, that I am very pleased to take part in this debate. The pleasure is, however, lessened by the gravity of the situation facing us at this time.

I would like to say, for the benefit of our viewers, some of whom probably could not sleep and were channel surfing and happened to come upon us on the parliamentary channel, some of whom found nothing else of interest to watch at this late hour, and those who are such great fans of the dry debates that are held in the House of Commons that they have chosen to follow us at this late hour, that if, indeed they do find their MPs in session at such a late hour, it is because circumstances have forced it.

What we are taking part in at this time is what the Standing Orders call an emergency debate, one requested and allowed because of the gravity of the situation on the issue of softwood lumber, with the United States.

This guerrilla warfare, if I may call it that, which the Americans are waging on the Canadian softwood industry, is nothing new. It is, to all intents and purposes, one which saw the light of day in the early 1980s, around 1982 to be exact. That was before the Canada-U.S. free trade agreement and NAFTA.

Since then, the United States has never stopped harassing Canadian softwood lumber producers by claiming, most of the time erroneously, that Canadian businesses were subsidized, and consequently they needed to impose countervailing duties, antidumping duties. At this time, we are experiencing the latest sortie in this guerrilla warfare that has been waged for some years.

It is surprising that the United States has decided, once again, to attack Canada, the Canadian softwood lumber industry, given the particular circumstances in which we find ourselves at the present time.

As a result of the tragic events of September 11, one might have expected a much more conciliatory attitude on the part of the Americans to the nations around the world that responded to their appeal to join in the fight against terrorism.

One might have expected that the U.S. would ensure its allies did not suffer an economic backlash in this situation, where we need a strong and solid economy behind us. One might have expected, given the economic indicators pointing, in both the States and Canada, to a major downturn in the economy necessitating—the American government announced investments on the order of $100 billion—major work.

One might have expected, in this context, that they would not want to be without any resource Canada could offer in terms of lumber, knowing that south of the border major projects would be undertaken to offset the effects of the economic downturn.

And yet, the United States has decided to once again go after the Canadian lumber industry. The agreement Canada finally concluded with the Americans in 1996 was not very favourable to the Canadian lumber industry and especially to that of Quebec.

However, under the terms of this agreement, one would expect that we could return to total free trade in lumber. Yet the United States decided to impose countervailing duties of 19.3% in August.

We are now faced with new duties of 12.58 %, anti-dumping duties this time, in addition to the ones levied by the United States last August.

These are totally unacceptable decisions because, over many years, the Canadian industry adapted progressively, if I may say so, to deal with the complaints of the American producers. It may have been true a few years ago the Canadian industry could have been accused of receiving subsidies or of being indirectly subsidized by the government, but I think we can reasonably say now that the Canadian lumber industry and the Quebec lumber industry are not subsidized.

Therefore, the American decision is totally unfounded. Particularly since a free trade agreement exists between the two countries. We then have to expect and demand that the Canadian government strongly intervene in this issue. This has to be done at the highest levels. The Prime Minister has to deal directly with the President of the United States.

As the hon. member for Lac-Saint-Jean--Saguenay mentioned earlier, we must also get all the producers and stakeholders involved. Already, for a number of months now, since the crisis resurfaced in April, producers have been kept in the dark. They are not informed of what is going on. They are asking to be consulted. They want to be allowed to make a contribution, to comment and to make suggestions so that we can solve this crisis.

The impact of the decisions made by the United States on the Canadian and Quebec softwood lumber industry should not be underestimated. Thousands and even tens of thousands of jobs are at stake. Our industries' profits are at stake. The U.S. government is hitting very hard, and unjustifiably so, one of its most loyal allies in the fight against terrorism. This is what makes this decision all the more unacceptable.

In Quebec, we are talking about 40,000 jobs. There are 40,000 jobs that are directly and indirectly related to the softwood lumber industry. In Canada, it is 130,000 jobs. The softwood lumber industry injects over $4 billion a year into the Quebec economy.

So what is happening now must not be taken lightly. As I was saying earlier, we must demand that the Canadian government pursue this matter vigorously. In the meantime, until we can settle this issue with the United States once and for all, we must also ask the Government of Canada to be understanding, to show some compassion toward the workers who have already been affected by the U.S. decision or who will be affected by it in the next few days or the next few weeks.

In times of economic downturn, or should I say in times of economic growth such as we had over the last few years, the Canadian government was able to get away with changing the employment insurance plan and accumulating huge surpluses without having a decisive impact, although the impact was significant.

I should remind members that four out of ten unemployed workers who had paid premiums qualified for benefits. In times of economic growth where job creation is occurring, the adverse effects are somewhat lessened. But there is an economic downturn, it is important that the government realize that its EI reform has had and will have even more adverse effects that will penalize the unemployed.

We are therefore calling on the government to make a certain number of changes to the EI system, as recommended by the Standing Committee on Human Resources Development in its unanimous report.

In conclusion, I would urge the Canadian government to take action and if, as I hope, they are following the debate now taking place, I urge the American authorities to be more receptive to the message from Canadian authorities. On that note, we can only hope for the best.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Thank you, Mr. Speaker, and thanks to all those who are helping the House to function at this late hour.

Much has already been said in this emergency debate on the violence being done to the Canadian lumber industry by protectionist forces in the United States. Much has been said by members of parliament whose constituents are directly and powerfully affected by the countervailing duties so far imposed on the industry by the United States.

We have heard about the more than 15,000 jobs that have been lost in the industry already and the anticipated additional 15,000 jobs that are imperilled. We have heard about the economic devastation this has for many small communities, particularly in British Columbia. We have heard much about what the government has or has not done to protected this vital Canadian export industry.

I would like to focus my remarks on my extreme disappointment with the congress and the government of the United States in allowing these countervailing duties to proceed. Members would be hard pressed to find a member of this place who is more friendly toward the interests of the United States of America. I am an unvarnished fan of the American tradition of ordered liberty, of the American example of democracy given to the rest of the world, of the American system of free markets and the economic example to the rest of the world created by the free enterprise system in the United States.

In a country that is not always so friendly to such sentiments, in a country, Canada, whose political culture is sometimes formed not by a nascent anti-Americanism, sometimes taking such a position is not always easy, but it has never been more difficult than it is now.

I want to say to my colleagues in the American congress, many of whom are friends of mine, particularly members of the Republican congressional caucus in the house of representatives, that by allowing these countervailing duties to proceed they have betrayed what is best about the United States and have undermined some of the very virtues and values that make the United States the leader of the free world.

They have done violence to the principle of free trade, without which the entire system of free enterprise collapses. They have allowed themselves to do this, and I include in that a Republican administration that knows better, an administration that preaches the economic gospel of free markets, free enterprise and free trade. It has in this instance allowed the retrograde, economically destructive forces of protectionism to assault an ally, and not just an ally but the closest ally, friend, neighbour and partner of the United States for over a century.

Not only have they assaulted the economic interests of Canada and the principle of free trade and free enterprise, have they assaulted even their own consumers. Of course this is the twisted logic of protectionism. A small, discrete number of people have an acute interest in promoting countervailing duties of this nature on this and other products, those who own large companies that compete with products produced by folks who send products into the United States, exporting countries such as Canada. Yet the cost of the protectionist measures imposed on behalf of and for the interests of a small number of corporations is borne by individual U.S. consumers.

As the American consumers for housing coalition has pointed out, the average American house, newly constructed, already costs $1,000 more under the Canada-United States softwood lumber agreements of the past six years than it would if we had no such agreements and if we simply had free trade.

This is not just an attack on Canadian companies and Canadian lumber exporters. It is not just an attack on the 30,000 Canadians who are working hard to produce a valuable product needed in the United States. It is also an attack on hundreds of thousands of American consumers who essentially are forced to pay a form of taxation through the now expired softwood lumber agreements and who of course will also bear the brunt of inflated prices as a result of the cumulative 32% countervailing duties imposed since August.

I want to emphasize how disappointing it is for Canadian advocates of free enterprise, free exchange and free markets to see American politicians and policymakers who do know better taking this position.

When President Bush visited us here in Canada in Quebec City in August at the Organization of American States heads of state and heads of government meeting, he among others was a strong proponent of hemispheric trade. He spoke eloquent words then, as he has elsewhere, about expanding the circle of exchange and the circle of prosperity by opening up trade. He clearly articulated it as one of the foundational economic and foreign policy principles of his administration, the idea of opening markets, knocking down tariffs and allowing rules based trade systems to replace the small mindedness of tariffs and protectionism.

Yet while he was making that speech and subsequent remarks in rhetorical support of the principle of free trade, he knew full well that members of his administration and senior members of the congress were preparing to take these countervailing actions against Canada. He has allowed that to happen.

The United States government and President Bush I hope have the unqualified support of this country and this parliament in pursuing and leading the civilized and free world in its war on terrorism.

We have seen the United States government understand that at this time in particular, it is important for the United States to align its foreign and trade policy goals with that overarching objective of winning the war on terrorism. We have seen this through its changes in policy toward, for instance, Pakistan. Months ago it was considered a pariah state or pariah regime by the state department in Washington. Foreign aid had been cut off and trade sanctions had been imposed.

As an instance of this new reality, Pakistan is now an important ally of the United States. I am not cynical about these things; I understand the realities of realpolitik. I understand that the United States consequently has, for instance, eliminated virtually all of its economic sanctions on the Pakistani regime and legitimized the government of President Musharraf. It has increased foreign aid to that country and reduced the outstanding debt from Pakistan. That is one example of how American foreign policy and economic policy have aligned with the new reality.

That is why it is particularly troubling to see that the United States has not taken the same kind of approach to its strongest ally here in Canada, why it continues to pursue a policy which inflames Canadians against this American attack on our economy, which is frankly what it is.

I hope the government will do everything it can vigorously to represent our interests. I hope that we will not allow the Canadian government and the Canadian lumber industry to be taken hostage and taken to a negotiating table to come up with another sequel to the Canada-U.S. softwood lumber agreement. The last thing we need is another five or six years of de facto protectionist tariffs to which we agree. We must insist on the principle of free trade.

Canada can be a leader in the hemisphere by saying no to the special interests in the U.S. congress and by saying yes to the principle of free enterprise and free trade. We must hold firm. We must stand together. We must make this our top international trade priority, as we insist on free trade, so that Americans can benefit from the products we produce, and that circle of free exchange can gradually incorporate more and more people in this hemisphere.

[The Speaker]

Order, please. I am satisfied that the debate has now been concluded and I therefore declare the motion carried.

(Motion agreed to)

[The Speaker]

Accordingly, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 24(1).

(The House adjourned at 11.24 p.m.)