Debates of March 15th, 2001

Supply

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the hon. member for his question and the support I sensed behind it.

I believe that the entire American industry is experiencing a depression in softwood lumber prices. One of the reasons for this is that since our access to the American market is limited, our domestic supply is too great, particularly since there has been a general increase in the North American production capacity.

It must be kept in mind that a lumber industry has developed in the southern United States as a replacement for the Canadian industry. In my opinion, a very important factor in the drop in lumber prices is the fact that there is a downturn in the United States, and there is a risk of its spreading to Canada.

It is therefore extremely important that the rules of free trade be restored effective April 1 to the softwood lumber industry, so that pricing will reflect market realities and not the ideas of certain American producers.

[Carmen Provenzano, Liberal, Sault Ste. Marie, ON]

Mr. Speaker, my riding of Sault Ste. Marie is one riding which relies heavily on softwood lumber. It is partly a resources based economy. What I have to say applies to the other cities which comprise the region of northern Ontario.

Softwood lumber is very important to that region and, indeed, it is important to the country. I thank the member for his excellent representations and indicate that this motion is likely to have very strong support.

Why is softwood lumber so important? Why is this one of the most important trade issues that the country faces? I will tell the House why. Softwood lumber is Canada's largest industry. It is an important issue because one in sixteen Canadians work in the forest sector. It is important because 337 communities are more than 50% dependent on forestry for economic survival.

It is important because Canada has 20% of the world market and 34% of the United States market. Goods worth $10.7 billion were exported to the United States market in 1999 alone.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased that the hon. member is supporting the motion. It is important that everything be extremely clear.

In terms of the commercial practices of Canada or one of the Canadian provinces, there is no reason for countervailing duties. That is why all members should be supportive of this industry, which is extremely important, like the hon. member said. We will have the opportunity to vote on this motion, and I encourage members of all parties to support it.

[Gérard Asselin, Bloc, Charlevoix, QC]

Mr. Speaker, I am pleased to take part in the debate on the motion by my hon. colleague. The Charlevoix riding depends largely on the development of the Charlevoix and north shore forests. In Quebec we have more than 30,000 workers in the forest industry.

The motion before us during this opposition day will no doubt get the unanimous support of the government and opposition parties. All regions of Canada, the ten provinces and two territories, have a forest industry producing lumber.

Our forest is a natural resource on which many workers depend for employment. In the past these workers were often referred to as lumberjacks and considered as second class workers. Today we have to make a special effort to recruit and train people to work in our forestry industry.

This motion and the amendment must receive the approval of the House of Commons in the vote to come because it is vital for our economy. We accepted the free trade agreement in Canada. This agreement has had advantages but also disadvantages.

The issue was on the agenda of a meeting between the Canadian Prime Minister and the U.S. president. They discussed free trade in softwood lumber. I hope that discussion was preparing the way for the summit of the Americas to be held in Quebec City, where free trade in softwood lumber, among other things, will be discussed thoroughly and extensively.

Why did they limit Canada's trade in softwood lumber on international markets by imposing quotas on Canadian and Quebec lumber producers? We have a high quality product, and we have the workers and resources necessary. The U.S. senate and even Americans in general were afraid that we might flood their market because Canadian softwood lumber is produced in larger volumes and at a better cost. That is when they introduced quotas. They said to Canada: “This is your yearly quota”. I think it was in the 1996 agreement.

Strangely enough in the free trade agreement the United States accepted that Canada export as much electricity and agricultural products as they wanted to meet their needs. However, if we consider another product traded under the free trade agreement, textile for example, we find that the FTA was not so good for us in Quebec, especially in Montreal. As we know, immediately after we opened up our market to textiles from other countries under FTA several productive textile firms in Montreal went belly up.

We could have done like the U.S. and say that we would allow imports to Quebec and Canada once we have taken stock of our needs.

Forest products like softwood lumber come from natural resources. Why are we penalizing the softwood lumber industry and not the mining companies, for instance, or those who produce iron on the north shore? It is because we know that there is a demand for the iron produced on the north shore, that the doors are already wide open and that we need this product.

Softwood lumber producers are overregulated and overlegislated. Even before they can access the international market lumber producers in Quebec and Canada have obligations to fulfil. They have to worry about the environment. Clear-cutting is no longer an option and forest workers have stopped harvesting without worrying about the impact of their operations.

Lumber producers must learn to share the resources. They must work in partnership with the people who live on the land they want to develop. They also have to work with native communities who have some land reserved to them. They have to take into account resort areas in some parts of the country and even protected areas in parks near rivers and lakes, as well as areas where the department of energy and resources has set quotas. They must live and work in partnership with the aboriginal communities and the people they share the land with.

Note that we no longer do clear cutting but rather a very selective type of logging in order to promote forest regeneration. Moreover, considering our climate and the rugged terrain in certain areas where it is not easy for the producer to harvest lumber using very specialised equipment, we must make sure this regeneration is possible. I will indicate you in a moment about the cost of lumber on the international market.

Also often at its expense the logging industry must build access roads which are used as well by vacationers and others who use the land. Lumber producers must also meet environmental standards.

Today it is well known that lumber producers get their licences or logging quotas after a feasibility and yield study has been made. They must also determine how the lumber will be harvested and moved. Will noise or water pollution standards be met? Likewise studies will be made on the habitat of the moose, deer and other species living on the land. Their habitats are in these forests.

Lumber producers must also conform to the Canadian legislation regarding the quota system as well as to the provincial legislation. In Quebec, as in other provinces, there are quotas for exporting, harvesting and renewal. This causes certain problems.

However if we want the resource to be there for the next 50 or 100 years, we must make sure that it is harvested in a civilized manner and that it is allowed to grow back. With our climate on the north shore, a spruce tree planted in 2001 cannot be harvested in 2010 when it has reached a diameter of six inches. It will be another generation, maybe two, after us that will reap the benefits.

Account must also be taken of the cost to producers of transportation. The more we log, the more the forest recedes, and the further the lumber must be transported. In addition to the costs of transportation and logging, there are processing costs. Recently there has been a terrible increase in the price of diesel and gasoline, but truckers have not been compensated by the mills or the producers. These are often individual operators with a firm contract who have had to absorb the increase in gasoline and diesel prices.

There are also the roads, which often deteriorate during frosts and thaws and which have weight restrictions. At this time of the year the trucks are either half full or half empty, depending on whether one is an optimist or a pessimist.

Consideration must also be given to the costs of processing, investment, equipment and manpower training. Today logging requires more than a saw and an axe. It requires specialized equipment and very expensive tools. In my riding there are more than six sawmills.

It is sometimes difficult to see the forest for the trees. We are asking the Prime Minister, at the summit of the Americas, to allow Quebecers to have free trade and to maintain their position on the logging and processing of softwood lumber.

In closing I wish to move an amendment. I move:

That the motion be amended by adding after the word “process” the following:

“for example the establishment of quotas or tariff barriers.”

[The Acting Speaker (Mr. Bélair)]

The amendment is in order.

[Preston Manning, Canadian Alliance, Calgary Southwest, AB]

Mr. Speaker, I thank the members of the Bloc for their presentations and the motion this morning. I would make a comment and ask a question.

The official opposition members are free traders and agree that the government should make every effort to secure free trade in softwood lumber and resist the U.S. protectionist interests.

I point out that western Canadians have supported free trade since prior to confederation, but it was central Canada that supported protectionism. It was only when Quebec business interests persuaded Mr. Mulroney to pursue the free trade agreement that we got the free trade with which the motion deals. I might say there was a strategic alliance between Quebecers and western Canadians to secure free trade which makes this motion work.

To win any trade dispute with the Americans, is it not true that Canadian producers need to hang together, that Canadian provinces need to hang together and that Canada needs to hang together? Does the member not believe that the bargaining power of a united Canada with the United States is greater than the bargaining power of a separate Quebec?

[Gérard Asselin, Bloc, Charlevoix, QC]

Mr. Speaker, I am pleased to see that the Canadian Alliance will support the amendment and the motion to allow the free trade of a product such as lumber.

As long as Quebec remains part of the Canadian federation, as long as Quebecers continue to be dependent on the goods and services tax and on personal income taxes, we must work as one to let foreign countries know that Canadian products are good. These issues are not mutually exclusive.

If the past is any indication of what the future holds, then the Liberals missed their turn in various negotiation processes and I am not sure that they have adequately protected Quebec's interests.

If the hon. member for Joliette in his capacity as the Bloc Quebecois critic on international issues is using this opposition day to propose a motion, it is because Quebecers are once again adversely affected by the free trade agreement that the federal government negotiated while allowing them to impose quotas on us.

Who is most affected? Quebec for one and Quebecers. Bloc Quebecois members represent Quebecers and wish to take advantage of this opposition day and say “As long as we are in this situation, we will be asking the government and the Prime Minister to be our spokespersons at the Summit of the Americas”.

We are also asking them to have the Minister of Foreign Affairs negotiate so that lumber is recognized in the free trade agreement and so that we are not adversely affected by quotas. However these two issues would not be mutually exclusive.

When Quebec becomes a sovereign country, it will be a partner under the free trade agreement and we will be negotiating for ourselves.

[Carmen Provenzano, Liberal, Sault Ste. Marie, ON]

Mr. Speaker, the hon. member opposite mentioned that forests must be harvested in a civilized way. We would all agree with that comment. That is certainly the case in Canada.

Canada is a world leader in forestry management practices. It is not Canadian forestry management programs that confer any countervailing subsidies, and that needs to be understood clearly.

[Gérard Asselin, Bloc, Charlevoix, QC]

Mr. Speaker, as I said earlier in my brief remarks, I would have had much more to say.

Softwood lumber is a chief resource of the north shore and the Charlevoix area, and many workers draw their income from it. The generations that preceded us also drew the bulk of their income from forestry.

If we are talking about civilized wood cutting today, it is because at one point in time logging companies were given access to the forest and allowed to do whatever they wanted with it. Today we are talking about selective cutting and the need to protect habitats and the environment, and there is a better framework for operations.

The hon. member certainly noticed, like me, that we have had uncontrolled forest harvesting because clear cutting was allowed. Today we have to bear the consequences of that.

[Pat O'Brien, Liberal, Parliamentary Secretary to Minister for International Trade]

Mr. Speaker, this is the first opportunity I have had to congratulate you on your appointment to the chair, so congratulations to you.

I am very pleased to have the opportunity to address the House today on a matter of great importance to all Canadians. I say to all Canadians that the softwood lumber business is Canada's largest industry, as has been noted by one of my colleagues, and that it touches people in every province, including the province of Quebec.

One in sixteen Canadians work in the forest sector and hundreds of communities across Canada rely on forestry for their economic survival.

A healthy lumber industry is critical for Canada. To guarantee the health of our industry we need access to our largest market. The United States is by far our largest market. Canadian exports account for one-third of the U.S. softwood lumber market. That 33% share is the crux of the matter.

With the softwood lumber agreement due to expire on March 31, it is very important to shed some light on what is really behind the United States' position in this longstanding dispute.

Let us be very clear on this. The United States' position on softwood lumber is not based on any legitimate claim of unfair practices by Canada. It is based on protectionism, pure and simple. That has always been the case and, unfortunately, it appears it may well continue to be the case.

For over a century, U.S. softwood lumber producers have been trying to restrict Canadian exports. For over a century, they have wanted protection from Canadian competition. For over a century, they have stopped at nothing to hold on to market share.

The first U.S. duties were applied to Canadian exports of softwood lumber way back in 1930. The duty was $1 per thousand board feet and rose to $4 by 1935 before we successfully negotiated it back down to $1. Two years later, in 1937, lumber producers in Oregon and Washington petitioned the U.S. government for protection from unfair Canadian competition. At least that time they failed.

As time moved on and the number of Canadian imports into the United States increased, U.S. producers became increasingly agitated and sought protection. However, despite the fact that the U.S. lumberman's economic survival committee was able to prompt both congressional hearings and the formation of a White House task force on the issue, the U.S. trade commission chose not to impose any restrictions on Canadian lumber imports.

In the past 20 years the protectionist actions have continued and intensified. There have been three countervailing duty investigations in those 20 years and not once have the U.S. claims of subsidy been sustained.

We had a memorandum of understanding that allowed provinces to adjust their forestry practices. When these adjustments effectively eliminated the export charges it made no difference. Still, the subsidy claims persisted.

Now we are in the dying days of a softwood lumber agreement that was never intended to address the subsidy issue because clearly subsidies were never the issue. What the U.S. industry has always sought is to protect its market share. That is what this is all about.

It is true that Canada does well in this regard. We do well because we produce an excellent product at modern, efficient mills and follow practices that ensure sustainability. We do well because we deserve to do well, not because of unfair trade practices as the U.S. industry would have us believe.

In 1999 Canadian softwood lumber exports accounted for 33% of the U.S. market, an increase of 8% since 1990. The lion's share of our exports, some 47%, come from British Columbia. Twenty-one per cent come from Quebec, 9% from Ontario and 7% from Alberta. Those are the four provinces covered under the SLA.

In addition, the Atlantic provinces export softwood lumber to the United States, as does Manitoba, Saskatchewan and the territories.

This is a trade dispute that affects all Canada.

Today, with the market in a downturn, the United States is eyeing Canadian market share and does not like what it sees. It does not like the fact that so many consumers rely on Canadian softwood lumber. It does not like the fact that so many of our mills are efficient and modern compared with its mills. It certainly does not like the thought of how much more of the market we might get if we really had free trade.

The United States is clamouring once again for protection and threatening costly countervail duty and anti-dumping action against Canadian producers. However, rest assured, as the Minister for International Trade has stated repeatedly in and outside the House, the Canadian government will vigorously defend Canadian interests on behalf of all the provinces of Canada.

The temptation to restrict imports can be strong for those looking to protect a domestic industry that cannot always compete. However, in today's rules based trading system, that is no longer acceptable. Let us not forget that it is the United States that has led the charge away from protectionism and toward free trade.

The argument that open markets are in our greater economic interest and must be created and maintained is a sound argument. This is the driving principle behind the WTO and the NAFTA. This is the argument the United States is making again in favour of more market liberalization.

Let us not forget that it is not just Canadian producers who are looking for free trade in softwood lumber. American home builders and other consumers of softwood lumber are calling for an end to protectionism. They do not like the fact that they are being asked to unfairly subsidize U.S. companies with higher prices simply because those companies cannot or do not want to compete. That is unacceptable.

The United States is not self-sufficient in lumber. It needs our Canadian exports. Mr. Speaker, you know that very well with the riding you represent. Only the market should be allowed to determine how much Canadian softwood lumber enters the United States. The market should decide, not American congressmen or senators who are under political pressure. That is not the job of the coalition for fair lumber imports. It is not the job for Senators Trent Lott, Max Baucus or Olympia Snowe, and it is not the job of U.S. trade representative Zoellick.

We are committed to responding to protectionist threats from the United States and we will do so in consultation with the provinces, the industry and other stakeholders. Such consultation has already been very extensive by the minister and that will continue.

We have proposed that impartial envoys from Canada and the United States be appointed to explore the issue from all sides and to consult with stakeholders and bring forward non-binding proposals for resolving this longstanding dispute. We must be creative and constructive if we are to achieve our goal of free trade in softwood lumber.

I am pleased to indicate my support for the motion and our firm intention to pursue Canada's goal of free trade in softwood lumber.

I will turn now to some allegations made recently by certain U.S. senators and address and elucidate those with a few facts that they do not seem to have at their disposal or which they choose to ignore.

On March 1, 2001, 51 U.S. senators alleged that Canadian lumber was subsidized and that its stumpage fees were less than the market value. The reality is that Canadian provinces do not subsidize the lumber industry. Timber pricing by provincial governments in Canada has been the subject of three U.S. countervailing duty investigations in the past 20 years and not once have these challenges been successful.

In a recent report from the U.S. congress it is stated that:

Evidence to demonstrate this possible disparity between U.S. and Canada stumpage fees, is widespread, but inconclusive.

That comes from a congressional research service report for congress, “Softwood Lumber Imports from Canada: History and Analysis of the Dispute”, dated February 2, 2001.

The second allegation by senators was that Canadian lumber producers derive an unfair advantage from subsidized rail rates. This is rubbish. The United States department of commerce has been unable to sustain a subsidy finding on any government program. Canada's two national railways are privately owned and operated. There is absolutely no basis for this subsidy allegation.

The senators' third allegation stated that log export restraints by Canada are unfair. The United States was unable to sustain a subsidy with respect to log export restraints in the last countervailing duty investigation.

The U.S. has changed its law regarding the treatment of export restraints in any future investigation relative to CVD. Canada has challenged this provision of U.S. law in the WTO dispute settlement mechanism. It is worth noting that the United States also maintains restrictions on the export of logs.

The fourth allegation states that a flood of Canadian lumber is the cause of mill closures in the United States. Lumber imports from Canada are not the cause of any closures of lumber mills in the United States. Closures are currently occurring on both sides of the border.

It is a cyclical industry which is primarily driven by market demand. The latest available data from the United States forest service indicate that in recent years more than 50% of mill closures in the U.S. and Canada occurred in the province of B.C. alone. It is not a phenomenon that is unique to the United States as we all know.

Fortunately there are other U.S. voices involved in the debate and I would like to address them briefly. Senator Craig noted that there were other U.S. opinions to be heard. This point ought not to be forgotten in the debate over softwood lumber.

United States senators and representatives have recently introduced two resolutions before the house and the senate calling for a return to free trade. Representing the interests of U.S. lumber consumers, the resolutions underlined that the 1996 Canada-U.S. softwood lumber agreement had a negative impact on housing affordability and jobs south of the border and excluded many Americans from home ownership. It is not something any administration in the United States would be proud of.

The United States census bureau estimates that the fees on additional shipments are equivalent to more than $1,000 U.S. for the lumber in an average new home. That is simply unacceptable.

I conclude my comments on these unfounded allegations of U.S. senators by stating that there is simply no basis in fact for them. They have never stood up to any objective analysis and they will not stand up to any future analysis.

The Minister for International Trade has repeatedly stated inside and outside the House that the government desires free trade in softwood lumber. It will vigorously defend the interests of the province of Quebec, the province of B.C. and of all other Canadian provinces. It will vigorously defend the interests of the whole country. The goal is clear: it is free trade in softwood lumber.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, according to U.S. Senator Max Baucus, one of the 51 senators and representatives who expressed support for part of the American industry, the best solution would be for Canada to levy a tax on its softwood lumber exports.

I would like to know what the parliamentary secretary thinks about this suggestion made by the U.S. senator.

[Pat O'Brien, Liberal, London—Fanshawe, ON]

Mr. Speaker, I did not fully understand the question from the member.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, as I was saying, this U.S. senator suggested that to resolve the softwood lumber dispute Canada should levy a tax on its softwood lumber exports. How does the parliamentary secretary react to such a suggestion?

[Pat O'Brien, Liberal, London—Fanshawe, ON]

Mr. Speaker, I heard the member's question and appreciate his clarification. I think he was citing Senator Max Baucus.

Senator Baucus is only a free trader when it serves his interests and it does not serve his interest in softwood lumber. It cannot work that way. It is fine for him to propose that we agree on an export charge, or whatever, to limit exports of our lumber products to the United States. Does his government agree with that? Categorically no. That is not the goal whatsoever. We want the U.S. to live up to what it says it is and to what we signed on to: free trade.

[Brent St. Denis, Liberal, Parliamentary Secretary to Minister of Transport]

Mr. Speaker, I appreciate the Bloc's motion today and the comments of the Parliamentary Secretary to the Minister for International Trade.

I represent a northern Ontario riding as do you, Mr. Speaker, my colleague from Sault Ste. Marie and numerous other members from northern Ontario. When 99% of the production in softwood lumber is from northern Ontario, it is critical to our fellow northern Ontarians that this issue be resolved and that we have free trade in softwood lumber.

The government's efforts in this area are laudable. It is very important to remind the House and those who are listening that there are victims of the political posturing we are seeing in the U.S. They could be workers and companies in my riding, in your riding, Mr. Speaker, in the riding of the member from the Soo and elsewhere in northern Ontario. Victims whose livelihoods are at stake for no other reason but politics.

Communities, all too often single industry communities, depend upon the forestry sector. They turn the lights off sometimes when the political posturing in the U.S. requires that their industry or factory be closed down or work hours be reduced.

Would the parliamentary secretary comment on how his efforts and the efforts of his minister will help bring some certainty to the livelihoods of the small and big businesses and the workers that maintain our very important softwood lumber sector?

[Pat O'Brien, Liberal, London—Fanshawe, ON]

Mr. Speaker, I thank my colleague for the question. Having served with him in the House for some years, I well know what a vigorous defender he is of the interests of his constituents and of those in the Canadian lumber industry.

He is exactly correct when he says there is a lot at stake here. There is an unfairness in what is being proposed by U.S. senators to our own producers, to the jobs of those producers, to the companies and to their valid profits. I am very pleased that the parliamentary secretary raised the issue, but I repeat for the record that some U.S. senators and representatives have recently introduced two motions in the house and the senate calling for a return to free trade in softwood lumber in the United States..

Why did they do that? They cited the fact that U.S. jobs were being unfairly injured and that housing affordability in the United States was being affected. To put it bluntly, consumers are being ripped off in the United States to the tune of $1,000 U.S., on average, for a home because the United States refuses to be what it says it is, free traders when it comes to softwood lumber.

[Preston Manning, Canadian Alliance, Calgary Southwest, AB]

Mr. Speaker, I thank the parliamentary secretary for his presentation and congratulate him on his current appointment.

The minister asked rhetorically what was behind the U.S. position on softwood lumber. His answer was U.S. protectionism. We agree but we would add that Liberal and Conservative governments ought to understand the subject since they have practised protectionism for over 100 years.

I will ask the minister a cluster of questions around the same issue. What is behind the lack of vigour behind the government's efforts to fight U.S. protectionism? Is it that the government still has philosophical reservations about free trade? After all, the Liberals opposed free trade in 1988.

Why is the government so slow to use the dispute settling mechanisms in the free trade agreement? It always has to be pushed into using them. It never seems to charge in that direction.

Is the real reason behind the Liberal government's weakness in fighting U.S. protectionism that the government still wants to practise protectionism in certain other areas such as supply management and cultural industries?

In other words, is this not the real reason Liberal efforts to fight U.S. protectionism are so weak and inefficient? Is it because it wants to practise protectionism in some other areas and this weakens its fight against U.S. protectionism in this area?

[Pat O'Brien, Liberal, London—Fanshawe, ON]

Mr. Speaker, I thank my hon. colleague for his questions and his kind remarks. Let me say it is very good to see him back in the House and looking so well.

Having said that, I have to disagree with him. I know he is a student of Canadian history, and so am I. Sir Wilfrid Laurier, the first great French Canadian prime minister of the country, was a free trader. He was not always successful in convincing Canadians that it was the way to go. In fact, it cost him severely at the polls. A quick read of Canadian history tells us that Sir Wilfrid Laurier was the leader of the Liberal Party and the first French Canadian prime minister of Canada. He was an inveterate free trader. I say that just to help a bit with Canadian history in this regard.

I am not sure as to why the lack of vigour. I understand the member is on that side of the House and I am over here. As the hon. member knows, the government has made representations on the issue. The Prime Minister raised it personally with the new president of the United States, President Bush. The minister raised it personally with the U.S. trade representative Bob Zoellick. The representations on behalf of our softwood lumber industry by the government has been consistent. I think vigorous would be the right word to use.

The hon. member asked why we are slow to move into the dispute settlement on this issue. Let me clarify. As we all know the current agreement ends at the end of the month. At that point free trade takes over. Canada just says fine, that is great. Now that the current deal is over, if everybody lives up to what they say they are on both sides of the border, free trade becomes the norm. End of problem.

Hence my point that it is the United States and its senators in their protectionist mode who will take it to a different level. Our government need do nothing but live up to the free trade agreement that both countries signed. It is they who will cause the dispute. Unfortunately they have made it clear they have every intention of doing that.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, it is my pleasure to join in the debate today. I will be splitting my time with the member for Lethbridge.

The forestry industry is very important in Canada. Last year we exported about $10 billion of lumber to the United States. It creates thousands of jobs. This makes it critically important that the government pursue the issue with vigour and that it push the Americans as hard as it can to ensure that we have a free trade deal.

Unfortunately, however, I agree with my colleague from Calgary Southwest, sometimes the government sends the completely wrong message when it comes to the issue of free trade. Canada does not always practise what it preaches. There are a number of sectors where we do not have free trade, precisely because the government has decided that it wants to protect certain industries for political reasons. That is regrettable, because in the end it undermines our case for free trade. Frankly it leaves Canada less well off.

I make the argument that Canada needs to practise what it preaches. Before I do that, I should like to talk for a moment about why free trade in general is a good idea. Canada is an exporting nation. We rely on exports for much of our prosperity. About 43% of Canada's total prosperity comes from trade. This is critical to us and we have to continue to push for the idea of rules based trade.

I am saddened and it concerns me every time I see a country that says on the one hand that it is committed to free trade but on the other hand finds ways to circumvent it every time it perceives its interests being threatened. I think the Americans are guilty of that in this case.

As has been mentioned, there have been three previous investigations into the lumber issue. Canada has won each and every one of them. Yet the Americans insist on pushing it. Canada has not helped itself either. I argue that the government has not always done a very good job of pursuing our interests when it comes to free trade and the softwood lumber dispute.

I point to the remarks of the industry minister who said not very long ago that he thought some kind of quota system, some kind of mixture of the softwood lumber agreement and free trade, would be the final result of a negotiation after the current SLA comes up for renewal at the end of March. That is regrettable, because we also have the trade minister arguing that we should have free trade in lumber, which is certainly the position of the Canadian Alliance.

Meanwhile, we have the Prime Minister saying, I think it was just yesterday, that there should be linkages between lumber and other industries when it comes to free trade, which is contrary to the position the trade minister has taken. I happen to think that the Prime Minister might be a little more correct on this than the trade minister. Nevertheless, people are confused when the government is saying different things on this issue and it does not help our case at all.

How do we make the best possible case that we can to have free trade in the softwood lumber industry between Canada and the United States? First, we need to speak with one voice. I have just made the case that government is saying different things on this.

Second, sometimes we have to examine the words of the Americans themselves and throw them back at them. When President Bush was campaigning for the presidency and since he has become president he has said at various times that free trade was a priority for him. Later in April, President Bush and other leaders from the Americas will be in Quebec City at the summit of the Americas.

One item on the agenda will be a free trade agreement of the Americas. President Bush has made it very clear that he wants to pursue free trade in the Americas, and I think Canada does as well. Trade is good for Canada. There is a powerful case to be made for free trade.

I do not think President Bush will have the credibility that he would like to have if on the one hand he is pushing for a free trade agreement of the Americas and on the other hand he is not standing up to his own senators who are pushing for a continuation of the softwood lumber agreement. In other words, they are pushing for more barriers to trade, and that is completely inconsistent with what President Bush has stated.

Not very long ago I was in Washington and had a chance to sit down with Vice-President Cheney. Vice-President Cheney made it very clear that he believed in free trade when it came to energy. President Bush has spoken of the North American energy policy. Free trade would be great, and we agree. We think that is a great idea.

Why would people in the energy industry go to great expense to build extra generating capacity to send energy to the United States, knowing that the Americans could at any point put in place barriers and tariffs the moment their own industries were being threatened because Canadian producers are so efficient?

The Americans have to ask themselves why they would have any credibility at all on pushing a free trade agreement of the Americas or a North American energy grid when they are being protectionist on softwood lumber. They simply will not have credibility and our own people will not invest billions of dollars in extra generating capacity when they know there is a possibility that these barriers could be thrown up.

Canada has to do a much better job of selling the benefits of free trade in the United States. My colleague from across the way just pointed out that the coalition for affordable housing in the United States has made the case that the current softwood lumber deal actually adds about $1,000 U.S. to the price of every home in the United States.

That is an important fact that Canada really needs to push. I do not think we have done a very good job of promoting in the United States the fact that the softwood lumber agreement is actually an extra tax on consumers in the United States.

President Bush on one hand is pushing his $1.6 trillion tax cut, a fine idea for the United States. We should have tax relief in Canada as well. On the other hand the U.S. is effectively raising taxes through the softwood lumber agreement, $1,000 U.S. on every new home, because of that agreement. We need to forcefully make that case to the American public.

My friend has also pointed out that there have been a couple of resolutions passed in the U.S. congress calling on congress and the senate to repeal the softwood deal because of its impact on homes. We should remind senators and congressmen that not everybody feels the same.

We met with Senator Craig from Idaho, the chair of the forestry subcommittee in the U.S. senate. He comes from a state where they produce softwood lumber. He made the point that there were other voices speaking on the issue and that not everyone agreed with the softwood lumber agreement.

We need to make the case that U.S. Senator Craig is making, that congressmen are making and that home builders in the U.S. are making, that this is a cost to American consumers. It actually costs jobs as well for people engaged in the home building industry in the United States.

We have not done a good job of that. We need to do a far better job of making the case so that the public starts to put pressure on the senators to urge them to back away from another softwood lumber agreement and instead embrace the idea of free trade in the lumber industry.

We need to make the case to the public in the United States, I have touched on this already, that the U.S. government's protectionism on the issue will ultimately hurt jobs there because it undermines its credibility when it pursues other free trade agreements which ultimately lead to prosperity. We urge the government to do a better job of making that case.

I will simply conclude by saying that Canada has to do a better job of vigorously attacking positions which oppose free trade. We put tremendous effort into all kinds of other things when it comes to our foreign affairs policy. The previous foreign affairs minister spent a lot of time globe trotting, pursuing noble sounding causes, but he simply did not get down to business.

We have a new foreign affairs minister now. We urge him to put extra effort into reinvigorating our relationship with the United States and reinvigorating the case for free trade, something that has not happened at this point. Because of that it is costing Canadians jobs and prosperity. We simply urge members across the way to put their resources and their time into reinvigorating the whole discussion over free trade that will ultimately benefit Canada.

[Carmen Provenzano, Liberal, Sault Ste. Marie, ON]

Mr. Speaker, I thank members opposite for their comments on the issue, in particular the comments made by the Parliamentary Secretary to the Minister for International Trade.

These comments drive home clearly that the softwood lumber problem is not a problem between east and west and the provinces of Canada. This is plain and simple a north-south problem involving the United States and $10 billion of annual trade in that commodity. I thank the parliamentary secretary because it is important to our area that the stated goal is free trade in this commodity.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, I think the member is right that this is a dispute between north and south and not east and west, but it continues to raise questions. My friend really did not address this point, but it continues to raise the question of why Canada is not more aggressive in practising what it preaches.

My friend is on the government side, but he knows very well that there are still all kinds of restrictions in place in Canada on imports of textiles, for instance. It is hard to make the case that we should be asking other countries to engage in free trade when we have protectionist measures in place.

On the issue of restrictions on textiles, for instance, it is something that hurts third world countries. It is odd that Canada sends aid to third world countries to help them out, to give them a helping hand, but maintains restrictions on textiles which makes it impossible for them to ever develop an economy. It is when we are involved in that kind of double dealing that we undermine our own ability to make the case for free trade.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I am sure my colleague would agree that when we look at overall trade between Canada and the U.S. this issue or this irritant constitutes less than 3% of all trade between Canada and the United States. Some 97% of all trade between the two countries is going well, but we will continue to see those irritants from time to time. It is imperative for us to use the existing mechanism to resolve those issues.

Would my colleague agree that the course undertaken by the minister of going to an alternative dispute settlement mechanism, as well as venues such as the World Trade Organization dispute mechanism and the NAFTA dispute resolution mechanism, is proper?

Also he might want to comment on whether or not the whole issue deals with efficiencies. The lumber industry is a cyclical industry. When the market is not there for lumber, producers on both sides of the equation raise concerns.

We are seeing closures on both sides of the border between Canada and the United States. In Canada over 50% of our mills have closed as a result of the market. I wanted to hear from my colleague, because he is probably quite aware given his area, whether or not those comments constitute the facts.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, I appreciate my friend's comments, but in Medicine Had we do not have a tremendous amount of lumber. In fact it is hard to find a tree.

My first point is while we understand the need for rules based trade and the need for dispute settlement mechanisms, the best solution is not to get to that point in the first place.

We have had five years since the SLA was put in place. It became obvious fairly early on that it was not working in the interests of Canadian producers. Over the last five years we should have arrived at the point with the Americans where we could have gone into the end of this agreement with an agreement that we would pursue free trade.

Ultimately we will go into it now and probably get a ruling in our favour, but it will cost the industry billions and billions of dollars. That is regrettable. We are at that point now. Yes, we have to use the mechanisms that are there. Rules based trade is the key.

My friend's point about the economy turning down or the lumber industry being a cyclical industry is correct. If we are heading for a recession it will raise tensions on both sides and make the situation more difficult down the road. That makes my point that we should have had an agreement earlier than today.

[Rick Casson, Canadian Alliance, Lethbridge, AB]

Mr. Speaker, it is a pleasure to speak to the motion brought forward by our Bloc colleagues. The Canadian Alliance certainly supports the motion as it supports free trade.

What is wrong with what is happening is that the agreement expires at the end of the month. We have no clear indication from the government of what angle it will take. We have conflicting reports from the Prime Minister. He thinks we should have it all linked together with other issues. The trade minister says that it will be negotiated on its own. We have to speed up the government or get it interested in the issue to have some resolution of it.

Previous to the softwood lumber agreement there were challenges against our trade with the U.S. in softwood lumber. Every time a challenge has been brought forward we have won. It has been proven that there is no subsidy issue which would allow the Americans a countervail tariff against our industry.

I know very well how hurtful a countervail tariff can be. It happened in my area of the country last year, when a challenge was brought by R-CALF in the United States against our cattle industry. Canadian producers had to post bonds at the border while this challenge was ongoing. Money was taken off all cattle that went across the line; a proportion of the amount was taken away.

In the end after months of investigation they actually came into the offices of feeders and went through their books. It was an horrendous process. It cost not only the amount of money that was taken in tariff, but millions of dollars to fight the issue that could have been better used. We won in the end. The tariff money that was taken was given back.

What is wrong is that the U.S. passed a law last year to say that if there were a challenge, a countervail put against our lumber, it gets to keep any money taken, even if Canada wins in the end. It could cost our industry billions of dollars, and that is totally unfair. That is an unjust law and the trade minister should have straightened it out by now. If we are talking about free trade with the United States, let us talk about free trade. Let us make it free, fair and rules based trade that we can all live by.

Here we are a few weeks away from the expiration of this agreement and we do not have the rules in place to move on.

One thing on which we have to be absolutely certain is that we do not do this alone. If only four or five provinces sign on to the deal then we are lost. We cannot be separated on this. We must hang in together. If the trade minister can keep us together as a country, then I am sure his leverage and power would create a fair package for our softwood lumber industry.

The softwood lumber industry is huge and, as has been pointed out by members opposite, it is important to Canada. It needs to have the government's full focus.

I feel that in many ways we have let down certain sectors of our country. Certainly one that I want to bring into the debate is our grain and oilseed sector. Because of some of the agreements the government has made with reducing tariffs and support to our producers, they have been put in a hole that I cannot figure out how they will get out of unless we support them ourselves.

We need to be more aggressive when we fight the Americans and the European Union on subsidies. We need to beat down the unfair subsidies that distort markets and production. We need to use more force. We do not think enough effort has been put forward by Canada.

We trade a lot of goods and we are a good trading partner. Trading partners can count on us to have good quality products that will be delivered on time and at a fair price. When we have those kinds of deals and that kind of reputation, why are we not using that as a bigger hammer when we go into these negotiations with the European Union and the United States?

The other challenges that have been brought forward in the past against the softwood lumber industry have crashed. The United States has done everything it can to try to point out that our industry is being unfairly subsidized, and it is not. If it does go to a challenge, let us use the present systems of WTO and NAFTA to deal with that. I am sure we would be successful.

However the thing that is really scaring the industry is the law that the United States has passed that says that any tariff collected would be kept. I cannot understand how on earth that would work but that is what it has done.

I had the opportunity in the last parliament to meet with some U.S. senators in Montana: Senator Craig, Senator Thomas and Senator Burns from Wyoming, Idaho and Montana. We were only able to meet for a morning but it was good to be able to do that. I think five or six of my colleagues attended the meeting in Great Falls. My realization from that meeting was that we need to have more open discussion.

There were many issues at that time but the one that was important to me concerned cattle. A lot of the stories on both sides of the border were not true, were mistruths or were misunderstandings. Even for the couple of hours that we sat down and went over a few issues we were dumbfounded on both sides by the number of things being said that were just absolutely untrue. Opening a line of communication and debate is very important. Just a few hours spent on one morning was very helpful on a lot of issues.

A coalition of senators has come together to lobby the United States government to protect its softwood lumber industry. It is a big and an important issue to them and we have to be aware that there is very strong lobby in the United States to protect its industry, unfairly we think. Getting back to open, free and rules based trade is absolutely essential, not only in this area but in others.

We have seen it in other sectors of our society where some of these agreements have really hurt certain parts of Canada's industry and we cannot be doing that.

The other issue is that of messaging to the people of the United States that these tariffs are increasing the cost of a home in the United States by $1,000 U.S. We have to make sure that we have coalitions built with people there that the message gets out that their own people are being hurt by these countervailing duties.

The importance of one stance from coast to coast to coast in this country on this issue cannot be overemphasized. I believe we have to appear united on it because in the end it will be far better for all if we can do that than to hive off separate provinces and separate parts of the industry to different programs.

It makes me a little nervous that the trade minister and the Prime Minister are not on the same page as of yesterday. We need to be absolutely certain that this will become a bigger priority at the cabinet table and that we do take a united position on this. If the Prime Minister is talking to the vice-president of the United States saying one thing and our international trade minister is at negotiations saying another thing, then the Americans know we are not being cohesive and they can split us apart and make a better deal for themselves.

My colleague, the member for Vancouver Island North, could not be here today to speak to this but he has let me know about all the work that he has done on this file. He is getting together with a bunch of folks on the west coast to talk about west coast issues, and I am sure this will be at the top of the list on their agenda. He has done a tremendous amount of work on this deserves some credit as far as keeping his colleagues on this side of the House informed of what is going on.

I will finish by saying that we need to have this free trade in softwood lumber and it has to be coast to coast. It also has to be pushed with the emphasis that it deserves because of the importance it has to Canada.

[Carmen Provenzano, Liberal, Parliamentary Secretary to Minister of Veterans Affairs]

Mr. Speaker, there is an expression “Don't look back unless you want to go there”. I think that certainly applies to this situation.

The people of northern Ontario, and indeed those involved in the softwood industry across this country, do not want to look back on that softwood lumber agreement because they do not want to go there.

I thank the Parliamentary Secretary for the Minister for International Trade who made it very clear that the objective of the government is to work toward free trade in softwood lumber. We are seeking solutions to this trade dispute. We will vigorously enforce our rights under international trade agreements at the same time. That should be clear to all of the members of the House.