Debates of May 7th, 2002

Presence in Gallery

[Some hon. members]

Hear, hear.

The House resumed consideration of the motion.

Supply

[Herb Dhaliwal, Liberal, Minister of Natural Resources]

Mr. Speaker, I am pleased to join in this debate to speak to the motion presented by the hon. member for Joliette that an assistance program should be made available to our softwood lumber industry and its workers until we resolve our trade dispute with the United States.

The federal government has been working closely with the provinces to determine how the workers, communities and companies will be affected by the U.S. ruling. A number of options are currently being considered by the federal government. The Department of Natural Resources is working with the Departments of Foreign Affairs and International Trade, Industry and Human Resources Development to look at all possible options.

We must look at not only short term support but also long term support such as stronger political advocacy to the American public, market diversification to make us less dependent on the U.S. market and more research and development to help deal with the issues, including the mountain pine beetle infestation in northern British Columbia.

As we get closer to the time when companies will be required to pay the U.S. duties, we as a government are devoting all of our time and energy determining how best to support workers, communities and the industry. Over the past number of weeks I spent a great deal of time speaking directly to workers and companies in sawmill communities about the impacts of the softwood lumber dispute. I visited Port Alberni two weeks ago and met with first nations representatives from 14 municipalities and representatives of workers. I visited Prince George where I met with a number of mayors.

At the end of April I attended, along with the Minister for International Trade, the softwood summit in Vancouver organized by the premier of British Columbia. I was again presented with the seriousness of these issues and a broad agenda of measures the federal government could undertake to help the sector deal with this crisis. This is a national problem that affects many parts of Canada.

I want to emphasize today the impacts this dispute will have in my province of British Columbia. It represents 50% of the industry. Over the next three years it is estimated that at least 20,000 direct and 30,000 indirect jobs will be lost. The province put together a compelling map for us to view at the summit. It showed us just how dependent communities are on the forest industry. From 1997 to 2001 there have been 20 prominent mill closures on the coast and 11 in the interior. Up to 20 additional mills are at risk in 2002.

The coastal lumber industry is already facing problems of overcapacity and high cost of production by going through a broader restructuring. The effects of these tariffs and subsidies will be devastating. In B.C. 90% of the lumber comes from the interior and 10% from the coast. Western red cedar is 4% of the total Canadian volume shipped into the U.S. The value of this product is five times that of the Canadian average. The value added products are unique to Canada and do not compete with the U.S. construction products. It is ridiculous that the U.S. has included these value added products in the dispute with us.

To add to the tragedy first nations have finally built strong partnerships with the coastal forest industry. In a pre-treaty environment the chiefs and councils have worked in their traditional territories to create economic opportunity for their people. Now because of the U.S. ruling on softwood these economic opportunities that they worked so hard for will be lost. The coast will be hit the hardest with an estimated 27,000 direct and indirect jobs being lost over the next couple of years.

The question for us as a federal government is, what is the best way to help? Through all of these discussions many common themes emerged that could help mitigate some of the effects of the softwood lumber dispute. These include the need to diversify our markets beyond the United States and the need for research which will help develop new products and processes to help our industry stay competitive.

The Government of Canada is currently doing many things to develop new markets and conduct forest products research. A few months ago I launched the Canada-China wood products initiative. Through Natural Resources Canada, the program would invest in eliminating the barriers facing Canada's exports of wood products into the Chinese market. This initiative responds directly to a need identified by the federal government advisory bodies such as the Forest Sector Advisory Council and other industry groups. It would provide opportunities for all regions of the country and would support a full range of primary and secondary wood products including softwood lumber.

The federal government is committed to forestry research in Canada. Natural Resources Canada maintains five research laboratories across Canada and provides credible and scientifically validated information for the development of effective forest policies, regulations and management strategies. It also enhances Canada's capacity to respond to strategic issues, facilitates the development of national standards for the production of forest health and biological diversity, and contributes to the resolution of national and international disputes involving natural resources.

Our federal expertise allows Canada to evaluate scientific information from independent sources. Natural Resource Canada provides Canada with a long term, continuous forest science capacity and encourages research partnerships with provincial research institutions, universities, industry and model forests.

A specific example of this partnership is our work with the government of British Columbia in helping to combat the outbreak of mountain pine beetle in northern British Columbia. We are working to develop forest and management techniques to control and/or manage the mountain pine beetle as well as providing decision support tools to incorporate predictive capacity into higher level planning. This is an example of where federal government research is helping a softwood lumber species.

We are all sensitive to the impact that the U.S. duties are having on our Canadian industry. We are working closely with the industry and the provinces to evaluate the effect that the unfair U.S. duties have on Canadian workers and communities, and are keeping all options regarding worker assistance open.

There are a number of programs currently available to provide assistance to workers and communities through difficult periods. We are looking at whether the existing safety nets are sufficient to help dislocated workers and communities, or whether there may be a need to examine possible options for further assistance. However as the Minister for International Trade has said, we cannot be precipitous on this. Sometimes there are needs that go beyond existing programs. The government is approaching the situation with an open mind.

In response to the opposition's suggestion last week that the government is not doing anything to defend our industry, I respond to those critics by saying that we are continuing to challenge the U.S. trade actions in all legal venues open to us. Aside from last Friday's action where we launched WTO challenges of the U.S. final subsidy determination, we are launching other challenges of U.S. softwood lumber decisions at the WTO and NAFTA. Moreover the Prime Minister has raised the issue with President Bush at every opportunity. We continue to consult with Canadian industry from every region of the country and are in touch with all provincial and territorial governments on a regular basis.

The Government of Canada, with the provinces and industry, pursued a two-track softwood strategy, and continuing that two-track strategy is exactly what industry, the provinces, and the Government of Canada have agreed to do. We are taking every action possible to defend the interests of Canada's softwood lumber industry, and we are doing it with every tool we have available.

Before I conclude my remarks I wish to say that I will be sharing this time with the member for Etobicoke North.

I know this industry. I have had family involvement in the industry. My grandfather worked in the industry back in 1906. My father worked in the industry, and I as well worked in the industry during the summers to pay for my education. I know the pain this will cause our communities. That is why we must ensure we do everything possible and that we are keeping all the options open to us. We must ensure a close analysis, evaluate what the effects are and ensure we can keep communities working and keep businesses going. That is what we are determined to do right across the country.

We will be exploring all the options available to us to ensure we protect and support our communities and individuals.

It is in the interests of both countries to come to the table to resolve this issue. We have been urging the U.S. administration to play a role in this so the issue can be resolved fairly for both Canadians and Americans.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Speaker, I have a question for the Minister of Natural Resources. We were at the same meeting on Monday of last week, the premier's summit. Two days after that meeting the Minister for International Trade in Ottawa said that there was no job loss due to the softwood lumber dispute, that it was due to restructuring. I wonder if the minister would like to distance himself from those remarks.

The minister in his speech studiously avoided the issue of a tariff management scheme whereby, either through EDC or through the Canadian Commercial Corporation, there could be a very appropriate way for the government to act with some urgency to keep the Canadian coalition together. I know the minister supported that on March 29 and I wonder if that support is still there.

[Herb Dhaliwal, Liberal, Vancouver South—Burnaby, BC]

Mr. Speaker, first, the Minister for International Trade has done a tremendous job ensuring that we have a team Canada approach in bringing the provinces and the industry together.

The minister's comments were totally taken out of context by the hon. member and by the media. He understands the effect the tariff has had on communities both in British Columbia and across the country. He heard those concerns when we were in the summit in Vancouver and directly by the mayors as to the effect that it has had on their communities. We are all very much aware of what is happening in the communities and the job losses and the pain communities are suffering.

In terms of the options the hon. member has put forward, I have consistently said that we need to look at all the options. We need to make sure we evaluate every option and not close any doors. We need to evaluate the situation. We do not want to rush into this. We need to make sure we analyze this closely because this is very important for communities right across the country. We need to act responsibly and we need to protect the jobs.

We are going through a process right now. We need to bridge the time until we get a final resolution through NAFTA or a final resolution through the WTO. We need to make sure that we provide support to the companies and the communities that are being hurt. I can assure the hon. member that we are investigating all the options, including some of the options the member has talked about, and the options I have talked about.

[Antoine Dubé, Bloc, Lévis-Et-Chutes-De-La-Chaudière, QC]

Mr. Speaker, I have listened to the words of the minister, who says he is open to solutions. At the same time, I know that other government members have also said so today.

Concerning the specific issue of the softwood lumber crisis, the Minister of International Trade talks about using existing programs. However, it seems to me that this crisis is particularly urgent and important.

I know that the Minister of Natural Resources, who is from British Columbia, knows this. I do not have to convince him. This is an extremely important and specific crisis, a conflict with the United States, and it is likely that Canada will win at the WTO or under NAFTA.

In the meantime, we must face the situation. Would the minister agree to consider a program or specific measures to deal with this particularly important and urgent crisis?

[Herb Dhaliwal, Liberal, Vancouver South—Burnaby, BC]

Mr. Speaker, the hon. member has articulated the situation very well. We are in a period of where we are in a legal process. It is in the interest of the Americans to accelerate this process so we do have a final decision, otherwise it could take some time. Meanwhile, there will be communities suffering.

We need to find ways to bridge the time between now and when we get a final resolution either through a legal resolution or through some sort of agreement. We need to talk about programs that can bridge that period so the people in our communities can continue to work and industries can continue to operate.

We are analyzing and looking at all the options. We have not closed the door on any option but we want the right solutions. This needs thoughtful, close analysis and a review. We need to take into consideration the fact that different parts of the industry will be affected differently. The coastal communities in B.C. will be hit a lot harder because they produce high end, premium products so they will be affected more than other places.

We need to take all those things into consideration before we come out with a plan of action, and that is exactly what we are doing.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to enter the debate again on softwood lumber, a problem that does not seem to want to go away. Today's debate is more in the context of how we might support the industry and the workers who may be affected.

We hear a lot of numbers being thrown out: 30,000 jobs or 40,000 jobs. My guess right now is that those numbers are somewhat exaggerated. Some of the numbers do reflect some restructuring of the industry. Some of the numbers reflect some companies that may be in difficulty. One of the other problems is measuring whether a mill has gone from three shifts to two shifts or has taken some extra down time as opposed to straight out mill closures.

The reality is, whether it is today or in the fall, if no deal is reached with the Americans, and frankly I do not see how can be done, and if the tariff remains, some very serious challenges will be presented to a number of forest products companies in Canada.

I want to come back to the main theme of the motion. The U.S. administration should be absolutely castigated for its lack of involvement in this file. We all know that the U.S. producers have a very strong lobby but if the U.S. administration put its mind to it, it could actually exert more influence on this lobby group. It could better balance the interests of U.S. consumers and homebuilders in the construction industry.

What do the Americans do? They sit back and let the U.S. producers define the terms of the engagement. I think that shows a lack of responsibility on the part of the White House, the president and all his staff.

What we have are basically bullying tactics. When we go to the WTO and to NAFTA, as we have done in the past, it will be proven that we do not subsidize our industry. However, the Americans do not seem to care about that. They just launch another countervailing duty action. In the meantime, from one to the other, they change the rules so they are able to re-launch another countervailing duty process.

Later on in my discussion I will address what we can do to move forward, because having the softwood lumber debate come back again and again is really not in anyone's interest.

We must support the government's position of a two track process, and that is, we take it to the WTO and to NAFTA and, in the meantime, we try to seek out a solution if one is possible.

My own view is that there is no viable solution. The Americans come at it from a totally different perspective. Most of their forests are private lands and they think that auctions are the panacea for everything. We have a system of public forest lands. Even if the Canadian provinces, and it is a matter within provincial jurisdiction, were able to crank it up to 50% or 60% of timber that would be sold by auction, the pricing of timber might even go down.

Right now there are various programs in various provinces where small business operators can bid on timber. A sawmill or pulp mill is able to buy that timber at a certain price because it is at the margin, but if they had to buy all their raw material from auction prices, there are only so many sawmills or pulp mills that are going to be built in Canada. In fact we have probably reached a reasonable limit now in terms of sustainable operations. There is a certain economic price that the mills can sustain. In terms of Canada's traditions and public policy framework I do not think we can move to an auction of 50% to 60%. I am quite sure that is the kind of parameter the Americans are thinking about but I am not sure it is possible in Canada.

I think it is reasonable to seek out a negotiated solution but I do not think one is possible. I do not think a negotiated solution that makes sense for Canada is in the cards because the Americans are coming at this from a totally different perspective.

Where does that leave us? It leaves us to pursue our challenges at the NAFTA panel and the WTO. How long does that take? It may take a year, a year and a half or longer. What will happen to these companies in the fall, especially when they will need to come up with a 27% duty? Some of the large integrated companies, meaning they have sawmills, pulp mills, newsprint operations and panel board mills, will be able to absorb the blow.

A lot of it will depend on what happens to the pricing on softwood lumber. If the pricing stays reasonably high more companies will be able to absorb the duty, but 27% is a huge amount to cover.

I think we should be looking, and I know that our government is looking, at various alternatives. There are different approaches. We could say that we should look after the workers, we should look after the companies or we could do a combination of both. If we look after the companies, in other words, help those companies that will not be able to weather the storm, then by definition if we can keep the company afloat we will help the workers.

The other approach is to go through Human Resources Development Canada but I am not sure it has a lot of creative magic to come up with programs that will be much different or slightly different from those that are already in place. I think that is a reality. If we did that for forest products we would probably have to do it for the automotive sector, the mining sector, et cetera.

While I think we should push the envelope on seeking solutions through HRDC, ultimately the best solutions will be coming in terms of offering support to our forest products companies.

How do we do that? First, a lot of discussions have taken place about taking measures that are not countervailable, in other words, that the Americans could not re-launch another countervailing duty process because the government support constituted a subsidy.

I want to throw something into the hopper here today in this debate. If it were countervailable, and I agree that we should try to keep it as a non-countervailable type of support, but if it were, it would take about a year to a year and a half through the American system for them to attack it and for that to be resolved. By that time, we may have a favourable decision. We will have a favourable decision, if the timing is right, through the WTO and NAFTA. If we win the decision at the WTO and NAFTA, guess what? All those duties will be refunded with interest. I think the risk of that not happening is very slight.

I think our government, either through loan guarantees from EDC or through the Canadian Commercial Corporations being a buyer of softwood lumber in Canada, should manage the risk, charge the companies for that risk on a commercial basis and resell the lumber into the United States market. The Canadian Commercial Corporations already do this. There would be a cost to that but the companies could probably handle the cost of servicing that type of support. When we win at NAFTA and at the WTO, those duties will be refunded. Therefore I think the risk to the government is relatively minor.

We need to look at it on a commercial basis. I do not think the government should try to backstop those companies that are facing financial problems, whether it be because of mismanagement, some bad asset acquisitions or some internal cost problems of their own. It should be done based on a sound commercial footing through those companies that have a solid credit rating. I believe we could do it through the Canadian Commercial Corporations or the EDC.

The reality is that we will need to find some help for the companies and for those employees who have become dislocated. I think we will need to have a bit of both.

Notwithstanding the rhetoric that is floating around, some mills have shut down and some mills are taking additional downtime but the big hits are still to come. They will be big hits and as a federal government we need to be prepared to support those companies and those individuals.

How do we move forward? Can we possibly be back in a countervailing duty fight year after year? I would like to make some suggestions. First, as part of a negotiated solution, if we could get a cross-border commission to deal with these trade irritants more efficiently that would be a great step forward.

NAFTA has worked well for Canada. In fact it has worked so well that about 86% of our exports go to the United States. It is an easy market, a closed market and we need to diversify.

I was just in India with the trade minister on team Canada and the wood products industry has put up a wood showroom in Bombay that is working out very well.

I do not know how we can accept the fact that the Americans talk about an integrated energy market when it comes to a certain commodity, but when it comes to softwood lumber they are sorry, it is not an integrated market. Of course they are both integrated North American markets, wood products and energy. There is no difference.

The Americans want their cake and eat it too. We should play hardball on that issue. I know we cannot link things formally, but I believe that suddenly the energy debate should slow down to a snail's pace and I do not think we would have to draw a picture for the U.S. administration or the elected people.

[Jim Gouk, Canadian Alliance, Kootenay—Boundary—Okanagan, BC]

Mr. Speaker, so many ideas were put out by the member who just spoke, some of them a little silly and some of them very silly. At least he said something at the very end, which is a good way to end, when he talked about the government getting a little tougher.

There are a lot of measures the government could take. It has not done a damned thing yet and it is high time it did. I am glad to see that the hon. member is at least suggesting his own government should be held to account on these issues.

There were a couple of things he said that I find rather fascinating. He tried to sidestep or remove himself from the comments of the international trade minister who said there were no job losses from this dispute at all. However he did suggest that a lot of it may be exaggerated. Maybe when we come from a big urban centre those losses are not all that significant.

He should come out to my riding. My riding is a rural riding, not one that has forestry jobs, but one that is forestry dependent. He should see what the dispute has done to the people of my riding. I invite him to come out as my guest. I would be more than happy to show him around if he really wants to find out what is going on in the industry.

I would be interested if he would clarify his suggestion that one of the solutions might be for the Canadian Commercial Corporation to buy all the wood from the Canadian lumber companies. It would be the marketer of the wood. That might be good if there were a couple of big, huge industries. Coming from an urban centre that may well be how the hon. member thinks. We have a lot of small companies that operate in niche markets. They find their own special buyers that operate on special contracts.

How would he manage that right across the board when we have one super gigantic government corporation, which is an oxymoron in itself, trying to sell to all of the United States? How could that possibly work in an efficient manner?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I lived in British Columbia for 12 years and spent 15 years of my life working directly in the forest products industry so I know a little bit about it.

While there may be some mills affected in the hon. member's riding I am sure that is unfortunate and I empathize with him. However we just had a decision that the bonds will be coming back so they will be getting some money back soon. To say that those mills are shut down and taking down time strictly because of the 27.2% duty is an exaggeration.

I spoke this morning with the president of the Canadian Commercial Corporation who agreed with me that it is feasible. Yes, it is a logistical nightmare, but bigger projects have been bitten off. We must start thinking outside the box. If we do not we will be stuck in the same mud we have been stuck in for the last 15 years.

[Antoine Dubé, Bloc, Lévis-Et-Chutes-De-La-Chaudière, QC]

Mr. Speaker, I have listened to the member opposite, especially when he said that, in his opinion, the risk of a WTO or NAFTA decision against Canada was minimal. He is almost sure that it would be in favour of Canada. He also admitted that there was a crisis that had to be solved in the meantime.

In the meantime, would he be in favour of government loan guarantees to be repaid, since we will be reimbursed if we win? There are not only big businesses, but also small businesses involved. I would point out to him that, since small businesses are not registered with EDC, we must find another way for them.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I mentioned the risk, because I think we have to determine how the government can help the industry and its workers.

For example, the government could provide loan guarantees. My unsolicited advice would be to ensure that the chances of winning at the WTO and NAFTA are solid, which I think they are. It is a question of risk management. If we were to provide some facility through the Canadian Commercial Corporation, it would have to take on a certain element of risk. Personally, I believe the element of risk is slight. Taxpayers want to know that if this agency was providing this kind of support that at the end of the day we would be successful or there would be a high probability of being successful at the WTO and NAFTA.

I agree with the hon. member. We need to look beyond the large integrated companies. I too am worried about the independent sawmill operators. The big guys might be able to look after themselves, but we need to ensure the independent sawmill operators are covered as well.

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

Mr. Speaker, first, I would like to indicate that I will be sharing my time with my colleague from Mercier who, as our critic for foreign affairs, is particularly interested in today's debate. As far as I am concerned, I am taking part in this debate as the Bloc critic for industry, science and technology.

I have the curious and unpleasant feeling that this is a bit a déjà vu. We already had a debate in this House on what might happen if the U.S. were to decide to impose a tariff. A number of weeks ago, when we debated this issue, we felt like we were in a nightmare where someone was chasing us and, although we ran as hard as we could, we were not moving. We could not get away. When we wake up, we suddenly realize that we are being eaten alive. Not a nice feeling.

On countless occasions, we warned the government about what could happen and what finally did happen. Members will recall that this problem dates back many years. In fact, the dispute with the United States started to develop in the early 1980s. From negotiations to discussions to trade disputes, Canada finally accepted to sign an agreement with the United States in 1996, agreement from which it emerged as the loser. Let us be clear about that. Canada did emerge as the loser because, even though the agreement gave it guaranteed access to the American market for a certain percentage of its production, that access was less than the access it had without the agreement but with the constant threat that such access could be denied.

It decided to sign this agreement that was not in its favour but that did guarantee a certain access to the American market for a few years. As the agreement was nearing its expiry date, we kept warning the government about the danger of finding ourselves in a situation as bad if not worse than the one that prevailed before the agreement was signed in 1996. The government told us that it would make its views and expectations clearly known to the Americans. It wanted to return to full free trade as prescribed under NAFTA.

However, we always felt that the government was not as committed to this issue as we had a right to expect. The result is that the decision finally hit us. When the agreement expired, the international trade commission reserved judgment. Recently, it was announced that, as of May 23, 2002, a duty would be imposed on Canadian softwood lumber.

The decision made by the Americans will have a huge impact. We are talking about a 27.22% countervailing duty that will be imposed on softwood lumber from Quebec and Canada.

For Quebec only, this represents costs of about $550 million. In the short term, the lumber industry may lose some 2,000 jobs in Quebec only.

Eventually, this number could reach 10,000 in an industry of about 40,000 workers.

Since April 4, we have witnessed an 11% decline in production in Quebec only. A dramatic situation is forthcoming. Like they say, there are no friends when doing business, and I believe we have here a very eloquent example of this. Immediately after the September 11 tragedy, the United States turned to their friends to ask them for their help in the fight against terrorism.

Without any hesitation, Canada stepped forward. Our country even went farther than other U.S. allies by sending troops to Afghanistan. We all know what happened recently when four soldiers from Canada and Quebec were killed, not by the Taliban or Al-Qaida terrorists but by a bomb mistakenly dropped from an American airplane.

Several days later, the American government finally got around to offering official apologies to Canada. Paraphrasing the president, and in so doing trying to correct a statement made by the president when he came to office, the secretary of state, Colin Powell, stated before a U.S. commission that the United States had no better ally than Canada.

Well, I think the United States have a funny way of treating its best ally.

In order to avoid implementing the restructuring plan proposed by the Bloc Quebecois and having to take money from its own surplus which will supposedly exceed $10 billion, the government said it would use existing dispute settlement mechanisms under NAFTA and the WTO.

What a spurious argument. Spurious indeed, because we have so many times used the dispute settlement mechanism under NAFTA and the WTO but the United States have completely ignored the result and took us back to square one.

It is as if we had all sat down around the table, agreed to the rules of the game of Monopoly, for example, and started playing. The Americans, however, whenever they think they are losing at Monopoly, decree that when they pass “Go”, they collect not $200 but $400.

The rules of the game cannot be changed along the way. Right now we get the feeling that the Americans do tend to change the rules when the situation is not in their favour. So the government cannot hide behind existing dispute resolution mechanisms since, while it argues and makes brilliant presentations before dispute resolution bodies, men and women in Quebec and Canada will lose their job, sawmills will close, and the industry will be permanently affected.

We expect the government to do what it was elected to do. It must take the interests of the public into account in this situation and help businesses hard hit by the duties imposed by the Americans and workers facing the consequences.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, my colleague opposite has accurately described the problem. What is the solution? How can we improve relations between Canadians and Americans?

I think the Americans are rejecting their friends and Canadians are their friends. I think there is a big problem.

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

Mr. Speaker, I think my colleague has put his finger on the problem. Indeed, and I mentioned this in my speech, the United States sometimes behaves improperly when it comes to international trade, when it finds itself in a position of inferiority or weakness.

On the issue at hand, we cannot even talk about a position of weakness. In the United States, a strong lobby has been active on the softwood lumber issue and the Canadian and Quebec industry will be heavily penalized because of this.

Of course we may argue and discuss at length for hours and for days about ways to compel the Americans to comply with multilateral and bilateral trade rules. We may debate this tirelessly but in the meantime men and women are seriously in danger of losing their jobs. Businesses will face bankruptcy and closing.

What we expect from the government in the short term and even in the medium term, is not for it to discuss and think endlessly about ways to improve its relations with the United States. From a political viewpoint, these relations are excellent. We cannot have better ones. We are even considering putting our defence into its hands. We cannot imagine having better political relations with the United States. It is odd that these excellent political relations are not matched by greater openness on their part, on the economic level.

The government can do as it pleases and ponder the problem as long as it wants to but, we expect that in the short term it will consider the measures that might be taken to prevent workers from finding themselves in a very awkward position and to prevent businesses from having to close their doors. In this regard, the Bloc Quebecois—my colleagues talked about this a lot this morning; in the past, we have talked about this a lot in the media and here in the House—has suggested a number of measures.

The government may have other measures in mind; it could include those suggested by the Bloc Quebecois. But the government must take acation. It cannot hide behind philosophical considerations concerning our trade relations with the United States, our most important trading partner. It must do something for the Canadian and Quebec softwood lumber industry.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, I would like to thank my colleague from Verchères--Les-Patriotes for his kind words and congratulate him on his speech.

I am very pleased to speak on the Bloc Quebecois motion which reads:

That, in the opinion of this House, the government should set up an assistance program for the softwood lumber industry and its workers, to support them in the face of the unjust decision by the American government to impose a 27.2% tariff on Canadian softwood lumber exports to the United States, the program to continue in effect until such time as this conflict has been resolved.

I join with my colleague in reminding the House that is it urgent that the government provide our businesses and our workers with the means to hang on while we challenge the decision made by the U.S.

Members on the government side and on this side agree that we stand a good chance of winning that challenge. But the real issue facing us is this: if that challenge takes too long, American companies and workers will have won. Therefore, we urge the government to look at effective ways to help businesses in Quebec and the rest of Canada to hang in there.

Not all businesses are large, diversified corporations that can rely more on one sector when another is struggling. We also have small sawmills. They are all caught up in this crisis that could bring about their demise. That is what is at stake here.

This is why, as a member representing the eastern part of Montreal, I feel the need to take part in this debate. We cannot say “This debate only concerns the regions. It has nothing to do with the urban population”. It is not true.

Why is it not true? Because at stake here is the survival of an important industry for the Quebec economy, and the Canadian economy, an industry that provides many jobs and where, year after year, businesspeople create employment opportunities and wealth.

When we say that countervailing duties will be 27.2%, this is huge. This means that, for Quebec alone, $550 million will be taken from businesses this year and will not be used to pay workers.

For people who are listening, this is surely strange. Why is it that, all of a sudden, the Americans can impose duties of 27.2% on our lumber exports, when, in Quebec at least, we remember a certain debate on a free trade agreement, in which the government said “Free trade means there will no longer be duties on goods that are traded. The strength of businesses will be the productivity of workers”?

I happened to be in Washington with the Standing Committee on Foreign Affairs two months ago. We met with representatives from the American administration. I asked why it was the fourth time that Quebec and Canadian workers and businesses were going through this same tragedy. For many people, this is a tragedy. This is nonsense. Why is it that the United States do not understand that this is nonsense, and contrary to the spirit of free trade?

The answer that I was given—and I was glad to hear it as a parliamentarian—was that, in some regions, MPs and senators are influenced or under pressure by local industries that find that Canadian lumber sells better, perhaps because of the weakness of the Canadian dollar. So, these local businesses, workers, and parliamentarians exert pressure, use the mechanisms available to them to try to delay the export, or prevent Quebec and Canadian lumber from being exported to the United States in the way it now is.

There is a reason why we have the support of consumers' associations in the U.S., and that is because they know they will be paying more for their houses with these countervailing duties.

I understood from the response given by administrators that even the American administration was very uncomfortable. It is aware that in its desire to extend free trade agreements to all of the Americas it is in an exceedingly bad position when, under the mechanisms included in the NAFTA, we who export our lumber to the United States quite legitimately and legally, are being challenged. There is more involved than just words. They are requiring, and can require that we pay countervailing duties of 27.2% until a final decision is reached.

Some time earlier, a colleague wondered what we could do. I will come back to this, but I want to talk more about the second solution.

The first solution is to arrange to get through this crisis and ensure that businesses and workers involved will be there when we win. We also think that we will win under the NAFTA and WTO recourse mechanisms, but we have to be there. Otherwise, we will not have won, we will have lost and will have demonstrated that the free trade agreement is not to be relied on. This is an extremely bad thing for many and it is more than a bad thing politically, because people are losing their jobs and businesses will close. That is the first point.

The Government of Canada must act. It is not enough for it to say “Ah, there are ways. Ah, there is employment insurance”—we know it is inadequate for such problems—“Ah, there is the former EDC, which we have rechristened Export Development Canada”.

We say to the government that certain measures are needed. Support measures have to be improved and additional and sufficient loan guarantees must be provided.

We must be more effective when dealing with American legislators than we are now. Relations between Canadian and American legislators are rare. On the foreign affairs committee, we even agreed, in meeting with Mexican parliamentarians, that we needed to develop closer ties and try to influence American legislators subsequently on other matters in addition to this one.

The stakes are high, and we must be ready and present when we win before the international tribunals.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, as usual I primarily want to speak about my riding of Yukon. I will also give some details of HRDC programs related to softwood lumber.

As in all of the debates, I mostly want to talk to the Americans about my riding. Virtually all of the sawmills are closed now, even before the tariff that will be coming. I urge the Americans to see if they can find Yukon on their maps. It is right up there beside Alaska.

Yukon is so many hundreds of miles from them we could not possibly be a threat. It is a very rural area with only 30,000 people, with a lot of villages of between 500 and 1,000 people. How could we possibly be a threat to the great American empire? How could our sawmills be a threat to the Americans' great computerized sawmills and industry? It makes them look foolish that they would even consider putting a 27% tariff on our mills. A lot of the mills cannot open even without it. Look at the hostile environment, with temperatures of -30 degrees and -40 degrees. They have to pay heating costs, transportation costs and extra costs of living.

A recent consultant study of our industry suggested how important it would be even to eke out a little viability for our industry, a lot of which is white spruce. If the Americans find Yukon on their maps, they can consider how far we are from their markets and how improbable a threat we are.

I want to talk about some of the programs we have put in place. The Government of Canada recognizes that onerous tariffs imposed by the United States have the potential to create dislocation in the lives of individuals, their families and whole communities that depend upon the viability of the softwood lumber industry.

There is no question we face a serious and complex challenge, but we will confront it and solve it together. The federal, provincial and territorial governments as well as community leaders and industry all have a role in developing the solution. That is why I am pleased to speak to the motion by the hon. member for Joliette and explain to Canadians how we are responding to workers and communities caught in this difficult situation.

First and foremost we must remember that the employment insurance program applies everywhere in Canada. It has been specifically designed to respond to the changing levels of unemployment in any given region. Should the unemployment rate increase in a particular region, it becomes easier for workers to qualify for the benefits and the benefit period is extended.

We recognize that to suddenly lose a job as a result of circumstances beyond one's control can be very difficult. It can be a very traumatic experience to the wage earner and everyone in the family. The last thing Canadians need in a situation like that is a lengthy and complex process before they can receive the benefits they need and deserve. That is why HRDC will take a proactive approach to assist the affected individuals in each and every community with fast and efficient processing of claims.

Local officials will travel to workplaces to help displaced workers with their claims. To further speed up the process, we will work with employers to make use of automated payroll information where available. We will also ensure that we make full use of the flexibility of work sharing provisions under employment insurance which allows employers to shorten work weeks and reduce costs while employees receive income benefits to help cover the shortfall.

Past examples show that these approaches work and make a real difference. Last fall when significant layoffs occurred in Canada's airline, tourism and high tech sectors, we used precisely these approaches to great effect. While income assistance under employment insurance is a vital, immediate response to the needs of displaced softwood workers, it is only a part of what we need to do and what we will do. Sometimes workers need services that help them find work, such as skills development programs, career counselling, job search skills, assistance in preparing resumes and a variety of other services.

In the case of Quebec, in 1997 the province opted for a transfer agreement. It was given responsibility for designing and delivering its own active employment insurance measures. The Government of Canada increased the funding made available to Quebec from $457 million in 1997 to nearly $600 million this year to assist unemployed workers.

Workers in British Columbia can also obtain these services under the auspices of the co-managed labour market development agreement between the Government of Canada and the Government of British Columbia. Over the last five years the value of the LMDA has increased by over 40% to $289 million this year, despite the fact that unemployment decreased over that time period.

This is a significant pool of resources upon which to draw. The joint federal-provincial management committee that oversees the LMDA has already identified the softwood sector as a priority for investment. We look forward to successful collaboration on this front.

As the Government of Canada indicated at the softwood summit on April 29, $13 million will be made available to help softwood lumber workers in British Columbia with the type of supports and services I just mentioned. I should add that the collaboration between the governments of Canada and B.C. will not stop at the LMDA itself. Our officials will work together to match clients with other federal, provincial or territorial programs drawing on our full range of tools and supports for displaced workers.

We will work with communities anywhere in Canada that are affected by these punitive tariffs because this trade dispute not only impacts companies, individual workers and their families, but whole communities as well. Many communities, particularly those in rural and remote areas, are heavily dependent on the softwood lumber industry for their economic and social well-being. That is why HRDC efforts will have a very clear community focus.

As a first step HRDC is already strengthening its capacity to track EI claims in the softwood sector so we have an ongoing accurate assessment of the extent of the dislocation and its impact on these communities.

Second, we will work with other departments, specifically Natural Resources Canada, Industry Canada and western diversification to do some community mapping. Specifically this will involve getting a detailed sense of the communities most likely to be affected and the degree of severity of the expected impact on any given community, given its level of dependence on the softwood industry.

Finally, just as we will work together to gain a fuller sense of the challenges we face, so too will we work jointly in the community as we respond, maximizing the integration and co-ordination of our efforts.

As we move forward, the key question is whether our existing tools, employment insurance income benefits and active measures are enough. It is important to recognize that we face a complex and dynamic situation. For example, even the United States has plans to impose duties. The U.S. housing market is booming. Given such cost cutting pressures, it will be a real challenge to gain a full sense of the potential impact.

We also need to consider broader issues including the state of the labour market in general and the softwood sector in particular, as well as broader questions of community and economic diversification. The key will be for us to work across federal government departments and with territorial and provincial governments as well as with community and industry leaders at the local level. By combining our experience and building on our partnerships we can better appreciate the nature of dislocations, make better use of the tools at our disposal and if needed, examine other potential avenues.

It can be seen that we are there in the communities across Canada, ready and willing to help as the need arises. I would like to thank the hon. member for moving the motion. I would like to say to those Americans who did not hear me the last several times, that the poor people in America, the people who cannot have houses, really do not need to suffer for a few industries to have increased prices put upon them by some local interest groups.

To some extent everyone in the House is passionate on this issue. We have to wage the battle. The Americans have to wage this battle, those who are losing out, those who have to pay the high prices for lumber. I hope we can all work together to solve the problem and in the meantime alleviate the problems of the workers.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Speaker, it was interesting to listen to the member's comments which went round and round in a self-serving way. There was a bit of a diatribe and rant on the darn old Americans who dare to implement these types of things.

The problem I have with that is it was a five year agreement. Five years ago we knew this was going to come to a head, that something had to be done. Guess what happened? Nothing. Guess who did not do it? It was his government.

For the member to say that the Americans are terrible for implementing this and so on, I find a little hard to take. He talked about the symptoms but not about the cause.

The cause is that nobody got off their duff here in Ottawa and took to heart that the agreement had to be renewed in five years. Two years ago it was pointed out again and again by members of all the opposition parties that the government had better negotiate with the Americans. It did not happen. Now we hear that type of speech by the member. Why did he not have that speech two years ago? Why did he not press his government to come to grips with this issue then?

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, that is exactly the lack of solutions opposition members have been offering for the last few years. They know we have been negotiating. If they would like to offer something positive, I will answer it.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I listened carefully to the speech made by our government colleague. It is true that everyone, including the industry, the workers, the provinces and the opposition, supported the government when it negotiated with the Americans.

Yes, the U.S. government did use protectionism against Canada with regard to softwood lumber. The member knows that the Bloc Quebecois would like his government to take active measures to help the companies, the industry and the workers.

I would like to know if my colleague from the Liberal Party agrees with the concrete measures proposed by the Bloc Quebecois to help the industry and its workers.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I thank my hon. colleague for her question and also for the debate. Bloc members have brought forth the debate and have presented their material in a very positive light. Unlike the question that prompted my last answer, they have actually presented positive solutions. I have read the solutions.

More than half of my speech probably covered a number of the programs and solutions that we presented. The Bloc has offered even more solutions. I definitely think the government should look at them one by one.

I have a concern about some of the solutions. We cannot treat unemployed workers differently or prejudice other unemployed workers just because this issue is a debate in the House of Commons or is in the national press. Lots of people have the same devastating consequences of unemployment. We hope whatever solutions we come to will help those people equally as much as possible in the sectors where it is needed. I definitely agree we should review the solutions that the member's party has proposed.

[Brian Fitzpatrick, Canadian Alliance, Prince Albert, SK]

Mr. Speaker, in speaking to folks involved in the industry and trying to figure out the real problems behind this sort of dispute, a message that comes back to me is that the NAFTA really is not a free trade agreement. It is not working. The dispute settlement mechanism contained in it is not an effective mechanism for dealing with disputes, and so on.

That being the case, I pose a question to my colleague on this front. Is the government considering opening up the whole North American Free Trade Agreement and renegotiating it so we can get a true free trade agreement with some effective mechanisms?

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I thank the member for raising that issue. It gives me a chance explain to those who might not understand when people suggest that the NAFTA might be causing these problems.

I do not think they understand how many more problems very similar to this we would have without a free trade agreement . The U.S. could do this unilaterally all the time and we would have all sorts of protectionism against our products.

Obviously in this situation, as the member has said, the NAFTA has not worked because there are sovereignty trade issues in both countries. Each country has the ability to offer programs of its own to protect its own businesses and maybe that is not appropriate. I think the minister would be happy to look at proposals the opposition has relating to fixing that up.

[Claude Duplain, Liberal, Portneuf, QC]

Mr. Speaker, I am pleased to address the House today and to have the opportunity to report the latest developments in the dispute that our government has taken before the WTO and the NAFTA panel to defend the softwood lumber industry.

We all know that the decision made by the United States is unjustified and unfairly punitive. Not only does this duty add $1,500 U.S. to the cost of a new house in the United States, which affects one of the few dynamic sectors of the otherwise lethargic U.S. economy, but it also exacerbates the economic difficulties that many regions in our country are facing right now. Sawmills have already had to shut down, and reports indicate that 22,000 workers have been laid off and that others could follow.

Ironically the softwood lumber production in the United States is not sufficient to meet the demand of the U.S. building sector. This means that, as the imposition of a countervailing duty reduces the supply of Canadian softwood lumber, American buyers will have to turn to other sources. We have already seen rapid increases in exports to the United States from third countries since the Americans have initiated their trade action.

We also know that the U.S. industry has made the same allegations of subsidies in the past, but it was never able to prove its claims conclusively. We all know that this dispute is the result of U.S. protectionism and that the case of the U.S. industry against our softwood lumber producers is weak.

In the latest case, which was settled in 1994, Canada appealed allegations of subsidies before a binational FTA panel and won. Following our successful challenge, the U.S. department of commerce accepted the panel's findings to the effect that provincial stumpage fees and lumber export controls were not countervailable subsidies, and it paid back over $1 billion, for countervailing duties that were improperly collected.

Despite this and the fact that stumpage rights have since been increased in Canada, we find ourselves faced with the exact same allegations. Once again, in close co-operation with the provincial and territorial governments, and with our industry, we are challenging these unfounded allegations.

This fight is being conducted before both the WTO and NAFTA. Allow me to first explain our representations before the WTO.

Our first representations to the WTO were made over a year and a half ago, when we challenged the claim by the United States that the monitoring of our lumber exports was a subsidy.

In June of last year, a WTO panel concluded that a restriction on exports, such as our lumber export controls, did not result in a financial contribution and could therefore not be a countervailable subsidy. This finding weakened the U.S. position and confirmed our lumber export monitoring program.

The second time we went before the WTO, we challenged a section of a U.S. act, on the grounds that it was incompatible with the obligations of the United States towards the WTO. The section in dispute precludes the repayment of certain countervailing and anti-dumping duties, should the WTO dispute settlement panel conclude that the initial decision to impose such duties was incompatible with the obligations of the United States under an international treaty. This challenge is already well underway and the final report is expected by the end of June.

A victory will give back to our industry the countervailing duties collected when, yet again, we successfully challenge the specious U.S. allegations made during the most recent investigation.

Third, we are also challenging the U.S. preliminary determination of subsidies, which led to the imposition of improper and unfair countervailing duties on our softwood lumber exports to the United States.

We contended that the U.S. department of commerce had violated the rules of international trade in its efforts to demonstrate at any cost that our softwood lumber exports were being subsidized.

In arriving at its conclusion, the U.S. Department of Commerce made many errors of law. In particular, the department mistakenly based its analysis on the conditions in the American market rather than those in the Canadian market.

Its analysis is completely incorrect and we are making this case to the WTO.

In the meantime, Canada is laying the groundwork for a fourth challenge to the WTO, this time regarding the final determination of subsidies.

On Friday, Canada filed its request for consultations on the final determination, and we expect the consultations to take place within 30 days. We then intend to formally challenge this American determination with the WTO.

Canada has also challenged the unfounded determinations of dumping. The last such determination, dated March 22, 2002, established a general rate of dumping of 8.6% for Canadian companies which had not been specifically investigated. Companies that had been investigated received individual dumping rates. The final determination of dumping, as well as the preliminary determination which preceded it, are both profoundly distorted.

On April 5, 2002, Canada held consultations with the United States in order to discuss the preliminary determination of dumping. Because this determination has now been replaced by the final determination, we are examining the latter for incompatibilities with WTO principles. To that end, we have corresponded with each of the six Canadian companies being studied by the Department of Commerce in its investigation in order to get their version. When we have received their observations, we intend to make a request for consultation on anti-dumping measures and to then file a formal challenge with the WTO.

Finally, there are two other challenges before the WTO which, although they do not arise from errors in the determination of subsidies and dumping by the Department of Commerce, nonetheless affect the softwood lumber industry. I am referring to the Byrd amendment, which requires that U.S. customs transfer to affected American producers the countervailing duties collected pursuant to a countervailing or anti-dumping duty order.

This is clearly incompatible with WTO principles and incites the U.S. industry to make and pursue claims against all types of imports, including those of Canadian softwood lumber producers.

Canada, in conjunction with the European Union, Japan and several other countries, is presently challenging this American measure, and a final report from the WTO panel is expected for the middle of this summer. Canada is also using the NAFTA framework to challenge unfair allegations by the United States.

On April 2, 2002, Canada filed a request for reviewing the American subsidy and dumping notices. We then lodged a formal complaint with the NAFTA panel that is examining the final determination of the subsidy. Other parties, such as provincial governments and industrial associations, have included Canada's claims in the complaints that they have filed. Submissions will be filed at the beginning of August and we are expecting a decision as soon as February 2003.

Finally, I believe it is worthwhile noting that Tembec, Doman and Canfor have all filed challenges under chapter 11 of NAFTA against the United States about the current dispute. These challenges all suggest that American disregard for fair and free trade principles enshrined in NAFTA boils down to forcing adversely affected businesses out of their market.

That Canadian businesses should be prepared to take such an approach shows that the federal and provincial governments, as well as the industry, are all committed to working closely together to fight the unfair American measures.

Our ultimate goal is free trade for softwood lumber without any threat of harassment. We will continue to work toward that goal and we will make the best use possible of existing and future legal proceedings to reach it.

[Myron Thompson, Canadian Alliance, Wild Rose, AB]

Mr. Speaker, I have a question for the member. I had also hoped to ask the member for Yukon the same question as he was looking for suggestions.

I would like to remind the member and the House that during the last five years a number of suggestions to better prepare ourselves to avert a problem in the softwood lumber have been put forward. It started quite some time ago. Suggestions came from the official opposition, the Bloc and the Conservative Party but they have not been heard.

We heard some good suggestions from the leader of the official opposition today which would offer immediate help, such getting people on employment insurance and ensuring that they did not have to wait 13 weeks for a paycheque to survive from day to day. Thousands of people have been laid off and they are hurting badly.

These suggestions are falling on deaf ears and have been for five years.

I have talked to some people in the industry and to some elected people in my province. We have come to the conclusion that there are some things we can do, so I will make the suggestions. I do not know what the member can do about it but perhaps he can help.

The trade minister should resign for his failure to do what he should have done. The minister responsible for the wheat board, the minister of agriculture and the industry minister had better stop, pull in their horns and resign before they get us into more trouble with the United States on these negotiations. Or do we have to wait until an election when hopefully these guys will be thrown out of office?