House of Commons Hansard #35 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was finance.
Dominic LeBlanc LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I am pleased to table, in both official languages, a number of order in council appointments made recently by the government.
Dominic LeBlanc LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, pursuant to Standing Order 36(8) I have the honour to table, in both official languages, the government's response to six petitions.
Paul Devillers Liberal Simcoe North, ON
Mr. Speaker, I have the honour to present, in both official languages, the second report of the Standing Committee on Justice, Human Rights, Public Safety and Emergency Preparedness.
The committee reviewed the main estimates for the fiscal year ending March 31, 2005, and submits its report without amendment.
Andrew Telegdi Liberal Kitchener—Waterloo, ON
Mr. Speaker, I have the honour to present, in both official languages, the second report of the Standing Committee on Citizenship and Immigration on supplementary estimates (A) for the fiscal year ending March 31, 2005.
I also have the honour to present, in both official languages, the third report of the Standing Committee on Citizenship and Immigration on citizenship issues entitled, “Updating Canada's Citizenship Laws: Issues to be Addressed”. This report was done at the invitation of the minister to help her department in drafting a new modernized Citizenship Act as was promised in the throne speech.
To arrive at its recommendation, the committee reviewed testimony given for the previous three proposed but failed citizenship acts. The committee calls on the government, in drafting the new citizenship act, to respect the following general principles: there must be equal treatment of Canadian born and naturalized citizens; there should be no probationary citizenship status; the legislation should enhance English and French as the official languages of Canada; Citizenship should be seen as a right for those who qualify rather than a privilege; no one should be deprived of Canadian citizenship if doing so would render them stateless; all determinations under the act should be made by an independent decision maker in a judicial process free from political interference; and, rights come with citizenship but also responsibilities.
In conclusion, I will highlight four of the committee's recommendations. First, there can be no question that revocation of citizenship engages section 7 of the Charter of Rights and Freedoms and the new citizenship act must adequately address this important issue.
Second, it would not be appropriate to include a security certificate process for citizenship revocation.
Third, any person born in Canada who lost their citizenship as a child because their parent acquired a nationality of another country should be eligible to resume their citizenship without having to meet residency requirements.
Fourth, there should be extensive public input in drafting both the citizenship oath and the preamble to the new citizenship act.
Richard Marceau Bloc Charlesbourg, QC
moved for leave to introduce Bill C-303, an act to amend the Criminal Code (child pornography, child prostitution and child corruption).
Mr. Speaker, I am pleased to again introduce a bill I had introduced in the previous session. Its purpose is to provide for a minimum punishment of imprisonment for offences relating to child pornography, child prostitution or child corruption. This is a follow up on the commitment made by the Bloc Québécois during the last election campaign.
I trust that I will have the support of the House to move this bill through as quickly as possible.
(Motions deemed adopted, bill read the first time and printed)
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I move that the first report of the Standing Committee on Finance presented on Wednesday, October 20, be concurred in.
I take this rather unusual step to draw the House's attention to the fact that the apparel industry is in crisis and needs the attention of the House of Commons. There is a very simple remedy found within the first report of the finance committee. It gives direction to the Minister of Finance to give relief to this industry in crisis and more specifically, from a self-interest point of view, to the 43 garment manufacturers in the riding of Winnipeg Centre. They have made representations to me that this is in fact an issue of urgency that should be dealt with in this session of Parliament. I also raise this matter because we are fast coming to a deadline where the opportunity to provide this relief will disappear.
It would be wise for me to back up a little to explain specifically what is in this first report of the finance committee and what measures we are asking the Minister of Finance to take on behalf of the garment manufacturers in my riding, and in fact the garment manufacturers in Montreal, Toronto, Vancouver and everywhere that this critical industry is located.
The issue is simple. Currently, there are duty remission orders that are in effect to help the garment industry cope with the pressures of international trade and globalization, and the pressures in recent years. Those duty remission orders have allowed these companies to keep their doors open in spite of overwhelming odds and adversity that this new global marketplace has put on them, and specific actions from this government that I will get into later. These duty remission orders are set to expire on December 31.
On January 1, 2005, these garment manufacturers will no longer enjoy this duty remission situation granted by the government. I can tell members without any hesitation or without any fear of contradiction that as soon as those duty remission orders expire these businesses will topple like dominoes. In my riding, Montreal, Toronto, Vancouver, and everywhere we have a garment industry, these businesses will fail and with them will go Canadian jobs. I do not say this to be romantic or to raise the level of rhetoric. I am stating a fact.
I raise this in the House of Commons today and take the rather unusual step of highjacking the orders of the day because these garment manufacturers have tried every other avenue of recourse to get through to the Minister of Finance the urgency of their message. They have lobbied the Minister of Finance in every way imaginable. They have asked members of Parliament from every party to lobby the Minister of Finance, which we have dutifully done in the months leading up to this urgency that we find ourselves in now.
However, we are out of time. December 31 is around the corner. Parliament will adjourn in a few weeks and we will not have the extension signed that would extend the duty remission orders that would allow these businesses to stay open. It is on the Minister of Finance's desk, ready to be signed. A unanimous report from the Standing Committee on Finance has directed him to sign it, not once but twice.
In the last Parliament, in April 2004, the Standing Committee on Finance dealt with this issue. It heard the legitimate grievances of the garment industry, acknowledged their concerns and wrote a recommendation in its report saying that the Minister of Finance should sign the extension of the duty remission orders that are due to expire on December 31. Nothing happened. Then we had an election.
The situation got even more urgent in July, August and September, until finally a new Standing Committee on Finance was constituted. Its very first order of business in fact was to revisit this critically important issue because the clock was running out. The finance committee resubmitted a report to the 38th Parliament. I have it right here. I will not bore members with all the details but I will read the first recommendation. It states:
That the federal government immediately extend, for a further seven years, the duty remission orders covering the apparel sector that are set to expire on 31 December 2004.
Our Minister of Finance should take this as a directive. This should be a marching order for our Minister of Finance, not something to be shuffled away. I do not know who he is listening to, but he is not listening to the garment industry. He is not listening to those representing the workers in those garment industry sectors who stand to lose thousands of jobs.
In my riding of Winnipeg Centre 400 jobs have been lost already directly due to the meddling of the government and its failure to sign duty remission orders. That is 400 good paying unionized jobs with benefits. These are not stereotypical sweatshops in some old fashioned garment industry. These are bright, clean, modern workplaces with a day care centre, a cafeteria, and good paying middle income jobs with benefits. They are gone. Imagine what would have to be done to attract 400 jobs like that to a riding. People would pave the streets with gold. We have knowingly and willingly allowed them to disappear from my riding.
That is the not the only one. That is just Western Glove. I can talk about Gemini Fashions and Richlu Sportswear. There are 43 of these garment manufacturers in my riding. I can say without any hesitation or rhetoric that they will topple like dominoes if the Minister of Finance does not put pen to paper before December 31.
I apologize to my colleagues for hijacking the order of business today, but this is an emergency. This is urgent. This is real business that the House of Commons should be addressing. This is not some abstract esoteric debate we are having. This is reality.
The garment industry runs on real time, not on government time, and it cannot wait for bureaucrats to have another go at this. Again, I do not know who is advising our Minister of Finance, but it is not sound advice. He should listen to the real authorities on this issue. He should listen to the garment manufacturers who want to keep their jobs in Canada, but are being forced to outsource those jobs because of an unwillingness by the government to recognize the critical important of this industry.
In other industry sectors, it seems, on the basis of a phone call, the chequebook comes out and $100 million cheques get written. I am not going to criticize any one industry sector or the government intervening to help a sector, but for God's sake help the clothing and apparel sector today because we have a deadline looming.
I raise this with some emotion and passion because my inner city riding in downtown Winnipeg is the third poorest riding in the country. The largest single opportunity for employment is the garment sector. It is a gateway for new Canadians to get into the mainstream economy because the face of the garment sector worker today is largely Filipino, Laotian, Cambodian, or Eritrean. All of the immigrant groups that are settling in my riding more often than not find their first job opportunity in the garment sector. Maybe their children go on to become the nurses, doctors and lawyers in the next generation, but they get their start, and it is a good start, in the garment sector. We cannot provide those jobs without some assistance from the government.
I urge my colleagues to look at the first report from the Standing Committee on Finance. It is only five pages long. It is of critical importance and value. It outlines the extent of these duty remission orders and the dollar value of them. It is not a huge amount of money. Nationwide it is only about $40 million. One would say that surely the industry could cope and adjust to this relatively small loss, but people have to understand that this is the straw that broke the camel's back.
It has been coping and adjusting with incredible market forces and adversarial situations for a decade or more now, 15 years really, because these duty remission orders were put in place to help the industry cope with the free trade agreement and with NAFTA. Granted, they were interim measures.
I do not believe these duty remission orders should go on forever. They are still interim measures until we can put together an action plan to help the industry cope in some more permanent way, such as, increases in productivity or whatever it is going to take to help that industry survive. In the interim, do not cut it off like this. We are standing at the edge of a precipice and we are about to be pushed over. Build a ramp so these duty remission orders can be phased out perhaps in time, but not this sudden jump.
I can tell everyone that the garment industry has to have lead time. The garment industry already has its next year's production scheduled and has planned nine months ahead. It has to plan in advance. It has planned with the confidence that the Minister of Finance would listen to it and extend the duty remission orders.
All of these companies and factories that I am talking about have set their 2005 production schedules with the comfort that the duty remission orders would in fact be extended. Yet, month after month goes by and it does not get signed and they cannot get through to the Minister of Finance in any other way.
This is why we are taking this unusual step today. They call, but their phone calls do not get returned. They do not get meetings with the Minister of Finance. They get passed off to some underling, some bureaucrat, who clearly has a bias against this type of duty remission order because they are advising the minister not to sign it in spite of overwhelming evidence of how necessary it is from one coast to the other.
It is not just my riding of Winnipeg Centre that will have catastrophic effects if these duty remission orders are not signed, but it is downtown Montreal, where there is a rich and vibrant garment sector that is hanging on by its fingernails. The riding of Vancouver East, my colleague reminds me, has a vibrant garment manufacturing sector which has also been subjected to overwhelming contrary forces.
It is a tribute, a testimony, to the strength of these Canadian nationalists, who own these companies, that they have managed to keep their jobs in Canada to date. It is almost a miracle, really. All of the evidence or all of the reason and logic would tell them to give up and do their manufacturing offshore, to do their design here and keep their books and accounts here, but do all their manufacturing offshore, because it just does not add up.
However, to their credit they have been creative and resourceful. They have tried to keep those jobs here in Canada. We are not helping them for a lousy $40 million. I am not saying that to be flippant. I know it is a lot of money. It is $40 million spread out over the whole industry. “For the want of a nail, the shoe was lost; for the want of a shoe the horse was lost”, and so the poem goes. For the want of this small amount of intervention on behalf of the government, we are about to lose this industry. I tell all hon. members, it will not be coming back. It will not be an interim plant closure. Once they are closed, they are gone.
Hon. members can tell from my tone that I am frustrated by this. I am frustrated because there are representatives from virtually every party who have personally and individually tried to reason with the Minister of Finance, first by letter then by phone calls and then by stopping him in the hallways, in the gymnasium, anywhere we can find him. We are begging, pleading, and imploring him to sign the paper that sits on his desk and save an industry.
There is no other single, more important thing he could do to preserve Canadian jobs in this session of Parliament than to sign the duty remission orders that we find here in the first report of the Standing Committee on Finance. If he needed more reason, he should listen to the Senate Standing Committee on Banking, Trade and Commerce because it recommended the same thing. We have two reports from the Standing Committee on Finance, a report from the Senate Committee on Banking, Trade and Commerce, all telling the minister to sign the duty remission orders. What do we get? A deafening silence. What does it take to get through to these people? We have an emergency on our hands.
Perhaps nobody says it better than an actual practitioner in the trade. Gemini Fashions of Canada Limited in my riding just closed a plant with 150 employees. It is a block away from my constituency office.
The owner said, “Dear Minister, Gemini Fashions is a company in Winnipeg with a very proud tradition in Canadian apparel manufacturing. We just had to close our state-of-the-art outerwear manufacturing plant on Notre Dame Avenue in Winnipeg. This facility employed 150 skilled workers. This closure was a direct result of Prime Minister Chrétien's least developed country initiative to allow duty free and quota free imports into Canada from some 48 low cost countries”.
That was a unilateral and arbitrary move that the then Prime Minister made without consulting the industry to allow least developed nations to export products into Canada without duty. The problem is that everybody knew. Global corporations simply moved their production to least developed nations and they now manage to get their product into Canada without duty. It was a bad idea. They were advised against it.
The owner of Gemini Fashion points out: “But this action was done without consideration of the Canadian apparel industry and rendered many Canadian manufacturing assets useless and nearly worthless. There has been no effective or meaningful consideration afforded to those most affected by this unilateral action of the Canadian government, and without meaningful consultation in our industry. We cannot turn the clock back now but there is something you can do. You can pass into law the unanimous report of the Standing Committee on Finance completed on March 31-04, enclosed herewith for your reference”.
Here we have a garment manufacturer who has just had to close his factory, his family business, and lay off 150 skilled workers, appealing to the minister in a letter in April 2004 to please implement the recommendations of the Standing Committee at that time. That was six months ago. The situation was urgent then. The situation is desperate now, because essentially we have two weeks to go in this Parliament to try to reason with the Minister of Finance, to implore him once again in this more public way to please sign these duty remission orders so that this industry can live to fight another day.
That is what we are asking. We are asking the minister to give the industry a pardon, what could we call it--
Pat Martin NDP Winnipeg Centre, MB
Yes, a reprieve. We are asking the minister to show mercy if that is what it takes. If I were allowed I would be doing this on my knees if it would help. I will get down on my knees and beg the minister to sign these duty remission orders because I do not see anything else working. I do not see reason working. I do not see logic working. I do not see political pressure working. I do not see the recommendations from the Standing Committee on Finance working.
When there are unanimous recommendations, why are they not viewed as marching orders? Let me point out that when we have a unanimous report from a standing committee, it includes members from the government side. There are plenty of members from the government side who feel the way I do, because they represent ridings in Montreal and Toronto, and I do not know where else we find Liberals but certainly elsewhere, that may in fact have garment manufacturers in their ridings and they have a moral obligation to represent the interests of those manufacturers. They have a duty to represent the interests of those manufacturers, not just some ideological bias that some bureaucrat in that department has against this particular program.
The program is flawed. I am the first to admit it. Even the garment manufacturers are the first to admit it is not perfect, but I ask the government not to cut them adrift without a safety net, without a safety boat or a lifeline. That is what we are recommending here. There has to be a lifeline extended to this industry so that we still have these Canadian jobs in my riding.
In summary, let me say that the garment industry has been critically important to the diversification of my riding. We look to the garment industry to add to the diversification of industry in Manitoba to make it a healthy economy, whether it is the aerospace industry, the motorcoach industries and the garment industry in my riding. They complement the agrifood industry that Manitoba is known for.
The garment industry is critically important as a gateway industry for new Canadians to find their footing in this new country. They are good jobs, they are Canadian jobs, and the industry is doing all it can to keep those jobs in Canada. I implore my colleagues in the House of Commons today to tell the Minister of Finance to help us keep those jobs Canadian and in Canada.
Charlie Penson Conservative Peace River, AB
Mr. Speaker, I listened with a great deal of interest to the hon. member speak about the need for the duty remissions. I am one of those on the Standing Committee on Finance who made the recommendation to the minister to have these remissions put back in place for the garment industry.
I find it passing strange that the market is not allowed to work here. What the member is asking for and what all of us on the committee were asking for was essentially that the government not collect tax against this industry in the form of tariffs or duties.
It raises an obvious question considering how serious the problem is for the garment industry. I think the member made the point very strongly that there are a lot of jobs at stake. It raises the question of why we would we charge these duties to begin with.
I think it is a very strong case for letting the market work in the fashion that only the market can work. We know that that there are very low tariffs or duties on most industrial goods now worldwide, especially after the end of the second world war and with the introduction of the General Agreement on Tariffs and Trade and what has evolved into the World Trade Organization. I think tariffs are now in the range of 2% or 3% worldwide.
Agriculture is one big exception to that. A number of people want to have those tariffs reduced as well, to allow the market to function properly in that sector. The textile industry is another. The point made by the member today really illustrates that something gets really out of whack when a member has to stand up and say that our industry needs to be pardoned so we need to make this exemption for it.
Common sense needs to prevail. We should not charge the duties to begin with. We should remove the tariffs. That would be a common sense approach and it has been recognized worldwide by 160 member countries, I think, that are working to try to reduce tariffs worldwide. Does the member not think it would be better in this particular case to just remove those tariffs altogether?
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I am trying to keep the debate focused on the one specific issue in a very complex industry. I am concerned that if we deviate too far into the broader issue of international tariffs, quotas and duty remissions, et cetera, we will lose sight of what we are asking the Minister of Finance to do today, which is simply to comply with the recommendations of the Standing Committee on Finance as it pertains to extending these duty remission orders.
I would be happy to have a further conversation with the member about the overall general issue of the reduction of duties and tariffs internationally, but I do point out it is frustrating that Canada seems to be willing to do that unilaterally and other countries are not. It leaves us at a disadvantage in the agriculture industry, as one example, when we decide we will no longer subsidize our farmers because all countries should stop subsidizing agriculture but then no one else does. It leaves us vulnerable and weak.
In this case, we are simply asking for a perhaps phased out duty remission regime so that these industries actually are not hit like a ton of bricks on January 1, 2005 and lose their lifeline.
The government should extend the orders for now and negotiate with the industry to phase them out forever, if it likes, but it should not do anything drastic as of January 1 or these plants will close their doors.
John McKay LiberalParliamentary Secretary to the Minister of Finance
Mr. Speaker, I thank the hon. member for initiating this debate. It is one that has gone on in caucus circles for quite a while now. It has also gone on in departmental circles for quite a while now as well. This has not been precipitated just by the report of the finance committee but also by the fact that there is a deadline coming up on December 31.
I appreciate the fact that the member wishes to keep this focused on one item in the finance committee's report. The problem is that as soon as we unpack that little piece of duty remission, it then leads into other items such as tariffs, tariff relief programs and things of that nature because all of them exist in relation to each other.
Just to stay with the member's focus for a moment, if I may, I would like to ask him a series of questions that have been batted around, so to speak, by the minister and others, having to do what is the best thing to do here.
This is about a $30 million program, $30 million in duty remissions. It is an historical program. There is really no coherent reason why some people receive duty remissions and some people do not. One manufacturer on one side of the street gets duty remission and another manufacturer on the other side of the street does not. That is not a good way to focus a policy.
It is not particularly good, so the first question has to do with whether he would change the list of people who receive duty remission. Would he have a phase-out of the duty remission in some manner or another? If he did have a phase-out, would he replace it with some other form of program? Because the industry says it does not like the way the programs are working. I appreciate that the focus of the member's speech may well be good politics, but it is not necessarily good public policy.
John McKay Liberal Scarborough—Guildwood, ON
With the greatest respect to common sense, we cannot take the first item in the report in isolation from others. He has not focused his speech at all on the second recommendation of the committee with respect to tariffs, so my second and obvious question is, would he also simultaneously do tariffs? If so, what particular tariffs? On inputs? On inputs to inputs?
This is a far more complex question than the hon. member wishes us to believe. I would be interested in his comments. I would like him to tell us which items he thinks should be dealt with under duty remission.
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, I can say that the duty remission orders do not benefit every garment manufacturer, but I can also say that no garment manufacturer is opposed to the idea of extending the duty remission orders to help those companies that they do have an impact on. The industry is unanimous in asking the minister to extend these remission orders even though some manufacturers do not actually stand to gain in any way. They know it is for the well-being of the industry in general.
If the hon. parliamentary secretary were being completely forthright, he would tell those who are listening that this finance committee report has only three very manageable recommendations in it. The first recommends extending the duty remission orders.
The second recommends that the federal government immediately end tariffs on inputs that are not produced domestically. We can support that. My hon. colleague from Peace River would surely be in favour of that. The government should immediately end tariffs on inputs that are not produced domestically. That is reasonable.
The third recommendation is that we undertake a study of temporary measures to help the industry survive once we do phase out these special intervention measures.
We need an action plan to help the industry survive in the long term. In the interim, we need these lifelines to keep the industry alive so it can live to fight another day.
Libby Davies NDP Vancouver East, BC
Mr. Speaker, I would like to thank my hon. colleague from Winnipeg Centre for raising this important issue in the House today.
It is a very important matter. As we have just heard, it is easy for the government to say, “Oh, this is so complex we cannot deal with it”, but as we have just heard from the member for Winnipeg Centre, it is not that complex. This is a straightforward recommendation. The committee has laid out a path for a direction that is reasonable and entirely doable. What is happening here is that the government is throwing up barriers, sitting on its hands and refusing to take action.
I have garment industry operations in my riding of Vancouver East and we consider those jobs to be very important, so I would like to ask the hon. member this question. Why is the federal government refusing to move on this issue?
Pat Martin NDP Winnipeg Centre, MB
Mr. Speaker, the question of the day is that no one can understand, for the life of them, why the minister is so reluctant to follow through with the recommendations of the finance committee. Reason, logic and all the authorities in the country are saying that this is the right thing to do. However, stubbornly he has dug in his heels and now he has even built walls around his office to where those industry practitioners cannot even get through to register their dissatisfaction.
Someone in the bureaucracy is advising the minister that this is a bad idea but that is one person against the entire garment industry. The people who represent the workers in the garment industry are all saying that it is the right thing to do. That does not add up.
Roy Cullen LiberalParliamentary Secretary to the Minister of Public Safety and Emergency Preparedness
Mr. Speaker, I am glad to enter into the debate on the motion. I feel some authorship of this issue in the sense that back in April, 2004 I had the great honour to chair the House of Commons Standing Committee on Finance. We had hearings on the topics of duty remission and the zero rating of tariffs on textile inputs. We wrote a report and tabled it in the House of Commons.
Subsequent to that, we had a general election in Canada and therefore on the dissolution of Parliament the report died. However the new chair, my colleague for Saint-Léonard—Saint-Michel, and the members of the reconstituted Standing Committee on Finance essentially re-endorsed the report and re-tabled it with one minor exception. They made a wording change in one of the recommendations that had to do with the undertaking of a study on the benefits and cost.
In terms of the recommendation around duty remission and the tariffs, the newly reconstituted Standing Committee on Finance endorsed the previous recommendations and that report was tabled in the House. What the member for Winnipeg Centre is arguing is that the House of Commons should endorse that report and the recommendations that were contained in that report.
I must say that we had some very compelling arguments made to us in the House of Commons Standing Committee on Finance back in April. What we have here are two different industries, although interrelated, the textile industry and the apparel industry.
If one were to go back to the days of the free trade agreement and NAFTA, everyone, certainly in the province of Quebec and perhaps across Canada, would have said that with the introduction of the FTA and NAFTA the textile industry in Canada was doomed and that it was long gone because it just could not compete with some of the huge textile manufacturers in the United States and around the world.
What we found however is that the textile industry in Canada was able to reorient itself and focus on some core competencies. It basically over time moved away from some of its traditional types of business, which was apparel and apparel related, and moved its industry more into industrial products, making carpets, accessories for cars and anything related to textiles in the industrial market. Therefore the textile industry has been able to survive and prosper.
We also heard that the apparel industry could not survive under FTA or NAFTA, but we have had some big success stories in the apparel industry. A company in Montreal named Peerless Clothing Inc. appeared at our Standing Committee on Finance. We all congratulated the company for the amazing work that it had done. It has been able to carve a niche in the United States market on men's suits and has turned its business into a multi-million business.
However we now have a changing world again. We have a changing world in the sense that there are companies in China, for example, and other parts of Asia where labour costs are very low and they have started to compete in a very big way. In fact the World Trade Organization, members of the House and members of the apparel industry and textile industry support moves by our government and governments around the world to remove some of the tariff protection that currently exists or has existed. They want to see the least developed countries having the opportunity to market their products around the world, which would create jobs, economic opportunities and economic development in the least developed countries of the world.
We heard at our committee that the apparel and the textile industry supported the WTO initiative to lower tariffs generally to provide opportunities for these least developed countries to realize their full potential when it comes to textiles and apparel.
Having said that, that creates some new challenges. We have some cost competitiveness issues where it is very hard for companies in Canada that pay a decent wage to compete against some of these countries in Asia and in Bangladesh and China. Therefore, there are some government programs and initiatives that help these industries.
In the context of the apparel industry, the first one is duty remission. I have been told that we have something like 200 companies in Canada that benefit from the duty remission program, which is a program where companies that manufacture apparel in Canada are able to get a remission on duties on some of the apparel products that they import into Canada.
I believe that program costs the government somewhere in the order of $26 million to $30 million a year. Some 200 companies in Canada benefit from that. The list of the companies that benefit was structured sometime in the 1980s. We would have to ponder how companies made it on to the list and how some did not, but generally, as I understand the criteria, if a company manufactured apparel here in Canada it got the duty remission.
Without the government taking any action, that duty remission will expire at the end of December of this year. The apparel industry is saying that it will be caught in a very difficult position if that duty remission order expires and there is no renewal at the end of this calendar year.
One can argue that the apparel industry was told when the duty remission order was renewed seven years ago that it would not be renewed again. One could fault them for not adjusting to the new competitive reality. However, maybe the industry did try to adjust. For example, I know of a company in the Toronto area that is on the duty remission and it received somewhere approaching $4 million a year. This company manufactures a lot of shirts in Canada and it employs a lot of people.
I do not have any apparel or textile companies in my riding. I became seized with this issue when I was the chair of the Standing Committee on Finance but I became more aware of some of their issues when they appeared in front of the committee. Some of these companies rely on duty remission to remain competitive. The very legitimate question is whether the apparel industry in Canada can be competitive in the medium to long run. I think that is a valid public policy question.
I do not pretend to have the answer to that. I do not know enough to say that maybe they have not been aggressive enough adjusting their costs or enhancing their productivity. I do not know enough to say that categorically. However, by the same token, I do not know enough to say that they have exhausted all the productivity enhancements that they could employ and therefore are still in a position of being non-competitive.
I think we need to examine this. My own personal preference would be to buy a bit of time. I do not think we should be stopping the duty remission cold turkey on January 1. I do think it would have an impact on jobs. I think it would have some economic consequences and consequences for people who are currently employed in these apparel industry factories and manufacturing facilities.
My own recommendation is that the government renews duty remission for seven more years, which is what the finance committee recommended. I understand that the finance committee can make recommendations and the government actually has a very good record of responding to recommendations from the Standing Committee on Finance, but in fairness, the Standing Committee on Finance looks at particular issues. The finance minister and the government have to look at a whole range of competing resource demands to come up with a budget and a fiscal plan.
I would like to see some accommodation on the duty remission. Whether it is renewed for a full seven years at the full rate is a question I think the Minister of Finance should ponder. I am not privy to all the competing demands on the fiscal resources of the government.
My only point is that I think it would be a mistake to just drop duty remission on January 1. I would like to see the government extend it somehow. It would make a very good study for one of the committees or a joint committee of the House to better come to grips with the textile and apparel industries, how they relate, what their competitive position is in the medium to long term, and what the best way would be for the government to involve itself.
We have programs in the textile industry. One of those programs is called the CANtex program. Industry Canada provided some funding for CANtex a year or two ago to help the textile industry. In fairness, it takes a while for these programs to get up and running, but when I speak to the textile or apparel industries they say that they still have not seen the benefits from that program.
Admittedly, they have their own economic axe to grind and economic interests at stake, but we as politicians have to sift through a lot of information and in our own judgment at some point we have to make decisions on where we stand on certain issues. We cannot always believe one stakeholder or the other or the government.
I have been told that this program has not really caught hold yet and that it does not have a lot of traction. Maybe it needs more time to get going, but from the point of view of the industry, it does not see CANtex as a replacement for duty remission or any of the tariff relief that it is looking for.
Many of my colleagues on this side of the House and members of the other parties who were on the finance committee were seized with this issue, but I would like to mention my colleague from Ahuntsic in Montreal who has been on a crusade on this particular issue. Chabanel Street, which is in her riding, is where a large part of Canada's apparel industry is located and she has been on a crusade about this.
My colleague, the member for Beauce, has been integrally interested in this and pushing for resolution. My colleague from Guelph has been very involved, as have many others on this side. I appreciate the initiative the member for Winnipeg Centre has taken on this but it is an issue that has been discussed and advocated by many colleagues on this side of the House as well. It is not as though this is a new issue. This has been around for a while.
The Parliamentary Secretary to the Minister of Finance talked about its complexity. I understand that complexity should not grind things to a halt but it is complex, particularly if one looks at the interrelationship between textiles and apparel. If we do something for the apparel industry will that be good for textiles? If we do something for textiles will that be good for the apparel industry? Or, will it be good for both? It is not easy.
One of the recommendations in the report from the Standing Committee on Finance was to eliminate the tariffs. Recommendation 2 states:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
I heard some of the representatives in the textile industry saying that at any point in time no one can freeze what textiles are produced domestically in Canada. What textiles are being produced domestically in Canada today might not be the same as the list that applies next week. There was discussion that it could be dealt with through regulation, that there would be a list and that any time that changed we could change the list. We also have the textile industry selling raw materials into the apparel industry. Therefore whatever is done on one side starts to impact on the other.
I would like to see the House of Commons do more work on understanding this industry better but in the meantime I would like to see something done on duty remissions. I do not think we should stop it cold turkey. I would like the government to deal with recommendation 2 in some shape or form.
There is a misconception that if the House of Commons concurs in the report of the Standing Committee on Finance, it does not necessarily mean the government is obliged to implement the precise recommendations. It does mean that the House of Commons endorses the report, which would be a clear signal to the government that the House would like something done about it.
Having said that, the government does not have to accept every word of the recommendations. It has a decision to make. It is charged with governing on behalf of all Canadians. It could select some of the items, or some mix of them, and come up with a policy stance that deals with the issues which have been raised in a substantive way and perhaps not necessarily implement every recommendation of the finance committee.
We should be concerned about is this. The apparel industry and the textile industry employs many Canadians. We owe it to them to ensure that we have studied this indepth. I do not think we have done that at this point. Perhaps some of the officials have studied it, but we in the House have not studied it in the depth required. I would like to see a joint committee of the House of Commons look at these industries in more depth. In the meantime, measures can be taken that respond to the recommendations in the report.
I am more familiar with the apparel industry. The apparel industry is strong in Toronto, perhaps not as large as in Montreal. There is a large apparel industry in Winnipeg. If duty remission is stopped cold turkey, there is a real risk that some of these companies will have to look at their options. One option would be to move their facilities to Mexico or to some other country where they could get productivity or cost advantage, for whatever reason. It would be a shame if we lost these facilities and jobs to some other country because we did not act when we should have.
This is an important industry for Canada. If we look at the number of jobs, the apparel industry employs somewhere in the vicinity of 97,000 jobs in Canada. The textile employs something like 47,000 employees. These are important industries for Canada. Jobs in the apparel industry are mainly in Montreal, Toronto, Winnipeg and Vancouver. Jobs in the textile industry are mainly in small cities in rural areas of Quebec and Ontario.
I hope the government acts. I know members on this side of the House have been seized of the issue. I congratulate the member for Winnipeg Centre for bringing it into the chamber for debate. I hope and encourage the government to act on the recommendations, but not necessarily verbatim, which would be good. However, it should respond in a very aggressive and proactive way to these industries. In the short run, they need the government's help. We need to understand these industries better so we can decide where the resources should be best applied in the future.
Werner Schmidt Conservative Kelowna, BC
Mr. Speaker, difficult as it is from time to time to compliment a member of the governing party, I must do that this morning. The ex-chairman of the finance committee has done an excellent job of presenting the case to the House this morning. However, I have a question for him.
He talked about the complexity of the adjustment that needs to be made. I think we all agree there is tremendous complexity. If we change one thing on one side of the organization, then it has implications elsewhere. I agree with that, and it makes good sense. The question I would like to ask him has to do with the overall study of the issue of tariffs and duties in Canada, not only with regard to the apparel and textile industry, but generally speaking.
I believe recommendation three gets into exactly that sort of thing. I agree that the report deals specifically with the apparel and textile industry. However, could the hon. member give us his opinion about examining the whole concept of duties and tariffs as they apply to Canada and its industries?
Also, is the difficulty experienced by the apparel and textile industry primarily about tariffs and duties or, as he intimated in his speech and perhaps even said directly, should the industry have made adjustments? Where is the problem? Is there a problem because the industry has not become competitive in terms of adapting its processes and operations to be more efficient, or is the problem because of the imposition of duties and tariffs, which may have nothing to do with the efficiency of operations of the industry? It seems to me that in the comments of the hon. member there was confusion in these areas. It was almost as if the industry were more responsible for being in difficulty than it was duties and tariffs. Could he perhaps clarify that?
Roy Cullen Liberal Etobicoke North, ON
Mr. Speaker, I am quite sure the member from Kelowna was a full member on the finance committee. He certainly was at some of the meetings when we were preparing the report.
I always get a little nervous about big macro studies. My experience with them is that a huge study often leads nowhere. I understand what he has said about looking perhaps at duties and tariffs in the whole global context of the issue within the Government of Canada. Then look at them in the context of the World Trade Organization.
It is a big issue. We do have a changing world though. China was brought into the World Trade Organization and it made certain commitments to move to a market economy. As a result of that, some tariff barriers are coming down and the Chinese economy is growing at an enormous rate. For these purposes, maybe we could use it as a pilot to look at duties as they relate to the apparel and textile industry. If we find there is more meat in there, then maybe it could be expanded. However, I am just worried about this being lost in the shuffle of a major study, where two years from now we are no closer to any answers.
On his other question, I would like to clarify that I do not buy necessarily the notion that the industry has been asleep at the switch. I remember this came up in the context of the rising Canadian dollar. Some were arguing that the Canadian industry fell asleep at the switch, that it should have been making productivity enhancements. Canadian industry generally is always making productivity enhancements. In the context of the apparel industry, maybe there was an expectation that the duty remission would always be there. Maybe it has pushed the limit on the productivity enhancements already implemented. Maybe we are up against the question of whether it can be internationally competitive. I do not know the answers to those questions, but I will not make the assumption that it should have made the adjustments but have not. That is not what I am thinking.
Joe Comartin NDP Windsor—Tecumseh, ON
Mr. Speaker, my question is for the parliamentary secretary on public security. I recognize his background with the finance committee, and I am to some degree puzzled by his position.
If I understand the situation correctly, with regard to the remissions, we are faced with the need for the decision to be made and signed by the end of December this year. We have heard from the parliamentary secretary on revenue that it is a complex issue and they are studying it.
Would the parliamentary secretary on security agree that we do not have time to come to conclusions on some of these other issues, such as who should be covered, whether there should be a phase-out and how it should take place? Because we do not have time in the next couple of weeks before the House adjourns to make those kinds of decisions, the Minister of Finance should sign the remissions documentation that is required to put this into place?
Roy Cullen Liberal Etobicoke North, ON
Mr. Speaker, I know the member for Windsor—Tecumseh is the critic on public safety and emergency preparedness. I want to make it clear that I am speaking on behalf of the member for Etobicoke North. As we are in this place longer, we find we have different hats. I am speaking on it because I am interested in the topic, and I was involved as chair of the finance committee.
I am saying this needs further study, but only in the sense of how the government could best deploy resources in the medium and long term. We need some short term decisions. The government is seized with that based on input from other members on this side of the House.
On duty remission, as I said, we need to do something before the end of December. I would like to see that rolled out beyond December. A cold turkey stop on January 1 is not appropriate. Jobs are at risk and the government should deal with duty remission before it expires at the end of December.
Rahim Jaffer Conservative Edmonton Strathcona, AB
Mr. Speaker, I, too, would like to echo my congratulations to the former chair of the finance committee. When we brought these recommendations forward, he was very helpful in ensuring that we worded them in a way that was acceptable to all the committee, which then further led to unanimous consent of the committee.
I know the hon. member said it, but it is important to continue to press the issue of extending the remissions. I almost fell off my chair when I saw an NDP member in the House rising to call on the government to reduce tariffs or taxes on industry. I do not know if it is because of the visit of President Bush today. Maybe it is having an influence on the NDP. However, it is good to see that party calling for a reduction. The member from Winnipeg was not there during the initial meetings of the finance committee on this matter.
It is important that we look at the issue and note that there is a timely situation here. When the remissions were first introduced in 1997, the current Prime Minister was the then finance minister. The commitment he made at the time was that the government would introduce the remissions, but it would ensure a review of the overall tariff structure on the industry and work with the industry to reduce any challenges it might have as it was restructuring.
I hope the parliamentary secretary, who is now in charge of a different portfolio, will continue to press the finance minister to address the issue of remissions. However, I hope we will be able to work with the industry in restructuring. We should do that in a timely way, not wait for another seven years.
Roy Cullen Liberal Etobicoke North, ON
Mr. Speaker, the member for Edmonton—Strathcona was a member of the finance committee, and he spoke out very forcefully for some action with respect to the apparel industry and textiles in particular.
I am not a big fan of studying things to death. We need to study this industry to better understand it so, in moving forward, we can make a clear decision of how the resources of the government could best be used to work with these industries to ensure they can survive, grow and prosper.
In the short run we should not stop the duty remission on December 31. The government should find a way to renew it partially, maybe not for the whole seven years, so we can buy a bit of time to better understand the interrelationship of these programs and duties and duty remissions. Then we can put it in a package that would make sense in moving forward.
Rahim Jaffer Conservative Edmonton Strathcona, AB
Mr. Speaker, I would like to start by saying that we in the Conservative Party support this motion for concurrence. This motion moves concurrence in the first report of the standing committee, as we have been debating this morning, “Duty Remission and the Zero-Rating of Tariffs on Textile Inputs: The Canadian Apparel Industry”.
I want to share some background on this because, as the revenue and customs critic, I was quite involved at the time we actually pushed this report forward. This issue first came to the finance committee during the third session of the 37th Parliament when we heard from witnesses on amendments to Bill C-21, an act to amend the customs tariffs. As I mentioned, I was in charge of this at the time. The issue was that the duty remissions which underpin Canada's apparel industry are set to expire on December 31, as we have heard.
Bill C-21 also did not look at the overall tariff structure or textile imports into Canada. That is why we decided to continue on. We said that we would deal with the remission issue but then would ensure that we reviewed the overall tariffs to see what we could do as a committee to work with the industry, and then finally we would look at another problem within the industry, one that dealt with gender biases.
That is what I will do. I will quickly read over the recommendations. We have been focusing on the first one quite heavily this morning, but I think the other two are just as important.
The first recommendation states:
That the federal government immediately extend, for a further seven years, the duty-remission orders covering the apparel sector that are set to expire on 31 December 2004.
Recommendation two states:
That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.
Finally, the third recommendation states:
That the federal government immediately undertake a study of temporary adaptation measures to enhance competitiveness, as well as the benefits and costs of eliminating tariffs on imports of fabric for use in the Canadian apparel sector, the types and quantities of products produced by the Canadian textile industry and the practice of tariff differentiation on fabrics based on their end-use. The results of this study should be tabled in Parliament no later than January 31, 2005.
That is what the original report said. From what I understand, there may have been a recommendation on or an amendment to that particular date.
Mr. Speaker, I just want to remind you that I will be splitting my time with the member for Cambridge.
All those recommendations, as we can see, are very clear. I think they were agreed to by all members, as I have mentioned, and a lot of thought went into structuring them in such a way that they would not cause problems for the finance department, especially in regard to extending those duty remissions in the meantime.
The remission orders have been around for quite some time. They were first introduced around 1997. There are remission orders for various textiles. Specifically, there was a new shirt remission order that provided shirtmakers with transitional assistance to help them remain in the shirt business in Canada. Similar remissions are also being considered for manufacturers of outerwear apparel and women's blouses and shirts. Shirting fabric and outerwear fabric are sub-sectors that are currently receiving assistance under existing remissions. This means that the duties on those particular areas of fabric will be reduced.
Duty remissions will enable Canadian manufacturers to complement the products they manufacture in Canada so that they would help to continue to encourage our industry to grow and flourish here in Canada. That will also help the textile apparel manufacturers in these import-sensitive sectors to adjust to the same kind of increased competition faced by shirtmakers. This recommendation calls for the extension of these remission orders for the next seven years. This was an easy decision for the committee to make and was reached unanimously, as I mentioned.
The surprising thing about it, as I mentioned in a question to the parliamentary secretary, is that there has not been any action by the government even though many representatives of the finance department themselves said that this issue needs to be dealt with and that we were getting closer to the end of the deadline. Why was there not greater attention paid to what other help is required to keep our industry competitive? Why was there not greater attention paid to the tax structure and the tariff structure?
My colleague from Peace River raised the idea of whether we should even be placing tariffs on these particular products here in Canada, seeing that many of the companies are importing these products that are not produced here. It seems to put them at very much of a competitive disadvantage with all these other competitors around the world. If the government had taken action at the time, maybe we could have moved this industry forward and we would not on the eve of this deadline be faced with this very important motion here in the House.
In the words of the committee:
--remission orders are, by their very nature, an incomplete and ad hoc method of addressing the needs of the entire Canadian apparel sector with respect to input costs: some textiles and sub-sectors are covered, while others are not. Moreover, we note the comments made by witnesses that the 31 December 2004 expiration date of the duty-remission orders is fast approaching, and companies need to make procurement and employment decisions in the immediate future. Consequently, it is vital that the federal government take immediate action to, at a minimum, maintain the current system.
Hopefully that cannot be impressed upon the government too much. I hope that message will get to the finance minister and that action will be taken immediately.
In my remaining time, I would like to focus on the last two recommendations.
The second part of the report details the mishmash of bureaucracy that government employs to deal with determining what is Canadian-made fabric and what is not. Simply, this recommendation calls for a streamlined process to determine if a fabric is made in Canada or not. If it is not, then it should not be entitled to tariff protection, as this raises the cost of importing it into the country. If it is, then it is necessary to see that the fabric is being put toward Canadian uses and not just being produced because of outdated tariff protections. This initiative is estimated to save the apparel industry approximately $9 million a year in unnecessary duties.
As I have said, extending this would specifically help Canadian companies with their inputs. Some of these products are not available in Canada. Clearly that is something of which we should be cognizant. If we are not producing these products at home, we should lower those tariffs because it would give Canadian companies the opportunity to access those particular products. A good example of this that was brought out in the committee was the idea of lycra or other poly-synthetics that are not produced here. Importing these products is very expensive.
Finally, the third recommendation dealt with the end use of fabrics when they are imported into Canada, especially the built-in gender bias that I spoke about. When textile importers bring in a fabric, they must declare what the end use of that fabric will be. For instance, if silk is imported to produce ties for men, the tariffs are not high; they fall under a preferential tariff. However, if silk is imported to produce women's blouses, it is subject to higher duties and tariffs. Therefore, women's blouses are more expensive because the fabric costs more to bring into the country.
It is really bizarre in this day and age that this sort of differential exists. We in the Conservative Party find it really unreasonable for the Liberals to be promoting this sort of gender bias in today's society. It does not make any sense. Gender bias could be eliminated with that simple recommendation.
In the little time I have left, I want to impress upon the House, as I did during the period of questions and comments, that this issue has unfortunately been dragging on for far too long. This affects our industry from coast to coast.
The committee received a number of submissions in the past. It studied the issue a great deal in the past as well. It is not like this has not been lingering around, especially when it comes to the extension of the duty remissions. I think it is clear. There was unanimous support on the committee. There seems to be unanimous support in the House, from what we have heard from the previous chair of the committee and members of the NDP. I am sure we will hear that from the Bloc as well. It seems that there should be some indication from the Minister of Finance that this particular act of extending the remission orders will be put in place.
This has really left the industry in a bit of a lurch. I have to impress this upon members. I was talking to some of the members of the industry. They are making plans for next year. They are trying to be competitive and want to continue to employ Canadians, but they are trying to deal with an industry structure that is very outdated and not responsive to the challenges they are facing.
I agree with the parliamentary secretary when he says it is up to the finance minister, that the finance minister does not have to adopt all the recommendations in this report. That is fine. We will deal with those other recommendations very soon, I am sure, but clearly we have to extend those remission orders so that our industry can feel safe about continuing to operate in this country, continuing to employ Canadians and still remaining competitive.
I will impress again on the Minister of Finance that he should not wait another seven years to deal with this issue. Let us address the tariff structure. Let us ensure that our industries remains competitive here in Canada. Let us not drag our feet on this any longer.
John McKay LiberalParliamentary Secretary to the Minister of Finance
Mr. Speaker, I thank the hon. member for his thoughtful speech, which is very reflective of his thoughtful contributions to the finance committee when he sat on it. I appreciate that the member appreciates probably more than most the complexity of this issue and I want to get his sense of what his recommendation to the minister would be.
Essentially on the duty remission part we can simply let it lapse, in which case duty remissions come off at the end of this year. We could extend for a period of time. If so, what would be his recommendation in terms of a period of time? Or we could do a phase-out of either the people who are on the current list or the amount of the remission. In other words, we could scale it down from $30 million down to $20 million and then down to $10 million, for example, or something of that nature. I would be interested in the member's response on those three options.
Just to make it a little bit more complicated for the hon. member, would he do something as dramatic, so to speak, as implementing recommendation 2, which is the complete elimination of tariffs on textiles? That is in the order of a $75 million to $90 million item.
The first is a $30 million item. The other is a $90 million item. Would the member do those as independent silos, which appears to be the position being taken by the mover of the motion, or would the member do it in a phased, staged way while looking at the consequences of tariff reduction simultaneously? I appreciate that this is a fairly complex question. It may even be a little bit unfair, but it may give the House some feel for why this is something of a fairly complex issue and not necessarily something on which it is easy to criticize that the government has been dragging its feet.