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.