Mr. Speaker, I am pleased to speak to Motion No. 397 sponsored by the member for Etobicoke North. I know that he has done a lot of work in this area and has some background. It is a well-intentioned motion, but it is basically just tinkering at the edges and I will make the case why I believe that.
The member gave a pretty good analysis of the longstanding problem of softwood lumber disputes with the United States. He talked about the subsidy game and the need for the net subsidy analysis. It reminded me that we are not so innocent in Canada either.
The Liberal government has been involved in subsidies right up to its eyeballs. The current Prime Minister and the debate that has been going on over the last little while is partly because of that. His own private company, Canada Steamship Lines, has been getting money from Industry Canada. Companies like General Electric, Pratt & Whitney, and Bombardier receive hundreds of millions of dollars in subsidies every year from the government. I do not believe that is right.
The motions seeks to direct government to negotiate with the United States a net subsidy regime to replace the current American countervailing duty process. In addition, the motion calls on the government to seek an agreement with the U.S. to eliminate cross-border tax competition.
I know it is well intended, but it bothers me when a Liberal gets up and talks about seeking to eliminate tax competition. It worries me because it seems to me that what the government is trying to do is to get other countries to raise their taxes to the levels of ours so that we can have the same kind of basis. The pressure should be to lower taxes because competition is a good thing.
The preamble to the motion makes it clear that these are industry specific recommendations, namely to help a struggling Canadian softwood lumber industry. Currently, when Canada responds to a U.S. countervail action and the imposing duties to offset the so-called unfair subsidies at NAFTA and the WTO, American subsidies to American-like industries are not taken into account. The aim of this motion is to ensure that the whole picture would be considered by allowing Canada to balance our subsidies with those supplied by the country launching the trade action.
Theoretically, if both sets of subsidies were found to be roughly the same in value, there would be no countervailing duty imposed at the end of the investigation. That is what I believe my colleague intends. It should be noted that Canada has attempted to establish this net subsidy method for calculating potential countervailing duties before within the dispute settlement regimes at both the Canada-U.S. free trade agreement and Uruguay round. However, it failed. Canada is currently pursuing that at the World Trade Organization and suggested it at the Doha round.
On the surface the net subsidy approach seems to make sense and seems like a good idea. But if, as in the case of softwood lumber, the U.S. is taking Canadian provincial government policies into account, American subsidies, even at the municipal and state level of government, could also be calculated and put into context.
On the surface Motion No. 397 appears to be a positive step on the road to dismantling U.S. trade laws which I would argue is the only way to end the harassment of Canadian industries by U.S. competitors. I would suggest as well that the American trade law has been one long process of engaging us and costing us a considerable amount of money.
As long as the U.S. has the ability to use the U.S. trade law tools, which are currently available to it, a sustained period of peace is highly improbable. However, it seems to me that Motion No. 397 will not dismantle U.S. trade law but only make it more complicated. It seems to me that it would be better to dismantle trade law within the economic free trade zone of Canada, United States and Mexico.
We should focus on getting rid of the countervail trade law and the anti-dumping trade law altogether. I do not think there is a place for it. It does not happen within provincial governments and the federal government. It does not happen across Canada. It does not happen internally within the United States. It does not even happen within the European Union that has 15 member countries, soon to expand to 25. The reason it does not happen is that it is antiquated. It is used as harassment.
The devil, however, in the approach that my colleague has taken us, is in the details. For example, if the U.S. department of commerce investigative panel were required to measure like products to calculate and measure subsidies, the determinations regarding definitions, scope, inclusions and exclusions would all become critical. It would be a very complicated process. It would become more convoluted and time consuming than the one we already have.
The only way to achieve fundamental concessions from our southern neighbours would be to reopen NAFTA. However, we have to offer something as well. We cannot only go with our own shopping list and say this is what we want, and that we are not prepared to offer anything. We must offer up some major concessions as well.
Pursuing a net subsidy method at the World Trade Organization or at NAFTA may not fare any better than past attempts. It is fair to say that we have a better chance in our litigation process and I think it should run its course.
The Liberal government and the trade minister have been making comments suggesting that we should negotiate another big process similar to the supply managed products on milk and butter, a supply managed deal on trade. We had it once before and it did not work. He is suggesting we go back to it.
I say stay the course on litigation. The NAFTA panel will report here in March and I think it will be favourable to Canada. I do not understand at all why the member or the government would want to shortcut that process and bypass it.
I want to deal with one comment that my colleague made in his speech. He said that the markets cannot be trusted. That really bothers me. We have built economies in North America and in Europe based on a market approach. It says a lot about the Liberal approach to governing, which is to control and interfere with the free market.
I suggest that the markets can be trusted. Certainly, we have obligations to be the steward for our people in Canada and put rules around them. I think they should be minimal. I think Adam Smith would be rolling over in his grave today to hear the member for Etobicoke North talk about markets not being trusted.
I suggest that it is the artificial barriers that have been put in the way of the markets that have allowed the kind of harassment to happen by the U.S. lumber interests. Trade laws were introduced by Canada 100 years ago. They have not always been in our own interest. I would suggest that in an economic free trade zone, such as we have and would like to develop further between Canada, the United States and Mexico, that we should be putting away these tools from the past. We should let the market operate.
I believe, as does the member, that our softwood lumber industry can compete on the basis of production and kick their butt down there. I believe the same thing in agriculture. We must get away from the subsidy game and negotiate these trade rules at the World Trade Organization, but the market needs to be allowed to operate. If the market were free of subsidies and free of these kind of policies that are used for harassment, I believe that Canada would win hands down.
In respect to the dispute over softwood lumber, the Canadian government should stick to its guns, stay the course of NAFTA and stay the course at the World Trade Organization. I think it is working for us. Negotiating a deal or tinkering with the process before the binding NAFTA panel has had its final say would be irresponsible and be a great disservice to the Canadian industry.
While I appreciate the member's good intentions in this, I do not believe that that is the route we should go to try to resolve these problems. We should enter into a process where we try to negotiate away this redundant policy on trade law.
Let us examine the anti-dumping portion of it for a moment. I know we only basically talked about countervail. Anti-dumping means selling below the cost of production. What is wrong with that?
Let me use the cattle industry as an example. A feedlot operator buys cattle at about 1,000 pounds, or he does not buy them these days because things are not working, but traditionally he buys them at about 1,000 pounds. Say he paid $1.25 per pound. He then puts those animals in the feedlot and puts on about 200 or 300 pounds weight gain. If the market moves against that individual and he sells them for $1 a pound, that is the chance that he takes.
Technically he is selling below the cost of production. What is wrong with that? That is all part of the market. I think that this policy with anti-dumping and countervail is very redundant. Tinkering at the edges will not do it. We need to scrap it all together.
However, in order to do that I want to conclude by saying that it means that willing partners must negotiate this. Canada must come to the table and offer up some things that we have had as sacred cows for a long time that we should be willing to accept as a result of trade negotiations.