Mr. Speaker, I would like to read the motion put forward by the hon. member, because it is made up of two parts which deserve to be considered as such. Motion M-397 reads as follows:
That, in the opinion of this House, the government, in thecontext of the softwood lumber dispute with the United States,should: (a) negotiate an end to the United States' countervailingduty process by replacing this United States trade remedy withone which either focuses on net subsidies—taking intoaccount tax-free bonds, sales tax abatements, property taxreductions, investment tax credits and energy co-generationagreements—which are available in the United States at thestate and local government levels, or that focuses exclusively onwhether or not policies in Canada and elsewhere are anti-competitive in nature; and (b) that, in addition to the foregoing,the government should launch negotiations with the UnitedStates government with a view to eliminating tax competition,in particular manufacturing subsidies, which is ongoingbetween Canada and the United States.
As the House can see, the motion is made up of two distinct parts. Part a , in which the government is asked to convince the United States to put an end to their countervailing duties by pointing out that the Americans themselves are funding the softwood lumber industry, deserves our attention. Everybody in this House would agree that the U.S. industry enjoys benefits that the Quebec and Canadian industry is denied.
For instance, forestry roads are built by private companies in Canada, but by the state and sometimes even the army in the United States. I could list other tax measures. For example, the U.S. softwood lumber industry enjoys tax holidays, jobs grant programs, shared capital cost programs.
We could also mention the clear cutting programs brought forward by the Bush administration to promote strip felling in an attempt to avoid forest fires, while our industry has to meet costly reforestation requirements.
By the way, I think it is important to mention that the sawmill industry benefits from several funding programs covering new investments in a number of New England states, particularly in Maine, Vermont and New Hampshire.
For example, there are programs that offer feasibility studies, tax holidays, employment tax credits and all sorts of other measures that are forms of subsidies. For that matter, the development agencies of these states frequently come to Canada and Quebec soliciting investments in their country.
It is clear that if we take into account all these factors, we can conclude that the countervailing duties imposed by Washington are unjustified and that we are totally right to challenge them. And, as you know, the challenge is based on WTO and NAFTA rules.
Confirming, as it were, the arguments raised by the member in the first part of this motion, the WTO as well the NAFTA secretariat concluded that not only was the American industry not suffering from Canadian imports, but that there was not even any threat that it would in the foreseeable future.
In fact, if both bodies—NAFTA particularly since, as you know, its decisions are enforceable in American law—maintain their position, the United States will have to withdraw its countervailing duties as well as its antidumping rights.
Until that happens, it would have been important to add to the motion the aid package that we have been demanding for close to two years, so that the industry can survive until the end of the legal proceedings.
It should be noted that neither of the two organizations I mentioned, the WTO and the NAFTA secretariat, recognizes the net subsidies mechanism, which consists in subtracting the subsidies of the exporting country from those of the importing country to determine countervailing duties. Let me remind this House that the United States opposed this mechanism. Nothing suggests that they are ready to support it at this time, especially since negotiations are at a standstill at the WTO and in the FTAA process.
We should keep in mind that the concept of net subsidies was examined during the Uruguay round but to no avail, because the United States and several other countries opposed it. Even if, at first glance, it seems attractive and logical, this approach is fraught with technical difficulties that would make its implementation problematic.
The subsidies granted upstream and the transfer of benefits to products downstream are a good example. Some examples are pork meat, live hog and corn. I could also have talked about international shipping, but that would have taken us away from our main focus.
From a political standpoint, I doubt that Canada can convince the United States that it should negotiate such an approach bilaterally because all the other countries together did not succeed in this respect during the last multilateral negotiations.
Although I agree with the previous speaker and the member that the motion stems from a good intention, I would be very surprised if such a motion were enough of a catalyst to influence the Americans or provoke any sort of reaction on the part of the American industry or the American administration.
As I said before, the important thing is that, meanwhile, the increasing value of the Canadian dollar as compared to the US dollar, and the continued imposition of punitive taxes on our exports—some 27.22 % on average—have become much more intolerable for our Canadian industry. Several of our producers are quickly approaching the breaking point because their financial burden is increasingly unbearable.
As I said, in the short term, what we need is a government program to help the producers, as we have been requesting since April 2001. This would take some of the load off the industry and help it survive until the conclusion of legal proceedings.
It is also important to point out that this aid package, whose first phase was announced, and whose second phase we are still waiting for, may be a very important element in the power struggle between Canada and the United States to get the American industry and administration to negotiate a full return to free trade. It is important for industry and government to collaborate closely, not only in order to have a program that meets the needs of the industry, but also to be more able to use it as a lever in the current dispute.
As for the first part of the motion, it does show good intentions, but we think it is impractical and has no impact on the current conflict. In contrast, part (b) of the motion is completely unacceptable to us. It reads as follows:
--eliminating tax competition, in particular manufacturing subsidies, which is ongoingbetween Canada and the United States.
The intent is certainly interesting, but it is clear that in this case it would lead us to tax harmonization between Canada and the United States, especially in the context where the Bush administration has entered a tax reduction phase, to the point of endangering American public financing, and even the stability of international finance. It seems to me that Canada cannot embark upon this course of action.
Second, the Bloc Quebecois is, naturally, extremely wary when it comes to mandating the federal government to harmonize taxation, which would also include provincial taxation. This seems to us to be extremely dangerous.
The third element I would like to discuss in relation to part ( b ) is that the motion presents even greater difficulties than net subsidies. We only need think of the overlap of taxes and the tax incentives of all kinds coming from all levels of government, especially in countries with a federal structure like Canada's—and this, by the way, is one of the reasons we want to get out—to imagine the obstacles to the feasibility of implementing the second part of the hon. member's motion.
Of course, this means giving up a great deal of sovereignty. I would like to remind members that the European Union just started its tax harmonization process. Imagine how different Canada and the United States are, and the various tax systems in the Canadian provinces and the American States.
In Quebec, the government is playing an important role that has allowed us to catch up remarkably well, even if we have not been able to close the gap between us and Ontario and the United States in particular. Still, we have made a lot of progress in the last 30 or 40 years. It has not been easy. We had to use tax incentives, particularly in the area of research and development. We also had help from major economic institutions of the government, like the Société générale de financement, the Caisse de dépôt and Investissements Québec. There were also tax incentives to the start businesses in designated areas to promote regional development. The Quebec government also supported the establishment of substantial venture capital reserves.
I have personally worked toward the establishment of one of those mediums, the Fondaction venture capital, which is sponsored by the Confédération des syndicats nationaux and which operates like the FTQ solidarity fund. I would like to take this opportunity to remind all Quebeckers in this RRSP contribution period that it is very important to invest in these venture capital funds to promote employment maintenance and development.
Such involvement of the state in the economy, during the quiet revolution, helped Quebec get out of its underdeveloped position and start catching up. Much remains to be done. We do not want to risk it all for the sake of tax harmonization.
For these reasons, I will vote against Motion M-397 and call upon my colleagues from the Bloc Quebecois to vote against this motion while acknowledging once again that it was well intended, as far as part (a) is concerned. However, I believe that it is completely useless.