Debates of Oct. 25th, 2005

Softwood Lumber

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Chair, personally, I think that we have to be careful not to mix apples with oranges. These are two entirely different actions. We are facing this giant, the United States. We must not necessarily tax them, but make them understand better that we are their main supplier of energy.

Last summer I took part in three parliamentary missions to the United States: one to Connecticut, one to Des Moines, Iowa, and one to Seattle, Washington. I asked a great number of American elected representatives the question. Most people thought their main supplier of energy was Saudi Arabia or other Arab countries, but it is Canada.

We need to review the entire relationship between the U.S. and Canadian governments. In my opinion, the softwood lumber crisis is evidence of our complacency in our relationship with the Americans, in thinking we were good neighbours and that everything would work out fine. The world is changing and there is upheaval. We need to make sure that the Americans have a better sense of who we are. We have to make them understand that we can broaden our market and sell energy elsewhere in the world. Then their supply might cost more not because of a tax, but quite simply because of the competition we can create on an international level.

The Americans need to feel that by not respecting NAFTA rulings, they are harming themselves internationally. We need to have the courage to confront them. I made a proposal that could be partially followed. This House could send to several other parliaments in the world a motion for the countries that are currently negotiating an agreement with the U.S., or that plan to be in Hong Kong in December to sign accords on lifting subsidies from agriculture or any other sector, that they make sure the ruling mechanism and the rulings themselves will be respected. We will inform them of Canada's example, which shows that the Americans do not respect rulings.

The Americans would have a hard time responding to this issue all over the world. It is not very diplomatic, but we have to use this type of argument. Slapping additional taxes on energy is not an adequate solution. However, we must not close the door on other ways to change the rules of the game and to open up the dialogue so that the entire planet knows that the country that claims to be the biggest promoter of free trade in the world is not keeping its word right now. We must not be afraid to say things politely.

To conclude, I repeat that we have to take vis-a-vis the Americans a position which unequivocally conveys that our industry will be well protected by loan guarantees and other forms of assistance consistent with international agreements that give us a strong upper hand. Not only do we have to speak loudly, but our actions also have to speak loudly.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Chair, I am thankful for the opportunity to say a few words as we debate a very important issue not only to Canada, but in particular to the area that I come from in northern Ontario.

It struck me as I listened to the excellent speeches this evening that we are surrounded by some very beautiful carved wood in this place. It also struck me that we have for too long taken for granted in our society the valuable role in our economy and in our culture and communities that the forestry sector has played and continues to play.

When times are good, it is easy to put aside this very important sector and not worry about it. As has been the case for a number of years now, and especially over the last months, weeks and days, we are reminded of how important this sector is to our economy, to our communities and to all of us, not only as individual consumers of wood products, but as members of a society whose very roots are in our natural resources, much of that being in wood.

I am also struck by something else. Those who may be watching this debate on television might see that there is a certain partisan aspect to this debate. Quite frankly, that may apply only to the ways that we each would solve the problem we are having with our American neighbours over the softwood lumber issue. In truth, there is no partisanship when it comes to the fundamentals of the debate. All members of the House agree that this problem has to be resolved. We have to continue to remind our American neighbours that they have before them the right decision that they should be making. We all agree that the forestry sector is important to our economy and that unanimously we want this situation solved.

Different parties would accuse the government of doing this or that or not doing enough in one area or another. I can assure the House that our Prime Minister, our international trade minister, our foreign affairs minister, the parliamentary secretary in particular, all those who are implicated in this important file have worked very hard, very diligently. Whether it is this government or governments past, whether it was a Liberal government or a Conservative government, they have worked hard to try and get this issue resolved once and for all. It is not an issue that only goes back a few years. This issue goes back decades.

I would like to put before the House that as important as the lumber industry is to northern Ontario, in fact my grandfather moved from Papineauville, Quebec in the 1890s to the Massey area. As a young man, my grandfather Arthur St. Denis became involved in the forestry industry and that was his livelihood throughout his life.

There are many aspects to this issue, but we are in unison on the need to get it resolved. I would like to take this opportunity to imagine that I was speaking to Condoleezza Rice who was in Ottawa. She is Mr. Bush's most senior cabinet member on foreign affairs. In fact, I am not sure if she is watching. I hope she is, but if not, I hope her officials and members of the U.S. embassy are watching.

I would like to tell her that this problem with the Americans is causing tremendous difficulty for many of the small communities in my riding and for the workers who work in the plants, and for the families of those workers. Those people work hard every day. They like to earn an honest paycheque, bring it home to feed their families, to educate their children and to have a good life.

Those people understand bad weather. They understand that forest fires cause problems for their sector. They understand that machinery breaks down. They understand all kinds of things that come along to disturb their enterprise, their workplace, just as farmers expect from time to time that sadly, there are going to be droughts or floods. These are the unfortunate parts of having a business. What these workers do not expect is a good neighbour to be disturbing their workplace in a serious way.

I call upon Ms. Rice to consider the plight of the families, whether they are in Hearst, Opasatika, Nairn, Thessalon, Chapleau, Dubreuilville, or any of the number of small communities in my riding that depend on the forestry sector. In fact I would like her to come and visit one of these communities to see what it is like first hand.

Sadly on the other side of the border there is a special interest group which is a very small group and in fact if the Byrd amendment is applied and a payout of some of the $5 billion is made, it is going to end up in the hands of a very small number of people, a couple of dozen companies and individuals. The American consumer is not going to benefit. The American taxpayer certainly is not going to benefit. It is a net zero benefit to the vast majority of Americans and Canadians. Continuing on this line that I am speaking to Ms. Rice, it is patently unfair.

In Canada we like to play by the rules. We expect those whom we trade with to play by the rules as well. In fact I would suggest that our American friends, and they are our friends and neighbours. We are not going anywhere. We have to live together. We have to cooperate on this continent along with Mexico. We have to make it work. Whether it is softwood lumber, wheat, steel or security, it does not matter; we have to make it work. We are not going anywhere.

I say it is unfair. The message that Americans are sending to others around the world is a bad message. Should other countries be contemplating making a deal with the Americans in light of this situation, I do not know. I would be wondering about that. We call upon them to be fair.

I would point out to Ms. Rice that there is all-party support for getting this issue resolved once and for all. Notwithstanding that there are different ideas on how this is done within our country, we all agree on the ultimate goal.

I would tell her that the Minister of International Trade was in my riding in September. He spent the day visiting the little village of Hallebourg near Hearst to meet with stakeholders. Later in the day he visited Elliot Lake and those along Highway 17 from Espanola and Thessalon that are involved in this sector. What he heard consistently was not to negotiate with the Americans until they make a very serious gesture on the $5 billion that they are holding illegally. I think they would prefer to see it all. Perhaps there is a little bit of wiggle room, but we want a very serious gesture from our American friends on those duties that are being held.

I would probably conclude by saying to Ms. Rice that regardless of what we do on our side of the border, I support the notion of providing a loan guarantee to the industry as it awaits the return of the improperly held tariff dollars in the U.S. Whether it is half, one-third or two-thirds, I do not know, but our government should advance some reasonable proportion of those dollars to the industry. I will trust our ministers and our Prime Minister on how we do that. I would say to Ms. Rice that U.S. consumers are suffering.

It is very interesting that a lobby group or a special interest group in the U.S. in the cement industry is doing the same thing to the Mexicans on cement as we see another group doing to us on softwood lumber. It is nothing more or less than protectionism, and not protectionism because they are worried about all the Americans, only because they are worried about a couple of different special interest groups.

I would say to her that if there is rhetoric on both sides, that is the nature of politics I suppose, but we have a greater responsibility to our kids and grandkids to create a North America that is a good place to invest, a stable place to invest, a place where our children and grandchildren can grow up and have careers and families and so on.

The Americans might say that over 95% of our trade goes without problems. I would say, so what? The 5% that has problems is a serious 5%. I would be happy to earn 5% if I had some money in the bank. Five per cent is a big number.

In conclusion, I want to commend all members. It is great that we debate how we take care of business on this side of the border. I know we are sending a unified message to our friends to the south that yes, in times of crisis, whether it is a disaster in New Orleans or a disaster here, we know we can count on each other, but that aside, we have to take care of this piece of very important business for the good of everybody on this continent.

[Rob Merrifield, Conservative, Yellowhead, AB]

Mr. Chair, I listened intently to my hon. colleague who was in a bit of dream world and wanted to talk to Condoleezza Rice. I would encourage my hon. colleague to wake up from his slumber and face reality. I do not believe that Condoleezza Rice is all that concerned about his riding, but I do believe that he is. If he is, I would like him to answer as to why the government, in which he sits as a member, sat on its laurels and did absolutely nothing while it waited for the clock to tick down on the five year agreement for the softwood lumber industry, before this ever got into litigation or got into a battle between personalities, between governments, and ruined the relationship between two sovereign countries.

The Liberals allowed the clock to tick down before any leadership was shown. They sat in a majority government and had the full opportunity to show leadership at that time and they refused to do it. They just sat there, did absolutely nothing and showed absolutely no leadership. Now the member stands and says they are wanting this to be resolved and they are wanting to show some sort of leadership at this stage in the game. A lot of the industry in Canada has lost jobs and it has ruined the lives of some individuals. Their opportunity for employment in the industry is no longer there.

Why would the government show that lack of leadership at that time? The hon. member has to go back to his place tonight and look in the mirror and answer that question, because it has negatively affected the industry in such a terrible way.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Chair, I totally reject the basis of the member's questions and comments. First, the government, since first being elected in 1993, has shown nothing but leadership. The fact that there was an agreement in place that expired should tell the member there was leadership. Why was the agreement there in the first place, and prior to that a memorandum of understanding?

I am trying to put as positive a tone as I can on his question and comments, but the present Minister of International Trade and his predecessors have tirelessly worked on the file without stopping, as have the present Prime Minister, who I commend highly, and our previous prime minister. It is understood that the forestry sector is among the largest exporter of Canadian goods of any sector in the country. Why would we not pay as much attention to that file as anything? It is that important to us.

I totally reject the idea that we were sitting on our laurels. In fact, nothing but the opposite of that is the case.

Just because the negotiations and discussions are held in Washington or Ottawa, not in front of the media, does not mean things are not happening. I am sure that if there is a chance to ask the trade minister at some other time what he has done, and he has told the member before, he will remind the member that this issue is a decade's old issue.

The special interest lobby group in the United States has been at this, without stop, since the inception of this problem generations ago. For us to imagine, in a Pollyanna fashion, that they will go away belies the fact that they will not go away. That is why we need to find a solution that is permanent and impermeable, so the special interest group in the U.S. cannot break through and continue to harass our Canadian industry and the people who work day in and day out in our ridings across the country.

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Mr. Chair, I listened with interest to my hon. colleague's speech. I would like to know if he would agree that a major problem with our Canadian strategy at present is the lack of public awareness of this issue.

Would it not be appropriate to pass in this House a unanimous motion highlighting the severity of the softwood lumber crisis and how important it is to us that the Americans keep their word? Copies of this motion could be sent to the U.S. Congress, the House of Representatives and each state legislature in the United States. A delegation of parliamentarians could deliver it to Washington. As Canadian parliamentarians, we could tour shopping centres to explain that, in the current situation, consumers are the big losers.

Is this not basically a very clear sign that having Canadian diplomacy use traditional approaches to try and further the cause really was not enough? Such a tool should be incorporated into the current strategy; we should have a way to convey to the American public how important this issue is.

Over the summer, I have had the chance to see for myself that many members of the U.S. Congress and House of Representatives knew very little about this softwood lumber issue. In this country, it is discussed in the papers every day. Giving prominence to this issue in the United States will certainly not be easy.

Would there not be value in including such a step, starting with the Parliament of Canada taking a unanimous stand, asking that the Americans keep their word, and then having this motion acknowledged worldwide?

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Chair, the member raises several excellent points. Rallying the Canadian public to this cause is a very interesting proposal because there are so many issues in the lives of individual citizens.

His riding, like mine, is a very large rural area. He knows how difficult it is sometimes to get the attention of rural issues in the cities. Thankfully, we have this chamber this evening, and other times, to bring to the attention of the larger population the issues of rural Canada. Even though our mills are in rural areas and our forest workers are in the bush, Canadians should know that the corporate head offices of these businesses, which employ many people, are in the cities. There are many jobs in the cities supported by the rural enterprise and undertakings of the forestry sector.

To rally the public, I would welcome his ideas. I am sure the government would welcome the ideas of all members on how to rally and engage the Canadian public in this cause. We see Canadians get excited about an Olympic gold medal game or about some other international event such as the Terry Fox runs every September. Those are important. To rally Canadians around this cause, we in this House are doing our part. We call on the industry, the unions and the communities involved to help us in that regard.

More important, to get the attention of the American consuming public and the American legislators, he suggested we maybe need to find new and innovative ways to do that. As it is to engage the Canadians on it, we do need to find innovative measures for our American friends. It seems to me that average American citizens, just because of the nature of their news, are not as engaged with the international community as Canadians typically are. That is not a fault of the Americans. That is the structure of their news information.

His idea is that we need to stand on the steps of the federal and state legislatures in the U.S. and inform consumers directly, much like our Prime Minister did in New York a few weeks ago when he laid it out clearly. He was criticized by some members for speaking out and pushing the envelope on what kind of things Canada would need to do if its major trading partner did not obey its agreement. This would include looking around the world for other opportunities where we can find stability in our trading relationships, maybe with others who would not as likely take us for granted.

The member's comments are very appropriate and we should pay attention to them.

[Bill Casey, Conservative, North Nova, NS]

Mr. Speaker, I am pleased to stand and talk about the softwood lumber issue.

I want to take a moment to correct the very distinguished member for Yellowhead who said that the Liberals had done absolutely nothing. They did do something in 2001 when they approached the Americans with a proposal that would have completely sold out Atlantic Canada. They proposed to take away the Maritime exemption, which the Maritime Lumber Bureau fought hard for over many years. It was so crazy it even baffled the Americans. The Americans never considered the possibility that Atlantic Canada had a subsidy on its softwood lumber. Nobody could understand why the government made this proposal. The government did do one thing in the last decade or so.

[Rob Merrifield, Conservative, Yellowhead, AB]

I stand corrected.

[Bill Casey, Conservative, North Nova, NS]

The member stands corrected, but I can understand his confusion. It is hard to find out what the government has done.

When I was first elected to this place in 1988, one of the first issues we dealt with was the softwood lumber crisis. It had been going on before I came here. One of the first battles we had was to educate the rest of the group on the fact that Atlantic Canada had an important industry and that it was unique and a little different than the rest of the industry across the country. The fact that the Department of International Trade made a proposal to the Americans that would sell out the Maritime exception was an example of the lack of understanding of the Maritime industry.

The U.S. industry claims that Canadian exports to the United States injures its business. It accuses Canada of selling our trees for less than market value. It is all about that. The Americans claim it is a subsidy. It petitioned the U.S. government for an interim countervail charge against the Canadian ministry. It said that Canadian provinces subsidized the forestry industry by selling its trees, logs and stumpage for less than the market price. It has been very successful in getting these interim countervail charges against the entire country.

However, the United States always has recognized that Atlantic Canada has different forestry practices and it has been exempt every time. I think it was 1981, 1986, 1991, 1996 and 2001 when the Americans acknowledged that the Maritime forestry industry and its practices were not countervailable because the practices were much the same as those in the U.S.

Seventy-five per cent of the lands that produce forestry products in Atlantic Canada are privately owned. Wood is marketed at market value. Even on government owned land wood is marketed at market value. The industry takes great steps to ensure that is the case.

The Maritime exemption has been recognized by different governments in the U.S. for years. In fact, they have considered a model of what the Canadian industry might look at if we were to avoid any of these countervail accusations and charges.

I want to make it very clear that the Maritime exemption does not come easy and it does not come cheap. The Maritime Lumber Bureau has established its own tracking system that satisfies the American authorities that every stick of lumber that comes out of Atlantic Canada has been grown in Atlantic Canada on Atlantic Canada land. There was an accusation that some lumber was being funnelled through Atlantic Canada from other provinces in Canada and that they were wrongly taking advantage of the Atlantic exemption.

The Maritime Lumber Bureau has invented a system to track every 2x4, every piece of wood that goes to the U.S. It can tell from what mill it has come and from what woodlot it originally came. That costs a lot of money. The bureau pays for it. It is entirely accepted by the American authorities. The bureau feels this ensures that the U.S. does not get subsidized lumber.

I can give the House another example of the price Atlantic Canada has paid to maintain this exemption.

Twice in the past the Government of Canada has offered compensation to cover legal costs in the softwood lumber battle. Both times Atlantic Canada has refused the money. It would rather not have the money than risk even an allegation of a subsidy. Atlantic Canada has chosen to pay the legal bills, and they have amounted to millions of dollars over the years it has been involved with this.

Atlantic Canada now sets the benchmark for forest practices. The Americans acknowledge that Atlantic Canada forest practices are not countervailable. It might be wise advice for other provinces to look at Atlantic Canada practices and try to emulate them. By doing so, we would not need another debate.

Each time we get into battle with the Americans we end up in litigation with the NAFTA panel and the WTO. Even if we win, we do not get a settlement. We recently won in the NAFTA tribunals. We lost one in the WTO but we won the most important ones at NAFTA and we are still here arguing about it. We are still paying the duties. We are still paying the billions of dollars to the U.S. because we have not been able to sort this out through litigation.

I have heard the term tonight and I have heard it a lot lately from the Liberals that we need a long term durable solution, and that is true, but the fact is, if the Americans suddenly had a revelation and said that they were wrong, that they accept the last NAFTA decision and that they will give all the money back, the very next day the U.S. industry would again petition its government and start the process all over again.

We need a long term durable solution. We need more than the Americans just accepting NAFTA decisions. We need to reach out to them. We need to start a process where we can negotiate a long term durable solution.

Yes, we need to ensure NAFTA is honoured and the agreement is kept but that is not enough. We need the Americans to move. We need to see some action on their part. I do not hear a lot about that. If we just accept the solution as being that the Americans accept the NAFTA decision, it will not be enough because they will just file another petition and start all over again. They will just take a different time period and away they go.

The government has to work a lot harder and do a lot more than just rattle its sabres and try to make the Americans live up to the NAFTA agreement. They have to start a process that will give us a long term durable solution.

I just received a letter that is only four days old. I just want to indicate where we are in this great debate with the Americans. The letter is from 21 prominent U.S. senators who wrote to Carlos Gutierrez, the Secretary of Commerce for the United States. One line reads, “There is no question that Canada subsidizes its lumber industry”. So We have not made a lot of progress.

The letter goes on to say:

NAFTA panel decisions cannot and should not force the Department to deny legitimate relief under U.S. law to the domestic lumber industry and its workers.

The letter is a very strong signal that even if something does happen and they accept the NAFTA agreement, they will be right back in the courtroom, right back in the tribunal and right back at the WTO unless we have a long term agreement to which we both agree. That has to be part of whatever we do next.

Imagine what we could do with all the money that is sitting in coffers in the United States. Imagine the health care improvements, the infrastructure improvements and the education improvements we could have if we had this money. We need the money here. We do not need it in the U.S. If we do not get it resolved, we are still sending money down every day.

In my opinion, all parties have to act in good faith. We have to honour NAFTA, but at the same time, we have to sit down and hammer out a long term and durable agreement that is acceptable to both sides. I do not mean just Canada and the U.S., but all of Canada has to agree to it as well. All provinces and regions have to be involved in the negotiations and the establishment of a deal. We had a deal before one time. One area of the country insisted that we renegotiate that deal and we are here today because of that.

We should start by trying to get some consensus and make sure we are all singing from the same song sheet and then arrive at a deal with the Americans . after they honour the NAFTA agreement. It has to be done. It is a signed, sealed and delivered agreement.

However that is not enough. We need to go on from there and negotiate a long term deal and it has to be representative of the interests of all of Canada. If there is one place where the government has failed, it has never has a unified position that represents all the interests in Canada. We have never had that through the years and years of negotiations. We have never had it and I do not believe we have it today.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Chair, the hon. member kept stressing the need for a long term, durable arrangement. If NAFTA is not a long term, durable relationship negotiated freely between Canada and the United States, what the heck is it?

He is saying that we should enter into more negotiations with the United States for another long term, durable agreement when the one that we have, which his party thought was a long term, durable and successful agreement, does not seem to be working. His response to our inability to see that arrangement work properly is to enter into another set of negotiations to come up with another agreement that maybe the United States will just choose to ignore as well.

If NAFTA is not a long term, durable agreement, what the heck is it?

[Bill Casey, Conservative, North Nova, NS]

Mr. Chair, that is an amazing question. The NAFTA is a long term, durable agreement but under U.S. domestic law, over which we have no control, it can start this cycle again. The American industry can petition its government to pick a different time period and say that it thinks there was injury or and a subsidy given during this time period and the process starts all over again. There is no point in just having the Americans agree to this NAFTA decision. We need to have an agreement that will go forward and overrule U.S. domestic law.

There is no sense in us doing this 20 years from now. I was involved in this debate in 1988. I am still here and we are still talking about the same thing and hearing the same arguments. If the member wants to continue doing that for another 20 years, I wish him the best of luck.

[Mark Eyking, Liberal, Parliamentary Secretary to the Minister of International Trade (Emerging Markets)]

Mr. Chair, I listened with great interest to the speech from the member for Cumberland—Colchester—Musquodoboit Valley, which is a great place to fish, by the way. I have fished there many times.

The government has always stood behind Atlantic Canada and the special case that Atlantic Canada has. Most of our woodlots are privately owned and almost negative subsidies go to our producers in Atlantic Canada. We have always stated that Atlantic Canada should be a special case and we expect the United States to continue to support our cause in that.

Does the member for Cumberland—Colchester—Musquodoboit Valley believe that the illegal fees collected from our companies by the U.S. should be returned to the companies that gave the money to the U.S.?

[Bill Casey, Conservative, North Nova, NS]

Mr. Chair, I do but I think the member oversimplifies the process. I do not ever see us getting all the money back just because of the process, not because of the decision, but I certainly think it should come back.

I want to disagree with the member when he says that his Liberal government has always stood by the Atlantic Canadian industry. I am not sure of the year but I believe it was in 2001 that the Department of International Trade presented a proposal in Washington that did away with the Atlantic exemption completely. It baffled the Americans, it baffled the maritime industry and still baffles me today that it did that but it did pull it back.

The Americans stood up for the Maritimes more than the Liberal government did. They were stronger supporters of us because they said that Atlantic Canada did not have a subsidy and that there was no allegation of a subsidy and asked why they would have a countervail against the Maritimes, but the Liberals offered it to them.

[Ted Menzies, Conservative, Macleod, AB]

Mr. Chair, I want to commend my hon. colleague on his obvious tremendous understanding of the issue and all the years he has put into this debate. It is unfortunate that it must continue.

I also would like to express frustration on this side of the House and the will to get this solved. It is unfortunate that we are not government. I think we would have had this fixed a long time ago. It seems to me that the most common sense solutions and the deepest understanding of this issue comes from my colleagues and not from the other side of the House.

Following that, I would like my hon. colleague to comment on something we talked about a little earlier and that is the proposal that our leader put forward about envoys, which would get this above the political rhetoric, the letter writing from senators back and forth and the name-calling from the other side of this House to what the Americans have done.

Could the member please comment as to how effective he thinks the envoy proposal might be to reach some sort of a solution?

[Bill Casey, Conservative, North Nova, NS]

Mr. Chair, as a former car dealer, I cannot help but answer that question with how effective was the Envoy. The Envoy was a car that was imported to Canada in the sixties and it was not very effective.

That worked very well in previous cases that Canada has negotiated with the U.S., especially the acid rain treaty that no one ever thought would happen. I was there when that was passed and it never would have been passed without that process, and I think it would work again.

However I have been at this a long time and if members were to go back and read my comments in Hansard for the last seven or eight years they would see that I have always advocated for a united Canadian position and one Canadian negotiator . In this case we have had every province and region go down to Washington to negotiate and then they negotiate against each other. The government has never established a united position for the entire Canadian industry.

I just cannot help but think of the expression “united we stand, divided we fall”. One of the biggest mistakes Canada and the Government of Canada has made is to not bring the Canadian industry together because the industry is completely different as we go across the country. We have many different forestry practices and in Atlantic Canada we have a unique practice and they protect it so well. They spend a lot of money and a lot of attention protecting the uniqueness of the Atlantic Canadian forestry practices.

I want to give credit to the Maritime Lumber Bureau and the president and CEO, Diana Blenkhorn, who might be listening, because she has led that team. It has been the most successful organization to represent a lumber industry in Canada. However the bottom line is that we need a united position and if we do not have one we will never succeed in any negotiations with the Americans.

[Roy Cullen, Liberal, Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness]

Mr. Chair, I was puzzled by the comments of the member for Cumberland—Colchester—Musquodoboit Valley when he talked about the need to have a unified position, when in fact it has been Atlantic Canada that has been one of the dividers of the Canadian position on the basis that because there is more private land in the Maritimes and it has more auctioned timber it is as pure as the driven snow. This has been counterproductive in terms of coming up with a unified Canadian position.

I was disappointed when I read in the paper recently about the position taken by the Maritime Lumber Bureau when again it seems to be trying to split Canada's unity on this issue.

While I take my hat off to what Atlantic Canada is doing, it is strange that to hear some say that because it has more private land and auction that is somehow implicit that there is no subsidy. It sort of presumes that if there is no auction system there is a subsidy. In fact, in 1982 the countervailing duty process concluded that there was no countervailable subsidy. Again in 1992, the Department of Commerce ruled that log export restrictions and stumpage were not countervailable. These were independent panels saying that just because there is no auction system that does not mean there is no subsidy.

I wonder if the member could comment on the divisive positioning sometimes of Atlantic Canada on this issue and the question of export subsidies and auctions.

[Bill Casey, Conservative, North Nova, NS]

Mr. Chair, as long as I am here I still get surprises when people stand and ask these questions. I find that approach absolutely amazing, that he would question the activities in Atlantic Canada. He does not have to ask me. He should ask the Americans who say that there is no subsidy. The Americans are the ones who say that if the rest of Canada had forestry practices like Atlantic Canada, we would not be here. We would not have $5 billion dollars sitting in a bank in the United States that we want to get back but may or may not ever do.

What an amazing admission by the Liberals that they do not understand the basic premise of this. The Americans are making the accusation against us. There is no accusation against Atlantic Canada. How the hon. member could stand and make that silly statement, I will never understand. It is the Americans who are calling the shots. They are making the accusations that if other provinces had the same forestry practices as Atlantic Canada, we would not be here because there would be no argument.

[Roy Cullen, Liberal, Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness]

Mr. Chair, I am happy to discuss this matter, which is really about the integrity of the NAFTA process. What we are seeing here is a shaking of the confidence of the parties, certainly the parties in Canada, as to how we resolve disputes.

We need to remind ourselves that this NAFTA panel considered an extraordinary challenge to the decision of a previous NAFTA panel. It is the right of the United States to do that, but this extraordinary panel also concluded that there was no injury to the U.S. lumber industry. That was after a panel had concluded previously that the amount of subsidy was well below the amount that had been determined by the commerce department.

Irrespective of all that, even if we do not accept the premise that the panel has concluded, and rightly, that there are no subsidies, the other panel concluded that there is no injury. Even if there are subsidies, which I do not accept, nor does this panel, if there is no injury, how can there be a cause for countervailing duties?

We know that the issue is about market share. We know that whenever the market share of the Canadian lumber producing industry gets beyond 30% or so, the U.S. launches another countervailing duty process.

Under NAFTA, we have concluded arrangements with respect to energy. How do we know that the United States, Canada and Mexico might not have disputes around the energy provisions of NAFTA?

If we do not have any confidence in the way that these disputes are resolved, then surely that puts a whole range of products and trade into question.

That is why I think it is important that we seek alternatives for our energy, for our oil and gas. We do not want to get caught in a dispute with the United States over energy and get into the same tangled mess that we have here with softwood lumber. The reality is that we do have options.

I myself think it would be preferable if we could work with the Americans on energy, but frankly I think they have shown they do not respect the way that disputes are resolved under the NAFTA and we do have to look at different alternatives.

The members opposite have talked about this letter from 21 U.S. senators about the fact that Canadian softwood lumber is subsidized. I guess they have not read the panel decisions from many years past, including the current one, that have decided just the opposite, that there are no countervailable duties eligible with respect to alleged subsidies.

I am wondering if they would also understand that if we wanted to put up a mill in the United States we would be offered incredible subsidies at the state and local government levels to put in a pulp mill, a sawmill or a panel board mill. I know that from personal experience. What about those subsidies? I suppose they do not count.

What about the subsidies that are offered to U.S. agricultural interests? Are they not subsidies? I think they probably are.

What about the subsidies provided to auto manufacturers in the United States? In fact, I saw a list. For the last 25 or so U.S. auto plant expansions, the subsidies at the state level were in the vicinity of 30% to 40% to 50% of the capital costs. This is at the state and municipal or local government levels. I do not suppose they call those subsidies.

The U.S. forgets about those subsidies and then it says there are subsidies in the softwood lumber industry in Canada although independent panels have concluded just the opposite after very thorough reviews.

A study done recently by an independent group of management consultants showed that the forest products industry in Canada is about 40% more productive than the U.S. forest industry. That is on what we call the basis of total factor productivity. It is 40% more productive.

I know from my experience in visiting the U.S. markets for softwood lumber that the builders, carpenters and contractors much prefer the lumber that comes from Canada compared to the southern yellow pine. It is a better product. It grows more slowly. It nails better. It does not warp and wane so much.

We have a good product. We have a very productive industry. We have a good source of raw materials. We have a highly productive labour force. We have a good infrastructure. I am wondering if it is not conceivable that in softwood lumber Canada has a comparative advantage over the United States. Is that too much to accept?

I would be the first to admit that in certain sectors the United States might have a comparative advantage over us, perhaps in IT or telecommunications. I do not know. I have not studied all the different sectors. Why is it so difficult for the U.S. to accept the fact that maybe we have a comparative advantage in softwood lumber?

As for all these countervailing duty initiatives that emanated out of the United States, of course we know the reason. It is that there is a very strong U.S. producer lobby that seems to be able to get its way time and again in Washington, D.C. Even though lobbies are formed on behalf of builders and buyers of homes, they do not even come close to the lobby of the U.S. lumber producers.

Every time one of these countervailing duty initiatives is launched, we have some winners and some losers. The losers are the homebuyers in the United States, and of course the sawmilling communities in Canada suffer as a result of layoffs and mill closures and the uncertainty that surrounds a lot of this.

We know who some of the winners are. Lawyers in Washington, D.C., and here in Canada make a lot of money out of this, along with the U.S. forest products companies. We know that in the United States there is more private forestry land. Every time a countervailing duty action is launched, the value of private forestry lands increases, so share prices go up for companies that own a lot of private forest lands.

We also know with these countervailing duty actions that lumber producers in the Czech Republic, Latvia, Russia and South America are very happy to increase their market share in the U.S. as a result of these disputes. Their market share has increased. It is nothing compared to Canada's, but I am wondering if anyone has ever looked at whether lumber is subsidized at all in Russia or the Czech Republic. I do not know. It is a question that someone might want to look at.

The thing is that this whole matter really comes down to the process of the NAFTA and it is really causing great harm to the way that disputes are resolved. As I have said before, if we look at other sectors in the United States we see that there are many subsidies provided by the United States government.

Unfortunately, the way the countervailing duty process goes, the only thing that Canada can do is respond to the questions posed by the United States. The United States does not have to defend any incentives or subsidies that it provides to its forest products industry. The whole process is skewed in favour of the United States.

I think it was in 1996 that the United States producers had the audacity to argue that restricting log exports in Canada was a de facto or effective subsidy. That is because the domestic policy here in Canada says that we want to encourage value added, so we do not like to see raw logs exported. The Americans said that this kept the domestic log market deflated and they alleged that it was an effective subsidy. Again, that was struck down by a panel, but this is the kind of nonsense that we see out of these processes.

While I agree that we need to find a durable solution, I am not sure what that durable solution is if we cannot rely on the U.S. to honour its trade agreements that are currently in place. The reality is that what the U.S. must do is honour NAFTA.

This issue has been through the NAFTA processes so many times, and it has been concluded so often that there are no countervailable subsidies. In fact, this panel has even concluded that there is no injury, so if there is no injury to the U.S. producers and there is no subsidy, how can the United States possibly be collecting tariffs?

The tariffs have to come back. The U.S. has to honour its commitments under the NAFTA. Perhaps we then need to look at a durable solution, but to do that I think we must have some very concrete undertakings from the U.S. government that any dispute mechanism that is put in place will be respected and honoured by the U.S. government.

[Randy Kamp, Conservative, Dewdney—Alouette, BC]

Mr. Chair, I have a question for the parliamentary secretary about a particular sector of the forest industry. Independent lumber remanufacturers are actually the only part of the sector that is growing in employment these days. They are a non-tenured group of companies. They buy wood on the open market and then add value and likely some sort of profit margin.

They are particularly hard hit in this softwood lumber dispute because they pay duties on the sell price, not on the lumber portion only, so for whatever they do to add value to it and any profit, they get charged the duty on that. They are now hearing that the tenured sector and the government have put together a secret deal that is going to be presented to the Americans, perhaps even as early as this week, without the remanufacturers being consulted. It is a deal that would basically sell them out.

I know the government claims that there are no negotiations, but one of my constituents received a letter from the Minister of International Trade. In it he said that the views and concerns of the Independent Lumber Remanufacturers Association will certainly be taken into account in any negotiations.

That does not give me a lot of confidence that there are no negotiations.

Apparently this deal, from what the remanufacturers have heard, includes having them pay for the maintenance of a system in which they do not participate. They buy lumber on the open market.

I was just wondering if the hon. member knows anything about this. Can he assure us that there is no deal being negotiated? If there is, can he assure us that the independent lumber remanufacturers, this important sector, certainly important in my riding, are being excluded from it, as should be the case?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Chair, let me say for the member for Pitt Meadows--Maple Ridge--Mission that I am not privy to this kind of discussion. I am not at all sure that it is going on. I do not think that it would be right for that to happen because we have to look at the remanners as a pretty important segment of our industry that is adding value to raw material.

As the member opposite mentions, they are non-tenured so they would presumably be getting logs and raw materials in the auctions, the log markets, so by the Holy Grail of the United States, given that it is an auction there could not possibly be any subsidies according to the American standards.

The member makes a good point: that the government should try to treat that sector a little more carefully. I know that during previous countervailing duty episodes the dimension lumber industry tried to be a little creative by putting holes in 2x4s and presenting them as value added products. The U.S. reacted negatively to that, but the industry the member is talking about is doing much more than that.

The remanners are adding considerable value. I think the government should recognize that and recognize the fact that for U.S. producers, whatever action they think they have, it is really coming out of the U.S. commodity, out of dimension lumber producers. I do not think it is coming from the value added sector, if there is any in the United States. I think the government should try to be mindful of that and take the necessary measures.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Natural Resources]

Mr. Chair, when we have a debate like this, I think it is fair to have an exchange of ideas. However, I do not think it is fair for members to leave out the facts. I want to go on the record and outline some of the facts tonight.

A member said earlier this evening that since August 10 all that had been done by the government was the placement of one phone call. That is obviously not true. So, I am going to put the facts on the record. We have been working on four fronts since August 10.

First, the Prime Minister has spoken to President Bush and Secretary Rice. The Minister of International Trade has made calls and met with his U.S. counterparts numerous times, including Rod Portman.

On the second front, which is litigation, Canada is pursuing litigation in the U.S. courts, as well as at NAFTA and the WTO. We are pursuing this file in every legal form.

On the third front, we are looking at new markets to diversify our sales. Several ministers, parliamentary delegations and other officials have sought to expand our markets for our softwood lumber products. Over 43 missions around the world in 35 countries are targeting lumber as a priority export. The hon. member for Willowdale has led trade missions to India, Russia and the Middle East to help market Canadian know-how and products.

Finally, on the fourth front, on advocacy, we are taking this message to the American people. Ambassador McKenna is fully engaged to use the entire Canadian consular network throughout the U.S.. Of course there was the Prime Minister's speech in New York, where he was very courageous to go right into the economic heartland of America. I know that his speech was also carried in major Canadian publications.

I want to compliment the Prime Minister for another major issue he brought up in that speech, which is very particular to me, the Arctic National Wildlife Refuge. Once again, it was a very courageous step by the Prime Minister in bringing that up in the heartland of America.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Chair, I know the member for Yukon did not actually pose a question, but I wanted to agree with him that sometimes we have overly simplistic solutions or ideas proposed by members opposite. In fact, when Bloc Québécois members, today in question period, was talking about the government taking more action, I wondered if they had in mind maybe sending in the army or I am not sure what.

I was happy to see that our government has linkage. Talking about NAFTA and how it operates, we do have concerns that if the U.S. does not respect the way we resolve disputes through NAFTA, then we could have issues around energy. I think this is something that the Prime Minister laid out very clearly, that we do have options. So, I agree with the member that the government has been very active and very forceful on this file.

[John Duncan, Conservative, Vancouver Island North, BC]

Mr. Chair, my question for the member for Etobicoke North is very simple and straightforward. I know the member for Etobicoke North thinks about these kinds of things. Why did the Prime Minister only ask for $3.5 billion to be returned? What about the other $1.6 billion? Where did this come from, what does it mean, and why did he do it? The member must have an answer.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Chair, I wish I did have an answer, but I do not.

I heard this differentiation of the $3.5 billion and the $1.6 billion for the first time the other day. I know the Deputy Prime Minister referred to it as well. I can only assume that it has to do with some process and a greater certainty around the $3.5 billion. I do not have an answer I am afraid. I think I can rest assured though that the reason for differentiating has to do with process and legalities.

The reality is that whatever amounts have been collected, or will be collected, have to returned. I think the only differentiation there has to do with timing and legal process. Whatever has been paid, or will be paid, given the decision of the NAFTA panel, must be returned in full.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Chair, I am pleased to participate in this debate this evening on the softwood lumber dispute with the United States. This is an important debate and an important issue for the people of British Columbia, my home province, and the people of my riding of Burnaby--Douglas.

Burnaby--Douglas is not home to a significant part of the lumber industry in B.C. but folks in Burnaby--Douglas know the importance of that industry to our province, communities in the interior, Vancouver Island, the coast, and the thousands of workers in British Columbia.

They know that we are intimately connected with their success and their ability to participate in this important industry. They know that in British Columbia we have lost over 20,000 jobs because of this dispute. They know that $4 million a day is bled from our economy because of this dispute. They know that is not good for them, for British Columbia or for Canada. They also know that this dispute is so important that continued inaction cannot be tolerated.

There has been a long series of clear decisions in Canada's favour. NAFTA includes a binding dispute settlement mechanism. That was negotiated as part of the deal. It was signed off by both Canada and the United States. It is binding. It was set up to be binding on the signatories. That is what is not happening at this point in this discussion.

The debate in the House in the last few days has been truly bizarre. We have heard the Liberals declare over and over again that NAFTA must be respected. We have heard that phrase constantly. It is the mantra of the trade minister that NAFTA must be respected. Every answer practically includes that phrase.

The Prime Minister, at his press conference yesterday, said in a very grave voice that NAFTA has spoken. That is all well and good, but what does it really mean? Repeating it over and over is not going to make it happen.

Yes, NAFTA has spoken and spoken clearly in terms of support for Canada's position, but the reality is that the Bush administration has spoken as well and it has said, “We could care less what NAFTA says. We could care less about Canada's position. We're not conceding. We're not repaying the illegal duties collected on Canadian lumber”.

Let us talk about respect. The people of Burnaby--Douglas and most Canadians know lack of respect when they see it. They see it very clearly in the actions of the Bush administration to not live up to the provisions of its agreement with Canada.

Canadians know a lack of self-respect when they see it. They see it in the failure of the Liberal government to stand up for this country. The inaction of the Liberals is ultimately seen as a sign of lack of self-respect. Either the Liberals believe that we are right and that we are standing on firm ground or they do not. To continue to negotiate, to continue all of these other talks, to continue with phone calls, and to have advocacy plans is an indication that they do not believe that we are right.

What has the Liberal government actually done? There has been lots of talk. There has been lots of spin, but no action. There was that famous phone call and we heard about it tonight. We keep hearing justifications for the phone call that the Prime Minister finally made to George Bush, the phone call that took weeks to actually get organized and be made.

Last week in the House we were debating the do not call list bill which is about unwanted telemarketing calls. In that debate I suggested that there were a number of do not call lists in the Liberal government offices. There was clearly one in the Prime Minister's Office that delayed and delayed that call to President Bush. Do not call lists seem to exist and they seem to exist in the Prime Minister's Office. A phone call is just not enough. It is just not an appropriate response. It was too little, too late, and it appears that it was totally ineffective.

What does the NDP propose instead? We were clear in August just after this final binding decision was made. The NDP had a three point plan and we have made that clear since August. Back in August we called on the Prime Minister to recall Parliament. We were prepared to come back from our summer work in the constituencies and our holidays last August because we understood the urgency of this issue. We were prepared to get back to work on this issue. We were prepared to debate this issue in August, not October. It seems to have taken months to get this on the agenda of the House.

Second, NDP said that we should stop the deep integration negotiations, the further negotiations that we were having with the United States around integrating our approaches to things like food safety, air safety and security. There is no excuse for going further down that road when the U.S. does not play by the rules we have already negotiated with it.

Third, we said we would impose an energy levy and lay down some export duties on our oil exports to the United States. We know that we are now its largest oil supplier, having replaced Saudi Arabia.

Those were three concrete actions that we believed would have gotten the attention of the Americans and indicated that we were serious about standing up for this decision and our country. We did that because we understood the importance of strong leadership on this matter. We know that weakness will only see us taken advantage of further. This week an Ipsos Reid poll confirmed that Canadians agree with our suggestions and agree with them overwhelmingly.

I want to note the order here. Unlike other parties, my party's leader, the member for Toronto—Danforth, took a strong stand, put forward a clear plan of action, and showed leadership. Later, the polling showed that Canadians agreed with us. Far too often in this place it is the other way around, where the government continuously polls to find out what people are thinking and then acts in light of that.

The polling last week showed that 80% of British Columbians support taking action in the form of imposing an energy levy. Overall, that poll showed that 77% of Canadians, a majority in every region of the country, supported restricting energy exports to the U.S. if Washington did not back down.

Canadians are prepared to take that risk and they know there is a risk involved. Canadians understand the challenges of living next door to the United States, but they do not want more negotiations. They want the agreement to be honoured. They want the dispute settlement mechanism and its decision respected.

They do not want to send a special envoy, as the Conservatives suggest, because to negotiate when we won would be wrong. To negotiate further new arrangements, as the Conservatives suggest, with the folks who do not respect the current arrangements would be wrong.

Canadians do not want the Prime Minister to look for signs that the U.S. is willing to abide by NAFTA. They do not want the Prime Minister looking for hints or reading between the lines or interpreting American statements optimistically.

Canadians want the government to have the courage of its convictions and the convictions of Canadians on this issue, and hold the U.S. to account for the $5 billion in illegal duties it has collected from Canada, and for the damage it has done to our communities and economy. Canadians want us to hold the U.S. to the agreement it signed with us and they want us to get on with that now.

I want to digress for just a moment to speak about another international agreement that the U.S. is not upholding. I had the pleasure, as did the member for Yukon, last night of seeing the film Being Caribou . It is the story of the porcupine caribou herd that is endangered by U.S. plans to drill for oil on the calving grounds in northern Alaska.

In the panel following the film, the member for Yukon noted that the U.S. was refusing to appoint its representatives to the joint herd management council established by a treaty between Canada and the U.S. It is doing this at a time when perhaps even later this week the U.S. Congress will pass legislation to give the go-ahead to drilling in the Arctic National Wildlife Refuge.

Again, there is that question of respect for agreements between Canada and the U.S. and another example of the lack of respect that the Bush administration shows for its treaties with Canada. I appreciate that the government is taking a strong stand on this issue, but at some point when the very survival of the herd is in question, that talk will look very cheap. I want to pay tribute to the member for Yukon for the work he has done on this, but we need to move it to the next level where we actually hold Americans accountable for the agreements they have signed with us.

The time for talk is long past on softwood lumber. The government has to get it together. It has to show some leadership. It has to show the Americans that we are serious about the agreements that we sign with them. Canadians want nothing less than that.