Debates of Oct. 25th, 2005

Softwood Lumber

[Stephen Harper, Conservative, Leader of the Opposition]

Madam Chair, I begin the debate today by noting that we have been honoured to have the presence of Dr. Condoleezza Rice, the Secretary of State of the United States in Canada this week. However, while Secretary Rice's visit is welcome, it has highlighted the fact that Canada and the U.S. are facing one of the most serious trade disputes in the history of our bilateral relationship, and that of course is the dispute over softwood lumber.

This dispute is about a very significant industry. The lumber industry generated some $33 billion toward our trade surplus in 2002 and employs about 360,000 Canadians in over 350 communities in literally every single province and region of this country. But it is more important than that. From Canada's perspective, this is a critical moment in the future of our bilateral relationship because it deals with the willingness of the United States government, particularly Congress, to accept binding multilateral or bilateral trade decisions.

In case after case, before GATT, the WTO, and NAFTA, it has been found in the end that Canada is not illegally subsidizing its forestry industry and that will be found again. Yet, despite our strong legal case and repeated decisions in our favour, the Americans continue to collect duties, now close to $5 billion, in countervailing and anti-dumping duties from Canadian mills.

Most recently, the NAFTA extraordinary challenges panel ruled that there was no basis for these duties, but the United States has so far refused to accept the outcome and has asked Canada to negotiate a further settlement. Let me repeat what I have said before, and let me be as clear as I can. This is not a time for negotiation. It is a time for compliance.

The NAFTA panel process is supposed to be binding. It is supposed to trump domestic American politics. The danger of a failure to uphold this decision goes far beyond the impact it will have in towns dependent on the lumber industry whether they are in British Columbia, Quebec, Ontario, New Brunswick or anywhere else.

Quebeckers, especially, overwhelmingly supported free trade in 1984, and it has proved very profitable to Quebec and all regions of this country. The time to negotiate the free trade agreement has passed; it is time to enforce it.

If the U.S. industry is able to pressure the government not to return duties when it has lost its last NAFTA appeal, it will not matter if most other trade is dispute free. If the rules are simply ignored, then the very basis of a rules-based system is threatened and the future of all Canada-U.S. trading relations could be profoundly affected.

I have to address how the government has handled this latest development. Over the past two months we have seen no less than three phases in its response. First, it has been complacent. This follows five years of this dispute and five years without a plan. I will remind the minister who is here tonight and remind the House that after the extraordinary challenge decision was rendered, this trade minister ran out to the media and insisted on our willingness to negotiate. That was the wrong message. Then, on top of that, for week after week the Prime Minister sat on his hands and did not call the President of the United States to express our concerns on this issue.

Second, the Liberals entered a second phase which was the anti-American hard line, not just critical of the United States actions on this decision, not just criticizing the United States in a speech in the United States, but a brutally, gratuitously critical speech of the United States and its entire system of government by our Canadian Ambassador to the United States. Then on top of that, sending the part time revenue minister, who I will refrain from impersonating tonight, over to play the so-called China card, as if we had suddenly discovered that China now exists.

Third, we have now entered the third phase of the Liberal Party's reaction which is the in-between reaction that the deputy leader of my party just referred to, waffling, dithering, looking for signs, and sending mixed messages. Messages such as: we will not negotiate, but we might negotiate; we want to negotiate; we will never negotiate unless we get our money, but we may negotiate even if we do not get our money.

These are the kinds of mixed signals we have had in the last 48 hours and at the very time when we did not need it when the Secretary of State was here. Now that the Secretary of State has left, we are back to the hard line message tonight and the slogan “respect NAFTA”. It all comes down to this slogan “respect NAFTA”.

Americans and Canadians will recall that the Liberal Party was the one who opposed free trade and NAFTA; that the Liberal Party was the one who committed to pulling the plug on them; and that, after Mr. Mulroney signed this historic agreement, the Liberal Party was the one who committed to tearing it up, against the best interests of Canadians and Quebeckers.

The Liberal Party now talks about respecting NAFTA, but it is all about credibility. We are at an impasse with a big customer and it is all about credibility.

What credibility does the Liberal Party have when it opposed NAFTA and wanted to rip it up? What credibility does the Liberal Party have when it shifts strategies on a daily basis and blows goodwill at the United States on issues that do not matter, making ill-considered comments and criticisms and decisions?

What the industry needs now, of course, is a plan; a plan to help after five years. No more time can be lost in developing a plan. Help must be given to our forestry industry and communities to fight this ongoing battle.

For years this party, and I need to say the other parties with who we often disagree, the New Democratic Party, including the Bloc Québécois, all of us have been demanding help for the industry, for communities, and for workers. We have asked the federal government to assist companies with their legal fees, with loan guarantees to cover the costs of illegally collected duty and, of course, particularly in British Columbia, to fight the pine beetle epidemic before it devastates the industry on a national basis.

All of these initiatives are long overdue and the time for action is now. We need to move quickly and decisively to help our softwood industry.

Now is not the time for more anti-American bluster because the Americans see through it. Now is not the time for inaction, for dithering or delay, nor is it a time to play a game of winks and nudges, and looking for signs. Now is the time to be clear and to stand up firmly for this country.

Now is the time, quite frankly, as soon as we can, in my view, to ask the people of Canada to put in office a government that will take a different approach to our relationship with the United States. I have said on many occasions that this country needs to understand not only its own interests but the interests we have in our shared relationship. We need to stand shoulder to shoulder with the Americans when we can, so that we can sit eyeball to eyeball with them when we must at a time like this.

The government has shown over the past 12 years the capability of doing neither. We can do better and Canada can do better.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Madam Chair, my question is for the leader of the Conservative Party.

Does he support the proposal by the Bloc Québécois and the NDP to grant loan guarantees to companies currently struggling as a result of the softwood lumber crisis?

[Stephen Harper, Conservative, Calgary Southwest, AB]

Madam Chair, we do in fact support this proposal. As a matter of fact, the opposition leaders gave a press conference on that very subject three years ago. However, to date, the government has chosen not to act. Clearly, an election is nigh, since the government is now talking about an action plan. We will see.

The member for the Bloc Québécois asked me the question. I appreciate his party's support for such an idea, which is important for the industry and this country. In this case, since we are engaging in a major battle with a country as large and as important as the United States, it is essential for Canadians to work together and present a united front.

I know that the Bloc Québécois is working for Quebec's sovereignty and separation. Nevertheless, I must say that the Bloc Québécois' plan is not in the interest of Quebeckers in this regard. At such times, we need to present a united front, to be united as a country, in order to truly protect our best interests with regard to the United States.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Chair, we are talking tonight about the softwood lumber dispute, but we are really in fact talking about the NAFTA dispute.

As the member will know, the volume of exports of Canadian softwood lumber to the United States for the first half of 2005 was 5% higher than the first half of 2004, and 14% higher than the first half of 2003. The member is probably aware that the quality of Canadian softwood lumber is much preferred by the U.S. the construction industry, and that it is adding about $3,000 on average per home there.

We know that we have a superior product, mostly because of the geography and our climate here. I think the Leader of the Opposition would agree that this is much more than just softwood lumber. We are a major exporter of hydro to the United States. We are a major exporter of other commodities and other resources to the United States. All of these things have a play.

The President of the United States would say summarily that this is just a very small part of the trade between our two countries, so let us not worry about it. My view, and I hope all Canadians would agree, is that we should worry about it because when one of our commodities is touched, when one of the elements of NAFTA is touched, all of them are touched.

I wonder if the Leader of the Opposition would care to comment on a prospective strategy of how we could respond, other than rhetoric, and what he would suggest in terms of pragmatic moves as to what we do in terms of other commodities to demonstrate our resolve that NAFTA must work.

[Stephen Harper, Conservative, Calgary Southwest, AB]

Madam Chair, first, let me comment on the rising volumes of our exports of lumber to the United States. No doubt this does reflect the competiveness of the Canadian product and the quality of that product. It also reflects something else. We need to point out to our American friends that it also reflects the failure of the entire approach to the countervailing and the anti-dumping duties.

These duties have forced Canadian mills to actually increase production to lower unit costs in order to pay the duties. To the extent that what the American industry wants which is to protect itself from Canadian imports, its strategy has actually had precisely the opposite effect. That is why the President and Congress should abandon it.

What do we do to advance this? What can we do in a concrete sense? We do not do what the member hinted at and what other members of the Liberal Party have hinted at. We do not hint at threats about not sending energy or other commodities to the United States. What we do is we point out the common interests we have in resolving this dispute and the common interests we have in getting our trading relationship back on track.

When this dispute reached the present stage, the present impasse, the Prime Minister should have called the President right away to make all of these points and to point out that the interests not only of the lumber industry but of the entire trading relationship were at stake.

I believe that because the Prime Minister and the President cannot speak at great length about this, they should have at least agreed on the fact that our relationship was important and it was being jeopardized. They should have agreed to appoint special envoys to continue their direct dialogue between them in order to understand the importance of the relationship and to seek a way whereby the United States could comply with its legal obligation and we could in fact strengthen the dispute settlement process to avoid these kinds of impasses in the future.

This is an approach that was used by, if I dare say, Prime Minister Mulroney on the acid rain problem which was previously considered to be an unresolvable impasse. The United States simply did not understand and had no interest in that issue. However, by having that kind of relationship and that kind of dialogue at the highest level, I believe we could make progress on softwood lumber.

The difficulty I think all Canadians have, when they look at the poison path of the relationship between this President in particular and the Liberal government, is that the relationship is simply not there to positively move this forward without sinking right back into the kinds of negotiations that we want to avoid.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Chair, I appreciated the comments by the Leader of the Opposition on the inaction of the Liberal government.

There is absolutely no doubt that we have had two months and the one action that the government undertook was a phone call. It is absolutely unbelievable that it would take two months to make a phone call and no other action has taken place. We have had a lot of rhetoric. We have had speeches at the economic policy meeting in New York. We have had speeches for domestic consumption. We have had absolutely no action.

The Bush administration has, for all intents and purposes, ripped up NAFTA. The dispute settlement mechanism, for all intents and purposes, is dead. We have seen absolutely no action from the government.

The Leader of the Opposition said that it was all about credibility. The Leader of the Opposition has not had any concrete action to suggest to the government either. The NDP came forward with a three point plan and careful specifics, things that would actually have moved this file forward. We have seen nothing from the official opposition, except, I should mention, a comment that if Canadians wanted to have somebody take care of their interests they should phone George Bush and the White House themselves because obviously the Conservative Party is not going to do any better than the Liberal Party.

The Leader of the Opposition has no credibility and his party has not brought forward any concrete suggestions except the special envoy which, as far as anyone who actually understands the file would be concerned, is exactly the same as negotiating. Since we won through the extraordinary panel procedure why would we go back and negotiate? That would be the worst possible thing we could do?

My question is very simple and it is all about credibility. What makes the Leader of the Opposition feel that he has credibility on this file when he has failed Canadians as well?

[Stephen Harper, Conservative, Calgary Southwest, AB]

Madam Chair, we have suggested a series of measures to assist our industry, community and workers and we discussed them tonight. We discussed the possibility of retaliation, although that is not my preferred option, but there are a whole series of retaliatory measures that my party and its supporters have outlined would be possible and, of course, reach out.

I do not subscribe to the notion that having a high level dialogue with the President is no action. The NDP clearly could not do that because the NDP never believed in NAFTA in the first place. NAFTA is not dead. I know the NDP would like it to be dead but it is not. I will say that the NDP has suggested one action. The NDP has suggested that we begin to place tariffs and taxes on our own exports to the United States.

I have heard some crazy ideas from the Liberals but in a trade dispute, where our own products are being penalized, we do not turn around and start penalizing other of our own products. Only the New Democratic Party would suggest that.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Chair, I am pleased to take part in this debate, especially since I believe we all agree in this House that it is unacceptable that the softwood lumber dispute has not been resolved after 41 months. I find it somewhat unfortunate, especially from the opposition parties, that we are engaging in partisan politics over a dispute that not only is making our softwood lumber industry weaker, but is threatening the survival of many communities.

That is how people seem to see it in Ottawa. I remember that when the dispute began in 2002, I moved a motion on behalf of the Bloc Québécois in support of the government taking initiatives to go back to free trade. I received a phone call from the Minister of International Trade, who has since become the Minister of Foreign Affairs. He asked me what was behind this motion, what it was hiding. It was not hiding anything whatsoever. It quite simply reflected the Bloc Québécois' desire to find a solution as quickly as possible to this dispute that was harming Quebec and all of Canada.

Unfortunately, we obviously did not achieve our goals. A great deal of the responsibility truly lies with the Liberal government.

We all recall that on May 22, U.S. authorities found that there had been subsidies for the wood, there had been dumping and risks of hardship to the U.S. softwood lumber industry. Accordingly, they imposed 27.22% duties.

As I was saying, the motion I had presented received unanimous consent from the House. The Canadian government, with support from the Bloc Québécois and the entire House, went before NAFTA and WTO tribunals to dispute these countervailing duties, which we felt were unjustified.

According to NAFTA rules, 10 months would have sufficed to resolve the dispute. We are now at 41 months, or four times as long under NAFTA rules. This is totally unacceptable. I am sure that all of us in this House realize that we have been victims of stonewalling by this protectionist U.S. softwood lumber industry and of decisions made by U.S. authorities for their own reasons.

We are currently awaiting the outcome of a dispute that was technically over on August 10, 2005. I would remind hon. members that the extraordinary challenge committee brought down a ruling finding that there was no violation of the dispute settlement procedures in any of the NAFTA rulings by the various tribunals. The Americans were therefore not entitled to keep the $5 million currently being held in trust.

What is more, on October 6, again under NAFTA, a ruling was brought down concerning subsidies to the Canadian softwood lumber and forestry industries. This was a first, we must make that clear. Throughout the numerous decades of the softwood lumber dispute, we have rarely won decisions all the way to the end of the legal process.

The NAFTA panel confirmed that there was no industrial subsidy. That was the icing on the cake. The ECC ruling was sufficient in itself to solve the problem because it confirmed that no prejudice was caused to the U.S. softwood lumber industry.

We ought not therefore to be having to discuss this dispute here. It ought to be settled, but the problem is that the U.S. authorities along with the protectionists in the softwood lumber industry, have decided to use delaying tactics and not to act on the NAFTA special panel rulings.

This leads us to a matter that goes beyond this specific issue and heavily involves the government and the Minister of International Trade. The whole spirit of NAFTA is at stake. We are constantly being reminded that softwood lumber exports—in the case of Quebec, 3%—are not the only thing Canada exports to the U.S. We agree, but for the first time in nearly 20 years, the spirit of NAFTA and its regulations have been broken and the chapter 19 dispute settlement mechanisms challenged.

Through its Subcommittee on International Trade, Trade Disputes and Investment, the Standing Committee on Foreign Affairs and International Trade has conducted a very comprehensive study of the issues related to the chapter 19 dispute settlement mechanism.

The American attitude is calling into question the efficiency of this chapter 19 concerning dispute settlement. It is also calling into question the confidence that everyone, whether in Canada, of course, Quebec, Mexico or in the international community, may have in this agreement. The American attitude concerning the Byrd amendment, which was declared illegal by the World Trade Organization, combined with the fact that Congress has not taken any action as of yet, have exacerbated this distrust on the part of Canada, Quebec and the international community as a whole. Therefore, for the first time since the free trade agreement was signed, we have been forced to go before American courts, as we used to.

The whole purpose for NAFTA was to spare the Canadian, American or Mexican industry from having to depend on the traditional judicial mechanisms. Now, the entire free trade agreement is being called into question. This is why I believe that we have to be extremely diligent in following up on this issue.

At stake is not only softwood lumber, but also the continued existence of the free trade agreement, as evidenced by the suit launched by the American softwood lumber industry—again, its protectionist component—concerning the constitutionality of chapter 19 of the free trade agreement.

We will recall that negotiator Gordon Ritchie had told the press that, had it not been for chapter 19, Canada would probably never have signed NAFTA.

This effect the dispute is having on NAFTA makes it crucial where the future of trade relations and just plain relations between Canada and the United States are concerned. But there is also its effect on industry.

We will recall that, a few days ago, on October 19, Carl Grenier gave a presentation to the Economic Club of Toronto, reminding his audience that the $5 billion in countervailing duties held at the border represent more than three times the combined net income of the 12 major Canadian forest companies over the past three years. These figures may sound low, but for the forest industry, this is significant in terms of capital expenditures and investments that cannot be made. It also means jobs that are not being created, or which are lost either temporarily or permanently.

All this is at a time when the softwood lumber crisis is not the only thing hurting the forestry industry. The Canadian dollar is very strong and therefore not working in the industry's favour. There are also problems with forestry management. For example, the Coulombe report was tabled in Quebec, and we know that there will be a 20% reduction in stumpage over the next few years.

We really need an assistance plan. I know that the government has presented an assistance plan intended as an a response to these challenges, at least for Quebec. However, $50 million is not really enough to respond to the current challenges.

Everyone is in agreement. The Prime Minister has said it again and again, even if it was not always clear, as did the Minister of International Trade, and the Leader of the Opposition just said so too: negotiations are out of the question. The way the Americans see it, negotiations will give us less than what the tribunals do.

It must be recognized that the Government of Canada made a strategic error. Perhaps the opposition was not vigilant enough. The then Minister of International Trade and current Minister of Foreign Affairs told us that the issue would be dealt with on two fronts, namely through negotiations and the legal process. Americans always felt that it mattered little if they lost the legal battle, because they could fall back on the negotiation process. That is what President Bush told us.

I am in favour of a lasting solution for the softwood lumber dispute, but we must not let the industry fend for itself at this very critical time. The federal government must assume the legal costs, which now exceed $350 million. Considering what lies ahead for the next two years, loan guarantees are also needed. An additional $2 billion will be added to the $5 billion. We are headed for something like $7 billion in duties. The industry will not make it. Some companies will go bankrupt if the government does not get involved.

Everyone agrees on the need for these loan guarantees, except the government. Some changes should be made to the employment insurance program. Policies are needed to help secondary and tertiary processing. In my opinion, the issue of the content of the North American Free Trade Agreement should be raised again at the political level.

President Vicente Fox acknowledged the problems relating to NAFTA. The Canadian government must do the same and make Americans realize that the situation is extremely serious.

We all want to maintain strong and friendly trade relations with our neighbours, but the ball is now in their court. The federal government has a duty to help the industry, the workers and the communities affected by this dispute.

[Brian Jean, Conservative, Athabasca, AB]

Madam Chair, I have one question for my friend. Obviously he is aware that Bill C-364, my private member's bill, was introduced in April and last week came before the House for second reading. Of course we were all caught unawares when we saw the deputy government House leader standing up and trying to rule that this particular bill would be out of order.

It is a trade compensation act, of course, which would provide exactly what we are seeking today and what would help industry. That is, of course, the repayment of legal fees, which I would suggest the government is obligated to pay anyway. The other part of the bill is the loan guarantees, which would keep our industry afloat and which are so desperately needed.

We have heard some speculation about why the government would not support this particular bill. The government is actually trying to stop it before it has any chance at all to get out of the gate, so to speak. I am curious to hear my friend's comments on that particular issue.

I have heard that there is a political motive to stop this bill, especially because of the impact it would have specifically in Quebec and northern Ontario, being a Conservative private member's bill, and there are the ramifications that may have for the Liberal Party. I would be interested in hearing his comments on that.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Chair, I thank the hon. member for his question and also for introducing the bill. Moreover, I pointed out in the first hour of debate that the Bloc Québécois was working on something similar.

The Americans are not the only ones engaging in harassment with regard to trade disputes. I am thinking of countries like New Zealand and Australia, in connection with milk, as well as the Brazilians—in addition to the U.S.—in connection with steel and swine. Our trading partners need to know that the Canadian government will support its industry.

The bill that has been introduced and that we will support, imposes some conditions of course. It is not a matter of requiring the government to jump in with loan guarantees as soon as some sector of industry is attacked by a foreign country, but this situation is different. Systematically, over the past 30 years, the highly protectionist U.S. softwood lumber industry has been involved in disputes over this.

As I have said, we do have some allies in the United States, and some of them will be here in Ottawa tomorrow. We will be meeting with them and I am sure they will also be meeting with members of the government, the Conservative Party and the NDP. Our trading partners need to know that we are prepared to support our industries when they are victims of harassment, as is the case with the softwood lumber industry.

I cannot, therefore, understand the Canadian government's attitude. It is not only their attitude toward the softwood lumber sector; they take the same attitude toward clothing, textiles and bicycles. They are afraid to make use of the instruments available to us under international legislation and the agreements we have signed. They are afraid of rubbing someone the wrong way.

That is the answer we got from the Minister responsible for the Economic Development Agency of Canada for the Regions of Quebec. According to him, these instruments must be used with caution because the Americans might interpret their use as protectionism. We have been involved in a dispute with them for 40 months. They do not seem to have budged one inch. I do not think that this perception will change no matter what. They will at the very least manage to get the message that the government of Canada will support its industry until they accept the rulings from NAFTA, a treaty they signed in good faith at the time.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Madam Chair, through you, I have a question for my hon. colleague. I would like to return this conversation and debate to the communities that are often affected by this trade dispute. Sometimes, as the rhetoric from the government and the other parties comes forward, the people in the communities most deeply affected by this trade dispute are lost.

My region of northwestern British Columbia is among the hardest hit regions in the entire country. I would argue this with little doubt in my mind. There has been an incredible concentration within the industry. A lot of the smaller and mid-sized shops have had to close. A lot of workers have lost jobs. A lot of families have had to move out of our region and into the cities and other places, seeking other types of employment, when their preference was to remain.

I am curious about my colleague's impression with respect to Quebec and particularly the smaller communities that are affected by this situation. There is the frustration they must feel that, after so many years of this debate going on over this trade dispute, the best we can hope for, after so-called victory after victory, are the suggestions of a special envoy, continued negotiations and a 20 minute phone call to the president. I am sure that for 15 minutes of the call the Prime Minister was reminding President Bush of who he was and where he came from. The remainder of the time, I am sure, was the hard chat that he talked about.

Let us talk about the effect on the communities. The communities are tired. I have raised the issue of there being some sort of warning period for the Americans. I know that is quite contentious within the Canadian economy, particularly for those in the energy sector, but I have raised the issue of there being some sort of warning period for the Americans to suggest that this trade agreement we have is of such great importance to our economy that it must be protected and the dispute resolution must work.

I have suggested that we say we are willing to impose some sort of countervailing duty, with a warning period, a grace period, to allow the Americans to make the change, with this being done in order to affect the voters in the United States, to affect the congressmen and congresswomen and senators and get them to finally pay attention. I am sure the view in Quebec is the same as it is in British Columbia: the Americans are still not aware of how important this is to Canadians.

The Americans may not be aware at all of where Canada is at this point, but we must appeal to the American people, who have a sense of justice and a deep connection with our country. We have a long history together. Somehow they have failed to push their own politicians to react in a way to push the Congress, the Senate and the president to finally return all of the duties and to remove the Byrd amendment, which is illegal in almost any international context.

There must be a resolution from this House to finally get serious about the issue, not the Conservatives' suggestion of a special envoy nor the suggestion of the Liberals for negotiating after we have won. This is a bizarre and absolutely insane scenario in which we negotiate after we have won, which only means that we can negotiate backwards from that point of victory.

The Prime Minister would like us to believe this delusional notion that we somehow have this $3 billion plus because the trade dispute panel said so. In fact, the cheque is not there and no money is present.

Would the member comment on some of those issues?

[Pierre Paquette, Bloc, Joliette, QC]

Madam Chair, I want to touch upon two points, because I know that I will run out of time.

First, with regard to the communities, there is a great deal of talk about loan guarantees and this is very important. There is also much talk about the fact that the government is assuming the legal costs. It is also clear that a whole series of small sawmills, small forestry-related businesses are not included in this. For example, some people are struggling due to the difficulties of large companies in exporting to the U.S. and are now facing competition from local and regional markets.

We must consider these companies that do not export to the United States, but which are indirect victims of this dispute. We have a whole series of proposals in this regard. The same is true for workers. We must review EI to ensure that they have income security.

At the political level, with respect to American society and Americans, I talked earlier about working better with our American allies. As I said, they will be there tomorrow. Many people realize that the Americans' protectionist vision of softwood lumber is responsible for houses costing between $1,500 and $2,500 more, this at a time when major reconstruction is being contemplated in the southern United States, be it in Louisiana or in Florida. Why pay more? It is like shooting oneself in the foot. People do realize that, but a lasting solution has to be sought.

That is why the subcommittee suggested a chapter 20 challenge concerning the implementation and interpretation of the agreement. The NDP, as well as the Conservatives, approved. In the event of an unfavourable arbitration decision under chapter 20, Canada might consider going back on some of the compromises it made in 1994. That is not my wish, nor that of anyone in this House.

There is the issue of energy, for instance. The Minister of Foreign Affairs told us that energy exports could be cut back and redirected elsewhere. That is not allowed under the free trade agreement, and we want that agreement to be respected.

What is allowed under the agreement, through an arbitration mechanism concerning how the implementation of the agreement is interpreted, is to go back on compromises that we made 10 years ago, but the Mexicans did not. They did not make any compromises about energy.

If we really mean business, we could let the Americans know that we are planning to open discussions under chapter 20, knowing that this will put pressure and shake the American public opinion. Granted, we do not wish to carry through. We would just like common sense to prevail on the side of the American government and the protectionist component of the softwood lumber industry. Again, I stress that this is not the attitude of the entire industry. Those who, for the past 30 years, have been fighting to prevent Canadian exporters from marketing their softwood lumber products in the United States are well known.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Chair, to start, I just want to mention that the NDP and the other parties fully support the idea of loan guarantees and assuming the legal fees for companies that are in this situation because of the government's inaction. It is absolutely not their fault and Parliament must definitively support these companies and these communities. It is because of the government's inaction that we have to make such a suggestion.

We are in a situation now where the softwood lumber industry is bleeding $4 million in punitive tariffs every day. We have lost 20,000 jobs in my province of British Columbia. Softwood lumber tops the agenda of concerns of British Columbians because of the tens of thousands of lost jobs in the softwood sector.

We are now talking about accumulated punitive tariffs of $5 billion. It is important to note that due to the Byrd amendment, millions of dollars of that $5 billion have already been paid out to American competitors and it will never return. We do not really know how many millions have been paid out already.

We are talking about an extremely serious situation, which is why it is appalling that we have seen no action in two months. I will give credit where credit is due. There was one phone call in two months.

Let us go back two months to the extraordinary challenge procedure. Article 1904 states that the committee decision shall be binding on the parties. There is no ambiguity and there are no weasel words. It is very clear that the process is binding. When Canada went through three panel decisions and three remand determinations before getting to that point, we are talking about something that was clear.

What is shocking is the fact that since this clear violation of NAFTA and the dispute settlement mechanism, we have seen no action from the government. The dispute settlement mechanism is tied completely to the concessions that the Conservative government made and that the Liberal government maintained on NAFTA in energy.

With the proportionality provisions of NAFTA, in the event of a shortage, a reduction in supply or in the event of a national emergency, we are obliged under NAFTA to ship most of our energy supplies to the United States. Those wonderful negotiators, the Conservatives, consented to those proportionality provisions. They have real backbone when they negotiate agreements. In return, we were supposed to have a dispute settlement mechanism that would be binding.

Two months later, the dispute settlement has been ripped up and the Liberal government is saying, obliquely, that it will go back to negotiating. The Conservative opposition uses the words “special envoy” to negotiate when the agreement has been violated and very clearly the dispute settlement mechanism is null and void. We have not heard one concrete suggestion from either the Liberals or the Conservatives. We have heard a lot of speeches, posturing and spin but while Canadians wait for some action, what they have seen is 20,000 lost jobs and a bleeding of $4 million a day.

What does the NDP call for? We had a three point plan and said that Parliament should be recalled immediately to debate the issue to see what action should be taken. We did not suggest sending a special envoy to go and negotiate after we had won, which is what the Conservatives suggested. We actually said that we should recall Parliament and take concrete action.

We have called as well for the halt of the deep integration of the NAFTA plus negotiations. It is no wonder the Bush administration sees mixed signals coming from the government. We are currently negotiating concessions in about 300 different areas, including food and air safety, and the Liberal government wonders why the Bush administration does not take it seriously. The NAFTA plus negotiations are continuing. NAFTA's dispute settlement mechanism has been ripped up and the government continues to negotiate further concessions to move even further along.

We also called for the government to impose an energy levy. We are bleeding $4 million a day. The dispute settlement has been ripped up. We are continuing to provide extraordinary privileges that no other country on earth provides to a foreign country. Proportional sharing of our energy means we give our energy to the United States first, even in the event of a critical supply shortage and yet there has been no action from the Liberal government at all on the three point plan put forward by the NDP.

I am not just talking about a failure of the government's NAFTA policy. I am talking about a failure of the government's economic policy. Statistics Canada has been very clear on the impact this has had on the Canadian economy over the last 15 years. The way Statistics Canada does that is to basically divide up the population into five quintiles: the lowest income Canadians, working class Canadians, middle class, upper middle class and the wealthiest.

Since the signing of the free trade agreement in 1989, the lowest income group of Canadians has actually seen its real family income drop by nearly 10%. It is unbelievable. What a failed economic policy when the lowest 20% of the population has seen its income fall by 10%. The working class, the second quintile, has lost approximately three weeks of salary a year in real terms over the last 15 years under the failed Conservative and Liberal, let us say, fair economic policy.

The middle class has lost about three weeks a year of salary because of these failed economic policies. Even the upper middle class has lost in its market income about 1%. One might say that is half a week or a week of its salary but that has a real impact when it is getting harder and harder to make ends meet.

This will come as no surprise to anyone. The wealthiest of Canadians, the top quintile, the corporate lawyers and the CEOs, have seen their real incomes climb by over 12%.

What we are seeing is not only a failure of the dispute settlement mechanism and a failure of our government to deal in any concrete way with the Bush administration ripping up NAFTA's dispute settlement mechanism, but we are also seeing very clearly a failure in economic policy, a failure rate of 80%. Eighty percent of Canadians are having a tougher go of it now than they did 15 years ago. Eighty per cent of families are earning less.

We all know that Canadians are working harder than ever. Overtime has multiplied by a factor of three. Canadians are working longer and longer weeks, longer and longer hours, putting more and more in and getting more part time and temporary jobs which means more insecurity.

Statistics Canada tells us as well that most jobs do not come with pensions anymore and in real terms most Canadians have lost substantively anywhere from half a week, one week, three weeks or more of their salaries. This is a failed policy.

The industry minister said two months ago that the Liberal government would take the Americans into the boards, to use a hockey analogy. Our point is this. The Liberals are not even on the ice. They are hiding in the dressing room. There are concrete actions they should and could be taking and we in this corner of the House, in the New Democratic Party, will continue to push. We will continue to stand up for Canadians. We will stand up for those 80% of Canadians who believe that energy should be on the table now that the dispute settlement has been ripped up. We will be standing up for those 80% of Canadians who have seen their real incomes drop over the last 15 years. We will be standing up for Canadians from coast to coast to coast because we are the only party that is standing up for Canada. We are proud to that and we will continue to do that.

[Charles Hubbard, Liberal, Parliamentary Secretary to the Minister of Transport]

Mr. Chair, I listened to the NDP position on this but I am not sure if the member was talking about his position or his party's position.

We recognize that in terms of oil and gas, of the various countries from which the United States buys oil and gas, we are the largest supplier. We are a tremendous supplier of energy. We talk about Quebec with its power.

I wonder if the hon. member could tell us tonight what particular avenue he wants us to address first. Should we cut off electricity from Quebec, oil from Alberta or maybe try to get Saskatchewan to turn out a few of the lights that are burning in the United States of America? If he could give that position for us, we could understand better what the NDP wants us to do in terms of its suggestions to this problem we are encountering.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, what a silly comment from a member who should know better.

We are calling for an export levy on energy exports. Energy has been tied in with dispute settlement since the very beginning of negotiations on NAFTA and the free trade agreement. What we are calling for is that linkage with dispute settlement.

As the member knows, because the papers have been clear on that in the last few days, 80% of Canadians agree with us. Eighty per cent of Canadians believe that because energy supplies and dispute settlement were closely linked from the very beginning of negotiations on the free trade agreement and NAFTA, our government and this Parliament should be standing up for Canadian rights and Canadians jobs and should be looking very closely at that option.

I should mention, while I have a moment, that just because there were references from the trade minister about some of the avenues that they are looking at, such as advocacy and litigation, a negotiation would be the worst possible thing that we could do and litigation would be the second worse. What it does is it puts us right back to where we were before we signed the FTA and NAFTA. We are going to American courts, spending Canadian money for American lawyers, on an American playing field, to have an American decision. Litigation is not an intelligent route to take, but, unfortunately, because of the lack of action by the government, we have no choice but to support the industry in continuing along those lines.

To get back to this point of advocacy, I was part of a softwood delegation that went down to Washington last spring. The NDP was the only party that sent a full delegation. When we got off the plane we were given a t-shirt that was made in Mexico and a Canadian flag pin that was made in the People's Republic of China and we were told to go out and advocate on behalf of Canadian industry. This was a perfect illustration of why the advocacy efforts of the government have not worked. They have not been credible.

[Jay Hill, Conservative, Prince George—Peace River, BC]

Mr. Chair, there is more than a shade of irony here tonight that the NDP members get up and ask questions about respecting NAFTA and ensuring that the Americans respect NAFTA when their party position is that we should tear up NAFTA. Only the NDP would believe that somehow we solve trade disputes with our largest customer by taxing more of our exports.

The member, who is from the same province as myself, British Columbia, should take a little history lesson and look at the NDP government that we had and the bitter failure it was in British Columbia, to the point where its last leader was thrown out and it was reduced to only two seats by the people of British Columbia because they recognized that the NDP was crippling the economy of British Columbia through its ineptness and incompetence. What is unbelievable is that its leader ended up as a cabinet minister here at the federal level.

I do not know how the member has the audacity to suggest that somehow the Conservative plan of assisting our companies through loan guarantees and assisting our industry by covering the legal bills, which the federal government should be doing for our companies that are going through these disputes, is not a plan. These companies have had to spend millions of dollars.

I could not believe what I was listening to. The one thing I would agree with him on is that the real hurt is with the people, the people in British Columbia especially but all across the land, the people who work for our softwood industry. He cannot see the forest for the trees, which is so typical of the NDP. The reason the working class in Canada are working so hard is to pay their taxes in this overtaxed economy, which the NDP only wants to tax more. When the NDP negotiated its $4.6 billion last spring, Bill C-48, it somehow forgot all about softwood lumber.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, it is difficult to know where to start with a rant like that, but I will start by saying the reason the NDP is currently leading in the polls in British Columbia is that 80% of British Columbians, as the hon. member knows very well, support the idea of tying an export tax, an export levy on energy to the dispute settlement mechanism that was arbitrarily ripped up by President Bush.

It is very interesting to note that the Conservative Party has come up with nothing, unfortunately, no concrete action. We have been waiting for that. Tonight the leader of the official opposition called for a special envoy to negotiate, after we have won through NAFTA's dispute settlement mechanism. That is very strange and bizarre. I suppose a special envoy is different from whatever the Liberals would send, but it amounts to the same thing.

I actually tried to find proof that the Conservative Party was standing up for Canadian sovereignty and Canadian interests and I did find it. On the website there is a press release “Stand up for Canadian sovereignty”. I was very impressed and read through it. I got to the key point. I was thinking that maybe the Conservatives were standing up against President Bush, but it turned out that they were standing up for Canadian sovereignty against Denmark. Yes, that is what they were doing. They will not stand up against the Bush administration. They proposed no concrete action, but when it comes to Denmark, they are ready to go. It is kind of pathetic.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Mr. Chair, my comments are on the NDP member's speech.

An event took place today. The U.S. Secretary of State and the Minister of Foreign Affairs met to discuss the softwood lumber issue. The secretary said that we needed to put the dispute in proper perspective and that it is only a small part of the trade between the countries.

Is this U.S. position on the softwood lumber crisis not becoming worrisome and does it not reduce the prospect of the ruling on this matter being respected? Does it not impel the government to negotiate something that is not negotiable? We all agree that a ruling is not negotiable.

From the perspective where the survival of our industry is being threatened, why is the government reluctant to help by providing loans and aid to the companies?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, I very much appreciate both questions from my colleague.

First, the question on the negotiations is quite worrisome. In my opinion, the government is preparing to negotiate. It has already moved ahead on this, but has not taken any concrete action. There is cause for concern that the government is trying to negotiate a cut-rate deal because it does not have any other plan of action.

The second question is very important. I began my speech by saying that we support the idea of granting loans to the industry and paying the legal fees because we have no choice. It is because of the government's inaction that we are required to support the industry.

Other action would have been far more effective, which begs the question: why did the government not act in several areas when it was necessary to do so? Unfortunately, that is a question only the Liberal MPs can answer. Why are there crises in education, health and softwood lumber? Why did the government not act quickly enough to resolve these crises? I have no idea; it is a mystery to me.

[Roger Valley, Liberal, Kenora, ON]

Mr. Speaker, first I would like to thank the House for this opportunity to debate the issue of softwood lumber. This debate acknowledges the considerable impact the softwood lumber dispute has had on the forestry industry in Canada. Many points have already been made and I will try to reinforce some of these as well as introduce some new ones. Some of the key areas of concern need to be covered.

The first point I would like to make is our great friendship with the United States. We are both very serious about free and fair trade. The softwood lumber dispute is not an isolated one. Whether we are speaking specifically on the softwood lumber sector, pulp and paper operations or value added plants, it is important to realize that the impact of this dispute is wide ranging and has been significant to the entire forestry sector. When I make comments tonight on the forestry sector, I am in fact speaking about the softwood lumber issue.

I would like to take a minute to talk about the issues in my riding of Kenora. My riding covers almost one-third of the land mass of Ontario. Some of the greatest boreal forests in the world are part of my riding. This tremendous expanse of natural beauty and economic opportunity is our home. We have pride and respect for our forests and we realize we are there to look after our forests for future generations.

We understand the power of our forests. The modern world has come to depend on their products, be they lumber for our homes, paper products for our businesses, or the stabilization mechanism for our environmental initiatives. We have what the world needs and the world is willing to pay a fair price in a fair trade marketplace.

In the riding of Kenora we have two pulp and paper mills, an engineered lumber plant and numerous sawmill operations. These mills range in size. There are the very large operations like McKenzie Forest Products in Sioux Lookout, Kenora Forest Products in Kenora and the Weyerhaeuser sawmill in Ear Falls. We have medium size mills and we have mills right down to the family run operations that have been in the Dryden area for over 100 years. The Skene family is a perfect example of pioneers who came and took the lumber from our forest to build the communities in northern Ontario.

All of these operations have faced difficulties, and rising costs for energy and transportation for many years, and now they are faced with another obstacle in the softwood lumber tariffs. In some cases this obstacle is proving to be insurmountable. The American administration has decided to ignore parts of the NAFTA, our agreement that we negotiated in order to have tools to protect our Canadian companies in case of trade disputes. We have used this mechanism as we have negotiated a deal. It is time the United States did the same.

The action has kept billions of dollars from being reinvested in capital projects at our sawmills and our plants. Before the dispute the industry was focused and knew what it had to do. It understood the importance of new technology in order to achieve maximum value from our sawlogs. More than understanding this importance, the industry took action to invest in such technology creating a momentum for the forestry sector. Up to a few years ago it was not uncommon to read in the local papers about upgrades, new equipment, new plants being built and all this to add value so we could get value out of our Canadian trees. The industry had been enabled and was working with our fair trade markets.

Since the escalation and the adding of tariffs to Canadian lumber, there have been no new investments in our area. These tariffs will have a strangling effect on our ability to renew and operate our plants. In a world of increasing competitiveness, we must guard against threats that will render Canadian companies obsolete. We must not allow the American government to reinvest the billions of Canadian company money received unfairly to increase the American industry's competitiveness. Canadian companies have been responsible in reinvesting in new technologies. We must not continue to allow Canadian companies to indirectly subsidize the American industry which has not kept up with innovation.

With all that is happening, it is no wonder we cannot build the confidence of forestry companies to invest in Canada. In my home province of Ontario we face additional challenges with the increasing energy and delivered wood costs. These challenges affect the ability of forest companies to operate in a profitable and sustainable manner. Whether it is a softwood lumber sawmill or a pulp and paper plant, the entire industry is affected.

To illustrate the interrelated nature of the industry let me give a simple example from our part of Ontario. When the logs are sawn and the residue is chipped, they are sent to the pulp mill. At the pulp mill sawlogs are sorted out and sent over to the sawmill. Because of the great distances involved, the need for cooperation is essential. Thus, if one mill is struggling, as many softwood lumber mills are, the others are affected as well. This is the way business is done in northern Ontario. The strength of one operation is the strength of all. All operations need to be viable to support the others.

The softwood lumber issue creates a ripple effect all through the forestry sector. We cannot lose or slow down one aspect of forestry without causing job losses throughout the sector.

We need a resolution to this dispute. We need our American counterparts to honour their part in NAFTA. As a country we need to have confidence in the agreements that we have chosen to abide by. We as Canadians have lived up to our part of the agreement and we expect our friends to do the same.

At our forestry caucus we have been gathering information, talking to communities and companies. We have been working with departmental officials to find ways the federal government can become involved with forestry. We have been very conscious of the provincial jurisdictions involved in this matter.

We understand the provinces have plans to help the forestry industry. We as a federal government need to find a way to support the provincial efforts, to bring confidence to the forestry companies so they will invest back into their plants, their operations and our communities.

We owe it to the families. We owe it to all the communities that are dependent on the forestry sector for their livelihood. We owe it to a sector that is one of the world's leading exporters. We owe it to an industry that is responsible for the largest private sector employers of aboriginal people in Canada. We owe it to Canada.

By strengthening the forestry operations, we will strengthen our communities, our provinces and our country. The softwood dispute has carried on for too long. We have had agreements that have carried on for a number of years, but there have been no lasting solutions. This time Canada has succeeded through the NAFTA rulings one after another. We have used all the mechanisms at our disposal and we have repeatedly won disputes. We need our American friends to honour the NAFTA agreement. We need to keep Canadians working in the forestry sector.

[Jay Hill, Conservative, Prince George—Peace River, BC]

Mr. Chair, the speaking slots are somewhat limited tonight and I think I speak for members of all four parties when I say that many MPs would like to have had a chance to speak to this important issue. They obviously will not get that chance other than in questions and comments.

I want to take a moment to pay tribute to the working men and women and the families who are affected by this not only in my riding of Prince George--Peace River, but the thousands of families who have seen some really tough times and continue to see tough times all across the country. These families are suffering. By and large they have seen an immense amount of inaction on the part of the government.

I do not want to be overly partisan or critical tonight. The Minister of International Trade is sitting here tonight and I commend him for staying through the debate and listening to the points of view. He knows how these families are suffering because I am sure they have communicated with him and that he has listened.

I also want to pay tribute to the industry which has brought down the unit cost. As the leader of the official opposition stated in his remarks, the unknown thing that transpired through these countervail duties is it actually forced our industry to become even more efficient. We were already efficient in our production of wood products, but the industry has become even more efficient. The unknown consequences for the Americans is that our wood products are flooding into the United States. As my leader said, this should prove to the Americans that this is a failed policy and that it is not working. It is not having the desired effect of protecting the American industry from a highly competitive, efficient, effective Canadian industry, and good on the men and women in the companies in Canada who have been able to do that under such adverse conditions.

The Conservative Party recognizes that we cannot communicate as often as we need to head of state to head of state. Obviously that would be the ideal. That is why we were urging the Prime Minister for quite some time to communicate directly with the President of the United States when it became clear that the Americans were going to ignore the latest ruling.

We have advocated that special envoys be appointed on both sides. These envoys would not negotiate because we have already won. We are all in agreement on that. We want these envoys to communicate to the Americans at the highest level possible that severe ramifications are at stake here, not just for the 3% of NAFTA that is softwood lumber, but for the other 97% that affects the economies of both countries.

Why will the government not at least look at appointing special envoys, not to negotiate, but to raise the level of debate and awareness?

[Roger Valley, Liberal, Kenora, ON]

Mr. Chair, I will answer the question from the bottom.

One benefit we have is our greatest friends in this dispute are the American public, and we have not used that enough. We can do more in marketing in their areas. We cannot afford to make our greatest friends angry with us. Everything else we can do from that level up is a bonus. It is something that we can gain in experience. We as Canadians have never been successful in marketing ourselves, the products we produce and how we can help Americans. We need to be involved in their trade.

At the higher levels, we try to involve ourselves. Our forestry caucus has been meeting with as many people as we can. We are trying to involve ourselves at the grassroots level. We are trying to ensure that the American public stays on our side.

The member mentioned 3%. How big this event could be if we get into an all-out trade sanction dispute is too often blown out of proportion. We are on the right track. We may have to raise the level of awareness, but we have to keep in mind that the American people are our friends, and that is one of the tools we should use.

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

Mr. Chair, I thank the hon. member for his speech. The situation that he is experiencing is very similar to the one in my riding.

However, I have a question for him. This evening, we are having a take note debate to try to find new ideas and ways to move forward on this issue. Is there any explanation as to why the government refuses to provide loan guarantees to companies that have had to pay $5 billion?

We have a very strong legal case that allows us to tell the Americans to respect their commitments. We could even tell the rest of the world to be careful with the Americans, because they do not always respect their commitments.

However, we need strong businesses. This the message that we want to send to the Americans. Why not follow up on that proposal which, in our opinion, is in compliance with NAFTA and the WTO agreements? Is this what is holding back the government, or is there another reason?

The government says that these businesses, these workers need help. Is what the Bloc Québécois has been proposing for close to two years and what all the opposition parties are now asking for not a tangible form of assistance? Why does the government not provide such a program?

[Roger Valley, Liberal, Kenora, ON]

Mr. Chair, I agree with the member 100%. The companies need help and they need it now.

As chair of the forestry file in our caucus, that is one thing on which I have been working. Whether loan guarantees are the answer, I cannot say. We have been working on it and gathering information. We had that proposal before our committee. We are trying to find everything we can do to ensure all forestry sectors are going to get the support they need.

The biggest thing we need to do right now is deal with the softwood lumber issue. Loan guarantees may be part of the plan. There is a whole host of things we can try to do, but it is not the only thing. We are going to continue to work on that.

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

Mr. Chair, a lot has been said on this issue and a lot has been very repetitive.

Based on the member's answer to the question from the Bloc member, he is once again talking about the issue of loan guarantees as if it is a brand new issue. The first time this was presented to the government was in 2002. The government has yet to respond that there is a technical problem with this. It has yet to respond in any way in the negative. It just never has responded in the positive.

At this point, one can only ask this. After three and a half years of strangulation of our industry, when is enough, enough and when will the government say yes?