Mr. Speaker, we often hear from the Conservatives that the industry and the local communities support this deal. The reality is that some of them have said they are going to support the deal because the Conservatives have said they will not support the industry if the deal is not signed. How could the forestry industry in Canada possibly continue this countervailing duty fight without the support and encouragement of the federal government? It just would not work. U.S. producers are bankrolled extremely well and the precedent has already been set.
We have to help the industry. That is why our party has said we would reject the deal. It is contrary to NAFTA. We would provide some bridge financing, some support to the industry, some loan guarantees. That would not be countervailable because we have won at every single panel.
This is not about subsidies. Anyone who thinks this is about subsidies is not dealing with reality. This is about protecting inefficient U.S. producers. They are not as efficient as Canadian sawmills. In terms of total factor productivity, they are about 40% less productive.
Most of the forestry land in the United States is private land. As soon as U.S. producers launch countervailing duty claims, the private lands are revalued upward because the U.S. has a protectionist policy in place. Who wins? Shareholders of big companies like Georgia-Pacific, International Paper, Boise Cascade and all those companies, they win. Do homeowners, homebuyers and developers in the United States win? Of course not, because the price of a house goes up by about $1,000 to $1,500 a year. Who else wins? We know who else wins. Lobbyists and lawyers in the United States are big winners because this is a big gravy train for them.
The deal perpetuates the lie that Canada's softwood lumber industry is subsidized. That argument has been defeated many times by objective panels, which have had U.S. representatives sitting on them. This is a sweetheart deal between the Conservative government and the Bush administration. If we scratch the surface, we find that it is not such a great sweetheart deal for Canada, but it is a sweetheart deal for the United States.
We have debated in this House to a great extent on why this is not a good deal, so I will not get into all the specifics today. I want to branch out into a different line of attack.
The president of the United States had the opportunity to reject the appeal that came to him in the White House, the extraordinary appeal, when the panel said it wanted another appeal. The authority to reject that appeal was in the hands of the president of the United States. He could have ended this countervailing duty case. It would have meant that the $5.3 billion would have come back to Canadian producers and the countervailing duty action would have ended. What did he do? He said no. He said to do a deal but that he still had to give U.S. producers their ability to appeal, even though panels consistently said there was no subsidy.
The United States has said our timber is underpriced. What the Americans are really saying is that we do not have a full auctioning system in Canada because most of our forest land is crown forest land. There is some private land, but most of it is crown forest land. A lot of the forest land in the United States is private land, so the private timber is auctioned.
However, what has happened in the United States? I think we should pay some attention to this. Maybe timber in the United States is overpriced. I will tell the House why that is the case. I know this to be a fact.
In the Pacific northwest in particular, there has been speculative pricing. People are bidding forward in terms of forward pricing. Twenty years hence, they will have to harvest this timber and in many cases they have found it is not economically sound to do so. The U.S. Forest Service also puts a lot of timber up for auction. When companies deliver on their auction price, the economics do not work and the U.S. government lets them off the hook on their auction price. Is that an auction system? I do not think so.
The U.S. Forest Service also provides huge amounts of subsidies for road building and other aspects of forestry in the United States. Does that ever come into the equation? Of course not.
As well, what about the subsidies at the state and local levels? I worked in the forest industry, and I can tell members that in Tennessee, Arkansas and Georgia if anyone tries to put up an OSB mill, a lumber mill or a pulp mill, the state governments and the local governments will be there writing cheques like we would not believe.
Does that come up in the debate? No, because the process is skewed. All we can do is try to defend our system. In our system, because of a public policy preference in Canada, most of our forestry is on crown land. We have a very good and very efficient system.
If we move to more of an auction system in Canada, the presumption is that it will push up delivered wood costs in Canada. I submit to the House that this is not going to happen. In fact, it could end up being exactly the reverse, and that by putting more timber up for auction, the delivered wood costs will go down. What would be the case then?
If the U.S. producers were sincere about their concern about our delivered wood costs, which of course they are not because they are only concerned about protecting their inefficient sawmills, if the Americans were really interested, that would be a concern to them. If we move to more of an auction timber system, then delivered wood costs to the sawmills will go down.
Why would that happen? I know there are some mills in British Columbia that have a mix of what are called small woodlot operators and crown timber. In their mix of timber, a lot of the wood they get on the auction system is cheaper than the price of the timber they are getting from the crown land.
As for this panacea, first of all, this is philosophical in nature. Because the United States has mostly non-crown forest land, then that must be the best system, so we in Canada have to go to auction timber. I would contend that this is robbing us of our sovereignty in terms of Canadian public policy.
We have the anti-circumvention clause within this so-called softwood lumber deal, which not only will attack moves by our federal government or the provinces to lay out good, sound forest policy in Canada, but also will rob us of our sovereignty. It fails to recognize that we have a different approach to things here in Canada. Why should we submit to the U.S. approach and policy when it comes to the way it deals with its forest companies?
This deal is not really a deal. It perpetuates the lie that Canadian softwood lumber is subsidized. We know for a fact that is not the case. It basically says to us that if we do not have an approach to forest policy that is similar to or the equivalent of what is done in the United States, then we must be wrong and the U.S. must be right.
I am a great believer in the power of the market. A market tells us a lot in terms of what is economically viable and what makes sense. But to have a functioning market, there has to be a fair market, a free flowing market, with knowledgeable buyers and sellers, and the market has to stick with the agreed upon prices.
As I said earlier, we have instances in the United States on auction timber, because there is this frenzy of speculative pricing into the future, where the pricing becomes disassociated with the economics. There is the case of the U.S. Forest Service, which has let some of these companies off the hook downstream in terms of their bid price. Is that what we would call an auction system? I do not think so. In an auction system there is a bid and, come hell or high water, we are stuck with that bid. It is not functioning like that in the United States.
In the U.S. Pacific northwest, we have seen the impact of the environmentalists. The famous spotted owl has taken huge swaths and tracts of commercial forestry land out of production. Is that the right environmental approach or not? I am not here to debate that. What I am saying is that it has taken huge amounts of productive forest land out of contention and that has resulted in a huge amount of speculative pricing, pricing that I would contend prices their timber erroneously high. Then our system ends up pricing timber in a fashion that is consistent with our values, our culture and the way we go about forest policy in Canada.
This deal is a total affront to Canadian sovereignty and our ability to set our own course here in Canada. For that reason, this deal should be rejected completely. We should provide the industry the support it needs to fight this countervailing duty right to the bitter end, because we have won and we will continue to win.