Debates of Sept. 26th, 2006

Softwood Lumber Products Export Charge Act, 2006

[Blair Wilson, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Mr. Speaker, the hon. member has some of the facts wrong so I will correct her and then raise another question.

When we take a look at this deal, why is Canada caving in at the negotiating table at this point in time? Every case that we have taken before the Americans we have won.

I have received letters from a lot of businessmen and businesswomen in my community who say that in business if they have a dispute and they are winning in the courts they will not go to the negotiating table and cave in and leave $1 billion on the table.

It would not be so bad if it were just $1 billion on the table that was going somewhere, but the way it breaks down, $500 million will be used by the U.S. lumber lobby group against Canadian industries. Why would we be bankrolling our competition? To make matters worse, $450 million of the $1 billion will go directly to George W. Bush to decide on which way he wants to use the money for other republican means.

If we take a look at just that one point alone we cannot agree with this deal, let alone the fact of the surge mechanisms and the increase in Canadian taxes that will be put on. It does not take an accountant to know the difference between a 15% tax and a 10.8% duty. The 15% tax will cripple our industry.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, the hon. member opposite has described the history of how the government has betrayed the softwood lumber industry and how it has sold out Canadian communities. We have heard in great detail in many debates in this House about its sorry record. We know about all the money that was levied illegally against Canadian firms and now some of that money is coming back to these firms.

Does the hon. member have a view on why the federal government did not stipulate that this money should have gone back, not to the corporations but to the communities that were so hard hit by the U.S. tariffs that were imposed on them, the communities that lost jobs when saw mills closed and that have paid the price by this lack of support from the federal government?

[Blair Wilson, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Mr. Speaker, I think there are two points here that we have to take into consideration. One is the speed at which this deal was rammed through Canada.

The softwood agreement was a two page framework agreement when it first came forward. In that initial two page framework agreement, the $1 billion that was being left on the table, half of that money was supposedly going to be put into a fund that was going to be overseen jointly by the Americans and by Canada as to where that money was going to go to help our industry on both sides of the border.

Then when we got the rushed final version of the deal, we find that that completely disappears and the $500 million goes right into the Americans' pockets. I think it points to the fact of how rushed this deal was.

The other issue that the member raises as well is the support for our industry. It is the support in our lumber industry with respect to the pine beetle infestation in British Columbia. We learned yesterday that this new minority Conservative government has just cut $11.7 million for pine beetle research in British Columbia out of the 2002 funds. If this Conservative government cared so much about British Columbia, why is it cutting $11.7 million that we could use?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, today I will speak about the softwood lumber agreement, an agreement signed by Ottawa and Washington.

The agreement reached by the Canadian and American governments is not the agreement of the century. I am certain that several MPs have had the opportunity in the past few months to meet members of the forestry industry who told them that an agreement had to be signed because they were on the brink of disaster. What must be understood is that the industry had no choice. The agreement concluded on July 1 was not a good agreement, but the forestry industry could not afford to wait any longer.

If the Bloc Québécois supports this agreement, it is because it is acting responsibly towards the thousands of sawmill workers. However, as a result of consultations in the past few months with the industry concerned, we have come to realize that the structural crisis of the softwood lumber industry cannot be remedied by the softwood lumber agreement alone.

Both the Liberal and the Conservative governments caused incredible harm by not supporting the softwood lumber industry in recent years. No company can emerge from a four-year trade crisis and hope that all will return to normal. It is even worse when an entire sector of the economy is in trouble.

Over the past four years, a number of companies working in the forest industry have closed their doors, and this deal does nothing to ensure the sustainability and survival of the industry. The industry is still in bad shape, so it is up to the government to implement a series of measures to help forestry companies that are facing serious difficulties.

During the dispute, that is, since 2002, 17,000 jobs were lost in Quebec. As you may know, in Quebec, forestry is the main employer in 260 communities. In 134 of them, 100% of jobs are in forestry. Consequently, it is important to ensure the viability of this industry.

Quebec is the second-largest exporter of softwood lumber to the United States. Fifty per cent of the province's lumber is exported south of the border. Now that important measures have been implemented with respect to softwood lumber, particularly with respect to quotas, a lot of companies have begun to rationalize their workforce in light of the agreement. I say “quotas” because it seems that Quebec will choose one of two options—either option A, a tax percentage, or option B, fixed quotas.

This is therefore a worrisome situation for thousands of workers. Given the growing supply of wood from China and new conditions in the industry, many companies will have to lay a lot of people off over the next few months.

Over the past few years, this crisis has had a dramatic impact on some communities in my riding, Chicoutimi—Le Fjord. One of the largest forestry cooperatives in Quebec, located in Laterrière, went bankrupt in December 2004. The bankruptcy indirectly impacted on many sawmills in Saguenay—Lac-Saint-Jean. Some shut down for a few weeks, while others closed their doors for good. That is what happened with the Produits forestiers Saguenay sawmill in La Baie. In March, it decided to close the mill a year earlier than planned for economic reasons.

In addition, since the softwood lumber agreement was reached July 1, several sawmills in Saguenay—Lac-Saint-Jean have continued to have financial difficulties.

To cite only a few examples, in early September, the Bowater mill at Saint-Félicien was forced to lay off 140 employees for an indefinite period. As well, one million dollars are needed to get the Coopérative forestière de Girardville back on its feet. For its part, the PFS mill at Petit-Saguenay has just reopened its doors after being closed for a month, two weeks more than initially planned. In addition, because of current market difficulties, the mill has decided to do away with a second shift. These are just some examples. However, a great many mills, such as the PH Lemay mill and the Péribonka mill have been affected by the crisis during the past few months.

The softwood lumber crisis has caused the loss of 3,000 jobs—yes, I said 3,000 direct jobs—in Saguenay—Lac-Saint-Jean, and the situation is getting worse.

I would simply like to give one last example to illustrate the general situation. Three weeks ago, the sawmills at Saint-Félicien and Dolbeau-Mistassini shut down for an indefinite period in order to reduce financial losses. As a result, the company was forced to lay off some 350 employees of the two mills. One of the spokesmen for the mills made the following comment, which sums up the situation very well:

We are going through an unprecedented crisis and it is difficult to meet the conditions for profitability. Like all the other forestry companies, we have no choice but to reorganize our activities or mills in order to remain competitive.

That comment sums up the situation concerning the softwood lumber crisis.

The root cause of the problem is still there. The situation will continue to get worse if measures are not introduced quickly. The problem is aggravated in the regions outside the large centres and we cannot close our eyes to this problem.

There are many reasons why the socio-economic problems are worse in the regions. The main reason is that the forest industry plays such a major role in many communities. For workers in the regions, the forestry crisis, combined with cuts to employment insurance in recent years, has worsened the economic situation. Many employees affected by this dispute have been left without income and have been forced to leave the region.

Between 1994 and 2004, cuts to employment insurance resulted in a direct and indirect loss of $875 million for the entire Saguenay—Lac-Saint-Jean region. This was due to the numerous cuts in the employment insurance program.

When we look at data for my riding of Chicoutimi—Le Fjord in particular, based on the cuts to employment insurance in the past few years, we can say that the population was directly denied some $221 million during those years.

We are proposing other measures to this government, namely the implementation of POWA, an income support program for workers who were part of massive layoffs.

In closing, I also want to point out that Bill C-24 does not resolve the structural problems of the market. In the coming months, measures will have to be implemented to prevent the forestry sector from collapsing. It is important that all stakeholders take action to maintain and consolidate the forest industry because many jobs in the resource regions depend on this sector of activity.

To that end, the Lac-Saint-Jean-Est RCM passed a resolution on September 19. I will close by urging the federal government to provide more support to the forest industry. I hope the government will implement measures that will help forestry workers and the industry.

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

Mr. Speaker, I have a question to put to my colleague, the member for Chicoutimi—Le Fjord. Today a good number of Bloc Québécois members have talked about the tensions and grief caused by these negotiations, and the fact that this is a bad agreement causing many problems. My colleague comes from a region similar to mine, a place where people work very hard in the forests.

I will ask my colleague a question about sovereignty in these negotiations between Canada and the United States. I am going to speak in English since the copy I have of the agreement is only in English.

Article XVII, the anti-circumvention section, is very important. For the people who listening and watching understand, under the statutes, the federal government cannot impose any type of administration or delegation of duties to the provinces on how they manage their forestry industry. Yet in article XVII paragraph 1 it says that neither party shall take action that circumvents or offsets the commitments set out in this agreement. Paragraph 2 is very interesting. It states that any change in a provincial timber pricing or forest management system, as it existed on April 27, 2006.

Suddenly we have a clause built into the agreement that even the federal Government of Canada does not have, which is to look at the practices of a province and if they are in disagreement with that practice, it can demand the province to change it. If it does not change it, then suddenly we are on the wrong side of the deal.

So we can easily break the agreement. This is a matter involving the sovereignty of Quebec, of Ontario and of the other provinces, the sovereignty that enables the provinces to manage forest activities on their territory as they see fit.

I would have thought that the Bloc Québécois would want to protect this sovereignty, but it is taking the opposite direction to sovereignty in their province and the country.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I thank my colleague for his question. The softwood lumber agreement between Washington and Ottawa is obviously a bad agreement and may be regarded as a sellout. But we have to realize that the industry has run out of steam. Many representatives and workers from the industry came to meet with me in my riding since my region is very much involved in the lumber and sawmill industry. It was recommended that I—and my party—support this agreement that we considered to be a sellout. We would have liked to recover all the money the softwood lumber industry paid in antidumping duties.

We must also recognize that the Government of Quebec gave its consent. That being said, the Bloc Québécois thinks that this sellout agreement should be accompanied by compensatory measures: improved employment insurance; a support program for older workers; assistance for the industry; an economic diversification program for communities that are dependent on the forest; a special tax status for the 128,000 owners of woodlots in Quebec; the improvement of funding for Canada’s Model Forest Program, run by Forestry Canada; special tax treatment for the $4.3 billion in countervailing duties; the acceleration of equipment amortization; and a program to stimulate innovation within the forest industry and improvement of productivity.

This is what we would like, and I hope that the Conservative government will get our message. It is true that we support this sellout agreement but the government should put forward some measures: a support program for older workers, a guaranteed income support program for workers affected by mass layoffs after the closing of a plant in the softwood lumber industry—because we know there were layoffs and there will be others; the improvement of employment insurance; and help for the industry. These are measures that should be promoted.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to take part in the debate on the softwood lumber deal.

I feel for those members who have sawmills in their ridings and the companies tell them it is a rotten deal, but they have on to sign it. The reality is the industry has been coerced and pressured into supporting this deal. They have been coerced because the Conservative government has said that it would cut off support to the lumber industry. What kind of a deal is that? What kind of support is that for the lumber industry?

There are two issues here. First, why would we cut a deal? Second, if we have cut a deal, is this a good deal? I will deal with the first question.

When the Conservative Party was in opposition, how many times did we hear it ask why we would cut a deal when we had been winning all the objective panels under the NAFTA. Now the Conservatives are saying that we have to cut a deal because it is in our best interests.

First, it is contrary to the NAFTA. NAFTA is meant to provide free and fair trade. Does it do that? Of course it does not. Also, the most important thing is that it perpetuates a lie. This point was made very clearly and very well by the Free Trade Lumber Council. The lie is that we subsidize softwood lumber in Canada. That has been shown time and time again by lumber one, two, three and four. Every objective panel, panels which have Americans sitting on them, have said that we are not subsidizing lumber in Canada.

Also, we have prevailed in every NAFTA panel, an objective review, and these panels have concluded consistently that we do not subsidize our lumber in Canada. Canada has followed the dispute settlement mechanisms that are laid out between Canada, the United States and Mexico.

The other thing that is terrible about this deal is that it sets a horrible precedent. That is where we as parliamentarians, notwithstanding what the industry or communities might say, are charged to deal with the national interests of Canada. If the U.S. can win this dispute, where we have consistently shown there is no subsidy, what does that mean for other products, for other sectors? The Americans will look upon this and say that if they can cut a deal on softwood lumber, they can cut a deal on plastics or on steel because with lumber the Canadians were well ahead. They have proved the case time and time again.

This is a horrible precedent. This is a sad day for Canada. It is another way in which the Conservative government has capitulated to the U.S. interests and to their love affair with the Republicans south of the border.

If we cut a deal, which it looks like the government has and it is the wrong approach to take, how good is it or how bad is it? First, how often did we hear the Conservative Party, when in opposition, ask us why would we not fight for $5.3 billion in the tariffs to be recovered by the Canadian producers. Conservatives would argue that we should not leave anything on the table. Now they are leaving $1 billion on the table.

I do not know how the Conservative members can now argue that the industry minister at the time knew the deal and conclude that this is a better deal. The minister then would have been sworn to cabinet confidentiality, so I am not sure they would know the details of the deal. Even if it is a slightly better deal, who knows, it is still a bad deal because there was no deal concluded by our Liberal government. There were discussions, but the Conservative government is proceeding with this.

The deal is of short duration. Within two years, the deal can be abrogated by the U.S. producers and by the U.S. government. They can say that they do not like it and that it is not working very well. In the meantime Canadian producers will have backed away from their lawsuits. How do we get that back? We cannot restart those lawsuits. It works very well for the U.S. producers and the U.S. government.

Another point is that the export tax increases as lumber prices decline. Does that really work to the best interests of Canadian producers? I do not think so. It might work for the best interests of the U.S. producers, but the prices have tanked already, from about $450 U.S. per thousand board feet to around $270 U.S. per thousand board feet today and the export taxes are going up. We have the compounded problem of low lumber prices and increased export taxes. Is this in the best interests of Canadian producers? I hardly see that. When lumber prices are low that is when Canadian producers need all the help they can get.

The member for Skeena—Bulkley Valley alluded to another reason why this is a bad deal and that is the anti-circumvention article. In a nutshell, this clause robs Canadians, within their federal government and their provinces, of sovereignty when it comes to forest policy. The U.S. is basically saying that if Canada does not do things the way it does things, then clearly Canada is subsidizing. I know for a fact that the auctioning of timber in the United States is not exactly a perfect market. Companies have bid on federal forestry timber and have been let off the hook later when pricing did not quite work to their advantage.

I have worked in the forest products industry. If a forest company wants to set up a lumber mill, an OSB bill, an MDF mill, or a pulp mill in Tennessee or Mississippi, the American government will put all sorts of incentives into its hands, whether they be sales tax abatements, property tax abatements, subsidized cogeneration energy, tax holidays of various descriptions, a whole range of things. Under our process, we cannot look at U.S. subsidies. We can only respond to the process in place, and that is fair enough because we agreed to that. However, the Americans should at least respect the process that is in place.

Is it too much to concede or believe that Canada might have a comparative advantage in softwood lumber? Our U.S. friends and neighbours to the south cannot seem to get a grip on this. I am prepared to say to the United States that perhaps it has a comparative advantage in IT or in other industries. However, Canada has a comparative advantage in softwood lumber.

A study done a few years ago showed that, in terms of total factor productivity, Canada's forest industry was 40% more productive than the U.S. forest industry. The problem the United States has is with the little sawmill in Portland or in Montana. What does it do with the workers if they are getting over blown by a very competitive industry in Canada. That is a U.S. problem and it has to deal with that.

There are other examples such as in Pittsburgh, Pennsylvania, which was a big commodity steel player. Steel companies could not compete with commodity steel because of the Asian producers. They became niche players and higher value-added players. Then Pittsburgh became a huge IT economy.

This is not our problem and it should not be laid at our feet. There are sawmills in the United States which cannot compete with our highly efficient mills. I have been to many mills in Canada and many mills in the United States. We should pride ourselves on the fact that we have some of the best sawmills in the world. The United States is now telling us that we are going to pay for this because of the softwood lumber deal.

We should never have cut a deal. This is a bad deal, and we should reject it on behalf of all Canadians.

[Helena Guergis, Conservative, Parliamentary Secretary to the Minister of International Trade]

Mr. Speaker, the hon. member and his party, the Liberal Party, have to admit, and I have said this many times before, that they were content with 100% of nothing for the softwood lumber industry.

For 13 years they did nothing. They had calls for loan guarantees. They did not bother with them. In fact, just before the last election, they were prepared to sign a deal that was nowhere near as good as what the Prime Minister and our Minister of International Trade has achieved for Canada. We know this because our Minister of International Trade used to be theirs and now he is on this side. He had the leadership of this Prime Minister to go forward and accomplish this deal. Therefore, I give my appreciation to the Minister of International Trade.

This member has talked about litigation as though he thinks that if we win this one last court case that all of a sudden the Americans are just going to want to have a great working relationship with us, that we are going to get all of our money back and all will be solved.

I think the member is dreaming in Technicolor. This has been going on for 24 years. In fact, the last litigation has been going on for five years alone. The U.S. lumber coalition has told us that if we do not have this deal there is going to be continued litigation.

I do not know why the hon. member fails to listen to this and understand it because that is a fact. He talked about the Americans having deep pockets. He is darn right, they do, and they will continue to file lawsuits.

The member talked about this agreement suggesting that under the agreement that perhaps industry will be paying more in an export tax. That is not true. Nothing could be further from the truth. In fact, there is an administrative review that is scheduled for this fall, so that without this deal what producers are paying in duties will go up to almost 15%. With this deal, it will not go past the 15%. They will have some stability. They will know what is coming as the year goes on.

If we do not have this deal, the hon. member needs to also recognize that with continued litigation, that there would be of course new duties and they could be as high as 20%. If the hon. member could please explain to us why, first of all, his party did absolutely nothing for the past 13 years and why he is choosing to ignore 90% of the industry in Canada that is supporting this agreement? Why is he choosing to ignore that our three major softwood lumber producing provinces are supporting this agreement?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, the member for Simcoe—Grey is right about one thing. We did not capitulate during the 13 years. We tried to take the process through to completion.

I find it interesting that she talks about the administrative review. This is where the Prime Minister went down to Washington or Cancun and at that point in time President Bush had the opportunity to waive the administrative review; in other words to use his special powers to overturn the appeal request. So he was down there, they were all buddy buddies, “Steve” and George Bush. What did the government get? It gets this contrived agreement which sells out the industry and sells out Canada's sovereignty and foreign policy. What does the government get? It gets assurances about military cooperation and so on. President Bush looked pretty good.

The problem is that this government said it would not support the industry. The reality is that if we leave $1 billion on the table, and contrary to the challenge of the Byrd amendment which says we cannot take that money and send it back to the U.S. producers, and again the U.S. has totally ignored that, that money goes back to the U.S. producers. Yet, the Canadian producers are sitting there trying to fight the softwood lumber deal. The Canadian government said I think they were bluffing because they could not have actually lived through that because the industry would have had to have support from the government to fight the softwood lumber deal. Therefore, this was a contrived deal and the industry was coerced into agreeing to it.

I have just a final point. I know it is hard to imagine that we could outlast the U.S. on this, but the reality is that some of the big producers like Georgia-Pacific and International Paper were actually bailing out of this coalition in the United States. They were the people with the big bank roll. They were financing the coalition to challenge this agreement.

If the government had stuck to its guns the way it had said it was going to do when it was in opposition and said $5.3 billion, no money to the U.S., then we may have found that the U.S. coalition might have started to tire of this.

I know it is hard to conceive that we would tire them out, but they are just as tired of this as we are and we are winning in every single way. I think the government should have done its intelligence and its strategic thinking a little better and I think there was an option there to say that we were going to outlast them. I think the deal is a bad one and should be rejected by the government.

[The Acting Speaker, Conservative, Royal Galipeau]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Don Valley West, the Environment; the hon. member for Skeena—Bulkley Valley, the Environment.

Resuming debate. The hon. member for Algoma—Manitoulin—Kapuskasing.

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

Mr. Speaker, I rise on a point of order. I will be corrected by the Chair if I am wrong, but the previous lineup had me following my namesake from across the floor. If that is not correct, we can adjust it. Perhaps you can seek some advice from the list.

[The Acting Speaker, Conservative, Royal Galipeau]

I have recognized the hon. member for Algoma—Manitoulin—Kapuskasing. Resuming debate.

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

Mr. Speaker, it is an honour for me to participate with my colleagues in the debate on Bill C-24, a bill which has very steep consequences for many forest communities across the country.

In my large riding of Algoma—Manitoulin—Kapuskasing, the forest industry is located along highway 11, whether they are sawmills, pulp and paper mills or panel board plants in Hearst, Kapuskasing or Smooth Rock Falls or workers who live in the small villages in between. On highway 17, there is a pulp and paper plant in Espanola, a sawmill in Nairn or Thessalon, forestry workers and logging companies between Thessalon and Espanola, including Elliot Lake, Iron Bridge and Blind River.

These are communities like others across the country that are facing very difficult times, as some of my colleagues have talked about, with energy costs, exchange rates, even government regulation, and the competing demands for the forests and competition from other countries where forest fibres are very inexpensive. All these things and other factors combine to make it very difficult to operate, to be a worker, small business or contractor in the forestry sector. That is why it has been a real challenge for me to try to understand why the government came up with the deal that it did with the U.S.

The Liberals were in office until January for some 12 and a half years and were actually making considerable progress on that file. It is my understanding that in November, prior to the election being called with the help of the Bloc and NDP supporting the Conservatives, it was possible to have an agreement with the U.S. Whether it was better or worse I am not sure, but a deal was possible at that time and would not have been satisfactory to our communities and to the industry, so the government declined to proceed.

Instead, it took the advice of stakeholders. When people were asked if they wanted to settle with the U.S. industry, if they wanted to compromise the gains they had made, if they wanted to give away progress under the free trade agreements or, rather, pursue their legal rights in the courts, under the NAFTA trade panels or the WTO and negotiate, almost exclusively stakeholders, workers and companies said no. They did not want to negotiate, give away what they had gained in their efforts to find softwood trade peace with the U.S. They wanted a solution which was based in the law and due process.

We were getting there and in fact decisions, even since the government came to office, have proven the correctness of that position to follow due process and get what is right under the law and according to trade agreements. The government, sadly, has rushed to find something maybe to make the Americans happy.

I do not want to be too cynical, so I will not go beyond saying that much, but in a rush to find a solution, any solution it seemed, it was prepared to give away all the progress that was made. That is among the many difficulties in this agreement and one of the hardest things to take. Why give away so much progress?

Let me comment further by saying that I have talked to a lot of people in my riding. One person was Guy Bourgouin, president of the Steelworkers local 12995 in Kapuskasing, who wrote in a letter to me in late August:

However, despite this continuing success,--

The success I referred to:

--Canada appears to have capitulated to American demands. Under the proposed deal we are still faced with restrictions on our access to the US market in the form of a tax and/or quota, we are agreeing to allow American oversight of our provincial forest policies, and we are leaving a billion dollars of illegally collected tariffs south of the border. To top it all off, there is nothing in the agreement to ensure the stability of employment in the forest sector or the ongoing viability of forest dependent communities.

Guy Bourguoin in Kapuskasing, president of that local, has summarized it very well. As well, I have talked to René Fontaine, the former Liberal cabinet minister in Ontario, who is so passionate about our forestry sector needing a good deal with the Americans, not this bad deal.

When we consider this deal, if there is one thing among the many measures that we would put at the top of the list of things required, it is stability, at least stability. It is the idea that the deal is bad, but if businesses at least could count on the bad deal for seven to nine years, maybe they could survive. The fact is that this deal can be cancelled by either side, Canada or the U.S., after 23 months. That is not stability. That is not what the industry needs as a top priority.

Yes, we have heard about some U.S. assurances in a letter, assurances that the U.S. will not just casually cancel a deal after roughly two years. What does a commitment like that mean? Our friends to the south went to war in Iraq claiming weapons of mass destruction. They had no evidence for that. So how do we accept some assurance, based on the letter, that they will not cancel this deal after two years? I am sorry with respect to our neighbours to the south who are our friends and our allies, but as neighbours we do expect to be treated fairly. Sadly, we are not.

Let me pick out a few other points that Guy Bourgouin raised in his letter. Let us talk about the over $1 billion that has been left south of the border and which, as some of my colleagues have already pointed out, is being shared. Half of it will go to the industry.

We can be sure that at least some of it will find its way into a legal trust fund for some future challenge once this deal unravels. Those who challenge this deal will be well prepared when it comes to paying for lawyers, court fees, research and so on, whereas our industry has been told by the new government, so new that it is possibly too inexperienced to really understand when it has negotiated a bad deal, that our industry will not be prepared financially to fight back when the other side has a part or all of half a billion dollars to fight with.

The other half-billion is going to be administered through the White House, ostensibly delivering programs, maybe housing, and promoting the use of lumber.

How many among us would actually believe that any of that promotion is going to be of much use to the Canadian industry? I doubt very much that any of it will be of benefit. We are told that the Prime Minister's Office will be consulted on the programs. I will wait to learn if that is actually the case, but I doubt it very much.

There are mid-term elections coming up in the U.S. I suspect that the money will find its way into districts where the Republicans need some help. There is no interest on the side of the U.S. in using that money to help Canadian industry produce lumber here and sell it in the U.S.

I wonder if the stability of this deal depends upon one side or the other determining after two years whether it should abrogate the deal or not. Who is going to make the decision to abrogate the deal? It is not going to be this side. It is going to be the U.S. side. Our side wants stability. Our industry members are fair traders and they are not subsidized.

My colleague from Etobicoke North mentioned the natural advantage. Do we challenge the U.S. because it has more sunlight in a year due to the climate? No, that is its natural advantage.

We have a natural advantage that we are proud of. We have great workers in the industry and great communities, and we deserve a much better deal than we have been shown here.

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

Mr. Speaker, I have a small question that remains unanswered. I put it to one of the hon. member's colleagues previously. Quite a few years led up to this flawed deal. There were also the previous negotiations by the hon. member's government, only to arrive at an equally flawed deal, one that was maybe even worse according to the government today.

They can decide what cabinet confidences were broken in the delivery of that news, but in all those years leading up to that, there was one thing about small and medium-sized producers in particular. Oftentimes the small and medium-sized mills are family based, with an extremely high ratio of investment dollars per job. This is an important ratio for people to understand, because as the consolidation of this industry has been going on over the last 10 years, it essentially has meant fewer and fewer players in the market, fewer and fewer manufacturers of wood, while provinces, and in particular the Gordon Campbell government in B.C., have increased dramatically the raw log exports going to southern mills and mills in other countries.

Anyone looking at the profile of the softwood industry knows that the greatest good is gathered at the processing level, not at the extraction level. While there are a few jobs out in the bush for taking wood out to the manufacturing level, there are relatively few in comparison to that. With increased technology, there are fewer still.

Through all of this consolidation, this larger format for companies, we have petitioned the hon. member's former government and the current government on loan guarantees, the ability of some of these medium and mid-size manufacturers to acquire the loan guarantees to allow them to compete with some of the bigger players in the market. Those requests fell on deaf ears in the previous Liberal government as well as in the current Conservative government. We simply cannot get anywhere with this. It is something that industry has called for consistently and New Democrats have joined them in that call.

Can the hon. member square this circle somehow and explain to me now how the Liberal Party is actually suddenly interested in those companies and those communities that have suffered for so long?

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

Actually, Mr. Speaker, I am very pleased to have the opportunity to clear the record. In fact, it was in the days before the NDP and the Bloc helped the Conservatives cause an election that the former Liberal government put on the table a substantial package including loan guarantees to provide funds to companies against dollars held illegally by the U.S. government. That program, that opportunity, was lost with the election, so I hope the hon. member understands that his party is partly to blame for the predicament facing the forestry sector in this country right now.

I will also say that it is now our position as the Liberal opposition that there be loan guarantees right now to help the industry through a very, very difficult patch. There have always been supports in one form or another to help with the implementation of new technologies, whether it was TPC or other Industry Canada programs like FedNor the case of northern Ontario, to help with the modernization of mills.To use an example, a pulp and paper mill in my riding got some assistance with technology improvement some years ago.

I do not want to speak for the hon. member, but I suggest that this is not really the issue he should be focusing on. In the forestry sector, the government says, some 90% of the people have signed on, but they have been forced to sign on. There are some major players who have not signed on. They will be penalized greatly if they do not sign on. They will have to come up with 19% of the money that is going to stay in the U.S. They will have to come up with their share of 19%.

The record of the former Liberal government when it comes to forestry is clear. We cannot do the provincial government's job when it comes to the forestry sector. The provinces have the principal role in managing the forests, but the federal government has always been there. This is the first time in a long, long time, I believe, maybe going back to the previous Conservative government prior to 1993, that so little has been made available except “take it or leave it”, as we are seeing right now.

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

Mr. Speaker, I have very much looked forward to my time to enter this debate. For a lot of members of this House, but now fewer and fewer of them, the ability to speak on the experience of watching what mills in their ridings have gone through in the last five to ten years is difficult. It is an extrapolation of the idea. It is an imagination of what it is for communities when they are faced with such trying times.

The reason that there are now fewer members of Parliament who have had that experience is that there are fewer mills across this country. In my region alone, not 30 years ago, there were 280 independently operated sawmills. The consolidation has left us with three or maybe four significant mills after all that time.

It is important for Canadians to understand the context of this deal. Many Canadians, particularly those living in urban ridings, may not have come to appreciate the magnitude of the destruction to the basis of our rural economy over the last decade. Not only have these illegal and punitive duties been slapped on by our American counterparts, but there has been huge devastation to the industry in an amalgamation process that has left small and medium operators completely out of the picture.

As I was saying to a colleague earlier, there are so many aspects to the so-called deal we are looking at today that it is amazing a sellout takes this many pages to be written. I would think that the words “100% total capitulation” would have taken a page to a page and half at most, but I suppose that a lot of legal text and jargon was necessary to keep government lawyers funded.

For far too long, the communities I represent have been suffering under a burden of neglect by the previous Liberal government. Just when things were as bad as they could be, a pine beetle epidemic has swept across our region and now is heading over the Rockies. Unfortunately, the rest of Canada may come to appreciate what it is to watch entire forests devastated.

We have a provincial Liberal government in Victoria that is interested only in massive raw log exports, which does little. For people who are not familiar with the industry, let me say we truly know that the best and greatest advantage and benefit to chopping down a tree is what is done with it once it hits the ground. We simply must manufacture and add value. We have talked about this. Every politician across this country who is dealing with primary resources in any way, shape or form says that we need to transform our economy to add further value to the resources we are endowed with, to the endowment this country has.

Yet the government is forcing industry, the provinces and various players to sign on to a deal that works in a direction that is opposite to the investment needed to actually add value to that wood. In cahoots with the Liberal government in British Columbia, it continues to raise the number and the amount of raw log exports that leave our region. When those logs leave, so too do the jobs.

For small communities in the hinterlands of Canada, there is a struggle to understand why so little attention is paid to them. These communities understand that they might not have the great subway systems, huge art galleries, and the scatterings and smatterings of MPs around every street corner that Toronto, Vancouver and Montreal do, but they cannot understand why, after having contributed so much to the wealth of this nation, they are given so little due and so little attention.

Let us get to the deal itself, for while it is complex, the reading is fine and the conclusions are disturbing. Bill C-24 continues the unfortunate legacy of sell-offs and sellouts that Conservative governments have left Canada with.

The government initially went to the table for the FTA and then NAFTA. In that negotiation, the Americans wanted access to our energy. That was one of the clear negotiating pieces of the American interests. We know this because the negotiators who were at that table have since written books, essays and discourses on what it was like to be there.

I remember one chief American negotiator calling it not so much a negotiation as a capitulation and a dictation from the American side. The Americans were dictating to us. They wanted access to Canada's vast energy resources. Energy resources were clearly seen as something important for the growth of the U.S. economy, but Canada was reluctant, knowing how important these energy resources were for our own growth. The trade-off became that the Americans would offer us a dispute resolution panel because they understood that the two negotiating partners were not in balance, that one was clearly economically stronger than the other, with the Americans having a larger, more powerful and protected market.

A dispute resolution panel was established to allow us to settle our disputes and now we have a deal that takes that dispute resolution panel and tosses it out the window. It simply says that when we win, when we are right, in fact we lose and we are wrong. All it takes is a certain amount of political pressure and opportunism by a government for us to get the short end of the stick one more time.

Oftentimes the government will try to talk about certainty and that the industry is looking for certainty. The investments that the softwood industry has to make are large and expensive and can only be paid off over a certain amount of time. Certainty for their products is important and yet, having just cut a cheque for $450 million to put into the war chest of the lobbyists who first launched this agreement against us, leaving over $400 million in the coffers of the very same people who are fighting and illegally pushing the U.S. Congress and Senate to put tariffs on our own duties, we have ensured anything but certainty. We have ensured that this fight will continue another day, because what else is one going to do with $450 million, if one is a lobbyist for the U.S. softwood industry, other than go after the Canadian industry and ensure that a fair fight cannot be fought?

We have also left half a billion dollars for President Bush's electoral campaign in November. I am not sure if such a sizeable cheque has ever been written by a Canadian government to assist a Republican president, but certainly the Americans are thankful. This is money well needed by an administration in the United States that is on the verge of bankrupting its own nation. It is so-called conservative economics at play once again.

What about the money returning to Canada? I have spoken with some of the CEOs who have been advocating for this deal and I asked them what encouragement the Canadian government gave them to take the 80% of the money that will be returned and actually invest it in Canada. Their reply was that the government had given them no encouragement to invest a single dollar in Canada.

While the money is supposed to be returning, many of these companies involved in this negotiation, due to the consolidation that has happened in this industry for the last decade or more, work both sides of the border. They have plants and operations on both sides of the border. Canadians need to ask themselves, if a company has mills both in Washington state and in British Columbia, why would it process a stick of wood in B.C. if it can move it across the border as a raw log and avoid the punitive tariff that our own government is placing upon a processed piece of timber or product. Why would anyone invest a nickel in an operation where they eventually will be punished for processing that wood?

It has created a disincentive for Canadian and multinational firms that operate in Canada and actually invest in Canada and create the types of jobs that we all hope for, for all these communities that have been through so much over the last number of years.

As time runs down, it is important to talk about the producers who are actually affected. I am thinking of a sawmill in one of my communities, which is Terrace, that has been through much. It is struggling to get reasonable access to timber to provide 60 or 120 jobs. For a community of 10,000 people that has struggled so much with an absolutely disastrous housing market and little space and room for companies to invest, this was important. They are looking at this deal as a small producer and wondering where they are in this.

A second important piece of what we have capitulated here is a basic notion of sovereignty, about how it is that we manage the forestry sector. Every member of Parliament will know that it is now provincial jurisdiction. The provinces decide how and where to cut wood and under what stipulations. However, in Article XVIII of the agreement, neither party shall take action that circumvents or offsets the commitments set out in this agreement and specifically any change in a provincial timber pricing or forest management system as it existed on April 27, 2006.

It is black and white. Washington has the ability to dictate terms over the provincial government's own jurisdiction, which our own federal government does not have.

What is important is that the system and the sellout that has been signed determines the cap by region and once that cap is broken then the duties start to increase and the tariffs and penalties go up. When a company chooses to flood any particular region with wood, it will punish a company that chooses not to. This is collectivism gone wrong. It is insane. How can we punish a company down the road that is actually abiding by the law when it is a larger company, which is what it will be, that wishes to glut the market?

This is a bad deal for communities and a bad deal for Canada.

[Helena Guergis, Conservative, Parliamentary Secretary to the Minister of International Trade]

Mr. Speaker, I would like to ask the hon. member why the NDP members never pushed for anything for the softwood lumber industry when they made their backroom budget deal with Paul Martin. They had an opportunity to pretty much ask for anything they wanted at that time but they never really cared.

[The Acting Speaker, Conservative, Royal Galipeau]

I am sorry to interrupt the hon. member but she is an experienced member and she knows that we do not name by name other members of the House.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

My apologies, Mr. Speaker.

I wonder if the hon. member could please let us know why the NDP did not care about the softwood lumber industry at that time or care about Canadians and the forestry industry then. I would like an explanation.

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

Mr. Speaker, I heard the call out around the House that it was a fantastic deal.

Let me talk about the NDP budget for a moment because it was a remarkable moment in parliamentary history. For those of us in the House who have studied the history of this place in any fashion whatsoever, we know that never before has an opposition party rewritten a budget, and what a budget it was.

We had $4.5 billion in an unannounced tax cut for the largest and most successful corporations in Canada that had not even asked for. It was not even mentioned in the pre-consultation arrangements by the government. The previous Liberal government suddenly popped up and said that the money was an early Christmas present. The NDP stood up on principle and said “absolutely not”. This was the first time in Canadian history that something like this happened. It was remarkable to watch the Liberal Party of Canada follow through on a commitment that it had made in an election. Thank goodness it took the New Democrats to actually make that happen. We saw $4.5 billion being invested into what Canadians actually wanted, such as post-secondary education, environmental initiatives and in overseas funding of international programs, which were things we all talked about and wished for.

I remember when the leader of the New Democratic Party stood in the House and asked the then prime minister if he would consider changing his budget. Lo and behold, the prime minister said that we should make him an offer and did we ever. We made an offer that worked for Canadians. It is just one of the most remarkable things to still talk about.

I thank my hon. colleague for the opportunity to once again talk about what was one of the most remarkable moments in our history as a House of Commons.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I wonder if my colleague would comment on the issue of raw log exports. I know this is a big deal in his part of the world.

I had the great pleasure to do some work up in Stewart, British Columbia on the issue of raw log exports. It is an important and sensitive issue. Why should we be exporting raw logs when we can process them here in Canada where there are very strict rules about how that operates?

It was in the third countervailing duty battle that the U.S. imputed a figure of something like 6.8% or 6.9% of a total countervailing duty claim of around 15%. The U.S. argued that restricting the export of raw logs was an effective subsidy because it had an effect on domestic log prices and deflated them, et cetera. If that were adopted, we could not really set our own forest policy in Canada and say that we want more value added In Canada.

More recently, a Chapter 11 lawsuit has been filed by a big U.S. company that has some private land in British Columbia. It wants to export its raw logs into its sawmills in the United States. That has been denied so it is suing under Chapter 11.

Could the member comment on raw log exports in the context of this deal, particularly the anti-circumvention clause that might allow the Americans to say that we now need to export raw logs to the U.S., raw logs in British Columbia that are feeding U.S. sawmills in Washington state and Oregon state? I am not talking about a few logs. I am talking about maybe enough logs to feed three or four sawmills in Washington state and in Oregon.

What does the member for Skeena—Bulkley Valley feel about this deal in that particular context?

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

Mr. Speaker, let me talk about the NDP budget a little bit more.

The important thing to consider, when we look at raw log exports, is to understand the vastness of the economic damage done when we take what is Crown property and simply chop it, chuck into the ocean and ship it down in massive booms to the United States, and sometimes to other countries by putting it on container ships, only to have the Americans process the wood and sell it back to us. This is a large amount of revenue that is lost to federal, provincial and municipal coffers when processing jobs are moved out of the country and put somewhere else.

I actually do not share my hon. colleague's concern about the Americans wanting to pull out of this deal in the next 18 months because it is such a good deal for them. When they can use many different elements to hammer away at us and destroy the very basis of the manufacturing base in British Columbia and other provinces, it would be insane for them to pull out of this agreement. Our government could have arranged a better deal, and it knows it, but the previous government did not even try.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I am pleased to speak today in opposition to this flawed bill.

In my riding of Nanaimo—Cowichan, forestry has been a long and proud tradition. We have a long history in forestry, the sawmills, the pulp and paper mills and the men and women who have worked in the forestry but we are seeing dislocation in my community that is impacting not only the workers and their families, but also their suppliers. It is impacting on municipal councils and cities to make long range plans and decisions that will support the vitality in our communities.

I want to remind the House why this is such a bad deal for Canadians and for British Columbians. Many of my colleagues, including the member for Skeena—Bulkley Valley, have spoken quite eloquently around the impacts, but I think some of these points deserve repeating.

Part of the reason that this is such a flawed agreement is that it is based on some falsehoods. Let us just call it what it is. It is based on the falsehood that the Canadian softwood lumber industries are subsidized. This falsehood has been exposed and rejected time after time by both the NAFTA and the U.S. commercial court rulings that have ruled in favour of the Canadian softwood lumber industry.

This agreement gives away $500 million in funds that are owed to the Canadian softwood industry. This is just a massive giveaway to the U.S. industry and to the U.S. government.

We often talk about accountability in this House and when we talk about accountability we expect good value for our dollar. I would question the fact that we are giving $450 million in funds to the Bush administration, funds that can be used at the discretion of Congress with no accountability attached to them. It seems to me to be a very strange way to talk about accountability.

I heard an echo in the background here talking about subsidy, and it does seem like a subsidy to activities that are detrimental to our industry here in Canada.

The other thing we talked about is the fact that this agreement can be cancelled unilaterally at any time. With that kind of uncertainty, how does that provide any stability to our softwood industry? We have seen this lack of stability played out over the last number of years as companies have been unable to invest in upgrading their equipment, as we have failed to invest in training and education for workers, as we have failed to provide that stability to our small communities.

This agreement also kills the credibility of the NAFTA dispute settlement mechanism. I have already mentioned the fact that we have had these rulings in our favour. This agreement goes outside of the NAFTA dispute settlement mechanism and goes ahead and talks about the fact that part of these illegally obtained $5.3 billion in duties are being sent back to the U.S. to fund further activity against Canadian softwood. It also does nothing for the thousands of workers who have lost their livelihood over the past five years. There is nothing in the softwood lumber agreement to deal with the major disruption that the U.S. abusive trade rules have caused to working families and their communities.

I talked earlier about my own riding. Whether we can directly attribute this to the softwood lumber industry or whether it is a secondary spinoff, we have seen mills close. The Youbou mill in my riding closed four years ago but I continue to hear from people who talk about the impact this has had on their livelihood and on their families. Some of those workers are still not employed on a regular basis four years later.

A little later I will talk about some other spinoffs that have happened that have put the continuing squeeze on this industry, and some of this is about actual deaths in the woods.

While the softwood lumber agreement supplies $450 million of Canadian money to the U.S. to help U.S. communities and workers, there is not one cent in this agreement for the transition for our own workers in our own communities. Many of the workers in our communities have already been displaced. Where is the funding for training and education that helps with the transition that is taking place daily in this industry? Where is the recognition of the value of the workers in our own communities who deserve to have some assistance with training and education as the industry changes? Some of these training and education dollars should go directly toward helping people gain the skills as the industry itself changes but some of these funds also need to be applied to help workers who need to transition out of the industry.

One of the other things, which is hopefully is an unanticipated consequence of the agreement, is that many people feel that this will discourage value added production and stimulate raw log exports. The deal fails to close a loophole that gives raw logs from private lands a competitive edge over logs processed here.

On Vancouver Island, in my riding, a significant proportion of the land is private land. The softwood lumber agreement fails to secure that those logs would be processed in British Columbia. People talked about a made in Canada solution. We do need a made in B.C. and made in Canada solution that considers our industry, our workers and our communities.

The member for Burnaby—New Westminster has consistently called for hearings that to take place from coast to coast to coast so communities, labour and industry have some input into crafting the agreement. I would strongly urge the House to support the fact that we want to see these hearings in communities across the country.

There is also a voice that has been absent in this agreement. I believe first nations were only mentioned once or twice in this entire lengthy document. First nations must be at the table and must be considered in the consultations around softwood. In British Columbia, in particular, we are engaged in treaty process, land claims and the management of resources. First nations must be at the table as equal partners in any discussions that go forward.

I want to talk a bit about statistics, and I know many in the House are thrilled with statistics. There is a need for an industrial strategy in Canada. According to the B.C. government, since 1999, British Columbia has lost 20% of our workforce alone. The workforce around direct forestry activity has declined from 31,000 to 21,000. This kind of massive dislocation in an industry calls for a national strategy. We as a country must determine whether we will commit to us being a processor, a hewer of logs, and we must have an industrial strategy that talks about the kind of reinvestment that keeps us competitive, both domestically and internationally.

According to the United Steelworkers, and it uses the government's own statistics on this, we can talk about the value that is lost both in our province and in our country. In 2001 logging produced revenues of $5.2 billion while solid lumber and pulp and paper mills produced revenues of $11.2 billion and $6.5 billion respectively. It is clear that the real value in our wood is when it is milled, not when it is shipped as raw logs. For every $1 million that forest companies invest, they create 3.9 direct jobs in their industry and 5.9 indirect jobs. In 2005, 3,300 direct jobs were forgone due to exports, which means $250 million in lost earnings.

If we just want to talk about economy, we need to talk about the fact that the more we do closer to home, the more it results in not only direct jobs in our community, but indirect jobs in terms of suppliers, transporters and all those other industries that support our forestry industry.

We talk about economics and industry, but let us talk about real life, on the ground, what happens to people in their families and their lives. Overall it feels like there has been increasing pressure on industry over this last several years and there has been little relief for them. The NDP has called for loan guarantees to help the industry over this tough time. We have called for an additional investment in training and education. The sad reality is there is increasing pressure on the industry. This agreement contributes to that overall pressure.

I talked about this being not just about dollars. I want to talk about last week's inquest into the death of Ted Gramlich in my hometown of Duncan. As a result of this inquiry, a number of health and safety issue have been exposed about the new regulations in the B.C. woods.

Responsibility for health and safety has been downloaded to individuals and contractors instead of the companies that buy the wood, creating huge gaps in the safety net. Last year 43 loggers lost their lives on the job. The Vancouver Island Loggers Safety Group continues to work to raise awareness among politicians and the private side as a whole.

My time is up, but I make a plea to the House to consider the impact, not only on the industry, but on communities and individual lives. This agreement will have a long ranging impact. I would urge us to think very carefully before members of the House support such a deeply flawed bill.

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

Mr. Speaker, I thank my colleague, the member for Nanaimo—Cowichan for expressing her passion for this issue and the experience she brings to it. Many members of the government seem lost on what it is to process a stick of wood and what it is to add some value and create the type of wealth for communities like hers and for many of the communities that I represent. This deal is an excellent sell-out. It is quite remarkable in its consistency page after page and in its depth of advocating the interest of exporting more jobs to other countries and then buying the products back.

The member quoted the statistics from British Columbia, 10,000 jobs out of a sector. If there are other sectors maybe a little more politically salient for the new government and for the previous government, we would have had a deal that would have actually met the requirements of our country and our interests.

Could the member comment on what the effects are in the community of Nanaimo and those surrounding it when even a single job or a set of jobs from a particular mill are lost and moved across the border or overseas?

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I will talk specifically about British Columbia in this context because it is one of the largest softwood lumber producers in the country. Ninety-five per cent of the land in British Columbia is provincial crown land.

I talked earlier about an industrial strategy. It seems to me that between the federal government and the provincial government we need to reinstate that social contract that says that when we have crown land where we are producing logs, there needs be some direct benefit to Canadians.

We see forestry workers cutting logs. We have seen transportation benefit from shipping the logs south. However, I know the Steelworkers, local 180 in my riding, is clearly calling for an industrial strategy that says that these forests must benefit all of British Columbia. We must reinstate the social contract that says not only do we cut the logs, but we process them close to home and that we ensure our communities remain viable and sustainable and our communities benefit directly, which keeps our province health and vital. We should not just be hewers of logs who ship them somewhere else to be processed.

It is absolutely critical that we examine the softwood lumber agreement in that light and that we call for those reinvestments in industry and in our communities.