Mr. Speaker, I am pleased to have the opportunity to comment on the motion tabled by the member for Burnaby—New Westminster calling on the government to move concurrence in the fifth report of the Standing Committee on International Trade.
The report consists of three paragraphs, and I think it is pertinent to remind folks of this. The report states:
The Committee calls on the Government of Canada to stem the current market disruption, in specific categories, in the Canadian apparel industry, by immediately invoking Article 242 of China's accession protocol to the WTO and putting in place restrictions or safeguards on the growth of specific categories of apparel imports from China; and
The Committee further calls on the Government of Canada to begin bilateral negotiations with China, similar to those undertaken by the United States and the European Union, to reach an agreement on imports of clothing and textiles.
A copy of the relevant Minutes of Proceedings (Meetings Nos. 39 to 41) is tabled.
I would like to emphasize that the new government is keenly aware that the Canadian apparel and textile industries are significant providers of earned incomes and economic activity in this country. The apparel industry is an important employer of new Canadians and is concentrated in key urban areas, such as Montreal, Toronto, Winnipeg and Vancouver. The textile industry is a source of skilled employment and communities throughout Quebec, Ontario and the Maritimes.
The government is equally aware that the Canadian apparel and textile industries have faced, and continue to face, a challenging global trade environment, one where markets are globally integrated. This challenge has encouraged the transformation of the textile and apparel industries from national to globally integrated industries.
Challenged by increasing competition from abroad, the Canadian apparel and textile industries have had to transform themselves over the past decade by focusing on higher value added activity, on innovative and attractive new products and by finding niche markets for their products.
There is no sign that these challenges will end any time soon. Apparel and textile markets continue to be global.
The complete elimination of global textile and apparel import quotas on January 1, 2005, pursuant to Canada's WTO commitments, has resulted in significantly increased competition for Canadian textile and apparel producers, particularly from low wage countries.
Although the need to adapt to increased competition is not unique to the apparel and textile industries, or even to the Canadian economy, changes in the global marketplace are, nevertheless, having a significant impact on the environment in which the textile and apparel industries have and continue to operate.
It is in the face of such challenges that the new government has demonstrated its continued commitment to the long term viability of both the apparel and textile industries in Canada, by working with them to confront these very challenges. To assist these two industries in their efforts to compete effectively in the changing world markets, we are: continuing to work with our U.S. and Mexican counterparts to facilitate the access of textile and apparel companies to world-class inputs; reviewing proposals for an outward processing program that could provide new market opportunities for the textile and apparel industries; continuing to protect against the illegal transshipment of imported apparel and textile products; working through the employment insurance program to meet the needs of workers adjusting to changes in the industry and to ensure, through ongoing support for human resource sector councils, that employees obtain the skills they need to respond to the challenges of a rapidly changing labour market; and identifying and reducing tariffs on imported textile inputs used by the Canadian textile and apparel industries to improve the industry's cost competitiveness.
Those points demonstrate that Canada's new government is working with both industries to address the challenges of globalization and to ensure the continued viability of these domestic firms.
These measures are designed to further enhance industry competitiveness. They will help ensure the industries continue to innovate and make the most out of their key competitive advantages: an indepth understanding of niche consumer markets and close proximity to North American customers.
I am pleased to remind members that many of the items in our 2006 budget are largely designed to promote a more competitive and productive economy by helping Canadian businesses meet the commerce challenges of the 21st century. The 2006 budget delivered tax cuts for Canadian businesses, big and small. Accelerating the elimination of the federal capital tax, reducing the general corporate income tax and eliminating the corporate surtax will help attract and retain investments in Canada and improve the competitiveness of Canada's businesses.
Further, additional support for education and the skilled trades, including the creation of a new tax credit and cash grant for apprentices, as well as investments in research and development, will encourage productivity growth in these and other sectors.
In addition, on October 20, 2006, the Government of Canada announced the targeted initiative for older workers, a $70 million federal program designed to help older workers in vulnerable communities, in sectors such as forestry, fishing, mining and textiles, remain active and productive participants in the labour market. Under this initiative, funding will be available on a 70:30 cost shared basis with participating provinces and territories.
I have spoken in general terms about the many ways in which the new government is working with Canada's textile and apparel industries to help improve their competitiveness. I will now speak in more specific terms about the fifth report of the Standing Committee on International Trade, that being on the import of clothing and textiles from China.
The fifth report of the Standing Committee on International Trade unfortunately does not provide summaries of discussions, analysis or explanations for its recommendations and does not seem to reflect the differing views of stakeholders regarding safeguard actions against China.
In his testimony to the standing committee, Mr. Elliot Lifson, president of the Canadian Apparel Federation, which represents over 600 Canadian companies involved in the apparel industry in Canada, spoke quite strongly against the use of such safeguard measures. Specifically he stated:
Our view is that the scope for Canada to enact safeguards is limited, and safeguards are not likely to offer any tangible benefits to domestic producers...
Mr. Lifson went on to say:
—safeguards will hinder apparel companies that are blending domestic production with imports from China and cause unpredictable bottlenecks in the supply chain that would likely harm a wide range of firms.
In her testimony to the standing committee, Ms. Lina Aristeo, director of UNITE HERE in Quebec asked in relation to safeguards “Why is Canada not doing anything?” She said that we might wonder why Canada had not used the special China bilateral textile and apparel safeguard measure like the U.S. and the EU. The answer is simple. The situation in Canada is different from that in the EU and in the U.S.
Unlike the U.S. and the EU, Canada did not back end load its adjustment to the new global textile and clothing market. Canada had already liberalized its textile and apparel restraints to a considerable degree by the time the last quotas were eliminated. This reflects a distinctly different approach taken by Canada during the 10 year phase-out period. Canada phased out the impact of its existing quotas and eliminated quotas on products of considerable commercial significance during the planned phase-out period. As a result, Canadian adaptation to liberalization in this sector has been going on since 1995 and Canadian manufacturers have largely adapted to a more liberalized trading environment.
Yes, imports from China have risen, but according to Statistics Canada recently released study entitled “Trade liberalization and the Canadian clothing market”, the increase has mainly come at the expense of imports from other suppliers such as Hong Kong, South Korea and Taiwan. The report also noted that as a result of trade liberalization, clothing prices had fallen steadily. Consumer prices were 5.8% lower in 2005 than they were in 2001, thus providing a benefit to all Canadian consumers.
Under the WTO, Canada retains the right to use safeguards, if necessary. Any request by industry for a safeguard investigation or action will be considered on its merits.
In 2005 UNITE HERE Canada petitioned the Canadian International Trade Tribunal to implement safeguards pursuant to the product specific safeguard provision. The CITT asked UNITE HERE Canada to establish that it had standing before the CITT by demonstrating that it had the support of the Canadian domestic industry before it could proceed with any inquiry.
The CITT reports that in response to its request for further data indicating domestic support, only two letters from small domestic producers were ever received. The CITT held the file in abeyance, pending the receipt of data showing broad producer support until October 6, 2006, when it ruled that UNITE HERE Canada did not have the required standing to petition for safeguard actions under the WTO China Product-specific safeguard.
To date, the Canadian textiles and the apparel industries have not sought government action under the China safeguard, as provided for under the terms of the WTO protocol of accession for China.
I wish to assure all members that the government is aware of the various challenges faced by the textile and apparel sectors and is committed to putting in place the right policies to assist these industries in meeting their challenges.