House of Commons Hansard #99 of the 39th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was food.


Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

11:50 a.m.


Derek Lee Scarborough—Rouge River, ON

Mr. Speaker, the hon. member is somehow suggesting that this particular trade agreement does a wraparound policy around all of our shipbuilding policies, or the lack thereof, in Canada. In fact, this treaty only concerns the four countries involved, one or two of which may produce ships. We need to make an adjustment with respect to those one or two marketplaces.

As he has pointed out, if Norway heavily subsidizes its shipbuilding, Norway will need to deal with that same adjustment period vis-à-vis Canada. If a country heavily subsidizes a production, the other party to the treaty will then point it out as a countervailing situation and then a countervailing duty will be invoked. Therefore, Norway, similarly, must make an adjustment.

What is happening is that all the countries to these trade agreements are signalling the end of subsidies.

We have made an exception for supply management in the agricultural sector. However, in shipbuilding, if we cannot subsidize but we can have tariffs, we get rid of the tariffs. If the other country cannot have tariffs and cannot subsidize, then we are on a level playing field.

Both Norway and Canada will need to have strategic plans in place, either to keep their shipbuilding, let it go or modify it so it can live on in the face of intense global competition from low wage countries.

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Government Orders

11:50 a.m.


Serge Cardin Sherbrooke, QC

Mr. Speaker, I would like all the same to reassure the hon. member. If the negotiations were very drawn-out, it was precisely because Norway used to provide heavy subsidies to its shipbuilding industry. The reason why the negotiations have finally reached a conclusion is that we are told—and our negotiators have confirmed—that Norway does not provide subsidies any longer.

We are obviously not going to start providing subsidies that are not allowed by the WTO. However, there are many things that can be done, including loan guarantees, better tax rules on leases, refundable tax credits for shipowners, measures based on maritime transport, and something like a Buy Canadian act for the shipbuilding industry.

I want some confirmations. Apart from the subsidies that used to be available in Norway, what would a Liberal government do tomorrow morning to help develop the shipbuilding industry and strengthen its infrastructure?

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

11:50 a.m.


Derek Lee Scarborough—Rouge River, ON

Mr. Speaker, as much as the member had difficulty cramming 50 years of wisdom into the last minute of his speech, I will have difficulty cramming into 30 seconds what the Liberal Party might or might not do in relation to a shipbuilding strategy in Canada.

Suffice it to say that all parties possess and have this additional baggage of a need to deal with our Canadian shipbuilding industry. The issue here today is the adoption of this treaty. I appreciate the member wants to hear the Liberal Party's position. However, the current government policy may or may not come up, which I am sure it will, during the foreseeable upcoming election campaign.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

11:55 a.m.


Pat Martin Winnipeg Centre, MB

Mr. Speaker, on behalf of the NDP, I am happy to join in the debate on Bill C-55.

What I understand from the speeches of my colleagues from Scarborough—Rouge River and Sherbrooke is that the NDP might be the only party standing in opposition to Bill C-55, the enabling legislation for the Canada-European free trade association agreement.

We in the NDP have some compelling reasons to oppose this legislation, most of which have been cited by the other opposition critics, and yet they still seem fit to support the bill even though they have raised very legitimate concerns about its shortcomings and potential hazards in the context of the shipbuilding industry in Canada, or what is left of it, and in agriculture.

As my colleague from the Bloc pointed out, the supply management of our agricultural products is important to our Canadian agricultural-industrial strategy and we do not want to do anything that will jeopardize, undermine or diminish, in any way, our commitment to supply management.

I point out to my colleague that this particular bill was criticized heavily by Mr. Terry Pugh, the executive director of the National Farmers Union, because he noticed that the provisions of the agreement concerning agriculture defer to the World Trade Organization's principles and mechanisms if there is arbitration or a disagreement.

We know the World Trade Organization's view on supply management and we do not trust its dispute mechanism when it comes to maintaining the strength and integrity of the Canadian supply management, be it the Canadian Wheat Board or supply management in various sectors in the province of Quebec. I would have thought that alone would be reason enough for my colleagues in the Bloc to oppose the adoption of this enabling legislation.

Until the shipbuilding provision was carved out and until the provision of using the WTO's dispute mechanism was pulled out, the NDP was not prepared to support this bill, and we maintain that principle today. We are not alone in that. Even though there are a few people who agree, apparently, in the House of Commons today in standing up for the Canadian shipbuilding industry and supply management, there are important third party validators in civil society who have made their opinions known at the committee and who spoke very well in defence of the NDP's stated position that we cannot support this legislation as it stands currently.

I will get into detailed specifics about the bill in a moment but I want to express my bewilderment over how it was that Canada abandoned and walked away from shipbuilding as a key industrial sector that we want to promote, support and maintain. What gang of chimpanzees decided that Canada should get out of shipbuilding? It seems to me that was the policy decision that was made.

I was the head of the Carpenters' Union in my home province of Manitoba and I know, from the history of my union, that in the 1940s, 1950s and 1960s the Carpenters' Union had 30,000 members working in the Burrard Dry Dock shipyards alone in downtown Vancouver. Those were 30,000 good paying union jobs in my union alone. That does not include the marine workers, the boilermakers, the ironworkers or the other tradespeople who were involved in the fitting out and production of ships in British Columbia.

My colleague from Victoria has tried to defend what is left of the shipbuilding industry in her coastal city. We had a burgeoning shipbuilding industry in this country. We were at the leading edge. At the Burrard Dry Dock alone, where my colleagues in the United Brotherhood of Carpenters and Joiners worked, they were producing a ship a week for the convoy to support Great Britain during the second world war, the merchant marine supply ships. The Burrard Dry Dock was setting the industry standard in the massive production of a certain category of ships that today cannot be built in Canada. That was 60 years ago.

We were at the leading edge, but by somebody's design, by some convoluted pretzel logic, somebody in the policy and decision making area of the federal government decided that shipbuilding was not really an industry in which we wanted to specialize as a nation. Maybe that someone had a grandiose idea that we would go on to more high tech industries or into the knowledge industry sector.

That is all well and good, but we should not think for a minute that shipbuilding is some smokestack blue-collar industry that is obsolete. It is not. Anyone who has ever been to Norway, as I have, would know that in Oslo the slips and the shipyards that build some of the world's finest ships are in a state of the art, computerized, high tech facility. It is on a par with the technology associated with the Canadarm in the robotics and magnificence of the machinery.

I have been to Lévis in Quebec, where there has been a fabulous tradition of shipbuilding throughout the 1800s and 1900s right up to today. If that were prioritized and nurtured the way other industry sectors have been, Canada would be right up there with Norway, Korea and Japan as one of the leading shipbuilding countries in the world.

However, there was a policy decision made many years ago to abandon that sector. People said, “Our kids do not want to work on those dirty tradesmen types of jobs, so we will move on to other types of work”. That was a tragic mistake.

No one can claim ignorance on this, because they have been reminded time and time again that abandoning the shipbuilding sector was a mistake. This bill that we are debating today compounds that mistake. It adds insult to injury in terms of abandoning that important sector.

Yesterday we sat in the House and listened to the president of the Ukraine outline the many bold, courageous moves that his struggling, burgeoning and newly independent country is going through. One of the things he focused on in his speech is how proud Ukraine is of the inroads it is making in getting competitive in shipbuilding.

Ukraine will be surpassing Canada in shipbuilding capacity and capability, because its government, through what I would argue is bold leadership on this front at least, has targeted shipbuilding as one of the industry sectors that it intends to promote.

We have a lot more shoreline than the Ukraine. We have deep sea ports in three oceans, including the port at Churchill, Manitoba. Of all countries, Canada should be at the leading edge of the shipbuilding industry. We are being left in the dust.

Members have talked about phasing out the tariffs on shipbuilding in order to enable and facilitate trade with these countries in this free trade agreement. Some have said that Norway has phased out its subsidies and is willing to drop its tariffs and therefore it is a fair trade relationship with a comparable country with high wages, et cetera. I am willing to admit that it is a social democratic country with a high wage, high cost economy similar to Canada's. That is a level playing field.

However, where it is not a level playing field is that Norway's shipbuilding industry was very heavily subsidized right up until the year 2000, when shipbuilders could stand on their own two feet and they did not need that subsidy any longer. We cannot compare that with the industry in Canada, which has been starved and systematically dismantled and is a mere shadow of its former self.

I argue that our shipbuilding industry cannot stand in fair competition with an industry that was nurtured, developed and fed for many years by public subsidy until the year 2000 and now is a successful, burgeoning, contemporary industry sector. It is folly to not acknowledge the inequity in these two businesses in these two countries as an example.

I said at the outset that the NDP is not alone in its opposition to this particular free trade agreement. While it has few supporters in the House, it seems, and our arguments have not moved MPs of other parties off their positions to support our position, there are many important third parties in civil society who validate and support the NDP's position.

Let me mention one. It is perhaps no surprise that the president of the Shipyard General Workers' Federation of British Columbia, Mr. George MacPherson, says:

The Canadian shipbuilding industry is already operating at about one-third of its capacity. Canadian demand for ships over the next 15 years is estimated to be worth $9 billion in Canadian jobs. Under the FTAs with Norway, Iceland, and now planned with Korea and then Japan, these Canadian shipbuilding jobs are in serious jeopardy. In these terms, this government's plan is sheer folly and an outrage.

Les Holloway, the Atlantic Canadian director of the Canadian Auto Workers and an outspoken champion of the shipbuilding industry, has made representations many times at committees before Parliament and before the House of Commons and said to the international trade committee that it “should not recommend this Free Trade Agreement without first recommending that the federal government first address the issues facing the shipbuilding industry that would allow the industry to compete in a fair and equitable manner with” these new trading partners.

That in and of itself, I would have thought, should have motivated my colleagues from the Bloc to say that this bill in its current form is not acceptable until some of these very real concerns are addressed.

Andrew McArthur, from the Shipbuilding Association of Canada and the Irving Shipbuilding yards, said before the Standing Committee on International Trade on April 2:

--our position from day one has been that shipbuilding should be carved out of this trade agreement. We butted our heads against a brick wall for quite a number of years on that and we were told there is no carve-out. If the Americans, under the Jones Act, can carve out shipbuilding from NAFTA and other free trade agreements, as I believe the Americans are doing today with Korea, or have done, why can Canada not do the same?

That is a legitimate question. The Americans are better negotiators than we are. Their negotiating stance is from a position of strength. They have decided that they are going to protect their shipbuilding industry under the Jones act. Eleven separate times, the Americans have challenged the Canadian Wheat Board as being somehow an unfair trade subsidy or advantage. We have never challenged the Jones act even though it is protectionism pure and simple, in its purest form.

I remember going down to Washington to argue with American senators on trade related issues. One time, in fact, it was on Devils Lake. One senator put it very succinctly to me and Mr. Lloyd Axworthy, who was the minister of foreign affairs at the time. We were sitting around a table with that American senator, who looked us in the eye and said, “Son, if it ever comes down to what is good for you and what is good for us, we are going to do what is good for us. Thanks for coming”. Then he showed us the door.

That is the bargaining stance of the Americans. The bargaining stance of Canadians seems to be one of weakness. We are lucky to get out of the room with some dignity after what we leave on the table.

I am no stranger to negotiations. I have negotiated collective agreements for the better part of my adult life. I know that we do not always get everything we want at the bargaining table, but I also know that we do not fold when issues of key importance to us are still on the table and there are still steps to be taken.

I put it to the House that there are still options for Canada if we want to make a statement about the integrity and the strength of our shipbuilding industry.

Mr. McArthur from the Irving Shipbuilding company also said:

We have to do something to ensure shipbuilding continues. The easiest thing is to carve it out from EFTA...if you do one thing, convince your colleagues in government to extend the ship financing facility, make it available to Canadian owners in combination with the accelerated capital cost allowance, and you will have as vibrant an industry as exists.

The capital cost allowance is something with which we are all familiar, something that is touted when it comes to promoting and supporting other industry sectors.

Those are two simple key recommendations that would be a vote of confidence in our industry instead of cutting it adrift and abandoning it to other actors and other players in other countries.

I was surprised at some of the things my colleague from Scarborough—Rouge River was saying. He said that we have to put in place these free trade agreements with no tariffs and barriers because we need to be able to compete with these countries of low wages and low costs that may be able to produce ships at a cheaper rate.

Korea is no longer considered a low wage, low cost country. Norway has a higher average industrial wage than Canada does. The people we have to worry about competing with are not, frankly, the low wage, low cost actors in this particular competitive environment.

Let us listen to what Karl Risser Jr., president, Halifax Local 1, Canadian Auto Workers Shipbuilding, Waterways and Marine Workers Council, said before the Standing Committee on International Trade. He said:

I am here on behalf of the workers in the marine sector of our union to express our opposition to this agreement. Canadian shipbuilders find themselves competing for work in domestic and international markets on far from a level [playing field]...Other governments, Norway for one, have supported their shipbuilding industries for years and have built them into [key] powers, while Canada has not. We have had little protection, and what little protection we have left is a 25% tariff on imported vessels into Canada, which is being washed away by government daily through agreements such as this and the exemptions being negotiated with companies.

Why are we giving this away? To what end? What greater power are we serving here? It boggles my mind. Mine is not a very scientific, professional or academic approach but a gut feeling that we are making a tragic mistake. I despair sometimes. Where are my kids going to work if Canada does not build anything any more, if everything is built somewhere else? Are we willing to abandon those key manufacturing sectors so lightly and so readily?

Karl Risser Jr. ends his comments by saying:

So this EFTA deal is a bad deal for Canada. I'd love to see someone answer the question, what is Canada going to get out of this agreement? I know we're going to destroy our shipbuilding industry, a multi-billion-dollar industry in Canada. It's on its last legs now and needs a real boost. We have that opportunity in front of us, but whether we take it or not is the question.

He closes by saying:

Again, the one question I have is, what is the benefit to Canada from this agreement? The last thing I would like to ask is, will this agreement be put before Parliament, as [the current Minister of Foreign Affairs] has said, for a full debate and vote?

I guess his question is answered. We are here for a full debate. We are not here in quite the context that we were told we would be when it came to free trade agreements and some of the points of concern that have been raised regarding the process, as we were told.

I do have some comments and notes to make on that subject. We are not entirely satisfied that free trade agreements are getting quite the vetting that was committed to us over the years. This debate today is still subject to the fact that the government “may” bring it before the House of Commons and “may” put it to a vote. I do not know at this stage what we can do to satisfy ourselves that the concerns of Canadians are being met in the context of at least the shipbuilding industry.

Second, with what time I have left, I would like to express again our concerns in the context of the integrity of supply management in this country, which is put in jeopardy by the dispute mechanism stipulated in this free trade agreement. If the government is going to subject disputes over supply management to the WTO, which we know is no friend of supply management, then the National Farmers Union and its counterparts in the province of Quebec would have serious concerns.

For those two reasons alone, we feel confident that we are doing the right thing in voicing our opposition to this bill. We are not opposed to free trade. We are not opposed to fair trade, especially with countries that are virtually our equals in terms of economies.

With social democratic countries such as Norway, I believe there should be a free movement of goods and services and products, but we should not trade away the farm. We do not have to be Jack and the Beanstalk here, where we trade the family cow for three beans, none of which may actually sprout. With that analogy, I will end my remarks.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

12:15 p.m.


Derek Lee Scarborough—Rouge River, ON

Mr. Speaker, I want to begin my remarks by endorsing the remarks that the hon. member made in relation to Parliament's unmatured role in ratifying or consenting to treaties entered into by the Government of Canada. Up to now, of course, when a treaty was entered into by Canada with another country, if there was no change to our domestic law, there was no need for the government to bring the matter to Parliament at all, and the treaty was entered into, signed, executed and parliamentarians would just be spectators.

In this particular case, entering into the treaty requires some adjustment to our domestic laws, therefore not the treaty itself but the changes to our domestic laws have to be presented to Parliament, and we now have the opportunity to comment on the overall treaty.

The hon. member, in talking about how agricultural products are dealt with under this treaty, treated the subject area a little bit like it was a zero sum game. In every trade treaty like this there are undoubtedly winners, losers, and an adjustment period as the two or more economies adjust to the new trade environment.

Would the member not agree that even with an adjustment where there might be some losers, there are always winners and in fact it is not a zero sum game? In fact, a trade treaty almost always brings about a quantum jump in overall trade where there is growth and many more winners offsetting whatever people have been harmed by the adjustment phase, even though these treaties try to protect those who are potentially harmed in the adjustment phase.

Would the member not agree that with this treaty, if it is adopted by Parliament, the House and the Senate, that there will be a lot more winners, that all of us will win?

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12:15 p.m.


Pat Martin Winnipeg Centre, MB

Mr. Speaker, I did state clearly in my comments that the NDP is not opposed to free trade or fair trade as our members would rather see it. We are just simply cautious because our experience has been such that we have put our hand on the stove more than once and we are being asked to put it on again in our view.

My colleague did raise the point that we are still not satisfied that these treaties are in fact not being brought to Parliament in the manner that we expected. International treaties are now tabled in the House for a 21 day period during which the House may discuss, debate or hold a vote. A copy of the treaty with an explanatory note is distributed to each MP and after the 21 days the government decides whether or not to ratify the treaty.

In the end the government still retains complete control over the process. That is not quite what we envisioned when we said that it should be up to Parliament to decide if we are going to enter into these international treaties dealing with trade because they are significant in terms of shaping the industrial development of our country.

We argue that treaties that exclude certain industry sectors will in fact shape our progress in that sector, such as shipbuilding. Therefore, we should have an opportunity to ratify or not this process in a greater way than we do.

My colleague had something to say about my remarks regarding how this free trade agreement would deal with agriculture et cetera. I remind him the profound effect that free trade agreements can have on industry sectors such as agriculture and the analogy that I have used is the ink was no sooner dry on the Canada-U.S. Free Trade Agreement than the Americans were filing unfair trade challenges at the Canadian Wheat Board. They tried 11 separate times to dismantle the Canadian Wheat Board by trade challenges. They put our Wheat Board under incredible stress and pressure that it is still suffering under today.

The Americans are lucky because they finally found a government willing to do their dirty work for them, what they were unable to do through the FTA and NAFTA. Believe me it was one of their designs and they had their sites set on the Canadian Wheat Board as they were sitting at the table. Simon Reisman did not have a chance because the American negotiators in the free trade agreements knew exactly what they wanted and they put in place, they believed, the provisions to do it. The Canadian Wheat Board has been hanging on by the skin of its teeth through these 11 separate trade challenges. Now, as I say, the Government of Canada is going to do it for them.

The reason I raise this is this particular agreement has a dispute mechanism that goes to the WTO in the event of trade challenges. The WTO is no friend of supply management. That in itself is worrisome enough that we believe this package should be opposed.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

12:20 p.m.


Serge Cardin Sherbrooke, QC

Mr. Speaker, I can assure the member for Winnipeg Centre that I was also there when we welcomed the representatives of the shipbuilding industry. They were in favour of two important elements concerning phasing out tariffs. There were two conditions.

Of course, there was accelerated capital cost allowance and, through EDC, there was financing, insurance and loan guarantees related to the sales agreements. As much as possible, the government needs to be firmly committed to Quebec- and Canadian-made products for its military needs, coast guard needs or offshore investments.

Now is the chance for the member to question the government and the current Minister of Foreign Affairs, who was formerly the Minister of International Trade, to ensure they are committed to supporting the shipbuilding industry in Canada and Quebec. I think that action can be taken, and that the government should not ignore or be unresponsive to the expectations of the shipbuilding industry. I am convinced that the government needs to be realistic and commit to respecting these elements in order to protect the shipbuilding industry.

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12:20 p.m.


Pat Martin Winnipeg Centre, MB

Mr. Speaker, I know there is very little time, so I will simply say briefly that people are judged by what they do, not by what they say. I do not understand how the member can hold those views about the failures of this bill to support the shipbuilding industry and then support the treaty.

I would remind him again that my union, the United Brotherhood of Carpenters, used to have 30,000 members building ships in the Burrard Dry Dock shipyards of Vancouver alone. That was how important shipbuilding was to the union that I represent and the people of Vancouver. That is 30,000 good paying unionized jobs in an industry sector that specialized in high tech and was certainly a modern shipyard.

As I said, it compares with the Canadarm in terms of the robotics and the specialization associated with building these big post-Panamax tankers that make the House of Commons look tiny. We could probably fit three House of Commons chambers in one of these ships. By supporting this bill we abandon even further the shipbuilding industry.

We have an opportunity here to make a statement, that the House of Commons is seized of the issue of the survival of the shipbuilding industry. By voting for this bill and supporting it, we are saying that we are not interested in that industry any more. Maybe there will be jobs created at Wal-Mart for our kids to work, but there sure will not be any in the shipbuilding industry.

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Government Orders

12:20 p.m.


Mario Silva Davenport, ON

Mr. Speaker, before I begin my remarks, let me say how delighted I am to speak on this issue. I think all members of Parliament, however they feel on this issue, whether they are in favour of it or against it, I am sure are quite pleased that we have an opportunity to debate this before this House.

It was not too long ago, and it still is to an extent today, that free trade agreements and trade agreements had been the exclusive domain at the executive branch. I think it is a positive step that the government has put forward this before this House. Bill C-55, the European free trade association agreement, is certainly an agreement worthy of debate in this House and also, I think, worthy of support because we are talking about some of the most ideal friends and countries with which we could possibly trade.

Obviously, some of us have concerns when we do trade with certain countries that have issues of human rights. This is not the case. These are, in fact, countries in Europe that we can certainly do business with because they have a proud history defending human rights as western democratic countries. They share the values that Canada and Canadians have.

Throughout our history, Canada has always been a nation of traders. From the fur traders of the early years of Canadian history to the current day when we sell the world everything from energy products to high tech products, our prosperity is dependent on our ability to trade.

In the early days of Canada, in 1867, when we founded this country, and before the Treaty of Westminster, the predominant trading partner for Canada was Great Britain. Today, 80% of our trade is done with our American partners. Diversity in trade is going to be extremely important as we get into a more competitive world.

I think that this particular deal, the European Free Trade Association agreement, is a great opportunity for all of us to broaden the trading partners that we have, and also the trading agreements that we have in place to ensure that we, as Canadians, benefit from the whole process of trade with countries in Europe.

It is important to remember that as a nation of approximately 34 million people, from the very beginning, Canada has relied upon trade for our prosperity and for our continued growth, both in terms of economics and population. We are a country blessed with resources of wealth and a labour force that is second to none in the world.

Our GDP is valued in excess of $1.4 trillion, creating a per capita wealth of over $38,000 per person. Our purchasing power as a nation is over $1.2 trillion. We export over 2.2 million barrels of oil per day. We export over 100 billion cubic metres of natural gas. We export aircraft, automobiles, industrial goods, plastics, timber and aluminum, to name but a few products.

Today, as we talk about the ever-increasing price of gasoline and the cost of a barrel of oil constantly going up, there are concerns about how this will impact on our economy.

Canada is certainly blessed with an abundance of natural resources and we are an energy super house, to say the least, because these are very valued commodities throughout the world at the moment. Canada is certainly benefiting and as we see today, the rising dollar in this country is having some positive effects and also some negative effects.

Some members in this House and I certainly have spoken before of the issues of concern in relation to the manufacturing sector. We are, of course, concerned about the loss of jobs in the manufacturing sector. Yesterday, it was reported in the news that today more people are working in the service sector than in the manufacturing sector.

Some people might say this is a positive things, however, others are really concerned. I would say the one issue of concern, specifically, is not just the loss of manufacturing jobs, which I think is so critical and important to this country, but it is also the fact that we are losing good-paying jobs as well.

The manufacturing sector pays twice what the average person is making in the service sector, and the service sector also has very few benefits offered to individuals and their families. This is of grave concern to all of us. We have to pay special attention to those issues of concern.

Total exports each year account for over $440 billion. What does all this mean to us as parliamentarians and, more important, to Canadians across our country who work each day to build prosperous lives for themselves and for their families?

Simply put, the future prosperity of Canada is dependent upon trade and our trading relationships as much as it was in the early days of settlement of this country. The most profound difference is that in the early days of settlement in Canada almost all trade was targeted locally or within the context of colonial realities. In later days, trade with Britain and within the context of the Commonwealth was very much the primary reality we faced as a country.

Few would argue that the world is a very different place, not only from the time of the early settlers hundreds of years ago, but from the world we knew less than 50 or even 20 years ago.There are a few realities that we as a nation must recognize and address. They are the emerging markets of Asia, the powerhouse economies of China, India and Brazil that will continue to grow and to impact upon the world economy.

We all know that Canada in the late 1980s entered into negotiations with the United States that saw the creation of the North American Free Trade Agreement. There are areas of the agreement that continue to cause us concern, but the reality is that our trade with the United States represents over 80% of our trade with the world. The reality is that under NAFTA Canada enjoys a substantial trade surplus with its trading partner, the United States. Possible changes to NAFTA are a debate for another day but the point is that in negotiating this agreement it was clear that new economic realities exist in the world and we must be in our best position to deal with them.

The European Free Trade Association agreement we are debating today may not appear to represent an enormous part of our economy. In fact, the European free trade agreement countries are the fifth largest merchandise exports for Canada.

There are some key points that need to be addressed and also to be highlighted on this particular bill. This bill eliminates duties on non-agricultural goods and selected agricultural products, giving Canadian exports better access to Canada's fifth largest merchandise export destination. It lays the groundwork for a more comprehensive agreement on service and investment with European free trade agreement countries as well as free trade talks with the broader European Union.

The bill addresses concerns regarding the shipbuilding sector by obtaining the longest tariff phase-out for any agreement with developed nations: 15 years for the most sensitive vessels and 10 years for other sensitive vessels, with known tariff reductions for the first three years. Shipbuilding is also supported through a $50 million renewal of Industry Canada's structured financing facility.

A snap back provision exists, raising tariff levels to the most favoured nation rate for up to three years if the agreement results in serious threats to domestic industry. A process for binding arbitration is also laid out. Canadian agricultural supply management and buy Canada government procurement programs are protected.

The European free trade countries, as I stated before, are the world's 14th largest merchandise traders and Canada's fifth largest merchandise export destinations. Two-way Canada-EFTA non-agricultural merchandise trade amounted to $12.6 billion in 2007. Canadian exports to the European free trade market amounted to $5.1 billion, as of 2007. It included some very important materials, such as nickel, copper, pharmaceuticals, machinery, precious stones and metals, medical devices, aluminum, aerospace products, pulp and paper, organic chemicals, autos and parts, art and antiques. There is a broad perspective of things that we are trading with the Europeans already and we expect this to grow with this particular agreement.

Canadian imports from the European Free Trade Association countries amounted to about $7.4 billion in 2007. These imports include mineral fuel, pharmaceuticals, organic chemicals, machinery, medical and optical instruments, and clocks and watches. Canadian foreign direct investment in the overall EFTA market was about $8.4 billion in 2006 and direct investment in Canada from the EFTA market was about $15.6 billion in 2006. We are talking about very large sums of money.

It is also important to note the reactions of some of the stakeholders. Some concerns have been raised and it is important to highlight what some of the stakeholders are saying. Despite the protections given in the agreement, there is still fear that the shipbuilding industry may be unable to compete under these terms and may result in significant job losses. That is an issue that needs to be addressed.

There are some provisions in here that address those concerns, but the government has to take those issues seriously. It must make sure that the shipbuilding industry is protected in whatever way possible, not just through these agreements but also through financial incentives that are needed to maintain that vital industry for Canada. We as a country should take very seriously the manufacturing sector and the shipbuilding industry.

The National Farmers Union believes that the agreement will negatively impact supply management by undermining Canada's position at the World Trade Organization. None of the supply management groups have indicated any concerns. One sector which is likely to feel the most effect is dairy, however, Dairy Farmers of Canada was consulted and has expressed no concerns. These are issues that need to be put on the table.

As I mentioned before, we are talking about an agreement the history of which goes back to 1998 when the Liberal government under Jean Chrétien first began negotiating this agreement. The agreement was signed on January 26, 2008 in Switzerland. It was tabled in Parliament on February 14, 2008. A committee reviewed the agreement and reported to the House on April 7, and now we are debating this government bill to enact it in legislation.

Of all the agreements we have spoken to in the past, this one deals with countries of like mind, countries for which we have a lot of respect and with which we have built long term alliances over many years. There are many historic and cultural ties that bind Canada and those European nations.

We have also seen the birth of the European common market, which has been a huge success. It has brought countries that at one time were in poverty into first world status and improved the quality of life of all people who live in those countries. The European Union has done a magnificent job of raising the standard of living of all Europeans, creating a common market that has been a huge success.

Every day I read about what is taking place in Europe. There was a major meeting to sign the treaty of Lisbon. Once it has been voted on by the parliaments in Europe and comes to fruition, it will certainly solidify a truly great united nations of Europe, if we could call it that.

It is a great leap of faith for all of these countries to work together. It is something they realized they had to do because of some of the strifes and wars that had taken place in the past, but also, the European nations realize this is a new reality that is important for the 21st century.

We here in Canada are quite pleased with the development that is taking place in Europe. We certainly want to solidify our ties not only socially, but also economically. This particular agreement that has been put forward will go a long way to doing that.

I am pleased to lend my support, notwithstanding the fact that there are still some concerns out there. I am not unsympathetic to those concerns. Those concerns need to be addressed. There are different mechanisms that can be put in place. It is beholden upon the government to do so and make sure that our sectors and industries are protected.

At the end of the day we want to ensure the well-being of all Canadians to make sure that they have a decent job and earn a decent wage. We want fair trade, as has been talked about. Fair trade is the important ingredient to make sure that these agreements stand the test of time and that they produce positive results for all Canadians.

I am delighted to once again state how pleased I am that this bill is before this House and that the executive has allowed Parliament to have a debate on a trade agreement.

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12:40 p.m.


Denise Savoie Victoria, BC

Mr. Speaker, the hon. member seems to have glossed over the issue of supply management. He said that dairy farmers, for example, were consulted and were not concerned. He said he is supportive of fair trade, but he and his party seem to be advocating free trade. I do not know if he missed the comment from the National Farmers Union before the standing committee, where it stated that the most critical and highly negative aspect of this deal from its point of view is its impact on supply management, for example in the dairy industry, by eliminating the import tariff.

It seems to me that supply management should be part of the architecture of fair trade, to help ensure food supply and food safety around the world. It is really key to the model upon which cooperative agricultural trade should be built.

I am wondering if the member would comment on that, because in this agreement, although it has some positive aspects, we seem to be certainly going away from supply management. It has no resemblance to the fair trade practices that he referred to.

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12:40 p.m.


Mario Silva Davenport, ON

Mr. Speaker, I take the member's concerns about supply management in particular in relation to food supply and safety. I think all of us as parliamentarians should be greatly concerned about those issues. I believe that in my remarks I also mentioned that there were some concerns. I did not say there were no concerns. Specifically, concerns were raised by the National Farmers Union, but I also did say that Dairy Farmers of Canada was consulted and expressed no concerns. This is the information that I received. I believe it is still accurate. I take note of what the member has stated. I think these are issues of concern.

Overall there is no such a thing as a perfect deal. Deals take many years to negotiate. There are many issues on the table. Not every sector is going to be 100% satisfied with any deal that Canada signs with another country, be it even countries in Europe specifically.

As I have mentioned, I think that certain countries in the European Union would be ideal partners for Canada. They have an incredible record in terms of human rights protections and fighting for social justice. There are many governments in Europe which have social democratic governments as well and which fought very hard for issues such as equality and human rights. They obviously are in agreement with this particular agreement. We have to understand there is a commonality that we share.

I think this agreement is a positive one, notwithstanding that there are some concerns. As I said, if the government gets together and tries to put investments into the right markets, it can alleviate some of those concerns and pressures that some of those sectors might feel from the agreement. In totality the agreement is not perfect, but it is a positive step forward.

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12:45 p.m.


Brian Masse Windsor West, ON

Mr. Speaker, what hope or indication does my colleague have from the government that it would introduce a shipbuilding policy or change its process right now? The current budget that his party is supporting does not have any of those mechanisms in there. In fact, it reduces the capital cost reduction allowance. It is eliminating that and phasing it out over the next three years. It is doing the exact opposite.

Maybe the member could educate us in terms of what specific things the Conservatives are doing to give him hope that they would actually address this issue.

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12:45 p.m.


Mario Silva Davenport, ON

Mr. Speaker, hope is an important thing. I certainly believe there is a possibility that the government would react in a positive manner to address issues raised, not just by shipbuilding associations and the shipbuilding industry, but also by the manufacturing industry.

However, the present government will not be in power forever. I hope the new government, the Liberal government, will enact some of those measures.

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12:45 p.m.


Guy André Berthier—Maskinongé, QC

Mr. Speaker, it is with keen interest that I join the debate today on Bill C-55, which would implement the free trade agreement between Canada and the European Free Trade Association. The association is made up of four countries: Norway, Iceland, Liechtenstein and Switzerland.

To begin, I want to reiterate that after responsible analysis the Bloc Québécois will support this bill, which we believe, in general, offers promising economic trade opportunities for Quebec that are worth pointing out. However, there are also some concerns that my colleagues have mentioned and that we share.

We all know that Quebec is a trading nation. Many of our companies, especially those operating in leading-edge sectors, rely on exports to ensure their growth. That is important. International exports represent almost one-third of Quebec’s GDP. If we include trade with Canada's provinces, Quebec’s exports represented about 50% of its GDP in 2006.

In trading terms, Quebec is far too dependent on American markets. Indeed, nearly 85% of our current exports go to the United States. Given the slowdown in the American economy that we are now witnessing, the rise in the Canadian dollar and the aggressive tactics of emerging countries such as China and India, we are finding it increasingly difficult to maintain our market share with our neighbours to the south. The results have been significant for Quebec. More than 150,000 manufacturing jobs have been lost in the past five years, including more than 80,000 since the advent of the Conservative government and its laissez-faire doctrine.

The riding that I represent, Berthier—Maskinongé, has been severely affected by the loss of jobs in the furniture and textile industries. If our trading opportunities were more diversified and we were less dependent on the United States, our manufacturing sector would not be so threatened. This is why this free trade agreement with the European association deserves to be explored and, indeed, to be supported.

For example, as is the case in Quebec, the brand name pharmaceutical industry is very strong in Switzerland. Quebec is the Canadian leader in the field of brand name drugs because of its pool of skilled researchers and its favourable tax system. One can easily imagine, and we even hope, that Swiss pharmaceutical companies could be tempted to produce their drugs in Quebec as a way of gaining easier access to the American market. We will strongly encourage that idea, which would result in new investments in Quebec. That is one of the main reasons why we support this bill.

If we look at the case of Norway, nickel accounts for more than 80% of Canadian exports to that country. The largest mine in Canada, and the third biggest in the world, is located in the Ungava region of Quebec and is owned by a Swiss company. This agreement can provide significant benefits for Quebec.

That is another reason why we support this agreement.

As I already said, we will support this agreement because it gives Quebec some good opportunities and the Bloc Québécois is here primarily to defend the interests of Quebec.

This agreement also has the advantage of not containing the same kinds of shortcomings as some other accords. For example, in contrast to NAFTA, the agreements with Costa Rica and Chile have a bad chapter on investment, as we know very well, which gives companies the right to sue a government that adopts measures that could reduce their profits. There are no such provisions in the agreement with the European Free Trade Association. The Bloc Québécois is very happy about that. These countries have a basic respect for human rights and the rights of working people and that is another reason why we support this agreement.

In addition, the agreement with the European Free Trade Association covers only goods and not services. Nothing would force us, therefore, to open public services to competition, whether provided by the government or not, because they are not included in the agreement.

Similarly, financial services and banks will not be exposed to competition from Switzerland, which has a very strong banking system.

It is the same with government procurement. The government remains perfectly free to purchase in Canada, subject to the WTO agreement on government procurement. This is an indispensable aspect of any kind of trade agreement.

I would also like to mention agriculture. Our colleagues in the NDP seem to have some concerns in this regard. I want to speak more especially about supply management, which is very important to Quebec and the riding of Berthier—Maskinongé that I have the honour of representing.

We all remember it was the Bloc Québécois that got a motion passed in 2005 requiring the full maintenance of supply management. We have been assured by agriculture officials in Quebec that this agreement does not derogate from supply management and does not contradict it or call it into question.

We are very proud of this motion and will continue to defend it because we think that farmers and consumers are best served by this system. We are satisfied with the bilateral agreements on agriculture because products subject to supply management remain protected.

The in-quota tariff is eliminated of course under the agricultural agreement with Switzerland, but it applies only to the part of the market already covered by imports, or 5%. The elimination of this tariff will therefore have only a marginal effect on our dairy farmers because the tariff rate quotas and the over-quota tariffs remain the same. It is important for this to remain as is, especially since milk proteins are excluded from the agreement. This is another essential provision for keeping our agriculture strong.

The fact that the 7% tariff is eliminated under this agreement makes it all the more necessary, however, for the federal government to remain adamant at the WTO that supply management is simply not negotiable. The Bloc Québécois will continue to demand a full defence of supply management at the WTO.

This being said, we have some concerns about what the agreement means to the future of our shipyards. Imported ships are currently subject to a 25% tariff. Under this agreement, the tariffs will gradually start dropping in three years and will be eliminated in 15. I heard the international trade minister boasting about the fact that his government had managed to negotiate this 15-year adjustment period.

I think the minister must be aware that the adjustment period provided for in the agreement will be useful only if it is accompanied by vigorous adjustment and modernization programs for shipyards.

Otherwise, it will just slow the decline of our industry. Norway has grasped this quite well, by the way.

In Canada, the federal government, be it Liberal or Conservative, has done nothing to support our shipbuilding industry. It has not supported shipbuilding since 1988. This is really a shame, given all the subsidies that are currently being handed out to the oil industry, which makes exorbitant profits.

As well, not only are the few aid measures still available very poorly adapted to the shipbuilding industry, but the federal government has even penalized the provinces that have instituted innovative measures, such as the refundable tax credit in Quebec, which for some years was considered by Ottawa to be taxable income under the Income Tax Act. That allowed it to claw back 20% to 25% of the assistance that Quebec paid to the shipbuilding industry. Unbelievable but true.

So today, some of our shipyards are having trouble and are not really very competitive. This kind of policy has to be shelved. We have to provide more support for our shipbuilding industry.

Because it receives support from its government, the industry in Norway is productive and competitive today. And now the Norwegian government is working to open up new foreign markets for it.

The Conservatives’ policy, which amounts to leaving companies to their own devices, could be very harmful to our shipbuilding industry. We have 10 to 15 years to get back on track and implement programs to support our industry.

In the case of the manufacturing sector, we can see how Conservative inaction has led to the loss of thousands of jobs. We should learn that lesson when it comes to the shipbuilding industry. So we are calling on the federal government to abandon its laissez-faire policy and put forward a policy to support and develop the shipbuilding industry quickly. The Bloc Québécois has been calling for this for several years now.

In fact, this is the motion that I introduced at the Standing Committee on International Trade, on behalf of the Bloc Québécois, and that received support there:

The Canadian government must without delay implement an aggressive Maritime policy to support the industry, while ensuring that any such strategy is in conformity with Canada’s commitments at the WTO.

The motion was supported by all members of the committee, but only after some discussion and some hesitation. I think it is important in this context.

We have to support our industry. We have 10 to 15 years, depending on the type of ship, to support the industry. It is therefore time for action.

In this motion we are telling this government that it has to act and put forward a comprehensive strategy to support the shipbuilding industry, because the Conservatives’ bad industrial policy must not be allowed to result in a bad trade policy.

Laissez-faire has produced no results for several years, and it is time for action. This government has the resources. The strategy should facilitate access to capital for the industry, stimulate investment, give preference to local suppliers in public procurement and of course encourage shipowners to buy their ships here at home.

When shipyard representatives appeared before the committee, they reiterated that they wanted a program to facilitate accelerated amortization that buyers of Canadian ships could use, and a structured financing mechanism.

On the question of support for struggling industries, the Conservative government is practising a hands-off, laissez-faire policy, as I said earlier, a free enterprise policy: free trade will solve everything, all by itself. That is not true.

In the case of shipyards, as in the case of manufacturing, where we have lost many jobs, we believe this policy is quite simply irresponsible.

We know how the Americans and the Europeans support their industries. We need to do the same so that we can become more competitive. That is why the Bloc Québécois will press the government to quickly introduce a series of measures to promote the development of our shipbuilding industry. I ask the opposition parties here to support us.

In closing, even though we support this agreement, we need to be aware that its impact will still be limited. The four members of the association represent nearly 12 million people and account for roughly 1% of Canadian exports. The real trade issue is the European Union. With its 495 million inhabitants who generate 31% of global gross domestic product, the European Union is the world's leading economic power. We believe that Canada should be pursuing a free trade agreement with the European Union.

As we know, Canada's petrodollar has risen substantially in value against the American dollar, which has led to a major crisis in the manufacturing industry. What people may not know is that the dollar has gone up in value much less against the Euro. As I said earlier, if our trade were more diverse and our exports less focused on the United States, our manufacturing sector would be much stronger and more robust. The European Union is an essential trading partner.

Moreover, a free trade agreement with the European Union would have benefits in terms of investment. Together with NAFTA, the agreement would make it attractive for European companies to use Quebec and Canada as their gateway to the North American market and consequently to move some of their production there. We will support such a free trade agreement. As nearly 40% of European investments in Canada are in Quebec, it would certainly be a desirable location for European companies that want to invest in North America.

We hope that the federal government will quickly reach an agreement with the European Union, because it would be the best way to diversify our economy and reduce our heavy dependence on the American market.

I am willing to answer any questions hon. members might have.

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1:05 p.m.


Serge Cardin Sherbrooke, QC

Mr. Speaker, my colleague spoke of how the government should be focusing on negotiating a free trade agreement with the European Union. I have a question for him on this. We are already part of NAFTA, which includes Canada, the United States and Mexico. This creates distortions because Mexico has a free trade agreement with the European Union.

Companies in Quebec, including Bombardier, currently have plants in Mexico. Bombardier has a small problem with regard to competition because it can export its product duty free from Mexico, while in Quebec and Canada it cannot export to the European Union without having to pay $800 or the equivalent in duties.

As far as employment is concerned, however, the company is managing quite well considering its performance, its modern equipment, and so on. It can be competitive in terms of its labour force. When it comes to duties, however, it cannot. We agree with the need for a free trade agreement with the European Free Trade Association, but I think there is an urgent need to negotiate an agreement with the European Union.

I would like my colleague to provide more information on this.