Mr. Speaker, this is the first opportunity I have had to congratulate you on your appointment to the chair, so congratulations to you.
I am very pleased to have the opportunity to address the House today on a matter of great importance to all Canadians. I say to all Canadians that the softwood lumber business is Canada's largest industry, as has been noted by one of my colleagues, and that it touches people in every province, including the province of Quebec.
One in sixteen Canadians work in the forest sector and hundreds of communities across Canada rely on forestry for their economic survival.
A healthy lumber industry is critical for Canada. To guarantee the health of our industry we need access to our largest market. The United States is by far our largest market. Canadian exports account for one-third of the U.S. softwood lumber market. That 33% share is the crux of the matter.
With the softwood lumber agreement due to expire on March 31, it is very important to shed some light on what is really behind the United States' position in this longstanding dispute.
Let us be very clear on this. The United States' position on softwood lumber is not based on any legitimate claim of unfair practices by Canada. It is based on protectionism, pure and simple. That has always been the case and, unfortunately, it appears it may well continue to be the case.
For over a century, U.S. softwood lumber producers have been trying to restrict Canadian exports. For over a century, they have wanted protection from Canadian competition. For over a century, they have stopped at nothing to hold on to market share.
The first U.S. duties were applied to Canadian exports of softwood lumber way back in 1930. The duty was $1 per thousand board feet and rose to $4 by 1935 before we successfully negotiated it back down to $1. Two years later, in 1937, lumber producers in Oregon and Washington petitioned the U.S. government for protection from unfair Canadian competition. At least that time they failed.
As time moved on and the number of Canadian imports into the United States increased, U.S. producers became increasingly agitated and sought protection. However, despite the fact that the U.S. lumberman's economic survival committee was able to prompt both congressional hearings and the formation of a White House task force on the issue, the U.S. trade commission chose not to impose any restrictions on Canadian lumber imports.
In the past 20 years the protectionist actions have continued and intensified. There have been three countervailing duty investigations in those 20 years and not once have the U.S. claims of subsidy been sustained.
We had a memorandum of understanding that allowed provinces to adjust their forestry practices. When these adjustments effectively eliminated the export charges it made no difference. Still, the subsidy claims persisted.
Now we are in the dying days of a softwood lumber agreement that was never intended to address the subsidy issue because clearly subsidies were never the issue. What the U.S. industry has always sought is to protect its market share. That is what this is all about.
It is true that Canada does well in this regard. We do well because we produce an excellent product at modern, efficient mills and follow practices that ensure sustainability. We do well because we deserve to do well, not because of unfair trade practices as the U.S. industry would have us believe.
In 1999 Canadian softwood lumber exports accounted for 33% of the U.S. market, an increase of 8% since 1990. The lion's share of our exports, some 47%, come from British Columbia. Twenty-one per cent come from Quebec, 9% from Ontario and 7% from Alberta. Those are the four provinces covered under the SLA.
In addition, the Atlantic provinces export softwood lumber to the United States, as does Manitoba, Saskatchewan and the territories.
This is a trade dispute that affects all Canada.
Today, with the market in a downturn, the United States is eyeing Canadian market share and does not like what it sees. It does not like the fact that so many consumers rely on Canadian softwood lumber. It does not like the fact that so many of our mills are efficient and modern compared with its mills. It certainly does not like the thought of how much more of the market we might get if we really had free trade.
The United States is clamouring once again for protection and threatening costly countervail duty and anti-dumping action against Canadian producers. However, rest assured, as the Minister for International Trade has stated repeatedly in and outside the House, the Canadian government will vigorously defend Canadian interests on behalf of all the provinces of Canada.
The temptation to restrict imports can be strong for those looking to protect a domestic industry that cannot always compete. However, in today's rules based trading system, that is no longer acceptable. Let us not forget that it is the United States that has led the charge away from protectionism and toward free trade.
The argument that open markets are in our greater economic interest and must be created and maintained is a sound argument. This is the driving principle behind the WTO and the NAFTA. This is the argument the United States is making again in favour of more market liberalization.
Let us not forget that it is not just Canadian producers who are looking for free trade in softwood lumber. American home builders and other consumers of softwood lumber are calling for an end to protectionism. They do not like the fact that they are being asked to unfairly subsidize U.S. companies with higher prices simply because those companies cannot or do not want to compete. That is unacceptable.
The United States is not self-sufficient in lumber. It needs our Canadian exports. Mr. Speaker, you know that very well with the riding you represent. Only the market should be allowed to determine how much Canadian softwood lumber enters the United States. The market should decide, not American congressmen or senators who are under political pressure. That is not the job of the coalition for fair lumber imports. It is not the job for Senators Trent Lott, Max Baucus or Olympia Snowe, and it is not the job of U.S. trade representative Zoellick.
We are committed to responding to protectionist threats from the United States and we will do so in consultation with the provinces, the industry and other stakeholders. Such consultation has already been very extensive by the minister and that will continue.
We have proposed that impartial envoys from Canada and the United States be appointed to explore the issue from all sides and to consult with stakeholders and bring forward non-binding proposals for resolving this longstanding dispute. We must be creative and constructive if we are to achieve our goal of free trade in softwood lumber.
I am pleased to indicate my support for the motion and our firm intention to pursue Canada's goal of free trade in softwood lumber.
I will turn now to some allegations made recently by certain U.S. senators and address and elucidate those with a few facts that they do not seem to have at their disposal or which they choose to ignore.
On March 1, 2001, 51 U.S. senators alleged that Canadian lumber was subsidized and that its stumpage fees were less than the market value. The reality is that Canadian provinces do not subsidize the lumber industry. Timber pricing by provincial governments in Canada has been the subject of three U.S. countervailing duty investigations in the past 20 years and not once have these challenges been successful.
In a recent report from the U.S. congress it is stated that:
Evidence to demonstrate this possible disparity between U.S. and Canada stumpage fees, is widespread, but inconclusive.
That comes from a congressional research service report for congress, “Softwood Lumber Imports from Canada: History and Analysis of the Dispute”, dated February 2, 2001.
The second allegation by senators was that Canadian lumber producers derive an unfair advantage from subsidized rail rates. This is rubbish. The United States department of commerce has been unable to sustain a subsidy finding on any government program. Canada's two national railways are privately owned and operated. There is absolutely no basis for this subsidy allegation.
The senators' third allegation stated that log export restraints by Canada are unfair. The United States was unable to sustain a subsidy with respect to log export restraints in the last countervailing duty investigation.
The U.S. has changed its law regarding the treatment of export restraints in any future investigation relative to CVD. Canada has challenged this provision of U.S. law in the WTO dispute settlement mechanism. It is worth noting that the United States also maintains restrictions on the export of logs.
The fourth allegation states that a flood of Canadian lumber is the cause of mill closures in the United States. Lumber imports from Canada are not the cause of any closures of lumber mills in the United States. Closures are currently occurring on both sides of the border.
It is a cyclical industry which is primarily driven by market demand. The latest available data from the United States forest service indicate that in recent years more than 50% of mill closures in the U.S. and Canada occurred in the province of B.C. alone. It is not a phenomenon that is unique to the United States as we all know.
Fortunately there are other U.S. voices involved in the debate and I would like to address them briefly. Senator Craig noted that there were other U.S. opinions to be heard. This point ought not to be forgotten in the debate over softwood lumber.
United States senators and representatives have recently introduced two resolutions before the house and the senate calling for a return to free trade. Representing the interests of U.S. lumber consumers, the resolutions underlined that the 1996 Canada-U.S. softwood lumber agreement had a negative impact on housing affordability and jobs south of the border and excluded many Americans from home ownership. It is not something any administration in the United States would be proud of.
The United States census bureau estimates that the fees on additional shipments are equivalent to more than $1,000 U.S. for the lumber in an average new home. That is simply unacceptable.
I conclude my comments on these unfounded allegations of U.S. senators by stating that there is simply no basis in fact for them. They have never stood up to any objective analysis and they will not stand up to any future analysis.
The Minister for International Trade has repeatedly stated inside and outside the House that the government desires free trade in softwood lumber. It will vigorously defend the interests of the province of Quebec, the province of B.C. and of all other Canadian provinces. It will vigorously defend the interests of the whole country. The goal is clear: it is free trade in softwood lumber.
