John Duncan

[Softwood Lumber, November 21st, 2001]

Mr. Speaker, over the last five months the provinces have been meeting with the U.S. department of commerce on the softwood lumber dispute. The provinces have done all the talking and the U.S. has done all the listening. Our bargaining position is completely unequal, contrary to commitments made by the U.S. at the WTO talks last week on countervail and anti-dumping.

When will the minister insist that it is time for the U.S. to start talking, rather than Canada doing all the talking?

[Canadian Commercial Corporation Act, November 19th, 2001]

Mr. Speaker, I was pleased to hear the minister make reference to the meeting last week in Doha, Qatar. It is a sign of the times that Canada had nine federal parliamentarians at the meeting, two from the official opposition of which I was one, as well as some provincial ministers. I was pleased to be there to see the process at work.

We met with parliamentarians from other countries while we were at the meeting. There are currently no terms of reference for parliamentarians at WTO talks so we came up with a resolution as a group that would see a parliamentary association attached to the WTO which would lend itself to increased transparency for the organization.

The resolution would need consensus approval from 144 nations. We are not yet there but the Canadian government is an advocate as is the European community. We can only hope that after the next ministerial meetings this will resonate and we will get there.

Bill C-41, an act to amend the Canadian Commercial Corporation Act, is largely a housekeeping bill related to the activities of the corporation. Unlike the Export Development Corporation, most Canadians do not know about the Canadian Commercial Corporation. Probably the prime reason is that the Canadian Commercial Corporation is generally involved in non-controversial projects. Canadian producers contract to the Canadian Commercial Corporation which then contracts to foreign governments and their agencies for Canadian goods and services.

Protectionism has been falling away and government procurement has been opening up considerably. With additional membership in the WTO governments need to harmonize their procurement rules with WTO rules.

While in Doha Canadian parliamentarians met with Taiwanese parliamentarians. One of the things they mentioned to us was that Bombardier had bid on the transit system in their capital, Taipei, and were unsuccessful. However the rules were different then. As part of the process of becoming a member of the WTO Taiwan had to change its government procurement rules. It has done that. It wanted in no uncertain terms for us to pass on to Bombardier that it is open for business.

Taiwan had looked all over the world and thought Bombardier's product was a good product in the marketplace. Taiwan wants to put transit into three more cities and does not want Bombardier to give up on it as a possible client. These kinds of meetings are potentially quite beneficial.

We also met with the delegation from the People's Republic of China. One of the things we wanted to scope out with them was how much potential Canadian demand there was for forest products. This looks very promising. It is an avenue Canadian suppliers and the Canadian federal, provincial and other governments are pursuing.

As the official government contracting agent established in 1946 the Canadian Commercial Corporation can sell Canadian products and services in foreign government markets. Without the corporation many of these markets would be much more difficult to access and we would lose opportunities.

The difference between the CCC and its partner Export Development Corporation is that EDC is a financial institution that provides loans and insurance whereas the Canadian Commercial Corporation is not a financial institution and does not issue commercial loans or sell insurance.

Bill C-41 would amend the Canadian Commercial Corporation Act by separating the functions of the chairperson of the board and chief executive officer and describing the roles and responsibilities of the chairperson and president of the corporation. It would also authorize additional borrowing. This would be a significant increase. It would go from the $10 million that is currently authorized to $90 million.

The bill would permit the corporation to charge an amount considered appropriate for providing services. The historical level is somewhere between 0.5% and 4% and has tended to be done on a cost recovery basis rather than through a commercial fee for service.

The Canadian Commercial Corporation was involved in $1.338 billion worth of business last year. The corporation currently receives an annual appropriation of $10.7 million for its operating expenses and is allowed to borrow up to $10 million.

The CCC does not lend money. It acts as a facilitator between Canadian companies selling to foreign governments. The CCC generally acts as the prime contracting agency with the foreign government while the domestic producer contracts with the commercial corporation.

The Canadian Commercial Corporation is the custodian of the defence production sharing agreement, otherwise known as DPSA, with the U.S. which represents more than half its business volume. U.S. department of defence regulations specify that all U.S. defence purchases over $100,000 from Canadian suppliers be transacted through the Canadian Commercial Corporation.

The Canadian Commercial Corporation provides services to Canadian defence suppliers such as a waiver of requirement for U.S. cost accounting standards. In other words, the commercial corporation will accept standard accounting practices in Canada and translate them into U.S. requirements. That is a significant service.

The corporation also offers a waiver of requirements to submit cost and pricing data, a waiver of some of the regulations of the buy American act, and duty remittance for defence goods and services purchased outside NAFTA for fulfilment of the defence production sharing agreement.

The Canadian Commercial Corporation charges no fee for DPSA contracts. The $10.7 million appropriation is linked to that part of its activity. In other words, if the CCC is not charging a fee it needs government appropriation to pay its operating and other costs.

This special defence arrangement dates back to 1956. It is in Canada's strategic interest to continue it. As custodian of the defence production sharing agreement the CCC is mandated to serve as the contracting agency in support of the procurement needs of the U.S. department of defence. It also deals with NASA.

In times of crisis or war the Canadian Commercial Corporation, in keeping with our obligations to the United States under the defence production sharing agreement, would serve as Canada's national contracting instrument associated with industrial mobilization of Canadian sources of supply. Accordingly the procurement regulations of the U.S. department of defence specify that all defence purchases from Canada above $100,000 U.S. must be transacted through the Canadian Commercial Corporation.

The DPSA maintains special access for Canadian companies to the enormous and highly protected U.S. aerospace and defence markets. The other 46% of business volume consists of contracts with foreign governments for anything but defence production sharing arrangement contracts. Cost recovery is practised but it is ad hoc. Bill C-41 would allow preset commercial fees to be charged for commercial corporation facilitation.

Some of the things the commercial corporation offers are risk assessment of financial, managerial and technical competencies; advice on preparation and submission; assistance in contract negotiation; government backed guarantees of contract performance; and contract monitoring including auditing and closeout.

The Canadian Commercial Corporation guarantees that small and medium size Canadian companies will be paid by the foreign governments within 30 days. Foreign governments usually take longer than 30 days to make payment so the commercial corporation may have large cash outlays it recovers some time later from the foreign governments. As I understand it, this provision is the major reason the Canadian Commercial Corporation wants to increase borrowing.

I disagree with this. There is no reason suppliers should not have to wait for normal payment regimes from foreign governments when they do so in all other transactions that fall outside the business of the Canadian Commercial Corporation. Domestic suppliers supplying to the Canadian government do not get this kind of favouritism.

In summary, the Canadian Commercial Corporation has had a fairly narrow mandate. As a consequence it has been run until now in a fairly conservative fashion. It has been around since the post war period, 1946, and the defence production sharing agreement has been in place since 1956.

The first priority of the Canadian Commercial Corporation has been the DPSA. The second priority has been all other procurements. It has tended to run a fairly tight risk analysis. This is why in the last fiscal year the broad debt worked out to 0.1% or one-tenth of 1%. Any lender would consider this to be good performance in terms of reducing their risk. I have a concern that relates to the new borrowing powers the commercial corporation wants.

I could describe that concern this way. If it were to have this new-found borrowing authority one of my concerns would be that normal constraints would fall away and there would be a tendency for the commercial corporation to go for riskier business on the basis of its borrowing power. Second, suppliers would be attracted to the commercial corporation not for its technical abilities or its ability to help them gain entry to the market but because of its expedited payment. Essentially, everyone knows that when we deal with governments we do not get paid within 30 days.

I believe this corporation has an essential role to play but I believe that increasing the borrowing power from $10 million to $90 million is not in the taxpayer's interest and is not in the long term interest of the commercial corporation.

[Softwood Lumber, November 6th, 2001]

Mr. Speaker, the ongoing softwood lumber dispute has a long and tangled history. My greatest frustration is the lack of urgency or hands on attention the Prime Minister has shown the dispute.

I am not alone in this thinking. It is the opinion of a majority of forest industry workers, people representing forest communities and political participants. If it is observable to us that the Prime Minister is not fully engaged then it is surely observable to the U.S. administration and the U.S. special interest lumber lobby.

Yesterday in the House of Commons during question period the Prime Minister said we had a softwood lumber agreement that worked for five years. It did not work. It led to a massive loss of investment and jobs. It led to distortions in the market that proved costly and divisive for producers and customers.

We are in trouble when we expect leadership on our largest trade commodity and the person from whom we require leadership makes such uninformed statements.

Last week the U.S. department of commerce announced a preliminary duty of 12.6% on top of an existing countervail duty of 19.3%, which brings it up to 32%. What did we hear from the Prime Minister? Did we witness a sense of urgency or direct action resulting from the announcement? I could ask the question again but I would not get much of an answer because we saw no urgency or direct action from the Prime Minister.

The U.S. administration has in some respects been much more engaged than the Prime Minister although the U.S. department of commerce has not. The administration has appointed a representative, Mr. Marc Racicot from Montana. He is in Ottawa today.

The Prime Minister assures us he is in communication every two or three weeks with the president and that he spent some time with him in China. That is the extent of it. I am embarrassed that the Prime Minister of Canada would stoop to suggest this would count for anything.

I read that the Prime Minister finagled a photo opportunity with the U.S. president while in China. Once again I am embarrassed. This is not how a Prime Minister behaves. He should not seek a photo opportunity with an unwary president to look good at home while achieving nothing. This is serious business. Communities, workers, their families and enterprises are at risk and we get glibness from the Prime Minister.

Let us talk about today. Today I asked the Prime Minister why he is not fully engaged. Once again he made reference to his overlap along with dozens of other leaders with the president of the United States in China. This was before last Wednesday's anti-dumping announcement.

Is anybody home over there? Are we to believe that the Prime Minister is fully engaged on softwood lumber? I am not a lawyer but the evidence is overwhelmingly clear that he is not.

I cannot overemphasize how large and significant a problem this has been, is and will continue to be unless we witness a dramatic reversal. The dispute may be resolved or it may go to long winded litigation. Does the government have a contingency plan? Since it does not have a plan it probably does not have a contingency plan.

I welcome the appointment by the U.S. of a representative on the softwood lumber dispute. I welcome the litigation announced yesterday by Canfor Corporation. Canfor announced its intention to file a $250 million legal suit under chapter 11 of NAFTA, claiming that the U.S. department of commerce has acted in a capricious and biased manner against its interests. This logic would apply to many other Canadian companies operating in the forest industry.

This protection exists under NAFTA but some in the House of Commons argue it does not belong under NAFTA. The sum of these members resides in the New Democratic Party.

This is the only way to get to a neutral body on this dispute. It is a good move on the part of a Canadian company to let the administration know that in the longer term biased behaviour from the U.S. department of commerce on what is clearly an unsubsidized industry is not acceptable.

When we describe the dispute it is important to recognize that we have strong U.S. allies on this file. A consumer lobby has been in effect in the U.S. for the last two years which has been lobbying legislators and congress to make them aware of the negative impact of the dispute on their constituents, the American public, from the standpoint that putting tariffs on Canadian lumber going to the U.S. is costing American consumers.

This is not a Canada-U.S. battle. It is a fight between Canada and the special interest U.S. lumber lobby. It is completely unproductive and unnecessary and it hurts both nations.

In the longer term I am optimistic because the consumer movement in the U.S. represents 95% of lumber consumption. We have seen an expansion beyond lumber consumer groups into the larger consumer group involved in all aspects of the American economy which says the dispute is hurting everyone in the American economy whether or not they are lumber consumers. That is a positive move.

In the longer term we will see U.S. protectionist legislation change. We may even see litigation deriving from some of the larger players in the consumer movement. I hope that occurs.

Canada cannot alienate the U.S. consumer movement. Whatever we do in the settlement of this dispute we must be cognizant of that. Canada must also rule out any arrangement where we would end up going back to a quota arrangement.

The old quota arrangement for Canada's forest industry that has just expired was a negative one. After yesterday's comment by the Prime Minister it concerns me that it was called a good agreement. I suddenly have a new concern that the government might consider another quota arrangement.

The Canadian Alliance has been pursuing free trade in lumber for a long time. The 1996 to 2001 softwood lumber agreement that recently expired created a softwood lumber quota system that cost Canada thousands of jobs. The federal government orchestrated the arrangement in 1996 with selected industry support. When the deal turned sour and its negative implications became clear to virtually everyone, the government washed its hands and said industry had made it do it.

The Canadian Alliance took the issue seriously and set out a clear analysis and policy statement in June 2000. The Minister for International Trade finally came to a free trade position in March 2001, days before the softwood lumber agreement expired. Much of Canadian industry, the official opposition and American Consumers for Affordable Homes worked hard to ensure the softwood lumber agreement would not be renewed or extended when it expired on March 31.

Canada cannot enter into any arrangement that would impair our competitiveness in the future or reinforce the belief in the U.S. that it could impose its will without concern for international trade rules. The Prime Minister has a strong role to play by talking to the Bush administration. The Prime Minister's Office should have no role in pushing a deal on to the minister against Canadian long term interests.

Some American politicians in the U.S. department of commerce are pushing for a crushing victory for the U.S. lumber lobby. This is producer driven politics at its worst.

What must the government do? The Prime Minister and his senior officials must continue to point out to the Bush administration the benefits of free trade in lumber. They must point out that Canadian industry is not subsidized. The Prime Minister must deliver on his promise that the U.S. cannot call for more Canadian energy while restricting Canadian lumber exports. He can do this in terms of any proposed continental energy discussions.

Now is the worst possible time for governments or industry to concede to the U.S. lumber lobby. Canada has a strong case for free trade access before NAFTA and WTO trade tribunals and the U.S. lumber lobby knows it. Fifteen years of harassment have taken a major toll. If we do not get back to free trade now we will see further permanent job losses and loss of investment in the industry.

Where do we go from here? We need a cost effective analysis to compare litigation with negotiation. I think we will find litigation comes out fairly well in the analysis.

For example, the softwood lumber quota arrangement we all lived with for the past five years effectively cost industry in the range of 15% to 20% although there were haves and have nots depending on who had quota or duty free access and who did not. There was no fairness there.

Now more than ever we need leadership and resolve from our Prime Minister and the federal government. The U.S. lumber lobby did not anticipate that Canada would hold out as long as it has. The U.S. lumber lobby has shown itself to be a self-serving special interest group contrary to the interests of both nations.

There is much pessimism today but there is room for optimism as well. We need to hold our alliance together. We need to fix this thing once and for all.

[Softwood Lumber, November 6th, 2001]

That just goes to prove, Mr. Speaker, that they can create statements that have never been said. The government has abdicated responsibility and displayed lack of leadership on the softwood lumber talks.

Last week after the anti-dumping announcement everyone fully expected the Prime Minister to engage himself with the U.S. president on softwood lumber. It did not happen. It still has not happened. When will the Prime Minister treat softwood lumber as an urgent priority?

[Softwood Lumber, November 6th, 2001]

Mr. Speaker, the Prime Minister talks about not wanting the Americans running everything in Canada. If the Prime Minister continues to display a lack of leadership that is exactly what happens.

Yesterday the Prime Minister said the 1996 softwood lumber agreement worked for five years. It worked all right. It worked against us. We had companies with quota and without quota, loss of investment, job loss, and the Americans continue to attack our value added products to reclassify them as softwood lumber.

If the Prime Minister thinks that was a good agreement, what is a bad agreement?

[World Trade Organization, November 5th, 2001]

Mr. Chairman, being from British Columbia it is easier for me to talk about that context.

In terms of jobs lost as a consequence of the softwood lumber agreement from 1995 to 2001, they are certainly measured in the thousands. The difficulty is that there are other things going on that are also impacting on labour and the forest industry, such as market boycott campaigns and all kinds of other pressures.

It is virtually impossible to quantify it, but everyone in the business recognizes that the great distortion the softwood lumber agreement created cost British Columbia investment in jobs and jobs certainly measured in the thousands.

[World Trade Organization, November 5th, 2001]

Mr. Chairman, there was certainly more than one question.

In terms of the commitment to on the part of the government to WTO, I said the government should not abandon WTO. There are times when the government has done exactly that.

The specific example I can point out was on the four year battle with Brazil in terms of the aircraft subsidy dispute between Bombardier and Embraer. We actually won. After four years we had the ability to apply tariffs. Rather than do that, we ended up getting back into the subsidy game.

When WTO ruled very recently in a judgment that was not very favourable, or at least the press reports it was not favourable because I do not have access to all that, the Minister of Industry was quoted as saying that he really did not care what WTO had to say, he would continue in the subsidy business. That is a very bad signal to send. It basically says that we will support WTO when it is comfortable and convenient for us to do so and not at other times.

The other question the member asked was what I am recommending on the softwood lumber dispute in terms of a role for WTO and whether I am saying we should have a short term or a long term solution.

We have had discussions and debates on this before. I said clearly last week that in order for us to make the right decision right now on whether we will litigate or whether we will be able to negotiate or come to some other accommodation, we have to know what the costs and benefits are of going those two ways. I do not see any movement on the part of the government heading in that direction where we are developing scenarios and costs and benefits in either way. There are private citizens who are doing that so I would like to see that kind of leadership.

I do not think we can make a decision in a vacuum. We need that kind of data.

[World Trade Organization, November 5th, 2001]

Mr. Chairman, I am pleased to take part in the take note debate on the World Trade Organization. I will give a little background for neophytes and as a reminder.

The WTO is a new organization started in 1995. It grew out of the general agreement on tariffs and trade, commonly knows as GATT. We all remember reading about GATT which was established after World War II. The WTO, the World Trade Organization, is the only global international organization that deals with the rules of trade between nations. The goal is to help producers of goods and services, exporters and importers conduct their businesses. It is a rules based, member driven organization. I believe there are 142 member countries right now. All decisions are made by the member governments and the rules are the outcome of negotiations among members.

Canada supports rules based trade. It is very much in our interest and in the interest of the international community that we live by rules based trade. We obviously are not considered a least developed nation but we certainly are a small nation, particularly compared to the United States. Given that the U.S. is our largest trading partner, and given that the internal trade laws of the U.S. allow it to be very protectionist when it comes to trade, we support the concept very strongly of a neutral forum where Canada can appeal for free and fair trade rulings.

The highest decision making body of the WTO is the ministerial conference. This week we are talking about the WTO conference in Qatar which is the fourth ministerial conference. It has to meet at least every two years. It brings together all members of the WTO. The ministerial conference can make decisions on all matters under any of the multilateral trade agreements.

It is obviously important for Canada to attend these ministerial conferences. It is equally important in my view that we have opposition members along with the other organizations. Non-government organizations are present so that Canada's breadth of various voices can be heard.

The WTO's rules are made by the members after much negotiation and discussion. If the only Canadian voice other WTO members hear is that of the Liberal government then surely they will have a skewed vision of what Canada stands for in its entirely.

I am personally committed to going to Qatar to advance Canadian views. Most often they will be reflective of the general direction of government policy but they certainly will not always be those views necessarily held by the government. We need to show the international community the whole breadth of thought in Canada in order to advance rules based trade.

We have had some recent examples where the actions of government have not been the best in terms of supporting rules based trade. The first thing that comes to mind is the 1996 to 2001 softwood lumber agreement. It has now expired and is a subject of much dispute again, but that diabolical agreement, under which we lived for five years, was a compromise on Canada's part that cost thousands of jobs and much investment in our forest industry.

In my view, that was somewhere we did not need to go at the time and it is what has festered and led to the depth of the current dispute on softwood with the U.S. If we had pushed harder on the free trade direction rather than cutting a deal, which ended up in a managed trade or quota system arrangement that terribly distorted the Canadian industry over the last five years, we would be in a better circumstance now.

What happened is that the government of the day caved in on the last bitter round of fighting about lumber by entering into the softwood lumber agreement, which has now expired, in order to buy some peace, but it was not proper, rules based free trade such as that envisioned by WTO or, for that matter, NAFTA.

The government will try to say that a choice has to be made, that it is either free trade or some other choice, and that I am blinded by the fact that we should pursue free trade at all costs. Of course not. That would be like suggesting pedestrians should cross the road if they have the right to walk according to the signage. That does not do a pedestrian a lot of good if they end up with tire tracks across their chest, does it?

However, with a neutral dispute resolution forum like the WTO and trade rules that we ourselves have negotiated and agreed upon, we must demonstrate more consistently than the government has done that we will support the WTO and the NAFTA rules. We cannot abandon international rules available to us on any number of disputes, including the softwood lumber dispute.

Everyone is well aware of the major issue we have right now on softwood lumber but we need to remember not to characterize that in the sense of it being a Canada versus U.S. issue. It is basically Canada against a special interest with favourable legislation favouring that special interest. The U.S. laws have favoured the producer lobby for the last 20 years but the climate has changed and we need to encourage that change.

Canada's primary focus at the WTO should be on rules based trade.

The second thing we need to focus on is agriculture. The agricultural talks and the agricultural things that need to be forwarded at this ministerial conference are crucial for Canada because we cannot meet the level of subsidy emanating from the U.S. and the European Union and they are crucial for the developing countries that need fair access to agricultural markets. We can make common cause with that.

Finally, the meeting will do a lot of favourable things for the war against terrorism because a growing, healthy economy in more countries of the world is beneficial for all.

[Lumber Industry, October 31st, 2001]

Mr. Speaker, that is not an answer. The 19.3% countervail expires on December 16 and the anti-dumping fees imposed today will be refundable if companies respond.

The minister is continuing to encourage negotiations with a format lending itself to predictable divide and conquer strategies employed by the U.S. department of commerce.

The minister has no mandate to do this. Will he display leadership, call the national stakeholders meeting and reinvigorate the Canadian position?

[Lumber Industry, October 31st, 2001]

Mr. Speaker, the U.S. lumber lobby has been harassing the Canadian forest industry for 20 years using U.S. department of commerce trade actions.

We had a 19.3% countervail tariff applied in August and now a 12.6% anti-dumping duty has been tacked on top.

More discussions are scheduled for November 12 in Washington. Will the minister now finally call a national stakeholders meeting to get the Canadian forest sector together prior to November 12?