John Duncan

[Export Development Act, October 30th, 2001]

Madam Speaker, we are a small country population-wise and a large country geographically, obviously. We are very dependent on our exports.

We have a major dispute on lumber. We have steel disputes. We have some agricultural disputes going on. We are reliant on WTO in the long run supporting the fact that we are fair traders and free traders. All of this, under the guise of some financing from the Export Development Corporation under the Canada account which I am calling a Liberal minister slush fund, is actually hurting us. It goes to the very core of what is important for us as a national strategy. We simply cannot play both ends on this kind of arrangement.

I am very critical of the Canada account. We do not need it. It is undermining WTO. It is also undermining EDC. EDC needs to focus on depoliticized finance arrangements, not on something like this. This has been foisted on it and it does not have the ability to fend it off unfortunately. It is a very unfortunate trend. I hope we can sort that out internally without waiting for WTO or someone else to embarrass us to the point where we have no choice but to remove it. We should be much more proactive than that.

There are two further statements from the EDC website which I will make reference to. The first one states:

As a crown corporation, we operate at arm's length from government and according to commercial principles.

I would put that in the category of a wish list. That is not actually what happens, as I have just described. The second statement is:

Governance policies and practices are determined by our board of directors. The board has 15 directors, drawn mainly from the private sector.

We know that is a wish list too, from the standpoint that the board of directors does not entirely make all the decisions on practices. Increasingly we are finding that the directors may be drawn from political appointments as opposed to from the private sector.

In summary, the EDC needs to be independent of government and it is not. I have given some rationale as to why, for example, political appointments and the Canada account. The Canada account is a Liberal minister slush fund. Mixed messages from the Minister of Industry and the Minister for International Trade are hurting us at the WTO and in the international community.

We are major beneficiaries of rules based trade and we cannot have it both ways. In other words, we cannot be free traders when it is convenient and protectionists when it is convenient. We have to have a level of consistency on the free trade ledger.

We have to keep this clean. It is too important for Canada to do it any other way. Today for example we are expecting the anti-dumping ruling from the protectionist side and instincts of the U.S. lumber lobby as exhibited by the U.S. department of commerce on Canadian imports of lumber. In order to keep the lumber file clean, we have to keep our other files clean. Softwood lumber is a huge issue for us.

A portion of the EDC mandate is politicized. These amendments do not clean that up. As a consequence, Canadian interests are not fully served, nor are the interests of the Export Development Corporation fully served.

[Export Development Act, October 30th, 2001]

Mr. Speaker, I am pleased to speak today to Bill C-31, the amendments to the Export Development Act. As the parliamentary secretary laid out, I do recognize that this has been a lengthy process. The process of review, consultation, surveys and other research that has gone into the background leading up to these amendments has certainly been a longer process than many of us have been involved in before. I have only been involved in this portfolio since June of this year so there is a lot to catch up to.

What I can say is that very clearly a consensus was developed on some of the needs that required addressing and they deal primarily with the issue of transparency and environmental and social standards. It is important to recognize what is the mandate of the Export Development Corporation. It is a commercial financial institution, the mandate of which is to support and develop directly or indirectly Canada's export trade and Canadian capacity to engage in that trade and to respond to international business opportunities. That public policy mandate is what makes EDC different from our commercial financial institutions.

As a result of all the consultations and input from various parties, we now have what is called an environmental review framework, which is built in as part of the mandate of the Export Development Corporation. It is to review on a timely basis the best available environmental information on projects for which EDC support is sought.

One thing that is clear is that EDC borrowed significantly from the World Bank group in regard to this. There is some background on this from the standpoint that very clearly the World Bank screens projects for their risk and impact and then categorizes them for their level of potential impact. It then provides reasonable public transparency for those projects that pose the greatest potential for environmental impact. The environmental review framework for EDC resembles that kind of background.

On the basis of looking at it historically over a 12 year period, I found it very interesting that something in the order of 13% of World Bank projects fall into category A, which requires a full environmental assessment. Thirty-five per cent fit into category B. The bulk of the World Bank's portfolio, just over 50%, was deemed to have no environmental impact and therefore required no environmental analysis. This is the proper way to direct ourselves because obviously every project or every finance opportunity does not lead to the same degree of environmental concern. It will be interesting to track the EDC experience over time and see how close it comes to reflecting what has happened over the last 12 years with the World Bank group.

There are ongoing discussions at the Organisation for Economic Co-operation and Development. It is likely to strengthen environmental considerations in its risk assessment practices for export development and export credit agencies and would like to pursue a multilateral approach. This is all very beneficial.

There is a very high degree of desire from the people who have appeared for consultations that the Export Development Corporation demonstrate responsible behaviour. In a sense it is a representative of the Canadian government and Canadian social and environmental practices, policies and values. One of the things that became very clear is that we have had no environmental mandate for EDC up to now. Although there has been some recognition within EDC and it has changed its behaviour, there really were some quite inappropriate measures or financing packages. Interestingly a lot of them seem to revolve around our financing of dams around the world. They involve not just environmental impacts but huge social impacts, having to do with indigenous people or long term communities sometimes being uprooted, and a lot of other untoward circumstances.

The government has argued at times that EDC was only a minor player and therefore whether it entered into those packages or not was not all that significant, but it was significant. I think it is important to recognize that in the same way Canada has some moral high ground in terms of its participation in the United Nations peacekeeping operations, often being the first to be asked because once it commits that is the catalyst for others to commit, the same argument could be used for EDC on some of these environmental issues. It is important that we have an environmental conscience, an environmental strategy, and that it is part of the decision making process.

The other thing that became very clear in the consultations and the responses to the proposed legislation is that people retain a residual concern, which is that there is nothing to prevent the Export Development Corporation under this legislation from revising its environmental review framework if it deems circumstances to be such that this is the appropriate thing to do. Many people wanted it to be more binding than that.

The Export Development Corporation's argument is, of course, that it needs flexibility and there are industry participants and stakeholders as well who are obviously concerned about any insecurity of arrangements that might result if something could be an impediment to making a binding arrangement.

All of those things require a degree of balance that leads me to think that although we have an environmental review framework right now that is considered to be progressive, we will see further changes. There will be pressure for further changes and it remains to be seen whether this will be workable without having it more binding in terms of the statutory requirement to have environmental assessments where appropriate.

I find it highly ironic that these amendments were tabled on September 20, during our first week back in this fall session, when just three weeks earlier on August 30, just before the long weekend, a very good time to announce something if we do not really want people paying attention to it, the minister appointed professional Liberal Bernard Boudreau to the Export Development Corporation.

I said at the time that we have a crown corporation attempting to operate at arm's length from government, and that is the stated objective of its mandate and the stated objective of government, yet appointed to head it is a long favoured friend of the government, appointed previously by the Minister of Finance to the Bank of Canada in 1998, appointed by the Prime Minister to the Senate in 1999 and appointed by the Prime Minister as the Minister of State for ACOA in 1999. This individual then resigned from the Senate in 2000 to run for the House of Commons and was defeated in November 2000. My point is that the independence of our crown corporations is made a mockery of by the moves of their political masters on the Liberal side.

In discussions with officials from EDC, I know how to read between the lines. This is not good for morale. It is embarrassing for professional employees of our crown corporations when these things happen. The only justification that has ever been offered is that because they are at arm's length and the government wants to retain some influence, the only way it can see to do so is through appointments of its people.

I find this completely unacceptable. I think the professionals who operate within this environment find it unacceptable but are compromised in their ability to say so. It is time for this type of behaviour to stop.

We have a living example with Canada Post. It is portrayed by the government as an independent crown corporation. It has the most blatant political patronage when it comes to filling the post of head of Canada Post, a very lucrative position and one which would be well sought after by very qualified people from the private sector. Yet we get political appointments in that very visible, high profile position as well.

We need to change that. It does not make Canada look good in the international community. Basically it is saying that the government wants it both ways. It lessens our stature domestically and internationally.

Another aspect to the Export Development Corporation which I would like to refer to is that there are two accounts within the Export Development Corporation. There is the EDC corporate account where admittedly the vast majority of EDC's business is conducted and there is this thing called the Canada account. Reading EDC's own information from its corporate communications department, it states:

Canada account is used to support export transactions that are determined to be in the national interest. They are negotiated, executed and administered by EDC but the risks are assumed by the federal government.

Negotiated, executed and administered by EDC is the operative statement. I wish I could witness that this were true but we have all seen very clearly that the Canada account has become a slush fund for Liberal ministers. It gets disbursed under the cloak of being arm's length business of the EDC and it simply is not in many instances.

This year for example EDC provided $3.7 billion in loans to two U.S. airlines to buy Bombardier jets. In the first instance the Minister of Industry made the announcement, basically barging in on the Minister for International Trade's territory. At the time he said it was a one time deal. Then just months later the Minister for International Trade followed up with a second announcement.

The first one I believe was Northwest Air and the second was Air Wisconsin. The first deal was $2.6 billion and the second was $1.7 billion. These loan guarantees were to offset competition from Embraer from Brazil.

We said at the time that this was inappropriate, that there were other mechanisms, other avenues open to us. We had a four year fight at WTO. We won the subsidy argument and we had $344 million worth of tariffs that we could apply as a penalty against Brazilian imports on this corporate jet subsidy argument. Rather than strengthening WTO and following its judgments, we basically taunted WTO by going in direct competition with further subsidies. This puts our taxpayers at risk, both on the loan and because we are running the risk that WTO will find that to be unacceptable behaviour.

This is all at a time when Canada has a strong vested interest in rules based trade. We have one of the strongest requirements of any country for strengthening WTO, not weakening it. As a small country with a large dependency on trade--

[Lumber Industry, October 26th, 2001]

Mr. Speaker, the softwood lumber dispute is continuing to victimize workers and their families and penalize the economies of Canada and the U.S. We have more than 20,000 forest workers laid off across Canada, the North American economy dipping into recession and consumers retreating from spending.

On Wednesday I asked once again for the minister to call a national stakeholders meeting to get the Canadian forest sector on the same page prior to next week's anticipated anti-dumping decision by the U.S. department of commerce. Once again no meeting has been announced by the minister.

Yesterday two U.S. consumer groups urged U.S. and Canadian negotiators to resist lumber export taxes because higher prices hurt consumers.

The minister cannot drop the ball on softwood lumber. When will we have the national stakeholders meeting?

[Customs and Excise, October 25th, 2001]

Mr. Speaker, our security minister goes to the U.S. basically empty handed. Our commercial traffic is suffering and this is a proposal that could be done in partnership with the Americans. It is urgently required, not consultations.

The U.S. is spending a billion dollars to tighten the Canada-U.S. border. We already have U.S. customs passenger preclearance through Pearson and Vancouver airports and other places. When will the government adopt this proposal?

[Customs and Excise, October 25th, 2001]

Mr. Speaker, the government is trying to reassure Canadians that all is well with Canada-U.S. border crossings. Even backbench Liberal members of parliament know differently.

The Canada Customs and Excise union is floating an excellent proposal for major commercial preclearance facilities in British Columbia, Quebec and Ontario in partnership with U.S. customs. Will the government work with the union to make this happen?

[Canada—Costa Rica Free Trade Agreement Implementation Act, October 25th, 2001]

Mr. Speaker, I am pleased to talk to Bill C-32, an act to implement the free trade agreement between Canada and the Republic of Costa Rica.

The purpose of the bill is to implement the free trade agreement with Costa Rica, the objective of which is to establish free trade between the two countries by gradually eliminating barriers to trade in goods and services.

I will put a summary at the front end, which is that this is not a controversial bill, with one singular exception. I believe, as the parliamentary secretary made reference to, that we have dealt with that quite adequately at committee. We tried very hard to make that a co-operative arrangement with the government. The compromise we came to hopefully will stand the test of time. This will be seen as time marches on. I will certainly be getting into that in some detail during my presentation.

The bill follows the free trade agreement with Chile in 1997 and NAFTA in 1994. One of the major stated purposes is to promote regional integration through an instrument that contributes to the establishment of the free trade area of the Americas, the so-called and so-named FTAA negotiations. This could be the first of several of these agreements with other countries in South and Central America.

Eighty per cent of what Costa Rica exports to Canada, primarily fruit, vegetables, coffee and coal, already enters Canada duty free. Canada was looking to expand its market for some specific things. Interestingly, french fries, metal structures, fish, paper products, auto parts, plastics, wood and agricultural products were among that mix. These products had very high tariff rates applied to them. One interesting example is french fries. Even though Costa Rica does not grow potatoes, it has a 41% tariff on imported french fries. This shows the need for tariff reductions on all kinds of fronts. That was very much a focus of these negotiations.

In 2000, Canada's total exports to Costa Rica were about $86 million. In the same year we imported $183 million worth of products from Costa Rica. These are Government of Canada statistics and I do recognize that there is some difficulty in identifying exactly what are the imports and exports because some of them flow through the United States and are attributed in that fashion.

The Canadian Alliance promotes free trade and the joint elimination of tariffs with our trading partners. We support securing access to international markets through the negotiation of trade agreements. We will vigorously pursue reduction of international trade barriers, tariffs and subsidies. Additionally, we will ensure that Canadians' concerns about labour practices, environmental protection and human rights are reflected in these agreements.

I did mention that there was one aspect of the bill that was contentious. I will spend some time making reference to it. It is an industry that is important to us. I am talking about the domestic sugar industry. Historically we have grown sugar beets in Canada in many provinces, and now, based on a closure of export opportunities with our trading partners, sugar is one of the most protected markets in the world. Canada has the most open market in the world for sugar.

What has transpired is that we have one sugar beet producing province left, which is Alberta. We have gone from seven sugar refineries not very many years ago to three. Those refineries have made major capital expenditures to ensure that they operate with world class efficiency.

We basically are supplying our own domestic industry with our own refined sugar. We are importing a lot of raw cane sugar. We produce beet sugar and have almost no export opportunity. For example our total export opportunity to the United States at this time is, I believe, 10,000 tonnes, which works out to one tenth of 1% of its total consumption. We are facing tariffs on exports to other countries in the Americas of anywhere between 50% and 160%. Our only protection for our domestic industry is an 8% tariff or about $30 a tonne. It is a very small tariff and we do not subsidize our sugar industry in any other way.

As an example, Costa Rican sugar prices are about $650 a tonne higher than world prices. What that really means is that Costa Rica can cross-subsidize any exports of its sugar anywhere in the world, including Canada. What this has done of course is create a lopsided agreement on sugar. In a sense we have sacrificed our sugar industry in many agreements. That is why our place in the sugar world has shrunk.

A very significant concern came forward from the refiners and the growers as represented by the Canadian Sugar Institute. They felt that although the bill would not be in itself a major problem because Costa Rica has no refining capacity, if the market provisions of this agreement were to be built into the ongoing negotiations with central American countries such as Guatemala, Honduras, El Salvador and so on, or with the free trade area of the Americas, we basically could write off our sugar industry. We would be doing that in a non-free trade environment because no one else is practising free trade. We believe in free trade but it has to be fair trade.

I will move on to some of the important parts of the agreement. We as a nation of 31 million people have entered into an agreement with Costa Rica, which has a population of less than 4 million, no military and longstanding democratic traditions and institutions. This is an important agreement because Costa Rica is very much viewed as a stable, democratic entity in that part of the world and one that we should be doing our utmost to do business with and to practise the purest of free trade with if we can.

Canadians have a lot of investments in Costa Rica. The Bank of Nova Scotia has 12 branches. Hollinger owns the newspaper La República . Canada has major solid waste treatment facilities, hotels and tourism oriented enterprises and Hydro-Québec is involved in a large hydro generating station in Costa Rica. Our total capital investment is running at about $500 million. I think investors have had generally pleasant experiences.

That gives a good summary of where we are. I will move now into the area of some of the things that would be exempt from tariff reductions under this agreement. Canada has a long tradition, under the Liberal government, of exempting some things from tariff reductions. They are simply not on the table. There is no change from that in this agreement. Exempted from tariff reductions from our perspective are beef, culture and our supply managed industries such as dairy, poultry and egg products.

The basic message is that when government negotiators negotiate a free trade agreement or any kind of international trade agreement, they do have to make choices. I believe, and I know others believe, that historically we have tended to sell out our sugar industry. This agreement is viewed as being no exception.

Our single protection for the sugar industry is an 8% tariff. As I mentioned, the lowest in the Americas is 50%, up to 160%, for all of our competitors. Canada is basically excluded from any ability to export beyond our boundaries for any significant amount of sugar. Nothing would change under this agreement. It is a very lopsided agreement in regard to our access to their sugar market. In the words of the industry, it is token access.

I would like to quote from the website of the Canadian Sugar Institute, which states:

The recently announced Canada-Costa agreement is a case in point. Costa Rica has a 50% tariff compared to Canada's 8% tariff, and supports its sugar production through high prices that are far above the Canadian and even the supported US price. Yet, Costa Rica is demanding approximately six times more duty free access than it is willing to give Canada during a transition period. Further, it will only grant access for a token amount of Canadian refined cane sugar (which makes up 90% of Canada's sugar production) and even that depends on Costa Rican sales to Canada. In spite of objections from the industry that this is both a bad deal and would set a dangerous precedent for the CA-4 talks (countries whose combined exports are 1.5 times greater than Canada's total production) and the FTAA, the government seems willing to accept these lop-sided terms.

It is referring to the Canadian government. The CA-4 talks are to be held with the Central American countries I referred to earlier.

This is what they were saying prior to the bill getting to committee. These are some of the other things and some of the background of the Canadian producers. There is only one beet sugar factory remaining in Canada. It is in Taber, Alberta. At one time beets were also grown and processed in Manitoba, Ontario and Quebec.

Canada has three refineries that process raw sugar. They are in Montreal, Toronto and Vancouver. In the past 20 years four other refineries have ceased operations. The total Canadian market for sugar is about 1.2 million tonnes. Beet sugar supplies about 10% of this amount. Of the remaining 1.1 million tonnes a small but significant portion is imported into Canada in a refined state.

Sugar is one of the world's most trade regulated commodities. Most countries severely restrict imports through a system of duties, quotas or other mechanisms. Canada is among the most liberal countries in the world with an 8% duty on refined sugar and free import of raw sugar.

Guatemala places a 160% duty on sugar imports. Canada is allowed to export only about 12,000 tonnes of sugar to the U.S. due to its quota system. This is sugar from beet sugar as restricted by country of origin rules. No other viable export opportunities exist for the Canadian industry. In other words we are locked into our domestic market.

I have covered the basics of the sugar situation fairly well. It is worth adding that the Costa Rican market currently does not include refined sugar. Only raw sugar is sold. The fact that we have gained entry into the Costa Rican market is academic from the standpoint that there is no current market. Its domestic prices are about $650 a tonne more than world prices.

This leads to cross-subsidization. It also leads us to ask why would they import sugar if they have those kinds of domestic pricing arrangements.

I will go into this a bit further. Guatemala is one of the CA-4 countries. CA-4 will be the next set of negotiations on free trade along with the free trade area of the Americas. Guatemala's current sugar exports amount to about 1.2 million tonnes. That is virtually identical to the entire Canadian market.

The CA-4 countries, the four major countries in Central America, have current export surpluses in refined sugar of about 300,000 tonnes. That is without further investment in refining capacity or anything else. That is immediately available capacity. This could totally displace the entire western Canadian market, which is the most likely place for these exports to arrive because their ports are on the Pacific coast.

This is a major concern. One can understand why members of parliament from every part of Canada are receiving a lot of solicitation from sugar refiners, sugar growers and the Canadian Sugar Institute, and why they are taking the Costa Rica agreement so seriously.

If it were to be a precedent for the next negotiations we could see the sugar industry in Canada, a non-subsidized industry protected by a tiny tariff, swallowed up with a loss of 1,500 refinery jobs and about 500 grower jobs. I am not sure anyone would consider this to be free trade in the sense of unsubsidized industries competing with unsubsidized industries. It is not.

In the House of Commons we have something called the national sugar caucus to which the parliamentary secretary made reference. Some of the hon. members on the sugar caucus were also on the committee which met earlier this week and heard witnesses representing the Canadian Sugar Institute, sugar refiners and beet growers.

At that meeting I tabled amendments to the preamble of the bill, not to the treaty, to give clarity to the fact that the sugar provisions should be seen as unique to the Costa Rica agreement and not as a precedent for the upcoming CA-4 negotiations or the free trade area of the Americas negotiations. What ended up deriving from discussions among all parties at the meeting was that I would withdraw the amendment if we could somehow build a similar thought process into the language of our report and a subsequent letter to the minister.

That is where we are. I can quote from the third report to the House of Commons which was tabled recently. I will outline the relevant paragraph. The Sub-committee on International Trade, Trade Disputes and Investment, which is an offshoot of the Standing Committee on Foreign Affairs and International Trade, is studying the bill. It stated:

The Sub-committee wishes to highlight the specific concerns of Canada's sugar industry and asks that their interests be taken into account in any future trade negotiations involving Canada.

That is what we did. I am hopeful the government and government mandated negotiators will take heed that those are the sentiments expressed by the all party subcommittee. It was done in the right spirit and with good intentions on all sides. It is an eminently correct way to proceed in our future negotiations.

[Softwood Lumber, October 18th, 2001]

Mr. Speaker, the minister has created a vacuum in the softwood lumber talks in B.C. The so-called talks are drifting into proposals, demands and offers. I call this negotiation.

One B.C. industry participant is quoted as calling for a flat tax on lumber exports. The B.C. minister is left to deny that this is the direction. The so-called flat tax is a spin. It is essentially a shutdown tax. The expectation is that with low lumber prices Canadian producers would essentially shut down to keep inefficient U.S. producers in business. It is not even flat. A volume based tax with cyclical prices is the same as a variable percentage tax on value.

Unhappily we have been here before in 1985 and 1995. Will the minister bring order to chaos and call a national softwood lumber stakeholders meeting? It is overdue.

[Softwood Lumber, October 15th, 2001]

Mr. Speaker, the minister has abdicated his responsibility in the softwood lumber dispute. The U.S. is now negotiating directly with the provinces in a divide and conquer arrangement.

The minister said that we could win the softwood lumber dispute on its merits. Why is he allowing the provinces to negotiate against themselves on stumpage, tenure and forest policy while U.S. officials put forth nothing?

The consensus developed between Canadian stakeholders and U.S. consumer groups is being put at risk. A cooked up backroom deal will inevitably go sour. The minister will then no doubt say the industry and provinces made him do it.

Canadians must know what is being proposed. It is time that the minister called a national stakeholders meeting.

[Softwood Lumber, October 4th, 2001]

Just to clarify, Madam Chairman, I will talk to the member privately. I do not want to say the word that several of us thought the hon. member may have said in case he did not say it. It would be inappropriate for me to say it. I will talk to the hon. member privately.

[Softwood Lumber, October 4th, 2001]

Madam Chairman, I rise on a point of order. I do believe that the minister used a profanity in describing my request for a debate tonight. I may stand corrected, but I do believe he used a profanity. Others may not think that he did. I will take his word that he did not use a profanity.