Mr. Speaker, I am glad to join this debate. I would like to share with members of this House the concerns of the United Steelworkers so that they will realize that these are not just casual concerns and how serious this issue is.
The United Steelworkers represent over 280,000 Canadian members, 50,000 of whom work in the forest sector. They know the issue well and they are very serious about their concerns. They truly believe that the deal we are considering is a poor one and that Canadians already had a successful strategy to deal with the U.S. forest industry and administration's unfair and illegal imposition of lumber tariffs and duties in May 2002.
Since then we have shown the Americans that many Canadian sawmills could outcompete them, even with exorbitant duties on our lumber exports. Any recent economic problems firms face have more to do with the rising Canadian dollar than with U.S. protectionist measures. By winning in court, meanwhile, we showed them that the Americans' legal case was groundless and their protectionist measures were illegal.
Canada was winning after all, whether in North American Free Trade Agreement tribunals, the World Trade Organization, or U.S. courts of law. On July 13 the Court of International Trade ruled that the tariffs and duties were illegal, a judgment that simply serves to confirm our views. The U.S. is rapidly exhausting its legal avenues before NAFTA, as witnessed by NAFTA's rejection of American extraordinary challenges appeals. The U.S. is even losing at the WTO, the only body which had previously upheld some of its contentions.
We find it unfortunate, therefore, that the current government is prepared to throw away the advantages we have earned at law and instead decided to saddle the industry with what is clearly a terrible negotiated agreement.
In agreeing to the terms of the current agreement, it appears that the current government has fallen into the trap that Carl Grenier of the Free Trade Lumber Council describes when he observes that Canada has admitted that we are “guilty as charged” of producing subsidized lumber, dumping it on U.S. markets and unfairly harming the U.S. industry. We are therefore prepared to throw ourselves on the Americans' mercy, as Grenier notes.
But Canada is not guilty as charged on any of these counts. We all know that. Successive court rulings continue to prove it.
Nonetheless, for policy reasons known perhaps best to the government but not to Canadians, the government has rushed into this devastating agreement. It did so without proper consultation with affected governments and stakeholders. In spite of commitments to the contrary, the deal was even initialed in Geneva before industry representatives had a chance to comment.
It is, in short, a hastily concluded deal. The steelworkers truly believe that we all, as Canadians, will come to regret it. After all, it is clear that the agreement is severely flawed. Those are the issues that are being pointed out to the government today.
The terms do not provide free access to the U.S. market, in spite of the Prime Minister's claim in the House of Commons on April 28. Canadian exports are capped at 34% of the U.S. lumber market and further trampled by the so-called surge mechanism, a policy which effectively penalizes Canadian producers for efficiency. Meanwhile the U.S. companies continue to have free access to the Canadian raw logs, while third country producers enjoy truly free access to the U.S. market.
The timeline, which has changed dramatically over the course of negotiations since April 27, potentially gives Canada as little as two years of peace, not the seven to nine we were originally offered. We learned that the U.S. would now enjoy preferential rights to abrogate the agreement, yet the $1 billion price tag remains the same.
The timing is poor, since most industry analysts agree that the U.S. housing market, hot until recently, is now cooling off. That means that from the onset of the agreement, Canadian producers will likely be paying 10% to 15% in export tax, a rate higher than even the current level of U.S. tariffs and duties.
What is in the deal for Canada? As was noted in a submission at the standing committee back on June 19, the steelworkers believe that the only reason to sign off on this agreement is the prospect of getting back a portion of the illegally held money currently held by the U.S. commerce department. They respectfully submit that this is just not a good enough reason to lock Canada into what is really a short term fix that not long from now will permit a renewal of U.S. protectionist measures. Developments since June have merely confirmed this judgment.
After all, although the deal calls for the return of 80% of the illegally taken remissions of Canadian companies, there are still no provisions in the agreement for much needed investment in the Canadian forest sector, even though we have seen a number of recent closures attributed to the lack of sufficient capital formation in Canada.
While many of the plants and their equipment in Canada remain starved for capital, our forest companies have continued to invest profits made in Canada in United States and overseas acquisitions, mergers or outside the sector. Notably, Canadian companies like Canfor, Abitibi, Ainsworth and Interfor have purchased mills in the United States. Steelworkers continue to have major concerns until we move forward.
To this end, there must be commitments that a generous portion of any remissions firms receive from a settlement of the lumber dispute will be reinvested in job creation, worker training and retraining and infrastructure and community adjustment in Canada, not outside Canada.
It is a bitter pill for workers and communities to swallow, for instance, when they learn that while the deal calls for $500 million in spending on such works in the United States, it calls for not one penny to be invested in Canada. How, they ask, can Canadian firms continue to invest in sawmills in South Carolina, Washington and Oregon, the OSB mills in Minnesota or plants in Maine while plants in this country continue to be closed due to lack of investment and capital? The Globe and Mail recently commented:
Underinvestment in the Eastern Canadian forest products industry has been chronic for so long that it would take billions to make the country's pulp and paper mills as modern as those in Scandinavia or South America.
The deal, however, with its abruptly short actual term of peace from U.S. trade actions, even provides the U.S. industry and the Coalition for Fair Lumber Imports with a reward for sponsoring what have now been definitely shown to be illegal trade actions: a $500 million nest egg with which to finance future harassment, as early as two years from the time this deal goes into effect.
In short, by now it is clear that this agreement does not well serve Canadian interests, whether the interests are of our forest industry, forest sector workers, forest based communities, or Canadian citizens. It provides insufficient value to Canada while offering dangerous incentives to future U.S. trade actions. It does not represent a satisfactory resolution to the lumber trade dispute.
Steelworkers recommend the following course of action. Canada must renounce this agreement. The government and Canadian companies should continue with their legal actions. They urge Canadian companies to not agree to withdraw their legal challenges nor to agree to the payment of funds to the U.S. industry. The government should continue to support the legal actions required to erase fully all possible U.S. legal actions.
In short, the United Steelworkers of Canada urge Canadian companies and governments to set aside selfish interests and clearly stand up for Canada and Canadian interests. We must keep in mind the reality that Canada's forest sector is our leading industry and that it is a major source of jobs.
I have appreciated the opportunity to share the feelings of the United Steelworkers of Canada and to ask the government to rethink this whole deal.
