Mr. Speaker, quite frankly, I was not expecting a debate on the amendment proposed by the hon. member for Beauséjour. I do not have the French version of that amendment. Nevertheless, what I would like to say applies to this debate.
As we know, on April 27, 2006, Canada and the United States announced that a framework agreement had been reached to resolve the softwood lumber dispute. The official text of the agreement, which had been initialed by the two countries on July 1, 2006, and signed on September 12, 2006, gave rise to Bill C-24. I will spare Parliament the official title of the bill, since it lists practically every aspect of the bill. I will proceed in a simpler fashion. It is known as the Softwood Lumber Products Export Charge Act, 2006.
I would like to briefly remind the House that we have been selling softwood lumber to the United States for a very long time. Except for a very short period during the 1929 crisis, our wood has always entered the United States duty free. Since the early 1980s, the lumber trade has been a steady source of conflict, the U.S. lumber lobby becoming increasingly protectionist and uncompromising.
On May 22, 2002, after an investigation using methods invalidated by international tribunals, the United States accused Canadian producers of being subsidized and Canadian exporters of dumping on the U.S. market and thereby damaging the American industry.
Before the Free Trade Agreement with the United States, the industry had to go before American courts, which often played favourites. The Free Trade Agreement and the North American Free Trade Agreement contained bilateral dispute resolution mechanisms—more impartial courts and disputes had to be resolved within 10 months.
The softwood lumber dispute has been going on now for 40 months. It is the longest trade dispute that has arisen between Canada and the United States since the Free Trade Agreement was concluded almost 18 years ago.
The NAFTA panel clearly decided that Canadian lumber was not subsidized, contrary to the American allegations. After using all possible stall tactics, Washington decided for the first time since the Free Trade Agreement was signed in 1988 not to bow to a final NAFTA panel decision. The Canadian industry had to turn to the American courts in order to force the United States to abide by its own laws. This leap 20 years backward in time raises the question of whether the agreement is worth anything at all.
During all that time after May 2002, the Bloc Québécois demanded an assistance plan for the softwood lumber industry—something that the federal government, whether Liberal or Conservative, always opposed.
The Liberals said over and over that they would never yield to the American demands, while turning a blind eye all that time to the dire straits in which the industry found itself and refusing to set up an assistance plan. They have opened the door, now, to the request for loan guarantees that the Bloc Québécois has been making, even though they said that they opposed them so long as they were in power.
The Conservatives, for their part, promised in their 2006 election platform—which was not so long ago—never to submit to the American demands because the United States should “abide by the NAFTA ruling”. More importantly yet, they promised to “provide real help for Canadian and Quebec workers and businesses coping with illegal American trade actions” —a promise that they certainly failed to keep.
The attitude of the federal government, whether Liberal or Conservative, leaves a bitter taste. In failing to support the industry, the federal government has greatly weakened it and forced it to accept this agreement under heavy threat.
In Quebec, more than 7,000 jobs have been lost in the forest industry since April 2005 and 5,000 others are in danger, according to the Quebec Forest Industry Council. The forest is the main employer in 260 towns and villages in Quebec, and in 134 of them, it accounts for 100% of the jobs.
Bill C-24 contains legislation implementing the July 1 softwood lumber agreement between the Canadian and American governments. Its provisions will all come into effect on October 1, 2006. If the bill has not passed by that time, its provisions will be retroactive to October 1, 2006.
The bill would introduce a system of controls on exports in the softwood lumber industry. What is surprising, these controls would take the form of amendments to the Export and Import Permits Act, an act that is generally used to control trade in weapons and dangerous substances and to restrict trade with countries that are subject to economic and military sanctions. In this case, it is Canadians and Quebeckers who are subject to the restrictions provided in this bill.
In the case of Quebec, which has chosen a lower export tax and capped exports, it is necessary to obtain a licence or export permit. The basis for allocating export quotas is not set out in the bill; it will be determined by regulation. Quebec has proposed that 94% of quotas should be allocated to companies on the basis of past exports, and that the remaining six per cent be allocated on the basis of first come, first served.
Quotas allocated on a monthly basis create a great deal of uncertainty in the industry. This issue has not been resolved. Of course, there is a group representing both countries and the Bloc Québécois hopes that the government will try to relax the monthly export ceilings by means of the regulations.
How can you ask a company to plan its procurements or its sales on an annual basis? Should it simply be a blind division by 12, regardless of the season or regardless of conditions in the construction industry?
The bill also proposes a tax of up to five per cent when there are export limits, but it could be as much as three times higher for exports from provinces where there is no export ceiling.
The rate of the tax would vary depending on the price of lumber. The lower the price, the higher the tax. The amount of the export tax that would be refunded to the provinces represents another important factor. The bill also provides that with the removal of the countervailing and anti-dumping duty orders, the government will proceed with reimbursement of $5.4 billion illegally withheld by the United States.
Canadian companies will be entitled to 81% of the countervailing and anti-dumping duties currently held by Washington. In reality, that represents about 65% of the amount that these companies have paid, taking into account variations in the exchange rate over the past four years. What would have been 63¢ in the beginning now equals 90¢. Previously, one American dollar was worth $1.59 Canadian; today it is $1.11 Canadian for one U.S. dollar.
The excess duties paid should be refunded within six months of the coming into effect of the agreement. In the Office of the Minister of International Trade, it is expected that more time will be needed.
The companies that have signed the agreement will receive their refunds through Export Development Canada (EDC). They will first receive 90%, and then the rest once the calculations have been completed.
The companies that opt out of the agreement have not assigned their rights to the federal government. They will be refunded directly by Washington. The agreement provides that refunds will be taxed at about 19%. Of course this has been strongly criticized. Who would have imagined that these companies might end up with a bonus for not signing an agreement?
Because of the irremediable damage caused to the industry, an entire clause of the bill is dedicated to provisions respecting companies that did not survive the conflict because the federal government did not implement a loan guarantee program.
The game is not over. Actually this agreement is still theoretical because it cannot come into effect until all the complaints currently before the courts—both international and American—have been withdrawn, and this is not yet so.
Furthermore, Washington can terminate the agreement as of the 18th month after it comes into effect, on six months’ advance notice. We are a long way from a lasting agreement.
Washington provided for the possibilityof excluding a province from the application of export restrictions if its forest policies change.
So the industry is experiencing quite a lot of insecurity. I have made a list of some elements, and they will be studied in depth in committee so that we have some certainty and not just a few elements on which we cannot rely.
In the end, who really comes out the winner in this agreement? Of the $5.4 billion held in Washington, the Canadian companies will receive about $4.4 billion. The American companies that instigated the conflict, however, will get $500 million. A fund of $50 million will go to initiatives aimed to promote the use of wood in both residential and commercial sectors. This fund will be managed by Canadian and American companies. Left to the discretion of the American government will be $450 million, an unexpected windfall for the Republican Party, just in time for the mid-term elections.
For Quebec this means the imposition of quotas, for which the terms and conditions of assignment are not set by law, but by regulation. This is another a grey area. Of the 34% of the American market that will be accessible to the Canadian market, 7% will go to Quebec, or 20%, instead of 27% of the average Canadian exports in the past 20 years. At present, these are at 17% because of the competition of the Canadian and Quebec markets.
With the quota method, Quebec companies will be able to export one twelfth of the annual quota per month and have only some leeway based on the quota for the previous or the next month. Only those amounts will be transferable. This inflexible approach is not advantageous given the cyclical nature of the industry.
For all intents and purposes there are two big winners: the Americans—both government and corporations—and the Prime Minister, who has made a friend of G. W. Bush.
As for what the main stakeholders have to say, the Bloc Québécois consulted the forestry industry and workers over the summer. We heard the same thing everywhere: their backs are to the wall. Although this agreement is objectionable, the industry does not have the luxury of time. The industry is almost unanimous in stating that this agreement is unsatisfactory but it is at the end of its rope.
It is interesting to note that the Conservative government did not consult the industry prior to signing the text of the agreement, even though this agreement governs the distribution of money that really belongs to the industry.
Thus, the Bloc Québécois accepts Bill C-24 with little enthusiasm. The reality is quite simple: the free trade agreement no longer applies to softwood lumber.
We know that there have been a number of requests for assistance from the forestry industry, which is experiencing serious difficulties just as it is emerging, in a weakened position, from a long trade dispute. Several of these requests date back to 2002 and could have guaranteed the survival of some companies that have now closed their doors.
A multitude of actions could have been brought forward, brought into play to support workers, for example, income support programs for older workers. The amount disbursed—about $75 million to help older workers who lose their jobs—would have been minimal in comparison to the $1 billion paid to the United States.
Communities dependent on the forestry industry need programs to diversify their economies, a special tax status for 128,000 private woodlot owners in Quebec, and increased funding for the Canadian Forest Service's Model Forest Program.
Companies need the following measures: special tax treatment for the $4.3 billion in countervailing and anti-dumping duties that the American authorities will pay back, to make up for the losses companies have suffered; faster amortization on equipment; a program to promote innovation in the forest industry and improve productivity; a market diversification and wood marketing program; and financial compensation for maintaining the forest road network.
We know that large forestry companies have to maintain, at their own expense, major road networks that are also used by the public. The government should also provide support for this. There are many other possible measures, such as research and development credits.
Speed is of the essence, because some of these measures will become irrelevant if they are not introduced this year, which is a pivotal year for the industry. Many companies are still on the verge of closing, even though they will receive a portion of the money they invested. In some cases, it really is too late.
If the assistance plan the Bloc Québécois has been calling for since 2002 had been put in place, many workers in Quebec would still have a job in the forestry sector today.
This time, does the Conservative government plan to keep its 2006 election promise to “provide real help for Canadian workers and businesses coping with illegal American trade actions”, or is it waiting for this industry to die while it waits for the Americans to deign to pay companies what they have coming to them: a mere 65% of what they paid out, which the NAFTA tribunal deemed 100% illegal?
To sum up, I think—and nearly everyone agrees—that this agreement does not live up to the forest industry's expectations. In all probability, no one would have accepted this agreement if people had been in a positive financial situation. But neither the Liberal nor Conservative governments were willing to keep companies financially afloat during the dispute with the United States. The Liberal and Conservative federal governments are to blame for this situation.
