May 23, 1921

UFOL

John Wilfred Kennedy

United Farmers of Ontario-Labour

Mr. KENNEDY (Glengarry) :

In order to arrive at some opinion as to how this clause is going to work out, will the minister take one or two articles with which we are all familiar and tell us how he is going to arrive at the actual cost of production? There is a duty on butter coming into this country of about four cents a pound; the same applies to cheese and other

articles. How is the minister going to arrive at the actual cost of production of goods of that nature?

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CON

Rupert Wilson Wigmore (Minister of Customs and Inland Revenue)

Conservative (1867-1942)

Mr. WIGMORE:

I was not talking about products of the field; I was referring simply to manufactured articles.

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UFOL

John Wilfred Kennedy

United Farmers of Ontario-Labour

Mr. KENNEDY (Glengarry) :

Does this clause not apply to all dutiable articles? Besides, is not butter a manufactured article?

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CON

Henry Lumley Drayton (Secretary of State of Canada; Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

Certainly

butter is a manufactured article, and of course it would apply to butter. I am willing to confess that this discussion has one item of novelty to me, and that is the use of the word "shop-worn." I have no doubt it has something to do with the technical working out of the Customs Act. I could not very well discuss that aspect of the issue. But let us see, now: was it intended that the principle of the dumping clauses should function?

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UNI L
CON

Henry Lumley Drayton (Secretary of State of Canada; Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

The dumping clauses were put in to serve a useful purpose-to prevent a sudden change in selling price to the wholesaler or to the manufacturer here of protected goods brought in at a lower rate than they could be fairly sold for in the foreign market-that, is than they could ordinarily be produced for, plus something on top of the ordinary.

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UNI L
CON

Henry Lumley Drayton (Secretary of State of Canada; Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

Well I do not think my hon. friend will argue that you can for very long continue to sell goods at less than the cost of production. The goods will not continue to be produced very long if there is not a little something over that cost in the shape of profit.

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UNION
CON

Henry Lumley Drayton (Secretary of State of Canada; Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

Well, I do not quite catch that point; I think it is rather an inverse question that the hon. gentleman is asking. I am discussing for the moment the improper invasion of the Canadian market and the protection to that market which the dumping clause introduced by the hon. member for Shelburne and Queen's was intended to afford. In normal times that dumping provision served its purpose and served it well. But trade in the United States to-day is no more normal than trade is in Canada. In some parts of that country it is even more abnormal than it is in Canada, and the

result is that from time to time certain stocks are liquidated, and liquidated to some extent in the local market. Three, four, five or six local sales are made, sometimes, as we believe, for the purpose of establishing a local market value which really does not exist. So that in that way the dumping clause of my hon. friend can be evaded. I wonder if it is not a good thing that it should continue to be enforced.

I just want to give my hon. friend an illustration. Three samples of goods were produced before me not long ago in connection with the question of the use of Canadian or English material on the one hand and American material on the other. The goods were ladies' dress wear, and I do not think any hon. gentleman could distinguish a difference between them. The price of one sample was $2.65; the price of another, $2.50 and the price of the third, $1.50-and the third sample was American. A quantity of that material was brought into this country. The manufacturer, of course, wanted to get a repeat order shortly afterwards but he could not buy a yard of it; that $1.50 was well below the American cost of production. It was a clean-out sale, and what good did it do here? There was not a cent taken off the ordinary price of the clothing when it was sold to the public, and you could hardly expect that there would be, because the sale of the material was an adventitious sale; it did not represent real value and could only be supported by one or two, perhaps three or four, temporary sales made in a limited area and for a specific purpose. The sending over here from the American market of a large amount of that material was no benefit to the Canadian public; on the other hand, Canadian factories and Canadian workingmen lost work. That is the sort of thing that the hon. member for Shelburne and Queen's wanted to stop, and he did stop it. But as I have said, these are not normal times, and the purpose of the resolution, as I understand it, is to provide that the value for duty purposes of such new or unused goods, goods which are not second-hand, shall be thus tested.

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UNION

Fred Langdon Davis

Unionist

Mr. DAVIS:

I think that the Chairman will be amused when I point out to him the fact that he has been the chairman of a committee on the fuel question which has been endeavouring to ascertain the cost of the production of coal and other fuels in Canada. The committee has been thus engaged for some weeks, and we are

quietly told by the minister now that he has the machinery by which he can determine, in relation to goods which are in a more advanced state of manufacture than coal, the cost of production in the United States.

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L LIB
UNION

Fred Langdon Davis

Unionist

Mr. DAVIS:

And tell that in foreign countries. We wanted to get the cost in the United States of this coal that we have been inquiring about, and it is certainly very negligent on the part of that committee that it did not call those officials of the Customs Department to give it that information. That is a simple matter compared with what you are attempting at this time. The other day I stepped into one of the largest stores in Ottawa, and I happened to run across an old acquaintance who is now in charge of purchasing in that store. He showed me piece of goods after piece of goods which were selling a short time ago at from $7 to $11 a yard. They are selling the same goods to-day for $3, $3.50 and $4 a yard, and he told me that they were making more money on them now than they did when they were selling them at from $7 to $11 per yard. That just illustrates the condition of trade with which you are endeavouring to deal at the present time. Values are going down, are changing, because of the change in the cost of raw materials, and I think, Mr. Minister of Customs, you will have to have a very much more extensive staff than you have yet persuaded this side of the House, at least, that you have the command of, to keep in touch with that and not to work unjustly to the genuine importer of such goods.

While I am on my feet, I want also to comment on the next clause which has to do with this 50 per cent on exchange. I have just secured the latest quotations with regard to Italian exchange. At par it should be 19.3 cents for the lira. It is now 6.24 cents. Therefore, you would put a value of 9.6 or 9.7 cents on goods that have cost 6.24 cents; you will rate your customs upon the higher value, and the consequence is that, with a 20 per cent customs tariff, you have a 75 to 80 per cent duty. In the present state of trade, when there is a possibility that we shall not be able to sell to the United States in the measure that we have sold to that country in the past, due to their unfriendly, if I may so call it, customs, we want to find other markets, and if we find markets to sell in,

we have to take goods back. One of those prospective markets is Italy. Our trade in the past with that country may not have been very great, but this measure is distinctly designed to kill that trade. We cannot take goods from them; they cannot afford to sell us goods on which we have to pay a duty of 75 or 80 per cent, and that is what this means. When I spoke on this question the other day, I was somewhat concerned as regards France and Belgium whom I felt we should not turn our sword against at this time. With the German indemnity, their exchange is up around 9.77 cents, which is just 11 p.m. over the half way mark, so that they will probably not be touched, because I think, with the continuance of the payment of that indemnity, their condition will be improved, and they will be out of reach of this most unfriendly measure. But with regard to Italy and other European countries, to which, it will be understood, we must look for increasing markets for our produce, you are going to make it impossible for them to exchange goods with us.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

I regret the Minister of Finance (Sir Henry Drayton) has formed quite a misconception as to the purpose of the dumping duty. He is labouring under the delusion that the dumping duty was designed to prevent the people of Canada from getting cheap goods. It was not designed to do anything of the sort. Those who brought about the dumping duty were perfectly willing that the people of Canada should get cheap goods, provided that that cheapness was the cheapness of the market generally. What was the condition that the dumping duty was intended to meet? There are notable cases which arise in my mind now where an American manufacturer, having a large quantity of goods which he desired to sell, was prepared to sell in Canada at a lower price than he sold at home. Our complaint was not that he sold the goods cheaply. As long as he charged the Canadian buyer the same price as he charged his home buyer, there was no dumping. But when he created a fictitious price, where he charged one dollar in the United States and offered to sell the same goods for 75 or 80 cents in Canada, we felt that that was not a legitimate transaction, and it was to meet that sort of thing that the dumping clause was designed. As long as there is created for the Canadian market a price which is not the real price at home, the dumping clause comes in.

It provides an ample duty; the machinery is in the hands of the Minister of Customs, and there is no need of anything more. When my hon. friend repeated the argument that special sales are made to establish a price, I say, without a moment's hesitation, that the Customs Department is not bound to accept and it will not accept those sales. In the earlier days of the dumping duty, there were some difficulties. It was described by an eminent English statesman as a piece of freak legislation. As time went on and the efficient officials of the department got a good grasp of the question, the thing worked out quite well. The only thing to be determined is: Is this a fair price as quoted in the home market? The design was not to prevent the people of Canada from getting cheap goods. If an article is made cheap on account of a surplus in the market, or by changing conditions, or if raw material is cheaper, or if one of the hundred and one things that enter into the cost of production is cheapened and the article is thus made cheaper, and it is as cheap in Canada as in the United States, there is no reason in the world why we should impose any barriers to keep it out. The real purpose of this proposed legislation is to create a fictitious price in order that you may increase the duty, which many people think is high enough already, but which, in some instances, would be made double what it would otherwise be.

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UNION

Francis Ramsey Lalor

Unionist

Mr. LALOR:

I think the impression that we had in Canada of the dumping clause was that it was to prevent Americans from shipping goods in here under the price at which those goods were sold in the United States. When the dumping clause was in force under the hon. member for Shelburne and Queen's (Mr. Fielding), I know from experience in general as regards machinery, canning machinery, for instance, which is expensive and which we use a great quantity of, the price, when the machinery came to the border, has been raised under our Canadian dumping clause from $600 to $1,000, and we have had to pay duty on that for any number of machines running into quite a large amount of money. That was what the dumping clause did for us. I think we all agree as regards the purpose of it, and I do not see much difference between that and the present legislation. We must not forget what the Americans did as regards, us. I have had experience in regard to shipping goods into the United States, and they have all this machinery for which the minister

is now trying to provide. It is said by speakers on the other side that it is impossible to carry out this legislation, to get at the values and to assess the duty. The people of the United States are doing it; they have no difficulty at all in doing it; they assess the value, and they hold up the goods until they get the value.

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UNION

Alexander Kenneth Maclean

Unionist

Mr. MACLEAN (Halifax) :

Does the

hon. member mean "value" or "cost of production"?

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UNION
UNION
UNION

Francis Ramsey Lalor

Unionist

Mr. LALOR:

They get at the value and the cost of production. I have in my possession a letter from a firm in Canada which has 50 cases of a certain line of goods lying at Black Rock. They are trying to get them into New York, having sold them there. These goods have been held at that point for nearly three months. The United States authorities have given no reason at all why they should not go through. The goods are properly valued, but they raise every objection and every obstacle they possibly can. Let me give an instance. A year or perhaps two years ago a branch factory that we have in the United States wanted to get something that we had in Canada, which we had imported from England and which they could not get at that time in the United States. They asked us to send over a certain quantity and we sent a thousand pounds of these goods to our own factory in Buffalo. The United States sent an appraiser from Washington to examine our books and go over our invoices in our home town at Dunnville. The officers reported that everything was fair and square, and they did not see why there should be any difficulty at all, but in th: face of that report those goods were held in Buffalo, and we were fined $1,200 for undervaluation. There was no undervaluation at all. We had bought the goods in England, and we added to them the freight and took advantage of the exchange for profit. I even referred the matter to Ottawa to see if they could not investigate this awful imposition of a fine of $1,200, but they reported that it was according to the American law and that there was no use talking about it. You have to show a profit of 10 per cent on your goodi or you cannot pass them. That is the way they treat us. Surely we are not going to treat them as generously as some hon. gentlemen would have us do. The values are raised and everything is done to prevent you shipping to the United States.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

It is not a question of how we should treat the American shipper but of how we should treat the Canadian consumer. We are not concerned if the American Government acts foolishly. It is not for us to follow their example. Their method may he good or it may be bad, but if that is the result of the determination of the American people to do business in this way the scheme we have been discussing on this resolution of sending over there a lot of trade agents to sell our goods would be a waste of money. But we are not concerned about the American people. We are concerned about the people of Canada who are going to pay this tax and who are going to be made to pay an extortionate duty which is not boldly mentioned in the tariff but is brought about in this round about way.

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May 23, 1921