May 2, 1923

LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

In Europe

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

In Europe, yes. I would point out to my hon. friend, though, that the vast amount of the exports of this country to Italy consists of wheat, and I am going to ask the Minister of Finance whether once upon a time central Europe was not a great wheat producer and whether there are not wheat fields .to-day on that continent which, if not perhaps actively under cultivation in Jugo-Slavia at least-and my information is that they are-are at any rate potential competitors of the Canadian wheat producers in the Italian wheat market. I should have thought that wheat raised in any quantities in central Europe and sold in the Italian market would be an important competitor against this country.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

Wheat is free in Italy, and all countries are treated alike. I do not think therefore that there is anything to be alarmed about in that regard. All I can say is that if at any time Italy granted preferential treatment to any other country competing with us in wheat it would be good ground for us to give Italy notice to terminate the agreement.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

My hon. friend is getting back to the chief argument he used in reference to the French treaty, which was that he could get rid of it in six months.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

Surely.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

But he cannot get rid of this treaty in six months; this is for four years, subject, if I remember rightly, to cancellation on a year's notice. So that the argument about being able to get rid of the agreement if it is not satisfactory does not apply here. I want to impress upon my hon, friend that the result of the treaty as negotiated is this, that if Italy chooses to put a duty on our wheat and flour she may do so and at the same time give a preference to Jugo-Slavia. She may give free entry to Jugo-Slavia and hold her tariff as against Canada. If I am wrong will my hon. friend put me right?

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

There may be a possibility of such a thing, but I must say that it is so utterly unlikely that I cannot treat it with as much gravity as my hon. friend does.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

But we have here a solemn document which is supposed to cover

Italian Treaty

these things. If we have not reserved to us in connection with our chief export to Italy, namely wheat, that which my hon. friend declared to be the real reason for making the treaty, that is, the assurance that Italy will not give someone else better treatment, what is the use of having the treaty? After all, wheat is our chief export to Italy and if my hon. friend can rely on Italy not to give a preference in respect of this commodity to other countries as against ourselves then there is really no use for the treaty. The effect of the treaty is to enlarge the scope of the most favoured nation compact, as pointed out by my hon. friend; it is a recognition of the principle. But it further complicates the situation to this extent, that so far as Italy is concerned the favoured nation treatment is to apply for four years subject to termination at the end of one year's notice. I do not know whether my hon. friend thinks or does not think that the most-favoured nation arrangement is a good thing for Canada; he has not t9ld us yet his view on that question. But we did the best we could to point out to him in connection with the French treaty just exactly how that most favoured nation provision works as regards Canada on the one side and France on the other. I notice'that the matter has been discussed in the other House, and I see that Hon. Senator Beaubien is reported in the Senate Hansard at page 350 as follows:

In our exchange of commodities with Spain, from 1912 to 1922, both inclusive, ten times out of eleven our imports have surpassed our exports. In the nine months ending December 31, 1922, our imports have exceeded by 200 per cent our exports to that country.

In the same period of 11 years-from 1912 to 1922, both inclusive-we imported from Switzerland over 60 million dollars' worth, exported to that country less than 4i million dollars. Whenever Switzerland bought $1 worth of goods from us, we purchased $15 worth of merchandise from her. During practically all this time Switzerland was a free-trade country and we could hope for no valuable tariff concessions from her. Lately Switzerland has adopted a policy of moderate protection, and we might perchance obtain from her useful tariff privileges. She imports yearly 250 million dollars' worth of products which we can furnish, amongst them, cereals, prepared foodstuffs, live stock, leather, furs, asbestos, mica, iron and steel sheets and tubes, agricultural implements and machinery, small hardware and tools, stationary and portable engines, varnishes, lumber, wood-pulp, paper, boots and shoes, cotton goods and tobacco.

On the other hand, our clientele, which is of great value to Switzerland could be easily shifted by tariff rearrangements to France. In 1921 we imported from Switzerland a total of $8,671,608, out of which textiles and fibres amounted together to $7,266,353, all of which textiles and fibres could have been purchased in France.

Hon. gentlemen will observe, Mr. Chairman, that the senator takes the position which we took in connection with the French treaty;

that the French treaty, as the result of the facts which he points out, could be much better described as a treaty, not with France for the benefit of France, but a treaty with France for the benefit of the most favoured nations. It was in that connection that I particularly pointed out to the hon. minister the position of the silk industry which France was so much interested in, that in connection with a tariff which was supposed to be for the benefit of France, she sent us $1,000,000 worth of silk products, while Japan and Switzerland sent us $8,000,000 worth, and that while there was some assistance given to France, at the same time the effect is to help France's competitors in our own market absolutely to the same extent as we help France. So that France is not helped very much after all. .

The hon. gentleman will also recognize this fact in connection with that very item of silk goods-and it comes in here again because the basis is the same-that we have a silk industry in Canada. I am going to point out to my hon. friend what has been done in a country where the manufacture of silk is just as foreign to it as it could be said to be foreign to Canada, where they are not entangled with the most favoured nation treaty clauses in connection with their tariff. The statistics of the United States show that their silk industry-which industry was entirely formed in that country as a result of a protective tariff, and which has resulted in silk to-day being cheaper in the United States, even with a high tariff, than it is in Canada -those statistics show the silk industry to be in this condition: In 1919-I am sorry I have not the later figures; I think they are better-there were 1,369 establishments; their employees numbered 126,782; they had an invested capital of $532,732,163; they paid in wages $108,226,330, and the value of the product was $68S,000,000. So there is a country which grows just as much silk as Canada does and no more-that imports every single bit of silk, whose people to-day are enjoying silk at a lower price in their common markets then we enjoy in Canada. Under a protective tariff-and it was a high one-they have worked up this industry, and at the same time besides having cheaper silk they distribute $108,000,000 among their wage-earners and produce manufactured articles to the value of $688,000,000. Is it any wonder that the ministry has to report an exodus from Canada to the United States? I merely point out these facts to my hon. friend.

If any further evidence is required as to the effect of the treaty, having regard to the activities of other most favoured nations, I

239S

Italian Treaty

have a list of the different countries supplying Canada with goods similar to those received from France for the years 1914, 1920, 1921 and 1922. If my hon. friend desires the information I will read it, or if he likes the figures can be placed on Hansard.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

The hon. gentleman's remarks have touched some really important questions and some questions that I think are not so important. First, let me again remind him that he may talk of these silks coming in, whether they come in from France or from Italy, Switzerland or Japan, the greater proportion-I will not raise the question of 90 per cent and 10 per cent-but certainly the greater proportion of these silks have got to pay a duty of 27i per cent, less 10 per cent discount. It is necessary to keep that in mind. The whole tendency oi my hon. friend's observations is that we are bringing in these silks for nothing. If these enormous quantities of silk are paying this duty it is a good thing for the revenue. And I think 27*i per cent, less 10 per cent discount, take it all in all, is not lacking in a fair measure of encouragement to the silk industry of Canada. I think it will be held by many in this House that 27i per cent less 10 per cent, or a net duty of 25 per cent, is a pretty stiff rate and a fair measure of encouragement to our domestic industry. Wiser people than myself will say that any industry which cannot live in Canada under a 25 per cent protection is of questionable value to the country.

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?

Some hon. MEMBERS:

Hear, hear.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

But I want to say this. My hon. friend in referring to the United States tariff on silks says that silk is cheaper in the United States than here. If he has made inquiries and finds that to be the case I will take his word for it, but offhand I think he is mistaken; I do not think that as a rule goods that are paying high duties are cheaper in the United States than here. However, no industry ought to complain if it is allowed 25 per cent protection in Canada. I think the silk industry is not going to suffer under these circumstances. But if my hon. friend thought a high protective system was so valuable, why in heaven's name did he not put it in force when he had a chance? Again and again he talks of this high protection as if it were something very good. We have a moderate system of protection now. Some people do not like to call it protection. But if my hon. friend thinks that cheap silk and general prosperity could be created by raising the tariff, why in heaven's name did he perambulate this country from Dan to Beersheba

and end by doing nothing? WThy did he say in the Speech from the Throne that he was going to revise the tariff and then not revise it at all? I do not think my hon. friend has so much faith in his own high tariff ideas. If he really believed so much in its merits he would have given us a high tariff long ago. On the contrary he gave us a tariff not very much different from what we have to-day, and yet my hon. friend

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?

Some hon. MEMBERS:

Oh, oh.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

What is the fun? We

took something off last year, and we are going to take off-possibly we could take off something this year if we wanted to.

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?

Some hon. MEMBERS:

Oh, oh.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

At all events the point

of my remarks is this: My hon. friend i3 trying to establish that you can bring about prosperity by increasing the tariff; I think I am not misstating his position. Well, I ask him in all seriousness, why did he not do it? He went all over the country; he travelled from ocean to ocean, as I have said; he accumulated a vast amount of information, and the result was that he made up his mind to do nothing. Well, I do not think he ought to complain of what we do under similar conditions.

My hon. friend talks of the favoured nation provision as if it were something created by these treaties. Again I must direct his attention to the fact that there is nothing in this treaty, there was nothing in the French treaty which says a single word about what rates should be given to Switzerland or Japan or any other foreign country. The privilege of importing from Switzerland, from Japan and all those other countries arises from treaties made not by this government, but by governments of long ago, treaties which the hon. gentleman respected and recognized when he was in office. If they were the wrong thing; if favoured nation treatment is wrong, then why did my Conservative friends, in all the years they were in power, allow these treaties to stand? The Swiss treaty to which my hon. friend refers was in force during all the years that he and his associates were in office, and they did not seem to find anything wrong with it. How is it that it is only now discovered to be wrong? I cannot understand that. Again I say that if there is anything arising out of this so-called favoured nation treatment, it has been there for years, and that when my hon. friends had to deal with it they accepted it as something good and stood by it. Only now that they are sitting

Italian Treaty

on the other side do they suddenly discover a very great evil in it.

The main question is this: Is favoured nation treatment a sound policy or not? Many hon. members will think it is not. For myself I would say that it might not be well to apply it universally. There might be conditions under which the favoured nation treatment would not do you much good. I would not value an agreement with the United States now on the favoured nation principle because the best they can give us under present conditions would not be anything favourable or satisfactory. But where a country has a low or moderate tariff, what more can we ask from them? Take the case of Switzerland; my hon. friend says their tariff is a low one. Well, can we expect them to do more? If they give us all they are giving to the wide world, and if their tariff is low, what more can we ask? We have had that question debated many times, and I suppose it will be debated again. But if you have no favoured nation treatment you must be forever on the watch to gain access to the markets of another country.

Let me illustrate by an incident from my own experience. In the early days of the Liberal government I remember the latP Mr Barker, of Hamilton, a very able member of this House, getting up one day and saying that some of the manufacturers from his city had gone to Japan and that on the same vessel that carried them there were some American manufacturers of similar goods. He went on to say with indignation, "You will wonder when I tell you that what actually happened was this: the United States goods were allowed entry into Japan at a low rate while we in Canada had to pay a high rate for the very same article." Well, the fact was that a few years before, a treaty had, been entered into between Great Britain and Japan with the privilege that Canada might or might not adhere to it. The Canadian government of that day-I am not sure at the moment who were in power-thought it would not be wise to adhere to the treaty, the consequence was that Canada was not included in the favoured nation arrangement, and when cotton goods from Yarmouth, Nova Scotia, and similar goods from New York arrived in Japan, the United States goods were admitted at a low rate and the Canadian goods were taxed at a high rate. There was an illustration of what resulted from our not having come in under the favoured nation provision. Well, the Canadian government very soon got busy and adhered to the treaty, and from that day to this United States goods and Canadian 153

goods have gone into Japan on the same terms. That shows how some other nations may get ahead of us where there is no favoured nation treaty as applying to our own country.

I am not laying down the doctrine that in all cases we should adopt the favoured nation principle, but in the main, especially in the case of a country which has a low tariff, I think the principle is a good one. No country will give to Canada, or to any other country, exclusive commercial privileges; but the best it gives to any country it may hold itself free to give to any other country. It would be preposterous for us to go to Switzerland and say: You must give us a lower rate than you give a certain other country. No country would do it; we would not do it. We would not give exclusively to any one country any special commercial privilege. We might give what we thought would suit them, but we would retain the right to extend the same privilege to any other country. And I repeat, if a country has a low tariff and is giving us the best it is giving to anybody else, what more can we ask? That, in brief, is the argument for the favoured nation principle. There may be cases in which its application might not be wise if, for instance, we discovered that we were suffering any great injury through the admission of Swiss silks at 27\ per cent less the discount, why, we could get rid of it, I suppose. But it was there all the time my hon. friend was in power; he did not want to get rid of it then, and I am not sure he wants to get rid of it now.

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

It is always a great pleasure to hear from my hon. friend (Mr. Fielding), even though the subject may be old and threadbare and pretty well washed out. Now, he says, why did we not increase the tariff? I would ask him to turn up any of his own speeches or the speeches of his leader when we were in power and to answer his own question from the arguments then advanced. Why, the whole time that hon. gentlemen opposite were over here they were declaiming to the House that we had no mandate and could not do business of any kind at all.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

Did you believe that?

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CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

That was the claim then made. No, we did not believe it. We believed we had the right to try to keep things going on in Canada and to put the country in proper shape after the war. And we were right in our belief; we were successful in our work, because when my

Italian Treaty

hon. friends attained power they were able to say that no country in the world was in better shape than Canada was. That is what we did.

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LIB
CON

Henry Lumley Drayton

Conservative (1867-1942)

Sir HENRY DRAYTON:

My hon. friend asked, why did we not do it? Why did not my hon. friend himself do what he said he was going to do-reduce the rates of duty? What was his answer? Why, his answer was that the great American republic was doing something. What did we say? We said that until the policy of that country was absolutely fixed; that until they were really committed to a course of action, Canada would do nothing to give them the slightest excuse for their action in the premises. That is the stand we took, and twelve months later that is the stand my hon. friend takes; yet he turns round now and says, why did we not do it? That is the kind of argument we get when we try to talk business.

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May 2, 1923