March 26, 1930

CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. A. D. McRAE (Vancouver North):

Mr. Speaker, in rising to speak to the subamendment before the house, I think I might shorten up the time which, owing to the importance of the industries affected on the Pacific coast, I otherwise feel I should take up, by referring to the very able presentation made of the subamendment by my colleague the hon. member for Vancouver Centre (Mr. Stevens). In endorsing his presentation in the house last evening I believe my remarks can be confined more particularly to those industries which I know best.

The observations which I should like to make to-day will be confined to treaties in general

Australian Treaty-Mr. McRae

and to the Australian treaty in particular. As regards treaties in general, I presume we should consider them from a national viewpoint and in that connection we on the Pacific coast, separated as we are by the Rocky mountains from the other parts of the Dominion. sometimes feel that our interests have not always been well considered.

I have in mind the revision of the French treaty which, I think, was termed the convention of 1922. To the amazement of those interested in the production of salmon on our Pacific coast they found that when the schedules became public knowledge, the preference they received in the new convention was but one-half of that previously enjoyed on their shipments to France. So seriously did this affect their exports that it was with difficulty they were able to compete with United States shippers of canned salmon to France. If one reads the convention, it would appear that some mistake was made in putting canned salmon into the intermediate column instead of into the column providing for the minimum tariff. This apparently did not occur in regard to any other article at least in the fishery line. It was a disappointment to the fishing industry on the Pacific coast that under the new convention they should be deprived of one-half of their preference without having been consulted in the matter. It might well be a principle in the negotiation of our treaties in future that those interests which are going to be vitally affected should be consulted so that a proper presentation might be made with a view of at least maintaining the preference previously enjoyed. We have a large Dominion; there are many diversified interests; changes develop from time to time; important omissions are no doubt made in certain instances, and a revision of our treaties may frequently be in order. In any event we are not experienced in making treaties; we have many interests to harmonize, and certainly revisions need not be unexpected.

Referring to the Australian treaty, I was rather surprised when I came to look the matter up to find that notwithstanding all the discussions there have been with respect to that treaty, at the present time Canadian exports to Australia are but two and one-half per cent of the imports into that dominion. This clearly shows that in a revision there is hope for an extension of the business we are now doing with that sister dominion, and I trust later to be able to point out to the house some outstanding instances which, in the light of results, do not appear to have received sufficient consideration in the making of the previous treaty. I agree entirely with the principle

enunciated by the hon. member for Vancouver Centre that treaties should apply to exchange of indigenous products.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

What is that?

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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

AVe produce in this country

certain commodities which we want to sell; Australia produces certain commodities which she wishes to sell, and the bargain is to effect an exchange of commodities which will be beneficial to both countries.

It happens that I was for some years interested in the principal lines of production on the Pacific coast. I refer to the products of the forest and the sea. Having divested myself, after entering the house, of any interests directly or indirectly in those industries, I think I am in a position to speak with a knowledge which may be interesting to the house. In the presentation I propose to make with regard to the products of the sea and the forests of British Columbia, and the possibilities of extension of trade in those great industries, there can be no charge of personal interest. There are in the schedule many items which will no doubt be discussed, but for my part I prefer to confine my remarks to the two industries which I understand.

AVe have heard a great deal about newsprint as connected with the Australian treaty, and I wish to state that the figures I shall quote are for the calendar year as furnished by the export associations and they will no doubt differ somewhat from the figures for the government fiscal year. The export of newsprint to Australia reached a rather low ebb, during 1908 it amounted to only 52,767 tons out of a total of, in round figures, 160,000 tons, imported by that dominion. I was under the impression, as I know most hon. members are, that the newsprint item in the treaty was largely for the benefit of the Pacific coast. On looking the matter up however I find that the Pacific coast is shipping only 40 per cent of the exports from Canada to Australia and that ti e remaining 60 per cent comes from eastern Canadian mills. It is interesting to note that at the present time we divide the Australian market with Great Britain, Canada furnishing about one-third and Great Britain the other two-thirds of Australia's requirements.

I would not like to agree with the hon. members to my left in the sentiments which they expressed yesterday showing their lack of interest in our exports to Australia. I am sure that the farmers of my province and also the farmers of the province of Quebec, who benefit directly from the paper mills, will not agree with those sentiments. One company alone in the province of Quebec last year purchased $450,000 of farm products direct

Australian Treaty-Mr. McRae

from the farmers of that province, and if you add to these purchases, semi-manufactured farm products, canned goods and such like, the purchases of farm products of that one paper mill company alone were in excess of $1,000,000 last year. I mention that to illustrate to hon. members who have shown so little interest in our industrial development just how important these industries are.

Further, the paper industry, as is well known, pays to labour in this country in excess of 40 per cent of the returns they receive for their finished product. That is an important factor at the present time; it is always an important consideration. How far can our newsprint business with Australia be increased? That is a fair question. It is a question that should be considered when this treaty is being revised. Under the present treaty the British preference gives us free entry, an advantage of three pounds per ton, and we are supplying about one-third of Australia's requirements. It is not too much to expect that at the present rate of increase we will eventually supply one-half of Australia's requirements, thus dividing the Australian market equally with Great Britain. Let me express in figures just what that means. It means that our newsprint business with Australia is capable of development to the extent of at least $2,000,000 a year, bringing our present exports to Australia, which last year aggregated $4,220,250, up to approximately $6,000,000 annually.

It is interesting to note the extent to which the mills of my province profit by the Australian treaty at the present time. I have it from the association that the value of our paper exported from British Columbia to Australia last year was $1,150,000, which again is but 40 per cent of the exports from Canada. So much for newsprint.

I come to the question of lumber. The lumbering industry is undoubtedly one of the outstanding industries of the Pacific coast. As yet it has received no advantage whatever from any treaty that has been negotiated with Australia. There is as hon. gentlemen probably know a present import duty into Australia on what is known as Oregon pine, being what we call in Canada Douglas fir. This import duty is 8 shillings per thousand feet and applies to hemlock as well as fir, whether it comes from the United States or from Canada. It is interesting to note where the Canadian lumberman is getting off in this competition. In 1922, Australia imported 159,000,000 feet of fir. I will ask hon. members to include in that, hemlock; probably few of them will know the difference.

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?

Some hon. MEMBERS:

Oh, oh.

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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

What I meant by saying that few would know the difference was this: It is technical. Those in the trade will understand how difficult it is to distinguish between the two woods. I can say this: After being in the business for many years, for nearly a generation, I am not always able to distinguish the difference myself. In Australian imports it all goes in as Oregon pine.

In 1922, Canada had 36 per cent of the fir timber shipments to Australia. We find that Australia in 1923 imported 237.000,000 feet, and our share of that trade fell off to 33 per cent. Every other foot came from the United States. In 1928, Australia imported 212,000,000 feet, and our share had fallen down to 13 per cent. In 1929, the year just closed, Australia imported 266.000.000 feet, of which Canada supplied only 57,240,000 feet. This is a decrease as compared with the amount we supplied in 1923 of nearly 25 per cent.

Where does all this lumber come from? Of the 266,000,000 feet imported by Australia last year, roughly 210,000,000 feet came from the United States. That seems peculiar, but it is a fact nevertheless. It is partially due to the excessive mail subsidies which the United States is now granting to steamships in an effort to foster its export trade with all parts of the world. That we must have some concession in preference, or in lieu of preference, steamship subsidies to foster our lumber business with Australia, is apparent The government has already made a small beginning by subsidizing a line of steamships to Australia. That is only a beginning. We have to go a very considerable step further, because if we get our share of the Australian lumber market it means that instead of shipping 57,000,000 feet, as we did last year, we should ship 157.000,000 feet. There is no reason why, with a proper treaty with Australia, we should not get practically the entire Douglas fir requirements in that market

What support has the British Columbia lumbermen got to have to get that business? That is an important question, because the business runs into very large figures indeed. If the Canadian mills can get the share of Australia's imports of Douglas fir which we should have, it would alone mean at least a trade of at least $3,000,000 a year with Australia. The assistance to shipping given by the United States, and which has given the United States a dominant place in the Australian market to-day, would probably represent as much as five shillings per thousand feet, based on lumber shipments. But my information, Mr. Speaker, is that with a dollar preference we would have the major portion of the Australian market. There is

Australian Treaty-Mr. McRae

a precedent for this; for twenty years and longer we have had a preference of approximately 50 cents per thousand feet in the South African market with the result that the mills of British Columbia have first call on the business in South Africa; and I want to suggest to the government that in the negotiations with Australia this lumber business should be given special consideration. There are $3,000,000 at stake. Sixty per cen't or more of that money goes to labour, and if we take into account supplies and equipment, 90 per cent of the proceeds from lumber find its way into channels of trade in our own country. I submit that a dollar preference in the Australian market for Canadian lumber as against United States lumber will result in $3,000,000 coming into our pockets, instead of going into the pockets of the Americans.

Now, there is one item that I want particularly to call to the government's attention, because I must say that in this instance, in my humble judgment there has been a very serious neglect of the interests of our country. I refer to the cedar lumber of the Pacific coast. Hon. members will see by referring to the Australian schedule that the redwood lumber of California get the British preferential tariff in the Australian market. That means a concession of fifty cents per thousand feet. I say to the house, and I say it advisedly, that our cedar lumber is superior to California redwood. Redwood is produced in one part of the world only-in northern California. It is an excellent wood, but its durability is not superior to our cedar, and when it comes to tensile strength there is no comparison between the two. In short, the cedar of British Columbia is vastly superior to the redwood of California, and being light in weight it is suitable for identically the same requirements. What I want to point out to the government is that they should see to it that we are not discriminated against in any sister dominion in favour of the United States, especially upon a commodity such as this which is superior to the redwood of that country.

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LIB-PRO

John Millar

Liberal Progressive

Mr. MILLAR:

May I ask the hon. member a question? In making the suggestion that the lumber of British Columbia be given an advantage of one dollar a thousand, on what Canadian products does he think the Australians should be given a preference to offset the account?

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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

If the hon. member will hear me through he will find that I am going to touch on the one vital point in the Australian treaty. I say now as I have said before, sir, that I do not believe that we should attempt

'Mr McRae.]

to exchange any commodity which interferes with the basic products of either county'. Now, as I was saying, the importations of redwood lumber into Australia last year were

50,000,000 feet-$1,000,000 more business, whirn without any special concession on the part of the Commonwealth of Australia might be diverted to Canada.

I now come to another industry to which I previously referred, and which has profited very materially by the Australian treaty. It is the fishing business on the coast, and particularly the canned salmon. Its importance is worthy of notice. In 1926 the United States shipped to Australia 132,000 cases, while we shipped 192.000; in 1929 the United States shipments had fallen to 92,000, while ours had increased to 217,000. It is rather interesting to note in that connection that we are as yet supplying but a small part of the entire importation of fish products into the Australian market. True, we have now about 694 per cent of the business in canned salmon in that market.

Summing uip the three commodities, paper, lumber, fish-

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?

An hon. MEMBER:

Pulp.

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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

There is a small amount of pulp shipped. I am not enthusiastic about the shipping of pulp out of this country; I rather feel that we should manufacture it at home. However, taking these three commodities, paper is capable of a further increase of 50 per cent, lumber of 300 per cent, and fish a small percentage-a growing percentage because in that market brands form a very important factor and it takes years to win away your purchasers from established brands. That accounts for the continuance of fish exports from the United States to Australia.

I said, Mr. Speaker, that I was not going to deal with the other items in the Australian schedule. They apply very largely to eastern Canada, and show that this is a treaty for the entire country, and not, as has been generally supposed, a treaty made especially for the benefit of the industries of my own province. The discussions which have taken place in connection with this treaty have attracted a great deal of attention in my province. I think the Canadian people as a whole are agreed that in this and similar treaties we must not interfere with any basic production in our country. I see my hon. friend from Weyfourn (Mr. Young) in his seat. He asked a question the other day as to how the people in the big cities felt about increasing the cost of butter. Well, I have here a wire from a

Australian Treaty-Mr. Bird

past president of the Vancouver Board of Trade in which he says:

Manufacturers interested here favourable to dairymen's request for increase m butter duty.

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LIB-PRO

John Millar

Liberal Progressive

Mr. MILLAR:

Would the hon. member

kindly answer my question?

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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

The hon. gentleman's question is a proper question for the commission that next negotiates a treaty with Australia.

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PRO

Thomas William Bird

Progressive

Mr. T. W. BIRD (Nelson):

Mr. Speaker,

I want to support the amendment moved by the hon. member for Acadia (Mr. Gardiner), and in order to justify my action I purpose, in as brief a manner as possible, to prove that the amendment is capable of rational explanation. That remark causes a titter of incredulity, but the difficulty is not on the side of proving it; it is probably rather on the receiving end.

As a matter of principle I am opposed to treaties of this character. A treaty of this kind is the fruit of the protective principle. Given protection as a fiscal policy, you must follow it up by treaties such as this, because if you give privileges in the home market you thereby in various ways create penalties in the export market. By creating privilege at home you increase the cost of production. It may be that I am indulging in platitudes, but these things have to be driven home continually, because they are just as continually forgotten. When you protect the manufacturer at home you increase the cost of production and put the manufacturer at a disadvantage in the foreign market. It then becomes necessary to have some device to enable the manufacturer who labours under this difficulty to export his goods. Not only that; there is a psychological side to the question. We protect our manufacturers at home and thereby throw out a challenge to the manufacturers abroad; tariff wall is raised against tariff wall. Not only so, but the natural channels of trade are thereby obstructed.

We ha,d a very convincing argument as to the undesirability of that last night from an unexpected quarter. My friend from Vancouver Centre (Mr. Stevens) pointed out the undesirability of deflecting the direct courses of trade. The more direct the line of approach between exporting and importing countries, the more benefit may be derived from both parties concerned. With protective tariffs those lines are bent, and instead of direct trade there has to be three-cornered trade. Worse than that, trade has to wander all over the face of the globe before it finds its object. It is admitted these days, especially in the League of Nations, that tariffs are not

conducive to international good will, but that they create ill will. So by artificial means which basically are unjust we raise up obstacle after obstacle, and crown every one of them with the barbed wire entanglement of international ill will. Then, having created a mischief, we seek to remedy the situation by further privilege. That is to say, this protectionist doctrine is like the vice of taking drugs: the habit has to be continued by additional doses. The protected manufacturer who, by reason of his protection, is placed at a disadvantage in the foreign market, has to be subsidized in order that he may surmount the obstacles which his protectionist principles have placed in the way, and you have once more to penalize other activities in the community in order to allow him to sell his protected goods in foreign markets. That, in brief, is my case against this class of trade treaty.

But may I say further that you are not through when you have given the second privilege; because as in the case of lumber you have still another subsidy. The people of Canada are called upon to assist once more in order to subsidize steamships to get lumber over these artificial obstacles that are put up.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

Lumber is on the free list.

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PRO

Thomas William Bird

Progressive

Mr. BIRD:

I understand manufactured

lumber is not on the free list.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

All this lumber we are

talking about is on the free list, and has no protection whatever. That being the case, my hon. friend's argument falls to the ground.

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PRO

Thomas William Bird

Progressive

Mr. BIRD:

My argument does not fall

anywhere near the ground, because in the first place I was not contradicting my hon. friend. I am not very well acquainted with the subject, but my hon. friend from Rosetown (Mr. Evans) hands me a copy of the customs tariff amendments. I find that items 503 and 504 cover rough lumber, and I believe that to mean lumber which has just been taken out of the bush.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

No; read the items correctly. Read the two items.

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PRO

Thomas William Bird

Progressive

Mr. BIRD:

Item No. 505 is as follows:

Sawn boards, planks and deals planed or dressed on one or both sides, when the edges thereof are jointed or tongued and grooved.

The British preference on that item is 17^ per cent; the intermediate tariff is 22i per cent, and the general tariff 25 per cent.

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

My hon. friend is not

reading the item he referred to. Items 503 and 504 are free, and the hon. member is not reading them.

Australian Treaty-Mr. Bird

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PRO

Thomas William Bird

Progressive

Mr. BIRD:

I contend, Mr. Speaker, that I am reading correctly. I say that I have read item 505, to which I was referring, and it specifies "sawn boards, planks and deals."

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March 26, 1930