March 17, 1936

LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

The total for 1930 was

1,437.136,000 board feet and in 1931, 986,446,000 board feet.

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

The minister said something about the quota for fir and western hemlock. Does the quota cover spruce also?

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LIB

Malcolm McLean

Liberal

Mr. McLEAN (Melfort):

There is no quota on spruce?

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

No.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

During the course of the discussion on the lumber items last evening the hon. member for Temiscouata (Mr. Pouliot), for whom I have a very sincere regard, made the following statement:

The Tory party is responsible for the decrease in the lumber trade. Whatever they

say they cannot change the facts; they are guilty of that great offence of destroying the lumber trade of this country. That is the fact, and every lumber man is a witness to it.

Those remarks were very largely concurred in by the hon. member for Dauphin (Mr. Ward). I would not presume to explain the situation in eastern Canada, but so far as the lumber trade in the province of British Columbia is concerned, those statements are just the reverse of the facts. From my observations I believe that hon. members are only too anxious to hear the actual facts in regard to any of these questions. I propose to give a brief summary of the position of the lumber trade in British Columbia, and I shall try to give it from a non-partisan viewpoint entirely.

The most important fact, and one that I cannot emphasize too strongly, is that our lumber trade in British Columbia is to-day standing on the foundation of the empire trade agreements, and the one thing we do not want, and the one thing we will not stand for, is to have the empire trade agreements endangered in any way. That statement about the empire trade agreements may sound a little strong to some hon. members, but I think I can best explain it by giving the committee a picture of the lumber trade during a few of the recent years.

The figures I am going to give the committee are taken from the 1935 report of the trade extension committee of British Columbia Lumber and Shingle Manufacturers Limited, an organization composed of all the leading lumber exporters of British Columbia. It is a non-partisan organization concerned only with promoting the lumber trade. May I say that behind all foreign trade, of which we hear so much, there has been the splendid work of some group of Canadian citizens, and I do not think there is any group of citizens in Canada to-day deserving of more credit for promoting our foreign trade than is this group of lumber men in my own province. They have gone to great expense to send trade representatives to the different dominions; they have gone to Washington to try to reason with the government there; they have really

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

No.

1190 COMMONS

Canada-U. S. Trade Agreement

done a first-class job in promoting the sale of Canadian lumber in foreign markets. My figures refer only to the coast region of British Columbia, but the great bulk of the lumber shipped from our province comes from that coast region. The figures are only approximate, to the nearest ten million feet board measure.

First, let me take the committee to 1929, a year that I have noticed brings happy memories to some members of the house. Let us get a picture of conditions at that time in the lumber trade. Our best market for British Columbia lumber in that year was one that is very hard to beat, the home market. We sold in Canada from the coast region of British Columbia over one billion feet board measure; of this about 40 per cent was sold in our own province; we shipped 36 per cent to our neighbours on the prairies, for whom incidentally we have a very high regard, and we shipped 25 per cent to eastern Canada. Our next best customer was the United States, where we sold 540 million feet, or just a little over half of what we sold in the home market. We sold in foreign countries, other than the United States, 240 million feet, and we sold to empire countries 160 million feet.

I carry hon. members along two years further to 1931, and I am skipping the intervening year not in order to avoid anything, but simply to save time, because the trend of the figures is practically the same from year to year. In 1931 our best market was still Canada. We sold just over 520 million feet in Canada in that depression year as compared with a little over the billion feet in 1929. By this time eastern Canada had replaced the prairies as our second best home market. We sold the United States 270 million feet although the Hawley-Smoot tariff had come into effect and there was a duty of $1 per thousand feet against our lumber. We sold to foreign countries 200 million feet, and to the empire 160 million feet. The last figure was the same as in 1929 largely because of the activities of the lumbermen in British Columbia.

Then we come to 1932. In this year our best market was still in Canada, but sales had dropped from 520 million feet to 360 million feet. For the first time the British empire was our second best market, sales there coming up to 250 million feet. This increase was brought about by the fact that we received a preference of 10 per cent under the Canada-United Kingdom trade agreement. The foreign market had decreased to 115 million feet and the United States market had dropped to 70 million feet. One of the

reasons for this drop was the fact that on June 21, 1932, the United States put into effect an excise tax of $3 per thousand feet. The hon. member for Dauphin said last night that this excise tax was in retaliation for our tariffs, but that is not the case. That excise tax was an emergency measure. The building trade in the United States had slowed up and the Americans were unable to get rid of their lumber, so they effectively stopped the importation of Canadian lumber. Incidentally, that tax was only temporary; it was renewed in 1935, and I believe it will come up for consideration again in 1937. At that time we hope the United States will see fit to take it off entirely.

We come now to 1935. Our best market in that year was the British empire, our trade having gone up to 640 million feet, four times what it was in 1929. This increase occurred despite four years of depression. Our home trade was now in second place, the total being 560 million feet; this trade had improved with conditions. Our foreign trade had come up to 160 million feet and there had also been an improvement in the trade with the United States to 100 million feet.

Under the Canada-United States trade agreement both the excise tax and the duty are cut in half. Instead of $4 per thousand feet we shall have to pay only $2, and let me say here that that will be a great help to the producers in British Columbia. I give the government credit for giving us that much assistance. However, there is a quota of 250 million feet.

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LIB

Olof Hanson

Liberal

Mr. HANSON:

That applies only to

Douglas fir and hemlock.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

I was just going to explain

that. This quota of 250 million feet applies only to Douglas fir and hemlock, although it must be remembered that in 1929 we sold the United States twice the amount of this quota. Quotas are something new to Canada. I believe this is the first time that one has ever been placed against us by the United States. I ask hon. members not to be misled during the next few months by the increases in lumber shipments to the United States, because at the present time lumber exporters are rushing lumber to that country in order to get their own lumber in before the quota is used up.

I should like the committee to compare that quota of 250 million feet with the sales to the empire totalling 640 million feet. This comparison will give the whole picture in a nutshell. It will show why the lumbermen of British Columbia are more concerned with the empire agreements than they are with

Canada-U. S. Trade Agreement

the Canada-United States agreement. The empire trade is far more important than the trade with the United States, because in empire trade there is great room for expansion while in the case of the United States we are met with the quota. Russia, Sweden and the Baltic countries sell to the United Kingdom four times as much lumber as we do; this shows the vast possibilities for expansion in that market. Also our empire trade is not subject to the dangers confronting our trade with the United States. The chief competitors of British Columbia in the American market are the lumbermen of Washington and Oregon, and they offer stiff competition. I should like to give some figures in explanation of this competition. In 1929 these two states shipped 550 million feet of lumber to the British empire in competition with British Columbia; this was nearly three times as much as the sales of British Columbia. Last year as a result of the empire trade agreements, Washington and Oregon shipped only 70 million feet to empire countries as compared with the 550 million feet shipped in 1929; this was just about one-ninth of what we shipped. Naturally this has irritated the lumbermen of the two states in question. These people have a strong lobby in Washington, and if the Roosevelt administration is defeated, I believe there will be little doubt that the lumbermen and other interests will make short work of this Canada-United States agreement.

My own opinion is that there is more scope for the development of trade within the empire than with the United States. The products of that group of nations which we term the British commonwealth are of great variety. This is not the case with Canada and the United States. As I have said already, the lumber of British Columbia must compete with the lumber of Washington and Oregon. As the hon. member for Yale (Mr. Stirling) told us the other evening, British Columbia fruit must meet American competition. The same thing applies to the fruit of Ontario and Nova Scotia. Wheat and other grains from our prairies and the manufactured products of Ontario and Quebec must compete with similar products of the nation to the south. The same applies to the cattle of the west and the fish of the maritime provinces. Both Canada and the United States produce practically the same commodities and there are definite limitations to the expansion of trade. This is not the case within the empire.

Finally, I believe it will always be more satisfactory for us to deal within the empire. Just as sentiment helps in business, so does

it help in trade between nations. There is a certain sentimental feeling between the different countries comprising the British empire. We know we are not so apt to be cut off on short notice by any of our sister nations, which might happen in the case of the United States, whose dealings with us are on a cold-blooded bargaining basis and always have been.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

Mr. Chairman, from what the hon. member, who has just spoken, (Mr. Green) has said, it would seem that in his opinion we have been discussing the relative merits of the Canada-United States agreement and the Canada-United Kingdom agreement, and that it was a matter of choosing between one or the other. Surely my hon. friend kpows that there is nothing of the kind at stake. If it can have both agreements British Columbia will be better off than by having only one, and the fact that there are possibilities of one agreement not continuing indefinitely applies equally to the other. There may arise circumstances which will occasion alterations in either agreement, and for that very reason we ought to be glad to have two strings to our bow instead of one.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

I thought I made it clear

that I gave the Prime Minister every credit for this preference in the lumber trade. I simply wish to point out, from a non-partisan standpoint, altogether regardless of party, that it is absolutely vital to us-and I say this in case some question may come up next year or the year after with respect to the empire agreements-that we must have these empire agreements. They are absolutely vital to our lumber trade and are far more important than the agreement with the United States.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I want to

make it perfectly clear to my hon. friend that so far as the Canada-United Kingdom agreement is concerned it is in no way prejudiced or affected by this agreement. The greatest care was taken to see that nothing in this agreement should affect the Canada-United Kingdom agreement either at the present time or at any future time. I might add, however, that if in negotiating the agreement the government had not been restricted because of certain provisions in the Canada-United Kingdom agreement greater concessions might have been obtained from the United States with respect to this agreement. It was felt, however, that the Canada-United Kingdom agreement was there and should stand as it was in all its details, and it has been left in that way.

Canada-U. S. Trade Agreement

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

Perhaps I might refer to

the statement of my hon. friend from Vancouver South (Mr. Green) with regard to the question of quotas. Ordinarily I believe a quota means that beyond a certain point there is an absolute embargo or prohibition of imports. That is not the case in respect of any of these items. With regard to Douglas fir and western hemlock, the quota, so-called, applies to the 250,000,000 feet upon which there is a duty of $2 instead of $4 as before; but if fortunately we do reach that amount of 250,000,000 feet there is no prohibition of further exports to the United States; only any amount above 250,000,000 feet will fall under the regular tariff of $4. There is considerable room for improvement in the export of these two woods. In 1934 we exported to the United States 25,000,000 feet as compared with 548,000,000 feet in 1930. I repeat, therefore, that there is a great deal of room for improvement in connection with these two woods. I might also make this comment without offence: My

hon. friend said that if a Republican administration came into office in the United States they would soon abolish the agreement. Well, this agreement was made with the one intention which I think should govern all trade agreements with other countries, namely, that the benefit is mutual. But if he fears that the United States will nullify this agreement, this shows at least that my hon. friends must think there was something advantageous to Canada in making the agreement.

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CON

Howard Charles Green

Conservative (1867-1942)

Mr. GREEN:

The minister says that

when we have reached 250,000,000 feet in our exports there is nothing to prevent us from exporting more; there will be no embargo. For all practical purposes, so far as the lumbermen are concerned, as the minister understands, there is an embargo because we cannot ship our lumber and pay $4 a thousand.

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

We shipped 25,000,000 feet.

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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

When the minister gave the comparative figures for 1930 and 1935, was he referring to calendar or fiscal years?

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

Fiscal years.

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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

So that the minister should not be too optimistic as to the recovery which may be anticipated from the agreement, I would call his attention to the fact that in 1930 our exports of Douglas fir and western hemlock, amounting to 548,000,000 feet, came under the old Fordney-McCumber tariff, under which they were free, whereas

the exports of 1935, reduced to 25,000,000 feet, came under the Hawley-Smoot tariff, which was $4 per thousand. Under this agreement the item is not back to free, where it was under the Fordney-McCumber tariff, but is $2 instead of S4.

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LIB

William Daum Euler (Minister of Trade and Commerce)

Liberal

Mr. EULER:

It is a great deal better than it was.

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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

Oh, half a loaf is better than no bread.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The full extent of the president's powers.

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March 17, 1936