April 2, 1937

REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

If my hon. friend would study that return a bit, as I have done, he would see how ludicrous the whole system is that we have been following. For instance, consider what came to our attention not very long ago; in order not to transgress the rules of the house I will not state what it was, but some hon. members will recognize it when I give the particulars. Here was a great, powerful firm importing tremendous quantities of goods, ten or fifteen million dollars' worth in a year. They go before the department and get the margin of discount varied from about 17 per cent to 25 per cent. Another firm producing absolutely the same articles and importing goods to the value of millions of dollars pays a different discount. Can any member of the government or any member of a previous government, under which the practice also obtained, say that such a situation is fair? I venture to say that within the next six months this government will be faced with claims for the refund of thousands, possibly hundreds of thousands, of dollars wrongfully extracted because of the differential in that allowance.

Let me give some further items, and I could give dozens. Here is one headed "Current values for duty." There is no authority for this bulletin, which deals with flashlight cells; standard 6 inch dry cells; standard 6 inch dry cells in assembled units of two or more; standard 45-volt radio B batteries; heavy duty 45-volt B batteries: 45-volt B batteries (special) cells other than cylindrical. Here is another, also dealing with flashlight batteries and so on. It may be argued that these things have been considered, and all that; but my point is that under the practice that has become established it is within the power of departmental officials to change the tariff without reference to the parliament of Canada. Furthermore, a study of these matters shows that in almost every instance

Customs Tariff

the change results in the tariff being raised.

I am not going to say that I am opposed to all that has been done; not at all. The chances are that with most of it I would agree, but I say it is done in an improper way.

Take the instance I gave a moment ago. It was ascertained that the competing firms- and there were many, though I mentioned only one-never knew that there had been a change in the rate of duty, because that is what it meant to the first firm. The others did not know a thing about it; they had no opportunity to appear before any body, and the public did not know anything about it. There was no hearing. It was done by regulations passed by the department, without reference to the tariff board, the customs board, or any other board. It was done in the way I have indicated and, Mr. Chairman, I direct the attention of the Prime Minister to this: Fourteen hundred

bulletins are mentioned, and I asked for specific information as to the date issued, the authority, and the date repealed or suspended. All the information is here, and it shows that in only 152 cases out of some 1,400 was there authority of the minister or by order in council.

I contend, Mr. Chairman, that that is not in accordance with the spirit of the Customs Act or the customs tariff. I think the theory of tariff in this country has been that if there is one thing sacred to parliament it is the fixing of the rates of duties on goods, but by the strange wording of these items in the tariff the authority of parliament is flouted and the power of parliament to control and fix duties is disregarded.

Earlier in the session I had intended to go into this matter with much greater care. I hold in my hand, for instance, a folio containing dozens of orders issued within the last few months. Again let me say to the Minister of National Revenue that I am not reflecting upon his administration. I am calling in question the practice that has grown up in this country over the years. Let me examine just one or two of these orders that have been passed recently.

Here is one dated December 3, 1936. I am not saying this cannot be justified; but this is the change. This order is headed "Made in Canada Rulings," and in one case after another the same thing applies. It is that little word slipped into the item to which I object. Without any reflection upon hon. members of this house I venture to suggest that there are very few who really appreciate 31111-160

the significance of those words in an item. And how common the practice is to change an item.

Furthermore, I have known instances in the past where a firm would come along, and under the law they are supposed to be manufacturing to supply the Canadian market, and they would claim that they were doing so, when in fact they had not even started to manufacture. They had some of the facilities to do it, and they declared they were going to do it, and undertook to do it; and it was a question whether they could supply the market.

I call attention to this fact: Canada is a vast country. If a small firm in the eastern or in the central section of Canada says: "We are going to manufacture" or "we are manufacturing this article, and therefore the tariff on imported goods should be under a higher, instead of a lower rate," that little firm does not supply the market in the west. It could not supply it. It could not supply the market in the maritime provinces. On . the other hand, if it happened to be in the west it could not supply the east. And yet, possibly because they manufacture to a certain extent, the commodity is changed from the item under which parliament placed it, and carried into another item.

It may be argued that care is taken, and all that, but what I submit is this: This matter should never be left to the judgment and authority of the officials of the customs department.

Topic:   WAYS AND MEANS
Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

With whom would you leave it?

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Subtopic:   CUSTOMS TARIFF
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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

I would leave it with a

public body such as the tariff board.

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Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Anyone may appeal to the board. The tariff board could never get through with its rulings. I was informed the other day that we had made something over six hundred rulings since I have been minister, ruling articles "of a class cr kind not made in Canada." That is part of the ordinary routine of the department. Rulings have to be made nearly every day.

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Subtopic:   CUSTOMS TARIFF
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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

And I will tell the minister another thing-and again I am not reflecting upon his administration: I will guarantee that if he will make or have made an investigation, he will find that there are in ports in this country half a dozen different forms of rulings on the importation of goods. I know that is a pretty strong statement.

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Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

That is a different point.

Customs Tariff

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Subtopic:   CUSTOMS TARIFF
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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

Yes, I will come back to the other one. It is argued that when an item goes in, it applies equally to all people. How in the name of Heaven can an appraiser -how many ports are there in Canada where there are appraisers?

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Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

I do not know offhand.

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Subtopic:   CUSTOMS TARIFF
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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

There would be seventy-five, anyway. How can seventy-five appraisers be kept up-to-date with thousands of orders? When I asked for this return, officials of the customs department phoned me that it would take over four thousand, to give me the whole list. I agreed that there should be a limitation. I am not objecting to that, because I saw the magnitude of it. But I will venture to say that there are extant and operating to-day 5,000 bulletins that affect or vary the tariff. Some are very trivial, but they do affect the tariff. Hundreds-yes, I w ould venture to say a couple of thousand of them effectively vary the tariff. Now that is not what parliament understands. That is not what should be.

The minister asked me who is to attend to these things. My contention is this: In the first place we are now dealing altogether too loosely with the privilege extended by parliament, I think almost unconsciously, in connection with the words "of a class or kind not made in Canada." Those few words throw the tariff wide open. Along comes a new firm which makes out a case complying with what the department considers necessary. They make their product in Caanda. A bulletin goes out to all these ports-bulletins, bulletins, bulletins, by the hundreds of thousands, go out. Do you mean to say that the collectors, the appraisers, and the long-room clerks, working for S120 a month, are going to have in their heads all these bulletins? They turn to the tariff as a rule, and pass it as it is in the tariff. They try to watch the bulletins; but they cannot do it. There is not a human being in this country who can do it; it cannot be done, and it is not done.

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Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

What is the remedy for it?

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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

The remedy is this, to stop the issuing of bulletins as we are issuing them to-day.

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Subtopic:   CUSTOMS TARIFF
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Then you would have no uniformity in the tariffs at all.

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REC
LIB
REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

No. I can go out tomorrow morning and get an article which will

[Mr. Usley.j

be covered under half a dozen different items in the tariff, in the different ports of Canada. I know that can be done; I have seen it done. I know what I am talking about. And I say that should not be. So I say this whole system of bulletins is wrong. True, it has grown up-

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

What is the alternative? If you do not send out bulletins, you merely add to the lack of uniformity.

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Subtopic:   CUSTOMS TARIFF
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REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

The alternative is this- but may I interject this bit of philosophy, if you like to describe it as such, that tariffs are not made for the convenience of individual firms in Canada.

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Subtopic:   CUSTOMS TARIFF
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LIB
REC

Henry Herbert Stevens

Reconstruction

Mr. STEVENS:

Let us take what the general theory of the tariff is, and that is that duties shall be imposed upon imports coming into Canada on all alike, and that any protection given an industry shall be protection given to all that are in that line of industry, irrespective of what the firm may be. That, I think, is the theory. But thait is not the practice, though. I am asked what the alternative is. I say (1) cease the general practice of issuing bulletins; and (2) my own opinion is that this whole tariff schedule ought to be revised and reconstructed.

Let us pause at that point for a moment and look at some of these schedules we happen to be dealing with at the present time. We find an item divided up into 41a, b, c, d, e, x, y, z-all through the alphabet. There are subdivisions, and then they are resubdivided, and each item includes a lot of detailed names. Take this item now before us-I shall not read it all, but just part of it to give some sort of idea of it:

Bearings, clutch release; bearings, graphite; bearings, steel or bronze backed, with nonferrous metal lining; bushings, graphited or oil impregnated; ceramic insulator spark plug cores, not further manufactured than burned and glazed, printed or decorated or not, without fittings; commutator copper segments; commutator insulating and rings;

And so on, and so on. There are forty or fifty items. As a parliament, it is time we paid some attention to the construction of the tariff. I am not suggesting it can be done now, but I do put in a plea for the changing of the system. Let the tariff first be made by parliament, and let it be understood that it is not changeable by departmental officials. When an application is made by an industry or manufacturer in Canada for a change in the tariff, let that industry or manufacturer go before the tariff board; and let those who are

Customs Tariff

opposed to it or competing with it have the same opportunity in the hearing as the applicant has. That is not done to-day.

Then there may be minor things; but no minor thing should be passed without an order in council. That is the least that can be done When I repeat to the house that in this return, officially given on the order of parliament, only 152 items out of about 1,400 bear the imprimatur of order in council, it is enough to alarm the house as to the chaotic condition into which we in Canada have drifted in dealing with our customs administration.

Again I say, so that there may be no misunderstanding and no question as to my motives, that I am not reflecting on the present minister. On the other hand, I will say to his credit that I happen to know he is giving consideration to this question. Last year I brought to his attention that notorious order No. 4035, and some months after his examination, the minister recalled the order.

What did bulletin 4035 do? I will tell you what it did. That was the value for duty purposes bulletin, referring to coated fabrics such as cover these chairs and are used in the manufacture of railway window blinds and that sort of thing. A firm in Canada applied to the department for a special ruling on the value for duty. An investigation was made, and where did they go? They went to the head of the world cartel which controlled this industry. There were four or five independent manufacturers in the United States making these goods who were willing to export them at prices considerably lower. But their price lists were not considered. The price lists considered were those supplied by the head of the cartel in the United States, and those prices were adopted in Canada as being the fair market value. When goods were shipped in by the independent manufacturers they were faced with a dumping duty. We talk about parliament controlling the tariff. The minister very properly repealed that order, I think in December last.

I shall not detain the minister any longer, but I say to him and to the Prime Minister and to the government that some time during this recess the whole question of the made-in-Canada provision in the tariff should be studied, and the system of issuing bulletins unauthorized by order in council, and not covering appeals to the tariff board, which affect and change tariff items and the impost of duties should be abandoned. I know that this will be a difficult task, but it is of major importance. It is about time that we as members of parliament awakened to the fact that there has unconsciously grown up in 31111-160}

this country, not under this government alone but under previous governments as well, a system of control of tariffs which is not in the hands of parliament.

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Subtopic:   CUSTOMS TARIFF
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DLTNNING:

My hon. friend has

quoted an item as an illustration of the confusion which he says should be removed. I should like to call to his attention and to the attention of the committee the fact that the item we are now discussing is one which was evolved by the tariff board after hearings stretching over two years. If we are to get away from confusion by using the method my hon. friend advocates, this is what it brings. After exhaustive examination the tariff board was of the opinion that in order to administer the tariff with respect to automobile parts, the description which the hon. member ridicules as confusing was a necessary description.

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Subtopic:   CUSTOMS TARIFF
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April 2, 1937