February 22, 1939

LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince) :

History gives us to understand that the national policy of high protection was inaugurated in Canada to protect our infant industries, and when those infant industries got on their feet the party of our hon. friends opposite was pledged to do away with this high protection policy and adopt a policy of lower tariffs. But those "infant" industries, many of them now hoary with age, are still clamouring for more and more protection. And every time they shout, our friends opposite come to their assistance and are 'willing to give them higher and higher protection. When all those industrialists and manufacturers climb on the back of the farmer he has pretty heavy going.

Our hon. friends opposite must be either for or against this agreement. They cannot ride

two horses; they cannot eat their cake and have it too. They will have to make a decision on this matter, and their time to make it is not far away.

On page 1070 of Hansard of this session the leader of the opposition (Mr. Manion) is reported as saying that he is absolutely opposed to a prohibitive tariff. But from 1930 to 1935 he was a member of a government which imposed the highest tariff that was ever imposed in this country; if ever there was a tariff that could be described as a prohibitive tariff, that was it. And we know what the results were.

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

It made a lot of good jobs.

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?

Some hon. MEMBERS:

Oh, oh.

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LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince):

I heard one of our friends over there the other day lamenting the plight of the young people of this country. I tell my hon. friends that the prohibitive tariff imposed by that government threw more people out of jobs than any other thing that ever happened. And see the other results. Not only was the indemnity of every hon. member of this house cut-we do not complain so much about that-but the salary of every member of the civil service was cut-[DOT]

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?

An hon. MEMBER:

Why shouldn't it be?

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CON

James Earl Lawson

Conservative (1867-1942)

Mr. LAWSON:

What has the tariff to do with that?

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LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince):

-and the business men followed suit, and so on right along the line.

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LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

The truth hurts.

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LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince):

Our friends over there may protest as much as they like; all I have to say is that-

It is the set of the sails, and not the gales,

That shows the way they go.

There was a good cartoon in a recent issue of the Montreal Gazelle, which to my mind sums up, better than anything else I can think of, the attitude of hon. gentlemen opposite. It showed a Conservative gentleman, dressed in black, looking very mournful, and applying black paint to one side of this trade treaty. And there was a charming, smiling, gentle looking Liberal on the other side painting it a lovely white.

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CON

Robert James Manion (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. MANION:

It should have been red.

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LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince):

This cartoon cleverly depicts the true state of the case. We have always told the people that the policy of the Liberal party was expansion of trade. We have told them that trade is the lifeblood of the country, that without trade we could not expect to meet our financial

Canada-United States Trade Agreement

obligations and prosper. With that in view, following hard upon the trade treaty of 1935, came the Dunning budget, providing for sweeping reductions in the tariff. Duties were reduced in many cases 17i per cent. Many articles coming from the United States were made free; the duty on farm machinery was reduced from 25 to 7i per cent, and so on all down the line. That is one pledge that the Liberal party have kept. They stated in a pamphlet which they issued in 1935 that they would seek to release and promote international as well as internal trade, and they have gone a long way in that direction.

Our trade has gone forward with leaps and bounds. I am not going to quote a great many figures but I have a few here from the bureau of statistics. Let us look at our trade with Great Britain. In the fiscal year 1934-35, the last full year of the Conservative administration, Canada's imports from the United Kingdom were $112,000,000. In the fiscal year 1937-38 they totalled $145,000,000-I use round figures-an improvement of $33,000,000, or 29 per cent. For the same two years our exports to the United Kingdom were $291,000,000 and $410,000,000, a gain of $119,000,000 or 40 per cent.

Look at our trade with the United States. In the Conservative government's last fiscal year, 1934-35, Canada's total trade with the United States was valued at $608,000,000, whereas in 1937-38 it came to $910,000,000, a gain of $300,000,000, or practically 50 per cent.

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?

James Houston Spence

Mr. SPENCE:

Were not times better in 1937-38 than in 1934-35?

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LIB

Alfred Edgar MacLean

Liberal

Mr. MacLEAN (Prince):

What do our friends over there want? They must be hard to please if those figures do not please them.

Now let us look at the export figures, comparing the same two years, 1934-35 and 1937-38. The percentage of gain in Canada's exports to some of the leading countries was as follows: Great Britain, 40 per cent; United States, 39 per cent; Australia, 79 per cent; Japan, 57 per cent; South Africa, 33 per cent; New Zealand, 118 per cent; Belgium, 24 per cent; the Netherlands, 32 per cent; Germany, 174 per cent; Argentina, 85 per cent, and Ireland, 25 per cent.

Right down the list you find that we have made a substantial gain in our export trade. Is not that what our country needs? Is it not what we have been looking for? We have a great deal-I was going to say to be thankful for, and I do not know that I can use a better expression, in the very favourable situation we enjoy not only from the trade angle but also from the financial angle.

Hon. members will recall that during those five years Mr. Bennett was not only prime minister but for most of the time was finance minister as well. He was going to show this country not only how he could run it as prime minister but also how to finance it. In the last year that the Liberals were in power Canada had a surplus of over $47,000,000. The first year after our friends came in they had a deficit of over $87,000,000. The next year the deficit was $114,000,000, the next year $220,000,000, the next year $133,000,000, and in the year following there was a deficit of over $116,000,000. Again I use round figures. The total deficit for those five years was over $672,000,000. That is the record of their party, brought about largely by the trade policies they have followed, because it was shown here yesterday that you cannot have trade dropping off and at the same time maintain your revenue. Our friends opposite complain about the balance of trade. We find that last year we brought in from the United States only $78,000,000 more than we sold them and, as the Minister of Trade and Commerce (Mr. Euler) said the other day, our favourable balance of trade with the whole world was $280,000,000.

Now coming more particularly to the benefits which will accrue to my own province, I should like to refer to the potato situation. In one of his speeches the leader of the opposition (Mr. Manion) said he thought one county in the maritimes could supply all the potatoes we were permitted to ship under this agreement. I cannot agree with that suggestion; I do not think any county down there could produce 2,500,000 bushels of marketable potatoes, which is our quota under the new agreement. The important thing, however, is that if you take 2,500,000 bushels from the maritime provinces and ship them to the United States you relieve the situation to that extent, so that the different markets in the central provinces may be able to absorb the remainder of the crop. That is why we down there are so pleased with the provisions of this treaty.

As you know, Mr. Speaker, the duty prior to 1935 was 75 cents per hundred pounds. Under the 1935 agreement that was reduced to 45 cents, and there was a quota established of 750,000 bushels. Under the new agreement the quota has been increased to 1,500,000 bushels of seed potatoes, while the duty has been further reduced to 37i cents per hundred pounds or 22J cents per bushel. That is a real concession. We are permitted to ship in twice the amount of seed potatoes and matters can be arranged in regard to the months of

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shipment; potatoes can be held and shipped into the United States in plenty of time for spring seeding. Then in regard to table stock, in 1935 there was no quota for potatoes of this class. Under the new agreement, however, we have a quota of 1,000,000 bushels of table stock at .374 cents per hundred pounds, from March 1 to November 30. That gives us a total of 2,500,000 bushels that we are permitted to ship to the United States. That is what we in the maritimes have been looking and longing for during the past number of years. Quite a substantial duty remains, but I am glad to say that we have a wonderful trade in seed potatoes. I believe eighty per cent of the seed potatoes entering the United States come from Prince Edward Island. Some of the other members from the man-times are going to deal with this question, so I will leave it in their hands, since they are better prepared to deal with it than I am.

Under this treaty free entry is granted in connection with a great many of our fishery products. Our lobster industry alone is estimated to produce 83,000,000 annually, and we are given free entry for lobsters for the duration of the agreement. This means a great deal to the Canadian fishermen because, as you know, there has been a very strong agitation in some of the Atlantic states to shut out Canadian lobsters. We also have free entry for clams, quahaugs, oysters, crabs, scallops and smelts, and I may say there is a tremendous trade in the last named fish. A splendid table was placed upon Hansard the other day by the Minister of Trade and Commerce, appearing at page 1068. I will not take time to read it again, but I would direct the attention of hon. members to it.

Then, Mr. Speaker, the reduced duty on dairy cattle is a big item in our part of the country. We have always enjoyed a splendid trade in these cattle, and some of the finest dairy herds in the maritimes are in the province of Prince Edward Island. One of the boys from my county exhibited his cattle successfully in Ottawa; he swept the boards at the Royal Winter Fair in competition with United States herds and then went to the United States, where he was again successful against the very best herds from the different experimental farms in that country. I think that is a real tribute to the dairy farmers of Prince Edward Island.

If this agreement will do anything to bring about a more equitable distribution of products I think we should be all in favour of it. I think we all agree that our greatest difficulty to-day is that there is too great a spread between what the farmer receives for

what he sells and what he has to pay for what he buys. We have all spoken on this question. Our friends in the far corner are very strong in their views, and we appreciate their sentiments and their sincerity. But nothing concrete was done to deal with this situation until the negotiation of this treaty. The reduction of many duties, which means so much to the consumer, and the opportunity which is given the producer to widen his market, constitute the first concrete evidence we have had in this house that we are trying to bridge the gulf between the consumer and the man who has to market his products. So I think the government are to be congratulated on what they have done.

In conclusion I wish to repeat what the Prime Minister (Mr. Mackenzie King) said the other day. When the reciprocity agreement was defeated in 1911 Sir Wilfrid Laurier stated that it might be twenty-five years before another agreement could be negotiated, and he was quite correct. Would not those great statesmen of the past have rejoiced to see the consummation of such a trade pact as this? Would not Fielding, Paterson and Laurier have loved to see the triumph of the principles for which they stood? We are proud indeed that to-day we have a leader of the Liberal party who has caught the vision of those who have gone before, and who has understood so well the message expressed in the words of our own poet-

To you from falling hands we throw The torch; be yours to hold it high.

Let us go on as a party. There is no doubt but that we are on the right track. This agreement gives consideration to all classes of citizens, the consumer, the producer, the farmer, the manufacturer, the labourer and the fisherman. I submit that trade is the very lifeblood of the nation. Without trade we become a decadent people. With trade we go forward to fulfil our destiny as a great and growing nation. Why should Canada fear competition? Canada, a young and virile nation, can compete with any country in the world.

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CON

Thomas Langton Church

Conservative (1867-1942)

Mr. T. L. CHURCH (Broadview):

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failure and burial of the League of Nations, which was to have removed international trade barriers, but has promoted more strife than peace. After its failure in achievements, the race was on to go to Washington for appeasement by means of these treaties. The league has gone up in smoke and is in ruins, and this agreement is the result of the new Washington trade treaty league of nations, and to appease the United States and get her help, something that is indispensable, by the Johnson act and the Ludlow resolutions.

With few exceptions, we get our news, published in the Canadian papers, with regard to Britain and this treaty through United States chains of newspapers. In my opinion the 1935 treaty was a mistake and a failure.

Recently I read this dispatch:

From Ottawa comes the report that if the Conservatives wax critical of the United States trade agreement signed at Washington last week the government is ready to make it a major issue in the general election which will likely be held next year.

I say, let the next election come, and it cannot come too soon for Canada's good. I am not one of those Conservatives who apologizes for the share the Conservative party had in the defeat of reciprocity in 1911, an agreement by which the grain trade would have been diverted to north and south; industry and agriculture would have been seriously injured, and would have made paupers out of our soldiers for the cheap boon of reciprocity. That reciprocity treaty would have made a Lazarus out of a country that Laurier professed to have made a nation.

In his last budget speech the Minister of Finance (Mr. Dunning), summing up the condition of Canadian-United States trade in the fiscal year which ended March 31, 1938, said:

Total exports of that country-

The United States-

-fell six per cent below the figure for the previous year to a total of $343,000,000, while imports, at $487,300,000, showed an increase of nearly 24 per cent.

A correspondingly adverse trend did not occur in the British market which absorbed more of our products than in the previous year.

That is the situation which existed under the 1935 agreement with the United States, which the Prime Minister has now agreed to continue * and expand. It is interesting to note that it flouts the very principle essential to international trade, and which he eloquently expounded when he laid the 1935 agreement before parliament. He said in the house at that time:

The government of the United States and the government of this country were actuated by one and the same motive, namely to make an agreement that would be equally beneficial to both countries. Could anything destroy the agreement more effectively than that it should be shown in the course of the next three years that one country had got considerably the better of the other? Would not the effect of an agreement reached in that way be to destroy the possibility of its continuance beyond the period of three years?

The Prime Minister apparently feared that it would, if Canada had not the best of the bargain. But when the balance swung against Canada, as the statement I have quoted of the Minister of Finance indicates that it did in the last fiscal year, the Prime Minister forgets it all and hastens to Washington to continue the agreement and extend its operation for another three years to several hundred new articles as well.

The whole question in connection with the treaty amounts to this: Are Canadians willing to see Great Britain open her markets to the United States on the same terms as she gives the dominions? Britain can take only so much bacon, butter and meat. Are we prepared to check the development of the dominions by selling less to the United Kingdom? Are we prepared to help the fruit growers of the southern United States in order that Florida and California may be able to sell in Canada the surplus fruits grown in those states at the expense of our fruit and vegetables?

As I see it, this treaty is free trade and anti-imperial. Our negotiators have driven the dominion out of the British market in order to act the part of Santa Claus to our United States competitors. All we can do here is to hold a post-mortem into it all which will end only in talk.

After all is said and done, not a line of the treaty can be changed or a comma inserted in it, or any amendments made, and it is only shadow-boxing for the Prime Minister to say that we shall go into committee on the resolution and consider the bill in detail on three readings; we can change nothing in it. When we get down to brass-tacks, the House of Commons will become in actual practice, nothing but a house of yes men and a house of nodders, and the whole treaty has been consummated over the heads of industry, labour and agriculture and of parliament in session. So far as this treaty is concerned, the executive have usurped the functions of parliament, and the private member has ceased to exist. It is enough to make the dictators laugh at our democratic way of doing things. Talk of Hitler and Mussolini! Where does the private member

Canada-United. States Trade Agreement

stand when all this has been done over his head? He is supposed to be the connecting link between the government of the day and the electorate, and when he ceases to function Burke says that all parliamentary government is at an end. As I say, not a line of this treaty can be changed here by us. This tremendous transaction, which may involve the ruin of many of our industries and of our agriculture, and labour, and cause widespread unemployment, was carried out over the head of parliament.

The United Kingdom cannot possibly give the United States the kind of trade treaty which the Americans ask for without reducing drastically the amount of preference which dominion goods receive in the United Kingdom markets and British goods receive in dominion markets, or without reducing the degree of protection which British goods now enjoy in their own home market. Why were not industry and labour consulted before such root and branch changes were made in our tariff? Why destroy preferences beyond recall? Why create a Pan-American orbit to please the United States and drive Canada into it for trade, defence and migration purposes? What is parliament for? What is our tariff board for? What are boards of trade and labour unions for? Have they no stake in the country? What mandate has the government? Talk of free parliaments; they are now abolished and can only hold a postmortem. The manner in which the treaty has been negotiated calls for constitutional, parliamentary and cabinet reform. The system is vicious and cannot last. It is deplorable to think of a treaty of such magnitude and such importance being launched without any prior consultation with the business or labour community. Washington, not Ottawa, has become the economic capital of Canada and it will in time become the economic centre of the British empire. The Anglo-American treaty means the end of the Ottawa agreements and the end of British preferences, and it is the forerunner of the dissolution of the British empire.

The proposed agreement is in no sense a business or commercial treaty; it is a political one to gain the friendship of the United States from European and dictators' menaces. Already there is an adverse balance of trade between the United States and Canada, because we are buying many millions more worth of goods from them than they are from us. The adverse trade balance between Britain and the United States is five to one against Britain. Australia buys from Britain more than the United States does.

71492-77j

The new agreements will have disastrous results on imperial unity, and England can no longer devote itself to the cause of empire development and make it effective. What it is going to do is to break up the great Anglo-Saxon confederation known as the British empire and not as the English-speaking union say, "unite the great Anglo-Saxon people." It allows the United States to function as an entity but refuses the same to the dominions. These same people have been misled about the United States before-witness the Irish treaty, the Indian Act, the League of Nations, the treaty of Versailles, the Kellogg pacts; for to please the United States we passed all those pacts. To please the United States we also chased Japan and Italy into German arms.

These unilateral agreements by Canada and Australia will mean the destruction of the Ottawa agreements, and the United States will now become the economic centre of the British empire. The reason for this rightabout-face by the government is the danger of the European situation and to secure the support of the United States for its Canadian anti-empire foreign policy. This new agreement will largely nullify the greater benefits which the Ottawa agreements in the years to come might have conferred upon the British empire as a whole, prolong the drawbacks in Canada which business is carrying at present, and lead to widespread unemployment in Canada as well as lead to additional burdens and an increase in taxation, which social services and unemployment are placing on the two central provinces of Canada, that pay now 80 per cent of the cash taxes of Canada.

That is the result, immediate welcome in certain quarters, but you will see the end of it very shortly. This agreement will ruin forever inter-imperial trade, and as Great Britain has to import 80 per cent of her food and almost 100 per cent of her raw materials she will now have to depend on foreign countries. We had an economic unit, the British empire, and under the Chamberlain program let me point out what that unit is. It consists of the British commonwealth of nations, with a population of 450,000,000. Its trade constitutes one-third of the trade of the whole world. Here are some facts. The United Kingdom buys 20 per cent of the total value of her imports from the major dominions, while she sells to them about 26 per cent of the total value of her exports. The dependent empire buys from her somewhat more than half her total exports of iron and steel, wood products, pottery, glass, cutlery and hardware, 60 per cent of British exports of electrical goods, 75 per cent of wearing apparel.

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paper and cardboard. But for the dominions exclusive of Great Britain 54 per cent of their exports are sold outside the empire, while about 50 per cent of their imports come from sources outside the empire. Bulking it all together, in this empire of 450,000,000 people, our position is being destroyed by the loss of preferences.

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SC

Joseph Needham

Social Credit

Mr. JOSEPH NEEDHAM (The Battle-fords) :

Mr. Speaker, I do not rise to condemn this trade agreement, but I wish there had been coupled with it a policy providing some benefits to our own Canadian people. I am not so much concerned with foreign markets as I am with our market at home.

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

This treaty kills the

home market.

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SC

Joseph Needham

Social Credit

Mr. NEEDHAM:

If I saw coupled with this agreement a policy under which our own people would be enabled to enjoy their own production to a greater degree than they can at the present time, it would have been welcomed all over this dominion. When this agreement was signed last November it was acclaimed in the press as a wonderful achievement, as something that would be of great benefit to Canada and to the Canadian people. But many people are still looking for the benefits that were to accrue from the trade agreement of 1935.

The Prime Minister (Mr. Mackenzie King) in presenting this agreement to the house outlined very fully what he had in mind and what he hoped this agreement would do for this dominion. He said that the Canadian producers in every part of the dominion will share in the benefits. And he went on to outline the benefits to the fishermen in the east, to the potato growers, the fox farmers, the producers of maple products, the dairymen, cheese factories, the growers of hay and of wheat, barley and clover seed, the lumbermen, paper mills, and those raising horses, cattle and poultry. He then dealt with the great benefits resulting to the mining industry.

Referring to the increased quotas for cattle, of which so much has been said, I find in this month's issue of Canadian Business the statement that the former quotas on heavy cattle, calves and dairy cows were all increased last month-referring to November -but the former quotas in 1938 were unused by 45 per cent, 74 per cent and 33 per cent respectively. Therefore many will question whether great advantage is to be obtained from increased quotas.

I notice that the Prime Minister did not mention agricultural implements, of which

special mention was made in 1935, when the trade agreement reduced the tariff from 25 per cent to 12J per cent and the price of agricultural implements went up, not only once but twice. I do not see any change under this agreement in the tariff on agricultural implements. He also said that this agreement means increased purchasing power, and made special mention of Alberta. It may mean increased purchasing power, but I am wondering whether the government have taken any steps to see that the reduction in tariff is passed on to the consumer. I have not heard anything from the Liberal side as to whether this phase of the agreement is receiving attention. I have asked housewives whether they can see any change in the prices of the things they buy for the home, and I have yet to find one that can say she has found any benefits that came into effect on January 1.

The Prime Minister said that the consumers will benefit from the removal of the special excise tax of three per cent. Those benefits should be apparent by now.

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LIB

Harry Leader

Liberal

Mr. LEADER:

The excise tax is not yet removed.

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SC

Joseph Needham

Social Credit

Mr. NEEDHAM:

Well, the tariffs are down. I also notice that the Prime Minister had the same thing to say in regard to the 1935 agreement. Speaking on February 25, 1936, as reported in Hansard at page 515, he said:

-to producers and consumers alike, it will assist our railways, will bring about an increase in purchasing power, and which may help very materially to lift our country out of the depression from which it has been suffering for so many years and to restore an era of prosperity and of better relations with other lands.

The same things were said then as have been repeated this year. But the real test is, did the trade agreement of 1935 produce those results?

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CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

No, it did not.

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February 22, 1939