May 21, 1951

CCF

Wilbert Ross Thatcher

Co-operative Commonwealth Federation (C.C.F.)

Mr. Thatcher:

I thank the minister for his correction. I am very pleased to have it. He

Trade Agreements

is correct and I was wrong, but the fact still remains that as to standard machinery what I said is correct. I say that despite the concessions which we have obtained from the United States at these three conferences the American tariff level is still considerably higher than the Canadian. The effect of Torquay, Geneva and Annecy is that it will facilitate the entry of more United States goods into Canada without bringing the United States tariff to a point where Canadian manufacturers can compete in the United States market. I think Canadians are going to be disappointed that something has not been said about armaments. I understood that Canada was going to manufacture arms for the United States. Now it appears that all we are going to make now is parts. I do not know if there is a tariff on munitions that we export to the United States. I assume there is. Perhaps this is one item on which we should have received a concession in these critical times. .

I say again that the Canadian government vas bested at Torquay by our United States friends, if you judge by the dollar value of the concessions obtained. I think at this time it is proper that we should consider the state of our trade with the United States. I would not deny for a moment the tremendous strides which the government has made in building up our exports to the United States. The fact that they have been able to build up our exports in that market, the most competitive in the world, is no mean achievement, and I do not wish to detract from it. Nevertheless when we recall that in 1950 two-thirds of our exports went to the United States we can see the dangers inherent in the situation. This afternoon the leader of the opposition (Mr. Drew) said we were something like the man who put all his eggs in one basket. That is what we have done so far as our trade is concerned today. As has been pointed out already, the United States market has never been known as the most stable market in the world. Actually the opposite is true. It is subject to economic recessions, and going by past history, tariff policy can change overnight. I wonder what would happen to Canada if suddenly General MacArthur or Mr. Taft should become president of the United States. I think then we might have to worry immediately about higher American tariffs. Therefore I say one of our objectives in tariff and trade policy should be to diversify our trade to a greater extent in future.

The minister or some of his friends may ask how we can do that. Well, there are many possibilities. I have in my hand a

clipping from the Financial Post of April 14, which states that France offers to exchange steel for our newsprint. They want our newsprint, most of which is going to the United States. We are pretty short of steel. There may be objections to such a procedure; perhaps the price of French steel is too high, or there may be other reasons why that is not feasible, but on the surface this would seem to be one way by which we might diversify our trade.

Our second chief trade problem today is the British market. A great deal has been said already about the deteriorating position of that market. In 1949 United Kingdom sales to Canada were only 43 per cent of her purchases from this country. In 1950 they were 85 per cent. Before the war Britain used to take nearly half our exports. Last year she took only one-third, and I think it is safe to say that all hon. members are alarmed at the way our exports to Britain have deteriorated. Prior to the war the British bought a great deal from us. Since the war they have not been able to buy as much simply because they lacked the Canadian dollars with which to make those purchases. British statesmen and opposition leaders in this house have warned the Canadian government repeatedly as to what would happen if we did not permit them to earn more Canadian dollars. To give only one illustration, I remember a Canadian Press dispatch back in 1949, which said:

Cripps issues warning Canada to lose exports unless it "buys British."

Britain will buy less food from Canada unless Canada buys more from Britain, Sir Stafford Cripps, chancellor of the exchequer, said Thursday.

. . . he said the crux of the post-war Anglo-Canadian trading problems is expansion of British exports to Canada.

At that time, two years ago, Sir Stafford Cripps put the trade problem as far as England was concerned right up to this parliament. If Canada wanted to hold the British market he told us we had to buy from them. However in the intervening years, our government has been most apathetic in trying to increase British imports. As a matter of fact this government has taken several steps which have had the opposite effect. For instance, several years ago our government encouraged the British to send textiles to Canada. They said that in order to encourage that trade they would remove the tariff. The British textile industry went to work and produced at competitive prices, and began to earn a great many Canadian dollars. As soon as they began to do that our government decided to put the tariff back on again. Much the same thing happened in the

automobile industry. Ever since the end of the war one cabinet minister after another, one government spokesman after another, has been urging British industry to become competitive, to get their prices down; yet when the British automobile industry did begin to compete, when they did produce a car that could be sold in the Canadian market, right away our government put on a dumping duty.

I cannot reconcile actions like those with a desire to increase British imports, and increase trade within the commonwealth. I think it is fitting also to mention what happened as far as our wheat agreement was concerned. The British government made an agreement in writing with the Canadian government to buy wheat at a fixed price. They fulfilled the terms of their agreement, and did so in writing; yet numerous members of this house accused the British of reneging, of failing to live up to a moral obligation, I do not suppose the British liked such statements very much. I think we in this house should remember that our chief market for farm products in the past has been Britain, as it probably will be in the future. When we do things like that and make statements like those in this house, I suggest that we are jeopardizing that market. Insulting your customers is not a good way to build up trade. I do not think you could do it in any other kind of business.

Mr. Speaker, it is clear now that another world-wide, multilateral trade conference like Torquay is most unlikely. If that is the case, any additional concessions we get must come from direct negotiations. Therefore I agree with other hon. members who have suggested that we should commence further trade negotiations with Britain. Probably we should do the same thing with the United States, and possibly with France and: other countries. Our first objective in these negotiations should be to get back our old, traditional markets, and our second objective, the diversification of our trade. If we can do these things, our trade in future will remain in a healthy position.

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PC

George Clyde Nowlan

Progressive Conservative

Mr. G. C. Nowlan (Annapolis-Kings):

Mr. Speaker, tonight I am not going to presume to assess the results which may or may not have been achieved in the Torquay agreements. We have had many discussions of these trade agreements in the past, as was pointed out this afternoon by the hon. member for Greenwood (Mr. Macdonnell), running from Geneva to Annecy and now to Torquay, and we are led to hope that much good will come out of this one. That is something that can be perhaps better determined by the committee to which this matter will be

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referred; and certainly we in the house will be in a better position to discuss the question after that committee has performed the functions required of it. However, I do suggest there are one or two questions raised by this report, some of them perhaps of particular interest to the east, to which I should refer tonight.

In connection with these agreements we see that some special arrangements are made with respect to Cuba. We are told that we will purchase some 75,000 tons of sugar annually for the next three years, and it is hoped that as a result we will be able to at least partially regain the position we held at one time in the Cuban market, but which unfortunately we lost. Just what we are going to gain by the concessions given us by Cuba is not clear; that is one of the questions the committee will have to determine. At one time that was a very satisfactory market for our potatoes, and it also took large quantities of fish products from eastern Canada. Then in the late twenties the government of this country negotiated a treaty with the British West Indies, no doubt thinking it was accomplishing a great deal in the development of our trade. I think most Canadians, however, and particularly those in the east will have to admit that as a result of that British West Indies treaty we gained very few benefits, and certainly we lost our markets in Cuba. If by these negotiations at Torquay the government has taken steps to rectify that position it certainly will be an advantage to us.

Then another question is raised. The British West Indies treaty has been in effect since 1927 or 1928. We built a fleet of ships, which we have subsidized. We have spent a great deal of money attempting to develop trade between Canada and the West Indies; but now we see that Mr. Donald Gordon, president of the Canadian National Railways, says that tremendous decisions will have to be made this year. He hopes parliament will provide money to cover the deficit of last year, which I believe was something like $845,000, but he doubts whether further deficits of this size can be covered in this way. More than that, he points out the fact that replacement of ships now in the British West Indian-Canadian service will have to be made if the treaty is to be maintained. Now, sir, there is a serious question.

The second question arising out of this one dealing with Cuba is: having once more sought to regain the Cuban market, are we also going to maintain the developments which we have achieved in the West Indian market? Certainly, there have been some definite advantages gained, particularly to

Trade Agreements

eastern Canada. One of the questions to which I am sure this house, or at any rate the government, will have to determine before many weeks go by is what will be our position with respect to the British West Indian trade in the future. Are we prepared to make the capital expenditure which will ultimately be necessary if these advantages are to be maintained?

There is one ray of sunshine that some of us may see in Torquay, perhaps a minor one. Those in the east, at least in my constituency, will note with some satisfaction that apparently trade arrangements have been made with western Germany. At one time the German market was of tremendous importance to us in the valley in so far as the shipment of apples was concerned. During the years immediately preceding the last war we shipped large quantities of apples there. Of course, that market has been lost to us. We would be interested, and I know the house will be interested, in determining just what advantages we derive under Torquay from the apparent beginnings which we are making towards the resumption of trade with western Germany. But generally, Mr. Speaker, I think that Torquay leaves one with a great deal of disappointment.

This afternoon the member for Rosetown-Biggar (Mr. Coldwell) referred to the triangle from Canada to Great Britain to the United States and back, which has developed over a period of many years. It has been of tremendous importance to all of Canada, but particularly to eastern Canada. Sometimes when we talk politically of the imperial preference one gathers the inference that imperial preference was something which developed under the aegis of the late Viscount Bennett. Our friends are sometimes disposed to shrug their shoulders, as if it were something of which they were not too proud. Of course, we know that imperial preference has been written into our tariff laws through generations. The preference was established by a Liberal government back in the days of Mr. Paterson, who was minister of finance. When Mr. Fielding was minister of finance we had the first imperial preference budget. It was written, into our trade throughout the years, but we received no corresponding benefit from Britain, because she was a free trade country. Throughout the years, we did everything to develop that trade, and1 we succeeded in so doing.

Then in the thirties the matter developed still further, but today we have to face the fact, as suggested by the member for Moose Jaw (Mr. Thatcher) a moment ago, that after Torquay it looks as if these conferences have reached the limit of their resources. From reports we have had about Torquay the

[Mr. Nowlan.l

United States, quite properly, was insisting on the one hand that imperial preference be reduced or be abolished, while on the other hand you had certain commonwealth countries such as the United Kingdom, New Zealand and South Africa refusing to compromise or to do anything with respect to these imperial preferences.

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SC

John Horne Blackmore

Social Credit

Mr. Blackmore:

Good for them.

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PC

George Clyde Nowlan

Progressive Conservative

Mr. Nowlan:

We in this country, because of our geographical position-I am not criticizing for the moment but I think this is a fact-felt we had to make some compromise between the two positions, and we did give away, rightly or wrongly, the preference on some two hundred articles or more in order to get some hoped for benefits out of the United States market. Whatever the situation may be, sir, we know that trade on the triangle has virtually gone. Figures have been given, and I do not want to weary the house with respect to them again, but our trade with Great Britain has diminished until last year our exports to Great Britain fell off some thirty-four per cent; our exports to other countries, outside of the United States, fell off by some twenty per cent, whereas our exports to the United States increased to a substantial degree. Instead of a triangle you have at the best a two-way street. For the sake of argument I will admit for the moment it is a two-way street, but it is a street, sir, which could be mined very easily. It is a street on which land blocks could be established, if not an iron curtain dropped. We could very easily find ourselves in the position where it became a one-way street or no street at all but simply a meandering path on which the grass will grow. Then, our trade will wither and disappear, because we have lost those traditional markets to which we have been accustomed; markets which we in the east have to depend upon if our economy is going to be maintained. It is for that reason we look upon Torquay with misgiving and with doubt.

So far as these concessions are concerned we feel that our government has gone about as far as it felt it could go. Other conference countries, commonwealth countries, refused to go that far. The United States has refused to go any farther. We know that sooner or later this government, or some other government, will have to make up its mind just what position we are going to take in the trading of the world in the future. Certainly, we hope for multilateral trade. Certainly, we hope for a lessening of the trade barriers. But, sir, I think we have to be practical. Living in this world today we have to realize how, not fantastic perhaps, but how very flimsy may be these hopes. This preference is more than a matter of trade to those of us

in the east. Written into the trade agreements of the past there is the benefit of direct shipment, and the fact that preference will only apply to shipments made from the ports of origin in the commonwealth to a port on a river, lake or seaboard in Canada without transshipment.

In his statement the other night the Minister of Finance stated we had safeguarded the principle of preference. I am not quarrelling with that for the moment at all. It is for the future to determine. Since we gave away the benefits on at least two hundred items, then we automatically lost the benefits of direct shipment on those articles coming into Canada. They will now go into New York or Boston.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

May I ask the hon. member

what the two hundred items were on which we gave away the preference? We did not give up our preference, but we reduced the preference on certain items.

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PC

George Clyde Nowlan

Progressive Conservative

Mr. Nowlan:

According to the statement

made the other night by the Minister of Finance, and the statement which appeared in the press, we relaxed our preference to that extent. This is a matter which will be developed later, so I am not going to quarrel with the minister now. I am certainly glad to hear the minister make that statement that we gave it up on none, because that is not the impression that has been created in this country. Whether we gave it up on any or relaxed it on any-I do not think this point has been made in this house before-to that extent we lose the benefit of direct shipment to Canadian ports. The people employed in the ports of Halifax,* Montreal, Saint John or Vancouver will suffer as a result of the relaxation of those benefits because that direct shipment clause was an important factor in the imperial preference agreements as originally drafted.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

Will the hon. member, at this

stage, accept my statement that there is no impairment of the privilege or obligation of direct shipments and the benefits accruing therefrom. He did not accept it before, he repeated his statement after I made the assertion.

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PC

George Clyde Nowlan

Progressive Conservative

Mr. Nowlan:

I accept the minister's statement, and I am sure that will clarify the situation in Canada which is worrying many at the moment because that is not the impression which has been created. I am sure the minister will also admit that as we do relax or give away the imperial preference on any item, then to that extent we are weakening or undermining the principle of direct shipment which has been an important part of the economy of the ports of Canada during the past twenty years.

Trade Agreements

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

You assert we are undermining, and I am asserting we are not.

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PC

George Clyde Nowlan

Progressive Conservative

Mr. Nowlan:

I am not asserting we are.

I am asserting that if we are, then that follows. This committee can determine that after the matter has been referred to it. I can tell the right hon. gentleman that papers which have not been entirely critical of this government have certainly suggested that is one of the outcomes of any relaxation of the imperial preference which follows because of Torquay. But we are not debating what may or may not happen. At the moment we are debating the realities of the situation, and the fact that we in Canada are facing an extremely serious trade situation because of the emphasis upon our United States trade and the diminution of our trade with the United Kingdom, the commonwealth countries and other countries outside of the continent of North America.

This afternoon the leader of the opposition referred to the statement issued: out of Toronto last Saturday by the British-Canadian trade group which has been studying our problems, and which had recommended and urged the establishment or the creation of a conference between the governments of the commonwealth in order to study this problem and to attempt to resolve it. Certainly I suggest that we all should support that proposal. If there ever was a time when such a conference was necessary, it is now. No stone should be left unturned. I realize that there are difficulties in the way. I realize that it is not an easy problem to solve. But the more difficult the problem, the more reason for prompt action and the less reason for delay. Having regard to the seriousness of the situation, and in view of the discussions which have taken place here today, I would hope that this government would take some steps to support the suggestion and to urge and to lead in the establishment of such a study in the immediate future.

Ancillary to that, may I say that I was intrigued to read in a press report the statement by the president, I think it was, of the British federation of agriculture-because agriculture, industry and trade were all represented at Toronto. The head of the British agricultural group suggested that the time had come when there should be, and would be on the part of the British government, greater relaxation of trade restrictions in so far as the importation of Canadian food products are concerned. I know the Minister of Agriculture (Mr. Gardiner) must have studied that statement with some particular interest.

In that statement some reference was made to the fact that the cheese contract showed

Trade Agreements

a relaxation at least on the part of the British of their fixed determination to engage in bulk purchases. Those of us in the apple industry know that last year Great Britain relaxed the restrictions upon the importation of apples from all the sterling areas. In other words, New Zealand, South Africa and Australia exported their apples to the trade in Great Britain, and the apples were .bought and sold direct without restriction; possibly that was only because they were in the sterling areas. But it has been suggested by more than one competent authority, or at least has been suggested, by one who had information on the matter, on Friday night in Toronto, that this coming year arrangements could be made whereby Great Britain would import apples from Canada, independent of and apart from bulk purchases and for distribution direct to the trade.

The minister will know that last year importations were made and that purchases of apples were made direct from the trade in British Columbia and Nova Scotia, without the intervention of this government; and that was a step in the right direction. I suggest that there is now more than a possibility and that apparently, according to these men who are now here, there is a probability that, if we take the right steps and follow the right course, this year we can arrange for the direct sale of apples from Canada- from British Columbia and from Nova Scotia; those are the two great exporting, production areas-to Great Britain, to the trade there. It has been suggested that a mission ought to be set up there, representative of the two apple exporting areas, to handle our apples and to sell them direct to the trade. If that could be done, it would be of tremendous importance to the apple producers not only of British Columbia, I assume, but certainly of Nova Scotia.

We know that there are governmental committees engaged on various projects. We know that there is always consideration given to the problem of the dollar and sterling areas. We know that each year during the past two years the British-after discussion, after debate, after waiting, after the apples were probably picked, when no one knew whether they were going to be, sold or not-made an agreement whereby they purchased a substantial quantity of our apples. I suggest that this year we take time by the forelock, that we do not wait until the frosts come next fall, that we pursue the matter now and that, if possible, we make arrangements so that the apples may be sold, in order that the producers will know of it well in advance.

Those are some of the minor and perhaps ancillary matters arising out of the discussion this afternoon of the Torquay agreement. By dealing with these matters, and by working at them unitedly and intelligently, we can and must solve the problem of regaining these markets in the sterling area; otherwise the economy of eastern Canada at least will be most seriously impaired in the future.

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LIB

Arthur Laing

Liberal

Mr. Arthur Laing (Vancouver South):

Mr. Speaker, I will be exceedingly brief, but 1 have heard such a spate of despondency over something that I had persuaded myself we should be overjoyed over, that I think someone should make a statement perhaps with particular reference to his particular part of the country.

I do not know whether the Minister of Trade and Commerce (Mr. Howe) has received many compliments from the province of British Columbia, but I am going to say that, if he has not, he should have, over the agreement which has been concluded. The general basis of the criticism has been that we were unable to get into the broad phases of over-all trading the world around. Theoretically, from that criticism we can only deduce that Canada is to be blamed for not taking complete leadership in everything. Perhaps Canada is to be blamed for the condition the world is in, if we carry that proposition to its logical conclusion. It always takes more than one to make a bargain; and in a conference of this kind, it takes a great many more than one to do so.

I have been readin'g the United States periodicals and the British papers, and I have been led to believe that Canada came out best of all of the countries in the conference. We in British Columbia were particularly delighted for a variety of causes. I am going to adopt the policy that was adopted by the opposition when they were dealing with the increase in the sales tax, and quote the decreases percentagewise. In the case of aluminum going into the United States, we secured a reduction of 25 per cent in the United States duty against Canadian aluminum. That is going to mean a tremendous boon to our province of British Columbia because we are getting a huge development by the Aluminum Company of Canada which is going to alter entirely the face of our province, particularly in the region represented by my good friend the hon. member for Skeena (Mr. Applewhaite). That development is going to change the entire face of the province of British Columbia. This reduction will induce the early sale of their product in the United States. In zinc ores there is a reduction of

15 per cent in the duty; in zinc blocks, there is a reduction of 14 per cent. The hon. member for Moose Jaw (Mr. Thatcher) said something to the effect: Oh well, those are

only things that the Americans want anyway. That is not a sound argument, Mr. Speaker. Of course they are things that the Americans want; but likewise they are things of which the Americans themselves produce vast quantities; and the reduction of their duty against our product makes it that much easier for our product to enter their markets. He seemed to indicate that we had given reductions in American manufactured goods. Why, of course! I understood that it was Canada's policy to have multilateral trade, to trade with everybody who would trade with us. A trading arrangement is a twoway street, as one of the hon. gentlemen opposite has already said. In order to get you have to give something. I think for the manufactured goods and the concessions that we have given we have reduced the cost of those goods to our Canadian consumers by that much, and it will not affect Canadian enterprise in any particular.

The next item to which I am going to make reference is the most important item of all, namely, Douglas fir plywood. We secured a reduction in the United States market of 50 per cent; in other words, a reduction from 40 per cent down to 20 per cent. This is of redoubled importance to us because it means a further manufacturing of our timber resources. There was a time in British Columbia when we British Columbians used to look askance at people who came along with rafts of logs with the bark on and threw them into the holds of boats which went to Japan. After that the best we could do for many years was to sell what we called squares. They too were manufactured abroad into finer lumber, or finished lumber. This agreement means that we are getting the most out of our lumber when we put it into plywood; and the plywood manufacturers in my riding tell me that even at 40 per cent they were almost able to get into the United States market. They tell me that at 20 per cent they will now have no difficulty at all. And we were wise enough to secure a reduction in the steel knives which cut our plywood, and they are a terrific expense. They are a knife I think of about 30 or 32 inches, and I think they run somewhere in the neighbourhood of $300 a piece, and they wear out fairly rapidly. We secured a reduction in those knives. The best knives are made in the United States, although they come from European countries as well. But the great development there is that we are going further with our manufacturing. And 80709-207i

Trade Agreements

today in broom handles, in paint brushes and in other things we also have advantages in that market, and now in plywood. I would suggest that we are getting out of our lumber resources three labour dollars for every one that we took 20 years ago. That is of tremendous advantage to British Columbia.

We have obtained a reduction in that market in canned salmon of 40 per cent. I do not know how great that may be to us in British Columbia. I rather imagine that we have pretty adequate markets for our salmon in British Columbia at the present , time; but I want to emphasize that this is a long-range deal. Had anything of this nature been announced in our province in the period 1925 to 1940 it would have been greeted as the greatest news that ever came to our province; and if there is any tendency at the present time just to accept it as another announcement it is because our industries are exceedingly busy at the present time, and have markets for nearly all the products that they can produce. But again I say this is a long-range proposition, and we should solidify and consolidate it as time goes on.

As I said, I wanted to speak just for a very few minutes, because after being a loyal Canadian I am a loyal British Columbian, and this agreement is of tremendous advantage to our province. I should like to say that our people in British Columbia are almost unanimously of that opinion, too. We have in this country today I think only two great sources of money to keep everything going. One is the wages of labour, and the second great source is the annual income of the Canadian farms from cash crops.

As a result of this agreement we are certainly going to step up the industrialization of the province of British Columbia, which is already a very great industrial empire. I should like to add my few words to those which the minister himself graciously gave to the splendid staff that Canada sent over there, headed by Hector McKinnon. I know some of the other men in agriculture, and in various other phases who accompanied the mission, and who I think did a magnificent job for Canada within the territory in which they were permitted to work.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Donald M. Fleming (Eglinton):

Mr. Speaker, some of us who in the debate on May 3 urged on the government that an opportunity should be provided for the house to debate trade policies in general and the Torquay agreements in particular welcome the opportunity afforded by.the present resolution to discuss these two very important topics.

Trade Agreements

It is just as well perhaps, Mr. Speaker, that the importance which the house attaches to subjects brought before it for discussion is not measured by the time actually spent on them; otherwise, so far as this session is concerned, it would appear that the house does not attach great importance to the subject of trade; for this is the first occasion that has been offered to the house to debate trade policies, so far as I recall, at the present session.

Trade, Mr. Speaker, has certainly lost none of its importance for Canada, and in approaching this subject we are approaching something which is part of the economic life-blood of our country. In the early post-war years we used to speak very freely about the fact that Canada had risen to the third place among the great trading nations of the world; that she was perhaps more dependent upon export markets for the employment of her people than any other country in the world; that three out of every eight persons in Canada owed their employment to our export trade. And although perhaps the proportion has been reduced slightly, to about one-third, nevertheless the subject is one of paramount importance for every Canadian. Therefore, Mr. Speaker, I think that the house should welcome this opportunity of spending a little time considering trade, and in particular these agreements which have been announced by the government as having been concluded at Torquay.

The hon. member for Vancouver South (Mr. Laing), who has just spoken in fulsome terms of the way in which the agreements have been received in his province, has used quite strong expressions. He has pictured the people of his province as overjoyed. Now, Mr. Speaker, to the extent to which there are benefits in these agreements for the people of Canada I am sure all hon. members will be glad to commend them. At the same time the house will not fail, I am sure, in the discharge of its duty to examine the price that is being paid for the benefits that have been gained, and also to measure what has been gained against the hopes that we were led to form in anticipation of this conference, and also to compare these benefits with the picture that has been given to the house by the government concerning the effects of these agreements.

Those who sat in the house when we were called to meet at the beginning of December, 1947, and recall the way in which the government at that time introduced the Geneva trade agreements, and saw later the way in which some of the colour came

out of the picture on closer examination, will, I think, perhaps approach the government's rather grandiose description of the benefits of these agreements with at least a measure of reservation.

One recalls so well that broadcast to the nation on the evening of November 17, 1947, when the then prime minister went on the air and announced that as a result of the trade agreements which had been negotiated by the Canadian representatives at Geneva the new heaven and the new earth had come. And then, as soon as the prime minister had finished, the Minister of Finance came on the air to announce to the Canadian people that the advent of the new heaven and the new earth was postponed because it was felt necessary by the government to apply what were then absolutely illegal and unconstitutional taxes and restrictions upon imports into this country, measures applied by orders in council, which eventually found their way into the Emergency Exchange Conservation Act.

And so the new heaven and the new earth announced by the prime minister on that occasion were at least postponed. And by and by we found we were going to obtain only part of the new heaven and the new earth, at best, because only part of the Geneva agreement has ever come into effect. If I remember correctly the statement made a few days ago by the Minister of Finance, if not one made in an earlier session, the Geneva agreements have come into effect with respect to about half of the items to which they purported to apply. And even on that limited basis the effect of the Emergency Exchange Conservation Act over a period of three years was to reduce still further the area within which the agreements were permitted to operate.

Some of us in approaching the present agreements, however hopeful we may be, cannot dismiss from our minds the recollection that every time the government has come out from a conference it has announced at that time whatever it had to offer in the way of an agreement as though that were the advent of the new heaven and the new earth. This necessarily leaves those who have grown accustomed to these tactics with the feeling that we must approach the government's statements with at least a generous measure of reservation.

I am sure that on the part of every member in the house there will be a desire to commend the able representatives of this country at Torquay. They included some of the ablest of men in our civil service, men of whom the country is justly proud. I am quite

sure that through them Canada was able to discharge her part in those negotiations with credit, in the manner in which the negotiations were carried out.

I have a feeling, sir, that if the government would really break down and forget, for once, trying to sugar everything that it brings before the house, or paint everything it has done in glowing colours-it is my view that if the government would really break down and be candid with the house it would tell us that it has been disappointed with the results at Torquay.

What was accomplished at Torquay? Well, we will welcome the extension of the Geneva agreements for a further period of three years, to January 1, 1954. Then, as to the other fact that has been put before us as an accomplishment, namely the negotiation of sixteen new agreements, I suppose we are glad to see agreements in a world in which it is necessary more and more for the free nations to show the nations behind the iron curtain that the free nations are prepared to work together. Trade is one way in which we believe we can work together.

Having said that, I think we must admit- and I believe if the government were frank it would also admit-that the sixteen agreements are rather narrow in scope. And, even apart from those two factors, the rest of the negotiations at Geneva has been written into a record of failure and disappointment. I do not say, and I wish this to be clear, that the failure is attributable to Canada or to the Canadian representatives. Unquestionably the position taken by some of the nations represented at Geneva made it exceedingly difficult for Canada, and other countries that would have liked to enter into agreements with them, to do so.

Nevertheless we must, in reviewing these agreements, try to see them in their true light and, so far as we can, in their precise proportions. And whatever may be said on their behalf, the fact of the matter is that their benefits are very narrow in scope; and, on the whole, the Torquay agreements in years to come will be remembered largely, I suggest, because of the disappointments that were encountered there.

Torquay is not the only milestone in the post-war record of disappointments in the field of trade negotiations. How hopeful we were in 1945 and 1946! We looked at the draft charter of the international trade organization and we saw a new spirit in Washington, a new attitude toward freeing the channels of trade in the world. We saw throughout the free nations of the world what on all sides appeared to be a desire to further and to extend world trade on a multilateral basis.

Trade Agreements

We were all filled with hope. That, of course, was in the days before Russia had shown to us that she was determined to sabotage every effort of the rest of the world to advance toward either prosperity or peace. And it was also before some of the harder facts of the trading position of many nations were fully appreciated.

We did not appreciate in those days the difficulties Great Britain was shortly to face with respect to her trade and her currency. We underestimated, I think, the material exhaustion of the nations of western Europe; and we certainly underestimated the complexities involved in multilateral trade negotiations.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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SC

John Horne Blackmore

Social Credit

Mr. Blackmore:

Hear, hear.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

That belongs to history now. I think most of the free nations of the world tried to do their best, with due regard for their own interests, to give some play to the principles of multilateral trade. But, apart from Geneva and some very limited success at Annecy, and even more limited success at Torquay, it seems that many of those high hopes that were held five years ago have passed now into the limbo of disappointments.

We will not forget, either, in measuring the benefits we have enjoyed as a great trading nation, the fact that we owe much to the enlightenment which has distinguished not only trading policies in the United States, but also those policies that have sought, even at considerable cost to the American public, to assist other nations on the path to recovery. Whoever in this world, living twelve years ago, could have foreseen that the policies of the United States which, up until that time, from the Canadian point of view presented a great handicap and barrier to the freeing of the channels of international trade, would have been supplanted by policies which have been marked by generosity rarely equalled in history? And Canada has been the beneficiary of those American policies of trade, and those economic policies which have been designed to assist Europe back onto its feet. The European recovery plan gave great benefits to Canada.

I think the house will welcome, in general, the proposal to send these agreements and the accompanying documents to the standing committee on banking and commerce for more detailed examination. That, I think, is a highly proper course with respect to a measure of this kind, particularly as it seems to me some attempt will have to be made with respect to many of these items to measure the advantages against the possible disadvantages involved for Canada. We shall have to work within obvious limitations, and the

Trade Agreements

judgment that we shall apply in the committee or in the house must necessarily be tentative, until the agreements have been in operation and there has been an opportunity to see them at work.

However, I think we may well pause to consider the rather limited terms of the reference to the committee, and shortly I should like to say a word concerning the terms of the resolution and to compare it with the course the government invited the house to follow with respect to the Geneva agreements in the session of 1947-48.

May I first offer some comments with reference to the background against which we ought fairly to measure either the benefits or the disappointments of the Torquay agreements. I am not going to weary the house with statistics. As a matter of fact very few statistics need to be emphasized now beyond those that have already been recorded in the course of the debate this afternoon. But let me deal with our fundamental problem, and it is a problem. Whatever joy we may take out of the fact that our markets in the United States have been expanding as a result of the stockpiling policies of that country, the fact nevertheless remains that our trade problem increasingly becomes one of seeing our eggs to an ever-growing degree being placed in one basket.

Let us look at the figures for only the last two years. I will not trouble the house to go back beyond that. In 1949 our total export trade amounted to $2,993 million. Of that sum we exported to the United States $1,503,459,000, or 50 per cent in round figures. To the United Kingdom we exported $705 million in round figures, or 23-5 per cent. To the other commonwealth countries we exported $310 million or 10 per cent of our total exports. That means that in 1949 we exported half our produce to the United States and one-third to all commonwealth countries.

What is the picture in 1950? Our total export trade expanded to $3,118 million, the largest figure in our history. The United States purchased $2,021 million out of that total, or 65 per cent of the aggregate. The United States, even with a much larger total of exports, moved up from 50 per cent the year before to 65 per cent of that considerably larger total. United Kingdom purchases dropped from $705 million in 1949 to $470 million in 1950, and that figure represented only 15 per cent of our total exports. That is a fact that must arrest the attention of the house and give concern to the Canadian public.

Our exports to the United Kingdom dropped from $705 million in 1949 to $470 million

in 1950, and in that year they represented only 15 per cent of our total exports. In 1950 the commonwealth countries purchased $185 million of our exports, a very substantial drop from the $310 million the year before, and at that figure of $185 million they were only 6 per cent of our total exports. Therefore, as applied to the larger total of exports in the year 1950 compared with 1949, we see that the United States has moved up from 50 to 65 per cent, and all commonwealth countries, Great Britain included, have dropped from 33 -5 per cent to merely 21 per cent. Only one-fifth of our exports went to all commonwealth countries combined last year.

One has scanned the figures for the first two reported months of this year 1951 in the hope that the trend would have been arrested, but we see that for the first two months of the calendar year 1951 our exports to the United Kingdom have dropped-I will give round figures-from $79 million to $73,600,000, and total exports to all commonwealth countries are about what they were in 1950. In those two months our exports to the United States have increased from $260 million to $339 million. Now, sir, let us be fair. We are glad to see the increase in our exports to the United States, but let us remember that they are due to what may be temporary policies. These high exports to the United States are due to their policies of stockpiling, but even if it is only temporary we are glad to see the trading gap between Canada and the United States, which has traditionally existed, being closed under pressure of world events.

But no Canadian can view with any degree of equanimity this situation when our exports to the United Kingdom have shown this very alarming decrease accompanied by an equally alarming decrease in our exports to all other commonwealth countries. When I say all commonwealth countries I am referring not merely to the aggregate; I am referring to all commonwealth countries because it is one of the alarming features of our trading statistics of 1950 that the decrease in our exports to commonwealth countries applied right along the line. All commonwealth countries were purchasing less from us than in the previous year.

In the face of that situation what is the course that we urge upon the government? We urge, as we have consistently urged, that the government should take every step open to it to arrest this alarming decline in our exports to the commonwealth countries, and in particular to the United Kingdom, that great traditional market, a great market particularly for the primary produce of Canada. This danger of which I have spoken, of putting all our trading eggs in one basket,

is a danger that confronts the primary producer in this country more than it does any other person in our Canadian economic system. Therefore as one who regards the primary producer of this country as still the bedrock of the soundness of the Canadian economy, I make no apology for attaching the highest importance to this decline in our exports to the United Kingdom and to all commonwealth countries.

It is a fact that stares every one of us in the face, and I submit that the house cannot be content to sit back and watch the government apparently viewing this alarming decline with apathy. In case hon. members think that is a little strong, may I come back to this point, that we have urged upon them the calling of a conference of these very nations who are purchasing less from us, as I have indicated. Why should we not sit down together and see if we cannot do something to eliminate the very real difficulties that stand in the way of restoring the kind of trade they were doing with us previously? It is not simply a case of trying to expand our trade. It is a case now, so far as Canada is concerned, of seeking to win back markets that we have been steadily losing in the past fifteen months at an alarming rate. It is not good enough simply to sit back and watch that going on under our very eyes. It is far too dangerous a trend for any Canadian to sit back and watch without grave concern.

There are difficulties on the other side of this picture. The difficulties are not simply on the part of Canada, or any unwillingness on the part of Canada to trade. We will frankly realize, if we approach the problem realistically, that there are in the policies being followed by the United Kingdom government difficulties in the way of increasing trade between Canada and the United Kingdom. The bulk purchasing policies of the United Kingdom government have not in the long run assisted Canada's export trade to expand, no matter what some of the ministers opposite may say about temporary benefits. As a country we have not had much benefit from some of the bulk purchasing policies followed by the socialist government of the United Kingdom which has been directing many of its bulk purchases to countries which are competitors of ours.

The difficulties in the field of exchange are very great; unquestionably the negotiators who represented Canada were confronted with the problem very frequently. But, sir, when difficulties arise do we simply sit down and say it is no use, and throw up our hands? I say this situation is too serious to justify an attitude of that kind. Not once, but on

Trade Agreements

many occasions we have urged the government to call a conference or to recommend the calling of a conference by other nations within the commonwealth, in order that sitting together we might seek to grapple with this problem and see if we cannot at least reduce some of these very real and admitted difficulties in the way of the expansion of trade with one another. The house will not have forgotten that on February 28, 1950, a motion was introduced in this house on behalf of the official opposition by the hon. fnember for Lake Centre (Mr. Diefenbaker) which will be found at page 308 of Hansard for that date. This was on a motion to go into supply; and after moving that all words after the word "that" be stricken out the official opposition sought to substitute this motion:

this house is of the opinion that the government should take immediate steps to convene at the earliest possible date a conference of the nations of the British commonwealth and the countries of the empire to devise policies to restore our lost markets, and thereby to provide jobs for our Canadian people.

If one turns to pages 337 and 338 of the same volume the unhappy fact will be noted that the government whipped up its big majority to defeat that motion by a vote of 148 to 55. What was the result? A situation which was then commencing to assume serious proportions was permitted to assume more and more imposing proportions until now the export trade of this country to Great Britain has dropped from $705 million in 1949 to $470 million in 1950, and to commonwealth countries from $310 million to $185 million. I do not say that whole drop could have been avoided by the calling of a conference. We have to be frank and admit the difficulties which brought about this situation, helped along by policies the British government felt compelled to adopt. But there is no possible extenuation for the failure of the government to do what ought to have been done to meet these conditions by seeking to call a conference at which everything possible would have been done by men of good will from our sister nations within the commonwealth to at least reduce those difficulties. So time has gone on and the situation has steadily become worse.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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LIB

Gladstone Mansfield Ferrie

Liberal

Mr. Ferrie:

Water under the bridge.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

Well it would not have been water under the bridge if the government had adopted the very constructive suggestion offered by the Progressive Conservative opposition on that occasion. We would not now be facing a situation in which our exports to the markets of the United Kingdom and the commonwealth countries have

Trade Agreements

experienced this further critical drop. And when I speak of the serious drop that has occurred in the last fifteen months, I do not confine to that period the falling off in our exports to the United Kingdom and commonwealth countries. That has been going on for some years, ever since war purchases dropped out of the picture. But the situation became infinitely more critical during the fifteen month period beginning toward the end of 1949 and running now into 1951. A great deal of this loss of trade would not have been water under the bridge today if the government had been prepared to move in the direction they were asked to move at that time and on other occasions.

I said something about the procedure indicated by the government on this occasion. What I have just said relates to the background of the trading situation against which we must measure the Torquay agreements to judge their value and relative importance in influencing a trade situation that has been characterized by an increasing lopsidedness. In 1947, after the Geneva agreements were signed and the then prime minister made the announcement on the air to which I have referred, parliament was summoned at a very unusual time. The reason given was that parliament was to be asked to meet on December 5, 1947, for the purpose of ratifying the Geneva agreements. Such was the importance of those agreements, such was the urgency attached to their ratification by parliament, that nothing short of immediate ratification was proposed at that juncture. So parliament was called to meet two and one-half weeks before Christmas. If you will examine Hansard for December 5, 1947, you will see at page 2 a paragraph in the speech from the throne relating to the course the government asked parliament to follow with respect to the Geneva agreements. That paragraph read:

A permanent solution of our exchange problems and the future well-being of the nation depend upon the revival of world trade. An important step forward in this direction has been the successful conclusion of the recent discussions at Geneva. A positive achievement was the conclusion of trade agreements with eighteen other nations.

Then mark these words, if you please:

You will be asked to approve these agreements. Canada is now represented at the United Nations trade conference in Havana, which it is hoped will result in the establishment of an international trade organization along lines agreed to at Geneva. The trade agreements and the establishment of an international trade organization will provide a sound foundation for the expansion of world commerce, production and employment.

I have already alluded to the fact that the Geneva trade agreements were to a substantial degree neutralized by conflicting policies adopted at the same time by the

government. But to contrast the course the government invited parliament to take at that session with respect to the Geneva agreements with the course suggested in the present motion may I refer to the resolution introduced in the house, which will be found at page 106 of Hansard for December 9, 1947:

That it is expedient that parliament do approve the general agreement on tariffs and trade, including the protocol of the provisional application thereof-

Then it goes on to set out the various documents, and in conclusion states:

-and that this house do approve of the same, subject to the legislation required in order to give effect to the provisions thereof.

In the course of the debate objection was taken to parliament being called upon to vote approval of those agreements before there had been detailed examination of them. On March 12, 1948, the then prime minister introduced the following motion, which was seconded by the present Prime Minister, and which will be found at page 2145 of Hansard:

That the subject matter of the general agreement on tariffs and trade, including the protocol of provisional application thereof, together with the complementary agreement of October 30, 1947, between Canada and the United States of America, be referred1 to the standing committee on banking and commerce.

You will see, sir, that the resolution is one which has been followed quite closely by the government in the resolution now under debate. I make this one observation in respect to the course that was followed in the banking and commerce committee and in the house. Following the adoption of that motion on March 12, 1948, the committee held several meetings and it heard some evidence. Then, the committee suddenly ceased to be called. The Geneva trade agreements rested literally in the lap of the banking and commerce committee, and that was the last that was heard of them. They have never been approved by parliament. The resolution which was introduced by the government at the beginning of that session was never disposed of because the agreements, apparently by the deliberate tactics of the government, were never reported back and have never been debated since.

Now, attention has been called in the debate today to the fact that the committee on banking and commerce is not being called upon to make any recommendations with regard to these agreements. The resolution simply proposes that the subject matter of the Torquay negotiations be referred to the standing committee on banking and commerce. What happens after they are referred there will remain, I suppose, in the inscrutable realm of government strategy. If it

suits the political interests of the government to have a resolution passed in the committee reporting these Torquay negotiations back to the house, unquestionably that will be done. If it suits the political fortunes of the government that the study of the agreements should die in the committee, no doubt that is the fate that awaits this agreement, just as it was the fate that overtook the Geneva agreements in 1948.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles:

The committee only has the subject matter of the agreements referred to it, not the agreements themselves.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

The committee has the subject matter of the agreements, but apparently will not be given the opportunity of passing judgment directly on the agreements.

Now, sir, it seems to me that this method, while commendable from the point of view of getting before a committee the details of the negotiations, is not a satisfactory method, having regard to the relationship between the committee and the house; and the relationship between the government, acting in pursuance of such powers as it possesses in the matter of negotiating a trade agreement, on the one hand, and the house on the other. It is no happy reflection upon the Canadian parliament, as it certainly is no happy reflection upon the government opposite, that measures such as these Geneva trade agreements which were pictured to be the new heaven and the new earth, in that broadcast of November, 1947, so important that parliament was summoned to meet on the eve of Christmas to pass judgment on them, were simply allowed to be forgotten. Such a course reflects no credit on the Canadian parliament, and it certainly reflects no credit on the government opposite. While I repeat that I am glad to see the banking and commerce committee given an opportunity of reviewing the details of these negotiations, I am nevertheless regretful that the government now proposes to simply follow a course which is a repetition of an incident which does not reflect credit on parliament or the government.

The government goes ahead with trade negotiations on what we were led to believe was a very broad and important scale, in pursuance of the powers it possesses to reduce the Canadian tariff. Surely, sir, if those measures have the importance pretended on their behalf by the government, this parliament should have the opportunity of passing judgment on them, whether favourable or unfavourable. It seems to me that what we have before us is a very halfhearted permission from the government to have a

Trade Agreements

peek at the details of the agreements, but apparently no opportunity of expressing some judgment upon them. I urge, Mr. Speaker, that the terms of this resolution should be broadened so that when the committee meets it will not be stultified, it will not be confined, but as a committee possessing the dignity of parliament will be a responsible committee to consider the matter which the government pictures as one of importance, and will have an opportunity of conducting such a review and inquiry with respect to these negotiations and agreements as will be a credit to the Canadian parliament.

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Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

Mr. Speaker, the purpose of this resolution is to refer the documents executed at Torquay to a committee of parliament for the information of the members of the committee, and for such report as may emanate from the committee to the House of Commons. Objection has been taken that the committee cannot change the agreement. Well, I agree that is the situation. To have forty countries enter into tariff negotiations and not make it possible for representatives of those countries to bind the governments that they represent to agreements reached during the conference would of course make tariff negotiations of this kind impossible. All the countries at Torquay were acting under executive authority. For the United States, Canada, Great Britain, all the countries there represented, the executive of each took the responsibility for signing the agreement on behalf of his country. It is the method followed by British countries, and it has been accepted in countries outside of the British commonwealth.

I do hope that the committee will give careful study to the results at Torquay, because it seems to me that this uninformed debate we are having indicates -that a study of the terms of agreement will be very helpful, particularly to members of the opposition who have spoken. We are told tonight that the results at Torquay have been unimportant to Canadian trade. I believe that many parts of the country will take a different view. We have heard the viewpoint of British Columbia, and I believe we shall get an even stronger viewpoint in the same direction from the maritime provinces. I believe the farmers of this country-

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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PC

Heber Harold Hatfield

Progressive Conservative

Mr. Hatfield:

No, no.

Topic:   TRADE AGREEMENTS
Subtopic:   TORQUAY NEGOTIATIONS
Sub-subtopic:   MATTER TO BANKING AND COMMERCE COMMITTEE
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May 21, 1951