May 21, 1951

LIB

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

Liberal

Mr. Howe:

The hon. member sees no virtue in anything but potatoes. We did not do anything about potatoes but we did get concessions for other maritime products.

We are told that Canadian -trade is in a very serious situation, but that the whole

Trade Agreements

situation can be saved by calling an empire conference. If hon. members were reading the newspapers they would know that an important trade conference is taking place in the city of Ottawa today with a high level team of British and Canadian experts. On the British team are the heads of three departments of government, the treasury, the board of trade and the ministry of food. This trade conference will continue throughout the week. I can say that conference is to be followed by a trade conference with the republic of France; that is to be followed by a trade conference with the British West Indies; that is to be followed by a trade conference with New Zealand. I believe this government is not wholly oblivious of the fact that conferences may be helpful.

The minister of external affairs (Mr. Pearson) has called my attention to the fact that last year Canada attended 169 conferences, so that if conferences, the cure-all of the opposition parties, can be helpful, I think we have done well by international conferences.

We are told that our Canadian trade is in a dreadful position. I will admit that the Conservatives have come quite a distance since 1911 when they said: No truck or trade with the Yaqkees. They now admit that some trade with the Yankees is not too bad, but they say that we have far too much of it at the present time.

Then trade figures are quoted to show that our trade with the United Kingdom has fallen off tremendously. I was interested in the base figure that was used by the leader of the opposition (Mr. Drew). He used the trade figures for the year 1943. In 1943 Canada was at the top of its production of munitions of war and we were sending those to England in tremendous quantity, with no price tag on the munitions. We built up a tremendous trade in that way, but it was wholly abnormal, of course. Using that base, he showed-

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

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

He did not use it as a base.

Topic:   TRADE AGREEMENTS
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LIB

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

Liberal

Mr. Howe:

He started with the year 1943 as a base.

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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

He did not say it was a base. He just started there, it is true, but he did not say it was a base nor did he look upon it as a base.

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LIB

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

Liberal

Mr. Howe:

We will call it a point of departure, then. In other words, his comparison was with the year 1943. Then he showed that after we had that level of trade established in 1943, through to about 1947, it began to drop away. But what he did not say was that today the trade between Britain and Canada is exceedingly high, compared with any pre-war year in history. It is still high. tMr. Howe.l

It is true we have not trade in munitions of war, but we are still doing a big business in the United Kingdom and with the empire, comparing the figures of today with any prewar trade figures.

There is a certain limit to the trade that a country can have. A country cannot export more goods than it produces, minus the goods that it consumes within its own borders. That is the limit of exports, and we have been producing exports up to that limit continuously since the year 1943. I will take the same point of departure as that taken by the leader of the opposition; we will use that as a base. Every year since then we have been selling everything that we could produce. I claim that no country can do more than that in the line of exports.

There is a limit to the amount any country can import. That limit is the amount that it can afford to pay for imports; and we have been importing about to that limit.

It has been said that we have been increasing unduly our exports to the United States. Why have we been doing that? We either had to d'o that or we had to limit our imports from the United States; and this country cannot get along without substantial imports from the United States.

My hon. friend has referred to the session of 1948, or of 1947, I believe it was.

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PC

Edmund Davie Fulton

Progressive Conservative

Mr. Fulton:

1947.

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LIB

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

Liberal

Mr. Howe:

Yes, 1947. At that time we were going bankrupt in United States dollars. In other words, up to that time we were exceeding our ability to buy in the United States. We had to meet that situation. We met it partly by cutting back our imports from the United States, but we met it to a larger extent by building up our exports to the United States and thus building up our ability to import from the United States. It seems to me that that was the logical development of trade. Today our trade with the United States is not in balance but, counting shipments of gold and certain invisibles, we are certainly trading on a basis that is manageable and that is within our ability to pay for imports.

The United Kingdom has been in the same 'position in its trade with Canada. We have never refused to export anything to England; we have pressed exports on England every year; and England has bought to the extent of her ability to pay. We have been told repeatedly by representatives of the United Kingdom that Britain would gladly spend in Canada all the dollars that she could' earn in Canada. Canada therefore has promoted the sale of British goods in Canada; and exports to this country from Britain are today at far the highest level in the history of either

country. In other words, we have been building up our trade with the United Kingdom by building up the ability of the United Kingdom to pay for goods purchased in this market. Through our efforts and through the co-operation of the British government, the balance of trade today is in favour of the sterling area. In other words, the sterling area is selling Canada more goods than it is buying from Canada. Surely that is a sound position for both countries to be in, because it removes the balance of payments situation as an impediment to trade and it places both countries in a position so that the trade of each can increase, step by step and in parallel.

Our trade with South America has been increasing greatly, particularly in the last several months. There again that represents a fairly well-balanced trade presently somewhat in our favour. Our over-all trade position is that exports and imports are almost in balance. In 1950 the figure for our imports was slightly larger than that for our exports. Usually there has been a slight difference in in our favour; that is, exports were greater than imports. Surely that is a sound trading position.

We speak of the old triangular pattern of trade. Under that pattern, we made most of our purchases in the United States, sold most of our products to England and said to England: You pay our bills in the United States; we cannot find the dollars; you must do it for us. That was the triangular pattern of trade. We bought in one market, sold in another market and asked our two principal customers to square up our balances with each other. Today our trading position with all our customers is nearly a balanced one, as nearly as it is desirable to get in the nature of multilateral trade in which Canada participates.

We are. told that we are sacrificing the British preference. As a matter of fact, we have given up no important British preference. The margin has been cut on a few items. At the Annecy conference Britain, for reasons that were good to both Canada and the United Kingdom, unbound the preference margin as far as the United Kingdom was concerned; and in a few items the margin of preference has been shortened. But no important preference has been given up and no preference has been taken away from any empire country.

A good deal has been said about empire preferences. Hon. gentlemen opposite speak as though those would be the salvation of any situation. Any British country can ship to Canada and can take advantage in Canada of the British preference. But I know of no

Trade Agreements

article that Canada can ship to any British country freely and as to which Canada can obtain a British preference. The preference is on the statute books, but behind the preference is a prohibition or a quota. Therefore, unless trading methods change within the empire, I doubt whether the British preference is going to find markets for us within the empire. With the improvement in the balance of exchange that I have mentioned, I hope that those quotas and prohibitions may be removed1, in time; if so, the British preference will be to the advantage of Canada. But today Canada is not gaining the advantage of the preference which inures to other British countries trading into this market.

I do not know that I need to touch on any other remarks in this debate. It was suggested that we have not been standing behind India. It was said that we should have given wheat to India. Well, I can say for the benefit of the house that we delivered wheat to India this year. We delivered our last cargo just a few days ago. We have delivered to India in this calendar year 300,000 tons of wheat, which represents something over 10 million bushels. I think that 300,000 tons of wheat from Canada compares reasonably well with 2 million tons just voted for delivery to India by the United States. It compares very well with 50,000 tons from Russia, and a very much smaller amount from China. I think it is well for hon. members to know these facts when they are being critical of the government for our not doing anything to help out this situation in India.

Then we are told that the only reason we are selling our products in the United States, apparently the only reason we are able to export at all, is due to stockpiling in the United States. I can say to hon. gentlemen that that is utter nonsense.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

Nobody said that.

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LIB

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

Liberal

Mr. Howe:

That was said by two speakers of the opposition.

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PC

Arza Clair Casselman (Chief Opposition Whip; Whip of the Progressive Conservative Party)

Progressive Conservative

Mr. Casselman:

It was given as one of the reasons.

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LIB

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

Liberal

Mr. Howe:

If that was one of the reasons, let us dispose of that one reason. I can say that the general demand for everything that goes into the United States stockpiles has been far greater than the supply, and the effect of the stockpile is not in any way important as far as exports from Canada to the United States are concerned.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Greenwood):

.Not to any extent?

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LIB

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

Liberal

Mr. Howe:

Not to any extent. Had the materials not been sold to the United States,

Trade Agreements

whether for stockpiles or anything else, there are other markets begging for them.

Talking of conferences, I might say that the lord privy seal of England was here today, and the purpose of his visit was to obtain greater quantities of raw materials from Canada of the very same items that have been going to a very limited extent into United States stockpiling.

I think that the sessions of the committee mentioned in this resolution should be very helpful. I hope that all opposition members who have taken part in this debate will attend the sessions regularly. I am sure anyone in the house can obtain great benefit from the information that will come out of these sessions of the committee, and I commend the work of the committee to all hon, members who are fortunate enough to be members of the banking and commerce committee.

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PC

Howard Charles Green

Progressive Conservative

Mr. Howard C. Green (Vancouver-Quadra):

Mr. Speaker, in spite of the very low opinion which the Minister of Trade and Commerce (Mr. Howe) seems to place on the suggestions which have been made to the house during the course of this debate today, I am going to be bold enough to put a few more thoughts before him and my fellow members of the house. I really believe that the subject is a great deal too serious, and of far too much importance to Canada, to be treated in quite the way in which it was treated by the minister in his remarks a few moments ago. However, be that as it may, I do plan to be analytical in my remarks about the Torquay agreements, and about the problem of Canada's external trade.

There is no doubt that the objective in these various negotiations held at Geneva, at Annecy and more recently at Torquay is very much worth while. That objective has been to expand trade, and I think that in each case there has been a valuable expansion of trade among the free nations. Of course the unfortunate position is that the Soviet and her satellites, as I understand-and the minister can correct me if I am wrong-have taken no part whatever in any of these negotiations, and the result must have been that the negotiators of all the countries, including those from Canada, have found the work difficult and discouraging. Our vision of a world in which there would be free trade among all the nations is certainly very far even from our imaginations under present conditions.

While there has been value in all these treaties, I do not think the minister will question that Canada, in telling the results of the treaties, has put her best foot forward

and I suppose that is only natural. I believe the United States has done the same thing. The American government, in announcing what it has gained in these various negotiations, always emphasizes the favourable side of the story, and the Canadian government ha's been doing the same thing. For example, in his statement on May 8, the Minister of Trade and Commerce pointed out that exports to the United1 States from Canada of the goods in the categories on which there had' been a reduction of tariffs granted at Torquay amounted to $120 million in 1949. He did not give the figure of the value of the goods coming to Canada on which the tariff had been reduced under the agreements, but we find this figure given in the announcement made from Washington. The Americans claim that they got reductions on trade with Canada amounting to over twice as much, the figure they give being $290,-

049,000 on United States products coming into Canada.

Their review of the results is quite interesting. I hold in my hand a clipping from the last edition of United States News and World Report of May 18, 1951, which sets out that tariff cuts negotiated by the United States with seventeen countries at Torquay involved about $500 million in imports, that being six per cent of all imports into the United States. On the other hand United States exports which got tariff benefits amounted to $1 billion in 1949, which hon. members will notice is about twice as large a figure; it is pointed out however that the figure of $1 billion would be well above any normal export year.

The statement goes on to set out that Canada and western Germany made the greatest concessions to the United States; that Great Britain and other nations of the commonwealth made no concessions at all; that France and some other countries actually raised duties on some United States export items. Then it sums up the results of the Torquay conference in these words:

Results of the Torquay conference, therefore, were not all successful. Actually, the tariff concessions negotiated are not expected to affect trade in the near future. Tariffs do not mean much when goods are scarce, demand high. Problem in world trade now is primarily to increase output of basic materials.

Topic:   TRADE AGREEMENTS
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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

Mr. Howe:

Hear, hear.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

The Minister of Trade and

Commerce says, "hear, hear." I believe that that summary fairly sets out the main problem today in world trade.

There is very little in the agreement which will bring down the cost of living in Canada. The Minister of Finance (Mr. Abbott) in making his speech the other evening referred to a few of the items on which there have

been small cuts, and -made special reference to grapefruit juice and half a dozen other items. But I do not believe the new agreements will give much help, so far as the cost of living is concerned. It may be that in the years ahead there will be some help for the little man; but he does not stand to gain much at the present time.

The hon. member for Vancouver South (Mr. Laing) dealt with the benefits to British Columbia, and said that these treaties were wonderful things for that province-perhaps the most wonderful trade development there had ever been from the point of view of British Columbia. I rather think the minister would not have gone that far, in so far as that province is concerned. Certainly the results are not that good. In his statement the other night the minister referred to canned salmon, plywood and base metals as being the three commodities produced in British Columbia which received the most assistance under the Torquay agreements.

The duty on canned salmon entering the United States has been cut from 25 per cent to 15 per cent, but at the same time Canada has cut her duty on canned salmon coming from the United States from 27J per cent to 15 per cent. We have always been in pretty tight competition with the canned salmon producers of Washington and Oregon, and it is too early yet to say what the results of this reciprocal change in the tariff will be.

Upon the announcement of the results of the negotiations Mr. S. M. Rosenberg, chairman of the salmon canners' operating committee in British Columbia, and president of the Canadian Fishing Company, said that Canadian costs were still too high to meet United States competition. I believe that British Columbia packers of canned salmon have never been able to get into the United States market to any large extent and, even with this cut, I doubt very much whether they will be able to do so.

As for the cut in the tariff on plywood going into the United States, I find in the same article the statement that at present British Columbia mills are going full blast to fill Canadian orders, bolstered by defence and other demands. While that may be the position at the present time, I believe the reduction in the tariff will be of benefit over the years.

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LIB

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

Liberal

Mr. Howe:

They have shipped large quantities of plywood into the United States over the 40 per cent tariff.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

This statement in the article may be incorrect. Then, with regard to base metals: there, too, I believe the Americans

Trade Agreements

have been taking all they can get, and for the time being the reduction in duty will not make much difference.

The hon. member for Vancouver South also mentioned the cut in the duty on aluminum. Well, we are not yet producing aluminum in British Columbia, and will not be for four or five years; so that the benefits are not apt to accrue on that commodity for a long time. Furthermore when aluminum is produced, it is earmarked for Great Britain; so that it would not be available for export to the United States.

The minister mentioned apples. While I believe some reduction has been given by Peru in respect to the tariff on apples, Canada has dropped her tariff on apples coming in from the United States from three-quarters to three-eighths of a cent per pound and has also extended the time each year during which apples can come in free. I believe the extension is from July 12 until July 31. So that once again apples seem to be getting a bad deal. In 1947 the preference on apples to the United Kingdom was given up; certainly in the negotiations at Geneva they came off very badly.

There is one point in connection with these negotiations which I cannot understand, and that is why Canada should give away negotiating points. In the debate on the resolution leading up to the changes in the Customs Tariff, statements were made to the effect that irrigation sprinkler systems were one type of commodity under negotiation at Torquay, but that Americans would not give any concession. Yet, in spite of that fact, a change is being made in the present budget cutting off the Canadian tariff on this product completely.

I cannot understand why that has been done. Where we have been actually in negotiation on a certain type of equipment, and have been unsuccessful in getting any concessions, we turn round and, without any quid pro quo, take off the protection.

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LIB

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

Liberal

Mr. Howe:

That is to help the farmers.

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PC

Howard Charles Green

Progressive Conservative

Mr. Green:

I believe the farmers of British Columbia, who are the ones using this particular kind of equipment, were perfectly satisfied to have the tariff remain as it was.

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May 21, 1951