May 21, 1951

LIB

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

Liberal

Mr. Howe:

They did not say so.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

The farmers will probably lose in the end, because I am afraid that once the American producers of this equipment get a corner on the market the prices will be what they can get, for the competition from a Canadian firm will be removed. I believe it is bad business to negotiate on an item such as that, and then, when our requests are turned down, to take off the

Trade Agreements

tariff entirely, thereby giving the other side the very best they could have got in the deal. I believe a mistake was made in that connection.

These negotiations and agreements really bring up for consideration a problem much deeper than that involved in the actual items covered, and that is the question as , to what is to be the Canadian policy in future years in the matter of external trade.

I believe it is clear that Canada is becoming more and more dependent upon the United States market, both in the matter of her exports and her imports. Someone pointed out today that sixty-five per cent of our exports are now going to that one country. There are certain dangers in that situation which the minister must see. One is that the basic United States policy, for as long as I can remember-probably right from the days of independence-has been to protect the American people first. The whole of their trade policy has been designed to protect their own people. The Hawley-Smoot tariff, which goes back to about 1930, is still in effect. That is still the basic United States tariff. Of course it is true that the president was given power to make reductions amounting, I think, to 50 per cent on items, and then still further power was given to him to make further reductions on the items as they stood at January 1, 1945, up to a maximum of 50 per cent. There are those provisions in the United States tariff law, but they are subject to change at any time, and the fundamental United States policy continues to be one of very high tariffs, much higher than Canada has ever had no matter what kind of government has been in power here.

Another fact which makes the situation dangerous is that Canada and the United States produce goods of the same type in many cases. On the west coast, for example, our lumber has always been in competition with the lumber of Washington and Oregon states. The same is true of canned salmon, as I mentioned a few moments ago. Our apples compete with apples from those two states, and the United States apples ripen earlier because they are grown farther south. To a degree we have had the same situation with many of our base metals. If you go right across Canada from one coast to the other you will find commodities produced by both countries. For example, there is grain on the prairie provinces and in the prairie states; manufactured goods in Ontario and Quebec and in the industrial eastern states; fishing in the maritime provinces of Canada and in the New England states to the south.

There will always be many commodities which both countries are producing, and

especially when there is no great demand for goods there is bound to be difficulty for Canada with respect to these particular commodities. The United States producer has a much larger home market. He does not have to depend on exports to the same extent that Canadians do, and for that reason our position has always been and always will be difficult.

Then there may very well be changes in the United States government. The present government has been in power for many years, and if there should be a change in the next year or two I think the minister will agree that Canada is apt to have a great, deal more difficulty in getting her goods into the United States market than she has under the present administration. Even as things are today, while the Americans perhaps have not been responsible for killing the international trade organization, certainly it is now a thing of the past, and no doubt the attitude of the United States has been largely responsible for the failure of the free nations to set up that agency under the United Nations.

Another thing we must remember is that the Americans for a long time have been attempting to destroy the commonwealth preferences. They have been against the preferential system ever since it was brought into effect. In the recent Torquay negotiations they set out to break down the preferential system. I am afraid that Canada, willingly or unwillingly, has been aiding in that attempt.

It has been pointed out today that the British preference was first created by the Laurier government about fifty years ago. Hon. members know that about 1932 the late Right Hon. R. B. Bennett negotiated extensive British preferential agreements. I do not know what their effect was in other parts of Canada but they saved British Columbia. The preferences on lumber, apples, canned salmon and metals saved our province at a time when we were in a desperate position. That was the one time when trade agreements meant a great deal to the west coast province.

Mr. Mackenzie King and the Liberal party fought the imperial preferences from start to finish. I am told there were extremely bitter debates in the house, and only one member of the Liberal party voted for those preferences, that member being Right Hon. J. L. Ilsley, who of course was representing an apple constituency in the province of Nova Scotia. When Mr. King came into power in 1935 it was not very long until he renegotiated the agreements and the preferences were reduced. In my opinion that has been the attitude of the present government right from 1935. They have looked on the imperial preferences as Bennett treaties,

and therefore as something that should be dealt with pretty harshly, to say the least. Step by step since 1935 we have found Canada whittling away at the roots of the preference system.

I have here a statement made by the present Prime Minister (Mr. St. Laurent) on March 17, 1947, when I believe he was secretary of state for external affairs. He made a statement on the situation with regard to imperial preferences. Members will find it at page 1414 of Hansard for that date. The present Prime Minister quoted a statement which had been made by Prime Minister Attlee setting out the situation of the preferences at that time, in which, and it was accepted by our present Prime Minister as correct, we find it set out there that these preferences would not be altered in the forthcoming Geneva negotiations unless all the parties thereto agreed to such alterations. The key sentence reads as follows:

There is thus no question of any unilateral surrender of preferences. There must be adequate compensation for all parties affected.

In other words if a preference was to be cut down or eliminated, all the parties thereto must agree and must get some quid pro quo. That was the situation in March of 1947. But in December, 1947, after the Geneva agreements had been negotiated we find Mr. King, who was then prime minister, making statements to the effect that any country of the commonwealth must be free to change the preferences. In fact he had a letter to that effect written to the British delegation, the stand taken being that Canada, or Great Britain for that matter, could simply give notice and withdraw the preference on any item, rather than having the items bound by an agreement for a term of years. That, of course, was going quite a lot further than the present Prime Minister had gone in March of the same year.

Then in 1949 we find the present Minister of National Defence (Mr. Claxton), who was then a minister of the government, expressing his views on the British preference. That was on October 12, at page 705 of Hansard, where the minister was answering a question asked by the late member for Broadview, Tommy Church. After the answer had been given Mr. Church said:

May I say to the hon. gentleman that the proposal also hangs preferential trade on the sour apple tree, like John Brown's body.

The reply of the minister was very short but very enlightening. He said:

That is a good place for it, too.

This question and answer had to do with the Annecy agreements, so we know exactly

Trade Agreements

where the present Minister of National Defence stands with regard to all these British preferences.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

If my hon. friend will permit a question, with all this discussion of British preferences will the hon. gentleman explain in what way British preferences have contributed anything to Canada's trade position during the past ten years?

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

Howard Charles Green

Progressive Conservative

Mr. Green:

I have pointed out to the minister what they meant to British Columbia before the war.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

That was twenty years ago.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

That situation existed right up to the outbreak of war. Of course when war conditions intervened the whole trade picture was changed. I do not suppose agreements of any kind made any difference during the war. I had hoped that after the war we would be able to retain this system of British preferences.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

We are retaining the system.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

I am complaining of what appears to be a constant whittling down of these preferences by the present Canadian government. I am not too sure that this government would not do away with the preferences entirely if they felt they could get away with it as far as the public were concerned.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

Who would stop us? Don't take yourself too seriously. If we wanted to get away with it who would stop us?

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

Howard Charles Green

Progressive Conservative

Mr. Green:

That is just typical of the minister; if he wanted to get away with anything who would stop him? I tell him he is not yet the dictator of this country, and he is not going to be. He grows more and more dictatorial every session. Some day the Canadian people are going to wake up and realize what a dictator they have here running this country.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

Some day the people of British Columbia will wake up and see what kind of representation they have here.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

The minister need not worry about the people of British Columbia. They will take care of the choice of their own representatives without any advice from him. They have experienced his visits to British Columbia, when he flies off the handle and uses abusive language not fit for any public man. They know of his doing that. One of the great tragedies of public life in Canada today is that the minister has such little control over his temper. That anyone in such a responsible position should have so little control is tragic. I am going ahead with

trade Agreements

my remarks. If the minister does not like them he can at least keep still; perhaps someone else will have the courtesy to listen to them, whether or not he does.

I dealt with the attitude of the Minister of National Defence in 1949. Now let us go on a year and see what was the attitude of the Canadian representative at Torquay in 1950. I have here a newspaper clipping dated September 29, 1950, headed "Wilgress startles tariff parley". I have great respect for Mr. Wilgress; I think he is an excellent civil servant. He was chairman of the Torquay negotiations, and this dispatch says:

At the formal opening, chairman Wilgress said the countries represented in GATT (general agreement on tariffs and trade) must face the ''fundamental question" of eliminating restrictions on trade.

By inference he referred particularly to the British system of imperial preference which is expected to come under strong criticism.

There we have the Canadian representative dropping a pretty broad hint that Britain had better do something about giving up the preferential system. Now this year, in 1951, we have another press dispatch dated May 9, headed "Trade pacts may doom preferences". It is from Ottawa, and reads:

Canada today had seventeen new tariff and trade agreements that many observers said spelled the doom of this country's participation in the British empire trade preference system.

Then it goes on:

Officials here said Britain's failure to work out new tariff agreements with the U.S. had been "regrettable." They indicated that the failure had been partly political-a resolve to maintain the empire's trade structure for its own sake.

There you have Canadian officials again rriticizing the British for the stand they took; and in the statements made by the two Canadian ministers on May 8 we find much of the same. For example, the Minister of Trade and Commerce (Mr. Howe) had this to say at page 2830 of Hansard:

From the Canadian point of view, it is a matter of regret that these countries failed, at Torquay, to add to the substantial body of tariff concessions which they made to one another at the earlier negotiations.

Mind you, he was dealing there with the British countries and the United1 States; and the Minister of Finance also made statements much to the same effect. Tonight, I suggest, the Minister of Trade and Commerce has shown pretty clearly that he is not a very strong advocate of the British preference. Incidentally he made a statement directly contrary to that made by the Minister of Finance on May 8. Tonight the Minister of Trade and Commerce said that no preferences had been eliminated. At page 2832 of

Hansard,-on the other hand, the Minister of Finance had this to say:

. . . we agreed to the modification and in some cases to the elimination of certain margins of preference.

Somebody is wrong.

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:

Somebody left out a comma.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

Somebody left out more than a comma. Somebody is telling one story and somebody else is telling another, and we will have to find out which is right. Then tonight the minister said these preferences do not mean anything, because even if we have them there are prohibitions and quotas put on by the British; that we cannot get into the British market and therefore, presumably, the preference system is of no value. Well, for the time being it may be necessary for the British to adopt measures of that kind. They have been in a terribly difficult -position, far more difficult than Canada has ever encountered, and they have had to take drastic steps. But because those quotas and prohibitions exist at -the present time it does not mean they are to continue indefinitely or even for very long. You know, there may very well be a change of government in the United Kingdom before the year is out. I believe it is only a matter of time until the British, the Australians, the New Zealanders, the South Africans and the Indians will be able to deal with this country on a normal basis. When that time comes, these preferences are going to be of great value to Canada. Incidentally, while Canada cut out some of the preferences she has been giving to other British countries, under these Torquay agreements we still retain our preference in the other British markets because those British countries refused to reduce any preference.

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

I am sure my hon. friend would not like that statement to Stand. There is no change in any preference between Australia and Canada, New Zealand and Canada, or South Africa and Canada. The only change is between the United Kingdom -and Canada, and that was with the consent of the United Kingdom.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

Was that contained in the

Torquay agreement?

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

The margins were reduced, but not as they affect Australia, New Zealand or South Africa.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

The statutory preference for Canada in the other British markets remains, does it not? It has not been reduced lat all by the Torquay negotiation's?

Topic:   TRADE AGREEMENTS
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

Mr. Howe:

The margin has, yes.

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

Howard Charles Green

Progressive Conservative

Mr. Green:

Not the margin in other British territory. Our margin of preference on the

goods we sell New Zealand, South Africa and Australia has been retained, because those countries did not give the United States any concessions at all; that is the point I am making.

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