Hon. W. E. Harris (Minister of Finance):
Mr. Speaker, in my budget speech on March 14 I referred to the tariff on potatoes, and to procedures which the government had initiated under the general agreement on tariffs and trade looking toward an upward adjustment in the present bound rate of duty.
In this connection we have been carrying on negotiations with the United States. I am happy to inform the house that these negotiations have been successfully completed, and that we are now in a position to implement the results. Later, when the Customs Tariff bill is before the house, I shall be moving an amendment as I indicated yesterday I might. This amendment relates to the potato item and I think I should give a brief explanation of the action being taken.
Since 1939 there has been no Canadian duty on table stock potatoes imported from the United States except for a seasonal tariff of 37J cents per hundredweight from June 15 to July 31. These rates were established by the Canada-United States trade agreement of 1938, and they were bound under the general agreement on tariffs and trade. During the same period there has been no Canadian duty on seed potatoes, but imports of seed have been negligible. The effect of the proposed amendment will be to apply, as of midnight tonight, a year-round duty of 37\ cents per hundredweight on all seed and table stock potatoes imported into Canada, except that new potatoes imported during the period from January 1 to June 14 each year will continue to be free.
In reaching a decision on this matter the government took account of the expert testimony and the conclusions available to it through the tariff board hearing on potatoes, and we attempted to weigh the over-all interests of Canadian producers and consumers.
In regard to our producers, we had to take into consideration not only their views expressed to the tariff board but also the fact that in our negotiations with the United States we were informed that, in so far as we found it necessary to increase our tariff applying to United States potatoes, they would consider it necessary to increase their tariff applying to Canadian potatoes. Our growers still attach importance to the maintenance of export outlets in the United States for a substantial volume of Canadian potatoes.
In regard to new potatoes, the tariff board pointed out that these are imported into this country during the spring and early summer months. The board concluded that they "command a premium because they are new; and probably would enter whether or not they faced a customs duty at the border". In such circumstances a tariff on new potatoes would not be of great benefit to Canadian potato producers, and would operate chiefly as a tax on consumers. There was a further point we had in mind during our discussions with the United States; producers in Florida, California and other southern areas attach a high value to their Canadian market for new potatoes.
The trade agreements to which I have referred provided for certain concessions to Canada on potatoes by way of reductions from the United States statutory tariff rate of 75 cents per hundredweight. Under GATT the United States has been obligated to admit at least 3J million bushels at a reduced rate of 37J cents per hundredweight; this has been made up of 1 million bushels of table stock and 2 % million bushels of seed.
Under the new agreement, and as a condition of getting freedom of action to make the tariff changes which I am proposing, the United States is reducing the present tariff quotas by 1 million bushels; 400,000 bushels will be taken off the table stock quota and 600,000 bushels will come off the seed quota. For the current crop year it appears unlikely that we will be able to take full advantage of either the seed or table stock quota.
It was against a background of reduced exports and increased imports, and following urgent representations from Canadian producers and an inquiry by the tariff board, that the government came to the conclusion that the potato situation was a special one which justified special action. Accordingly we took the exceptional course of renegotiating a tariff commitment under the special procedures provided for in article XXVIII of the general
Potatoes-Tariff Changes agreement on tariffs and trade. We took this course so that it would be possible to implement the results of the renegotiation during the current potato marketing season.
Subtopic: STATEMENT ON AGREEMENT BETWEEN CANADA AND THE UNITED STATES