Hon. E. J. Benson (Minister of National Revenue):
Mr. Speaker, on Tuesday I was questioned with respect to the importation of Volkswagen cars by Studebaker Corporation under the terms of the automotive pact and its predecessor, order in council PC 1963-1/1544. I was asked by the right hon. Leader of the Opposition to table a letter written in this regard by an official of my department.
In so doing let me make it clear that under either of these authorities, and in fact under the authority of the Customs Act and the transfer invoice procedures of very long standing, any person may, before goods are cleared through customs, sell such goods and transfer title to a new owner so that he may become the importer of record. Of course these transactions must be bona fide and supported by the proper customs and other documentation.
In this instance before us inquiries were made by Studebaker as to whether they could carry out such transactions. The answer was "yes", as evidenced by the reply addressed to them by the department, a copy of which, with the consent of the house, I hereby table along with copies of the automotive pact and the related order-in-council, its predecessor order in council and the departmental memorandum and instructions concerning transfer invoices.
The fact that Studebaker could import Volkswagen vehicles free of duty under the automotive pact or its predecessor did not alter this right in any way. Any Canadian manufacturer of motor vehicles who meets the contitions of the relevant tariff items and orders in council has been and is free to import foreign made vehicles of any make.
As hon. members know, the automotive pact is to encourage increased production of motor vehicles and automotive parts in Canada. As part of this plan, which also seeks
rationalization, Canadian manufacturers become entitled to enter vehicles and original equipment parts duty free provided, of course, they meet the conditions under the pact and the related orders in council that entitle them to this free entry.
[DOT] (2:40 p.m.)
The house will recall that prior to the automotive pact there was an earlier program which allowed duty free importations of automobiles and parts by a company which earned this right by increasing its exports from Canada of an equivalent value of cars and parts. Studebaker in fact availed itself of the right to import foreign cars on a duty free basis under both the old program and the present program which replaced it.
One of the conditions of the present program which must be met is that the automobile manufacturer in question has to maintain the ratio between his production of automobiles in Canada and his total sales of automobiles in Canada. This condition is spelled out precisely and clearly in a tariff item contained in order in council P.C. 1965-99 dated January 16, 1965 and tabled in the house at the time the automotive pact was under discussion.
This means that if the company chooses to import automobiles from abroad and sell them in Canada it must increase its production in Canada by an amount equivalent to such importations. Studebaker claims to have done this. It can be seen therefore that if Studebaker performed in accordance with the requirements of the relative tariff items it would have raised its total production of cars in Canada, thus creating jobs and providing additional business for Canadian suppliers, which were the central purposes of the automotive program.
Studebaker, a recognized car manufacturer in Canada, which had earned its right to free entry, found itself in the unique position of being unable to import Studebaker cars after the production of their parent company in the United States had ceased. As a result it chose to import other cars, as it was entitled to do because of its greatly expanded manufacturing activities in Canada. It chose to import Volkswagen cars, but before doing so it wrote to the department to ascertain whether it
Oclober 27, 1966
Importation of Volkswagens could purchase and import such cars duty free. As I have pointed out, they were entitled to do so, as any other manufacturer of motor vehicles in Canada would have been, provided they abided by the Customs Tariff, the Customs Act, the relevant orders in council and the established procedures.
The question now is whether or not they in fact did so. This will be established in the course of the departmental audit of their company, to which I have already referred in the house, as it will in the case of all other car manufacturers required to meet not only the terms of the auto pact and related orders in council but also the customs law and established procedures.
Subtopic: STATEMENT ON IMPORTATION OF VOLKS-WAGENS BY STUDEBAKER COMPANY