December 18, 1987

GOVERNMENT ORDERS

CANADA-U.S. FREE TRADE AGREEMENT


The House resumed from Thursday, December 17, consideration of the motion of Miss Carney that this House endorse, as being in the national interest, the Canada-United States Free Trade Agreement, the legal text of which was tabled in the House of Commons on Friday, December 11, 1987, and the amendment of Mr. Langdon (p. 11885).


LIB

Herbert Eser (Herb) Gray (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Gray (Windsor West):

Mr. Speaker, I rise on a point of order. There have been some consultations with respect to the order of speakers. It is my understanding that the Prime Minister (Mr. Mulroney) wants to speak this morning, and we would be happy to hear him.

I would like to propose that it be understood that the Hon. Member for Notre-Dame-de-Grace-Lachine East (Mr. Allmand) complete his speech, then the Prime Minister would be recognized, followed by the Leader of the Official Opposition who would then be followed by the Leader of the New Democratic Party. Of course, Question Period would begin at the usual time, as would Routine Proceedings.

What I have in mind is that this would mean it would be likely that the Prime Minister, if he wished to do so, would conclude his remarks at 11 o'clock. We would then go into the rest of the Routine Proceedings and Question Period. Following Question Period the Leader of the Opposition would be heard, and then the Leader of the New Democratic Party.

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PC

Douglas Grinslade Lewis (Minister of State (Government House Leader); Minister of State (Treasury Board))

Progressive Conservative

Mr. Lewis:

Mr. Speaker, we are content with that arrangement which is being made in order to give the Leader of the Official Opposition (Mr. Turner) an opportunity to make his speech in total at one time. We are content with the arrangements, with the proviso that should the remarks of the Prime Minister (Mr. Mulroney) impinge somewhat, not extensively, on the 11 o'clock start for Statements by Members that the Chair would not see the clock in order to allow the Prime Minister to complete his remarks.

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LIB

Herbert Eser (Herb) Gray (Official Opposition House Leader; Liberal Party House Leader)

Liberal

Mr. Gray (Windsor West):

I would be happy to agree to that, provided this means that time would not be taken from the Statements by Members or Question Period.

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PC

John Allen Fraser (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

In view of this morning's events, it has been suggested that the Prime Minister (Mr. Mulroney) be given every opportunity to continue his remarks, even if they go beyond 11 o'clock. There seems to be agreement. Is there agreement?

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?

Some Hon. Members:

Agreed.

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PC

John Allen Fraser (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

On the condition, of course, that that would not take away from the usual time for Statements by Members and Question Period. Is that agreed?

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?

Some Hon. Members:

Agreed.

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PC

John Allen Fraser (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

So ordered.

Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine

East): Mr. Speaker, as I stated yesterday when I started my speech, we must repeat over and over again that in this debate we are not discussing theoretical free trade. We are not debating the pros and cons of textbook free trade as we learned it at university. Unfortunately, that is what some individuals in this debate are doing. They are asking us to discuss theoretical free trade, and ask how anybody can be against it.

No, we are not discussing theoretical free trade, but we are discussing this very particular agreement signed between Canada and the United States and announced to the House on October 5, the full text of which we only received last week, on December 11. That is what we have to put our attention to. We must ask whether or not this very particular deal is good for Canada, if on balance it is good for Canada. We in this Party have come to the conclusion that it is not good for Canada, that we gave up too much for what we got.

By the way, it is very interesting to note what the Prime Minister (Mr. Mulroney) and certain Ministers said about free trade in general before the election of 1984. Let us refer to an article in Maclean's magazine of 1983. The Prime Minister and several other present day Ministers were asked what they thought about free trade, because at that time they were involved in a leadership campaign for the Conservative Party. Here is what the Prime Minister said in 1983, and I quote:

Canadians rejected free trade with the United States in 1911. They would

do so again in 1983. Canada must increase its share of total world trade which

has dropped by 33 per cent in the past two decades.

December 18, 1987

Free Trade

The Minister of Finance (Mr. Wilson) said:

Bilateral free trade with the United States is simplistic and naive. It would

only serve to further diminish our ability to compete internationally.

The Secretary of State (Mr. Crombie) said:

It's silly. Canada must improve relations in trade with the United States, of

course. But our national destiny is to become a global leader, not America's

weak sister.

I could go on. This is what leading Tories said in 1983 before the election of 1984 when, by the way, they never sought a mandate to go ahead with this kind of arrangement.

I said that we must examine this very particular deal in detail and ask Canadians whether the deal is good or bad for Canada. We must invite Canadians to examine this deal with us. We must ask ourselves, "Did we get more out of this deal than we gave up?" I would like to examine that.

By the way, this is not an easy thing to do in the short time given to us. I said a few minutes ago that we only received the complete text of this trade deal last Friday, on December 11, and this week we are being given three days to debate what the Government says is a most important measure; perhaps in its opinion one of the most important measures to be put before the country since the Second World War if we consider its economic implications.

After this short debate the Prime Minister will sign this treaty with the President of the United States on January 2. When we have raised this issue time and time again, the Government has said, "If you think it should be debated at greater length, we are prepared to sit next week", during the few days before Christmas. The debate we are carrying on in the House is not just for Hon. Members, it is for the Canadian people. A debate in Parliament is meant to be an interaction with the Canadian public so that public opinion can come back and forth and respond to what we are saying here. A debate in Parliament is an attempt to inform the public about the issues. To add two or three days next week will not meet that demand or need on behalf of Canadians.

As a member of the foreign trade committee which spent two weeks travelling in the country, let me say that a large number of witnesses to the committee said that they did not have enough information on which to make a decision in respect of this particular deal. They wanted more time. They wanted to hear a prolonged debate. In any case, this is the timetable with which we are faced, a timetable which was set, by the way, by the American Congress, not by us.

In examining the deal in detail, what did we get? The Government promised and still says that we got secure access to the American market for our goods and services. That is not true. We got an agreement that all tariffs would be eliminated over a 10-year period. That we got; both sides agreed to that. However, we did not get total access to the American market because countervail and anti-dumping laws of the United States still remain and will still impact on trade between the two countries. The barriers of countervail and anti-dumping

are the ones that are most serious for Canadian business and Canadian products. They are the ones which have been used to harass Canadian businessmen time and time again, and nothing has been done about them. We got an agreement to reduce tariffs or to eliminate tariffs on both sides. That is the gain which Canada got.

What did we give up? In respect of tariffs, I want to quote from the brief which the Hon. Eric Kierans gave before the parliamentary committee in Halifax. He said in his submission:

There can be little objection to the elimination of most of our remaining tariffs over the suggested 10-year period. We will become more efficient and the standard of living can only benefit but not to the degree that some envisage.

He went on to say:

This agreement can never be justified. By giving up sovereignty and jurisdiction over vital areas of our economy, we have reduced our status as a nation to that of an American colony.

That is what the Hon. Eric Kierans said, a man who was a successful businessman, a man who was President of the Montreal Stock Exchange, a man who served as Minister in the Province of Quebec and at the federal level in Ottawa, and a man who later became the head of the Business School at McGill University.

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PC

John Carnell Crosbie (Minister of Transport)

Progressive Conservative

Mr. Crosbie:

What did Gerry Regan say?

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LIB

William Warren Allmand

Liberal

Mr. Allmand:

The Minister can quote Gerry Regan. I am quoting-

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PC

John Carnell Crosbie (Minister of Transport)

Progressive Conservative

Mr. Crosbie:

He is your colleague.

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LIB

William Warren Allmand

Liberal

Mr. Allmand:

He was my colleague. He is your colleague now, I believe. Mr. Speaker, we will find mavericks on both sides of this issue, and God knows that there is a lot of them on the other side.

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PC

John Carnell Crosbie (Minister of Transport)

Progressive Conservative

Mr. Crosbie:

Poor Gerry is a maverick now.

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LIB

William Warren Allmand

Liberal

Mr. Allmand:

In any case, this kind of remark from the government side shows that they are embarrassed by the statements of Mr. Kierans. They cannot sit and listen to that sort of thing because it upsets them and tears holes in their argument.

In addition to reducing our tariffs to zero over a 10-year period-and the United States is reducing its tariffs to zero- what else did we give up, and why was it necessary? With respect to the energy provisions-and I have to read from the elements of the agreement of October 5 because if I try to read from the detailed legal text of December 11 it would take me a whole afternoon-this is what they said in the agreement:

There is broad agreement to assure . . . non-discriminatory access for the United States to Canadian energy supplies-

I think Canadians should examine that statement in detail. They go on to say in the agreement:

Both sides have agreed to prohibit restrictions on imports or exports, including quantitative restrictions, taxes, minimum import or export price

December 18, 1987

requirements or any other equivalent measure, subject to very limited

exceptions:

That is providing the United States with very wide access to our energy resources.

One must ask why was this necessary in what is described as a free trade agreement. Generally in a free trade agreement both sides reduce tariffs or eliminate them. It might have been sufficient if we eliminated our tariffs over a 10-year period and they eliminated theirs over a 10-year period. But no, Mr. Speaker, not only did we have to agree to eliminate our tariffs so that they would eliminate theirs, we had to throw in unrestricted access to our energy resources, as I just quoted the deal.

Is that appropriate in a so-called free trade agreement? Why was it necessary to put that in? We submit that it was not necessary. It indicates poor bargaining strength on the part of the Government and an inability to negotiate from strength.

What else did we give up? Let us look at the provisions with respect to investment. Again to quote from the elements of the agreement it says that the Parties have agreed to provide each other's investors national treatment with respect to the establishment of new businesses, the acquisition of existing businesses and the conduct, operation and sale of established businesses. What does that mean? It means that Canada has agreed to treat American investors and American companies operating in Canada just as Canadian companies. We have given up the right to screen foreign investment from the United States and control how U.S. investors operate in Canada. We have given up our right to legislate on that as we see fit in the best interests of this country.

Again one must ask why was this necessary if we had already agreed to eliminate all our tariffs. Again we gave up something that we should not have given up and something that was not necessary.

Let us look at the provisions with respect to financial services, banks and financial institutions. Once again we gave up a long standing tradition of control over our banks and financial institutions which has existed in this country for years and years.

With respect to the Auto Pact we have weakened it. We have given up the safeguards that made the Auto Pact effective in bringing investment and jobs to this country.

Concerning agriculture, we have put Canadian farmers in competition with American farmers despite the fact that Canada has a shorter growing season. Our farmers must deal with harsh winters and all the expenses that that entails. In general, Canadian farmers are farther from mass markets compared to American farm producers. Despite all of those things the Government has thrown our Canadian farmers into the same market-place as the larger American corporate

Free Trade

farmers from California, Florida and Arizona where there are very long growing seasons and lower costs.

These are some of the things that we gave up in the deal in addition to reducing our tariffs to zero. I have to repeat again and again that usually one would expect in a free trade agreement that a country, in this case the United States, would reduce or eliminate its tariffs and we would eliminate ours and there would be no tariffs on either side. That is what one would expect. But no, this Government, this weak-kneed Government decided to give access to our energy supplies and agreed to give up the right to control investment in American business operating in Canada, and we have given up our traditional control over financial institutions, banks and so on. The Government has thrown our agricultural communities into what I consider to be unfair competition with American producers and the safeguards in the Auto Pact have been given up. All those things are written right into the agreement.

What about those things we have given up that are not written in the agreement which, by the way, Conservative Members pretend do not exist. Here I am referring to the way in which this agreement undermines our regional development programs, our social programs, our labour programs and our environmental programs.

With respect to our regional development programs, they will still be subject to countervail from the United States. They have been countervailed before. In addition, they will be subject to the pressures of harmonization as a result of competition between Canadian firms and U.S. firms. I say that our regional development programs will still be subject to countervail despite this deal with the United States.

Let us look at what the United States Department of Commerce has already said about some of our regional development programs. For example, because we have a fishing vessel assistance program that is a sort of unfair subsidy to fishermen and, therefore, subject to countervail. They have said that our agricultural and rural development programs were countervailable and they imposed countervailing duties because of those programs. I could go on. I have a list of 12 regional development programs which the American Department of Commerce consider to be countervailable and imposed duties as a result. Nothing has been done in this deal to modify or moderate this ability by the American Government to countervail against our regional development programs.

What about our social programs, our labour standards, and our environmental laws? What about such things as medicare, family allowance, day care programs, minimum wages, unemployment insurance, health and safety standards, affirmative action programs and so on? Because these things are not written specifically into the deal the Government said they are not touched by this and that they are protected.

You do not have to be very intelligent to know that if a Canadian firm, subject to all these laws and standards that I have referred to, is in competition with an American firm, that

December 18, 1987

Free Trade

has complete and total access to Canada, it will lose out to the American firm that will have lower costs. In many States of the U.S., and in its federal Government, there are not the same high standards of unemployment insurance, minimum wages or affirmative action as we have here in Canada. The Canadian firm will be subject to higher costs because of those things. The American firm will have total access to Canadian markets to sell its goods and services.

I would like to refer to a statement made about 10 days ago at a symposium on this so-called free trade agreement in Montreal. Manfred Meier-Preschany, former chief of worldwide loans for the Dresdner Bank in West Germany said:

Without a free trade deal Europeans are almost forced to invest in Canada to reach the Canadian market. But free trade would allow them to serve Canada from plants in the United States.

If large European firms are given the option of locating a manufacturing plant in either Canada or the United States, they will, "almost by definition use the United States". That is because of such factors as transportation costs, taxation rates, market size and labour laws.

This deal will not bring jobs or investment to Canada. It will weaken our standards, weaken our programs and bring down our costs so Canadian firms can compete with American firms and thereby the pressure to harmonize with the lower standards in the United States will have to take effect. Either that or sooner or later firms will move to the United States where they will have lower costs, lower standards but still sell into Canada, thus having the best of both worlds.

Who wins in that deal, Mr. Speaker? Of course the Canadian firms. That is why business is in favour of this deal. Canadian firms can move to the United States. They are free to invest there but the workers who live in this country are not as free to move. They are not like capital.

In conclusion, we have to ask Canadians what kind of a country they want. Do they want one that becomes, as a result of this deal, a quasi-colony of the United States, an appendage of the United States? Do they want a free and independent country that will be able to act in its best interests whenever it sees fit to do so?

It is very interesting to note that we terminated our last colonial link with the United Kingdom with the Constitution of 1982. When we brought the Constitution home and established our own amending formula, the Constitution became completely Canadian. That long process started with the Battle of Vimy Ridge in the First World War when Canadians fought as an individual nation. We proceeded through the Statute of Westminster, the abolition of appeals to the Privy Council and the establishment of a Canadian Governor General. It went on and on, and in 1982 we became a fully independent country. It has only lasted for five years. Now this Government has sent us in the other direction. We will become a colony of the United States unless Canadians can stop this Government in a general election.

I ask Canadians, people beyond the House of Commons, to think seriously about this issue and to think about what kind of country they want. Do they want one that is part of the United States empire or one that is a free and independent country?

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LIB

Lloyd Axworthy

Liberal

Mr. Axworthy:

Mr. Speaker, I have a very short question for the Hon. Member. The Hon. Member has spent the last three years as a distinguished critic of employment programs, and goodness knows, that has kept him very busy because there has been a lot to be critical about.

We in this House have been told that any proposed adjustment could be handled by existing programs. We find that to be somewhat surprising since all the existing programs for job training have been cut back by several hundreds of millions of dollars in the last three years.

I wonder if the Hon. Member would care to comment on the real requirement for not only effective job-training programs but for programs to deal with the massive dislocation that will take place, as we heard by way of testimony before the Commons committee, in the food processing, the data processing, the printing, the agriculture and the garment and apparel industries. We are talking about some of the most significant and broad-ranging industries in Canada. There will be major job losses in those industries. What will be the requirements and the costs for a massive new adjustment program to respond to those problems?

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LIB

William Warren Allmand

Liberal

Mr. Allmand:

Mr. Speaker, it is more than laughable for the Government to suggest that the present retraining programs are adequate to deal with the consequences of this trade agreement with the United States. Let us be very clear, the Government has cut retraining programs by 32 per cent from 1984 to 1987. In 1984, the budget for retraining was $2.2 billion. Now it is $1.6 billion. When we ask questions in the House of Commons, the Government pretends to the Canadian people that this cut-back program will be adequate to deal with the massive readjustment resulting from this agreement.

The onus is on the Government to tell Canadians which and how many jobs will be lost and which and how many jobs will be gained. That it has not done. Studies have been done by various bodies from the Economic Council of Canada through to the Department of Regional Industrial Expansion and different estimates have been made. Many of those estimates were made before this particular agreement was announced. They were made on theoretical models and then readjusted after because they found that the actual deal was not quite the model on which they had based their studies.

Everyone on all sides of the House agrees that there will be massive readjustments. Even those on the government side agree with that because the Prime Minister (Mr. Mulroney) said so in a speech he made on October 6. He said that massive readjustment programs would be necessary. He backtracked after that but he told the truth on that night.

We do not know to what extent the number of jobs will increase or decrease, but we know that there will be a massive

December 18, 1987

loss of jobs and no doubt there will be new jobs created. We know that. Elowever, Canadians who now have jobs that they have held for 20 or 30 years will lose those jobs. Some of those jobs are high-paying, good jobs, not like the jobs that are being produced now, jobs at minimum wage with no benefits, no labour standards and no unions. Canadians will lose those good jobs. Maybe there will be new jobs created in other parts of the country or in other kinds of industries, but Canadians have no assurance yet from the Government that there will be an adjustment program to retrain them or relocate them. The Government has not made that commitment and it should. The parliamentary committee strongly recommended that, before the Prime Minister signs this agreement, he should announce such a program.

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PC

John Carnell Crosbie (Minister of Transport)

Progressive Conservative

Mr. Crosbie:

Mr. Speaker, it is interesting to hear the hon. gentleman. Since we have a precedent of asking questions despite the occasion, I would like to ask the Hon. Member a question.

I would like to know what he thinks of the submission by Gerald A. Regan to the Committee of the House of Commons on trade negotiations of December 3. At page 9 of his submission, he said:

I regard arguments to the effect that Canada will lose its culture, its sovereignty, or its social welfare system as a consequence of this kind of a pact as downright silly.

That is the opinion of a former Liberal International Trade Minister under former Prime Minister-what was his name- Trudeau. He is a man who attempted to negotiate free trade with the United States on a sectoral basis, sector by sector, and got nowhere under the last Liberal administration. He has called the suggestion of the Hon. Member "downright silly".

On the same page of his remarks, Mr. Regan pointed out the following:

That increasing dependence on the U.S. market has not eroded our social security system-indeed, during those years it has been enhanced by expansion of the U.I. system and the barring of extra billing for medical services as well as other improvements.

I would like to ask the Hon. Member's opinion of what was said on page 12 by Gerry Regan, a former Premier of Nova Scotia, not a neophyte, not some minor member of the Liberal Party of Canada as the hon. gentleman might be considered to be. He said this:

The greatest assurance of protection of our sovereignty and our culture is the maintenance of a strong economy. Free trade, with the greatest market on earth, gives us an opportunity to strengthen our economy that any other country on earth would give their eye teeth to have.

That was said by the former International Trade Minister. There is a lot of good material in here, but I will go right on to page 15. The same prominent Liberal about whom the Hon. Member has said is a maverick and is now being described as a maverick by the front-benchers in the Hon. Leader of the maverick's Party, said this about Nova Scotia:

With barriers removed, we can enter a new era of economic development in this province.

Free Trade

That was said by a man who was Premier of Nova Scotia for eight years, not some little turkey jerky from some remote corner of the Liberal Party of Canada, and God knows they have more turkeys there. Perhaps the turkeys in the Liberal Party are endangered by this agreement.

Mr. Regan also said:

A good free trade agreement can be the most effective regional development plan this country could have and could move us toward the time when transfer payments will no longer be necessary.

Did the Hon. Member get that? He said that it can be the most effective regional development plan this country could have.

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December 18, 1987