August 22, 1988

PC

John Allen Fraser (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

The Hon. Member asked for a point of order to clarify some comment that he made at some other time. I do not think that it can trespass into an attack on another Hon. Member, even though it may only be by implication. The Hon. Member has probably corrected the record, and I will hear him very briefly.

Topic:   ORAL QUESTION PERIOD
Subtopic:   POINT OF ORDER
Sub-subtopic:   CLARIFICATION OF REMARKS
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PC

Robert Pennock

Progressive Conservative

Mr. Pennock:

May I say that at no time did I suggest that Hamilton takes Toronto's garbage but recommended that, on a short-term basis, Hamilton could play a major role in alleviating a temporary crisis. I would encourage the Hon. Member to research this issue, and after she has done so, she will find that a very serious health condition exists in Canada that we could all work together and help to alleviate. If Hamilton would take the garbage on a temporary basis, I would be first to rise in the House and congratulate it.

Topic:   ORAL QUESTION PERIOD
Subtopic:   POINT OF ORDER
Sub-subtopic:   CLARIFICATION OF REMARKS
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GOVERNMENT ORDERS

CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT


The House resumed consideration of Bill C-130, an Act to implement the free trade agreement between Canada and the United States of America, as reported (with amendments) from a legislative committee; and the amendment of Mr. Axworthy (p. 18609)


NDP

Steven W. Langdon

New Democratic Party

Mr. Steven W. Langdon (Essex-Windsor):

Mr. Speaker, first I would like to indicate our strong support for these two amendments. I would like to focus on one of the questions which is stressed in the last part of the motion, the suggestion that the Canadian import tribunal would have the power to monitor subsidies to U.S. industries to see the effect of those subsidies on Canadian competitiveness.

One of the most ridiculous things about the discussions between the United States and Canada has been the suggestion from the United States that Canada massively subsidizes its industry, while the United States is completely guiltless with respect to that type of support. I want to put on the record some realities as opposed to some myths put forward by the United States. I start with an article quoting Robert Reich, a prominent American economist who has looked very carefully at this question of subsidization. He said, with respect to the United States:

When you add in all the (U.S.) government subsidized loans, loan guarantees, tax rebates and other subsidies, you get total government aid to the private sector that makes Canadians look like pikers by comparison- even as a percentage of GNP (gross national product).

The article continues:

Reich noted that in the U.S., 35 per cent of all research and development undertaken by the private sector "is, in fact, financed by the federal government. So when the U.S. points a finger at Canadians and says you unfairly subsidize your economy, why not point to that figure?"

Why not especially do that when, over the next five to seven years, this Government is going to have to face the fact of its failure in this negotiation so far? It went into this negotiation committed-and we have heard this from Minister after Minister-to see to it that a common subsidy code would be agreed between the two countries. We got the agreement back and I looked carefully through it to find the common subsidy code which would establish the level playing field between the two countries, and it was not achieved. This Government failed to achieve what it set out to do. It failed to establish that common subsidy code.

What does this mean for Canadians and for Canadian workers? It means, for instance, if we take just the auto industry as an example, that the Mazda plant which has been built in the United States received $184 million U.S. in terms

August 22, 1988

of subsidies. Most of it was in tax abatement, some of it in infrastructure, some of it in training. It means that Chrysler and its Mitsubishi plants in the United States and of which it has an interest, received $175 million in subsidies. It means that the Honda plant in Ohio received $130 million in subsidies, of which $124 million was in terms of infrastructure. In the case of Toyota in Kentucky, there is a further example of this Government's failure, with $269 million received, and this Government did not even achieve a common code of subsidies for our two countries. In the case of the Chrysler plant on Jefferson Avenue in Detroit, right across from my constituency, $366 million in subsidies were received.

Much of this comes from state and local Governments in the United States, so it does not appear when we look at federal grants and subsidies. Much of the rest comes from the Pentagon, in the form of support from defence contracts.

I will give you another quote from the careful analysis of prominent United States economist Robert Reich:

-the Pentagon and its sister agencies have become the source of America's high-technology industrial policy-a policy that is more costly, complex and intrusive upon the private sector than any ever imagined by our trading partners. The problem is not that they do it and we don't. The real problem for us is that we do it under the aegis of national defense.

Yet, what do we find when we look at the free trade agreement? We find that the United States can do anything in the name of national defence, and we cannot do anything about it. Even with subsidies with respect to national defence that come from the Pentagon, it will not be part of this five years to seven years of negotiation. They certainly should be if this deal ever goes through, but the United States has already won an exemption in this trade deal for that crucial part of its support to industry.

It is not just big plants. I could take us through dozens of subsidies to small Japanese parts producers from different states, from different communities. In virtually every case Japanese supplier satellite plants, which are shaping themselves up around most of the Japanese auto parts producers in the United States, are receiving massive amounts of support from local and state Governments. I predict that, having lost once in trying to get at the subsidy question through this trade deal, we are not going to be able to succeed, if this thing ever did go through, in the next five years to seven years.

It is not just industry. There are subsidies to fishermen in the United States. They get tax deferrals under the fishing vessel capital construction fund. The Fishermen's Protective Act provides funds for fishing vessel and gear damage. The Nicholson Act forbids foreign vessels from landing directly in U.S. ports, thus forcing Canadian boats to land in Canada and ship overland by truck, thereby increasing Canadians costs and making the Canadian fish less fresh than U.S. product. We also failed to get that changed as part of this trade deal. We let shipping and all associated connections slip away from us, as the United States shipping lobbies got themselves into high gear and stopped us from being able to get fairness in that area.

Canada-U.S. Free Trade Agreement

We can deal with agriculture. There are huge subsidies in the United States to agriculture. There are preferential procurements to small business. There are state subsidies right across the board in coal producing states to coal producers, so much so that I wrote earlier this year to the then Minister for International Trade, the Hon. Member for Vancouver Centre (Miss Carney), and suggested that if we were ever going to get western coal brought to eastern Canada on a fair basis we would have to attack those massive state subsidies to coal producers.

In 1986 the U.S. lumber industry received $1 billion in government assistance through special capital gains treatment, below cost sales of some federally owned timberlands, reforestation, and forest management assistance. All that shows that the United States has been the country which has put its Government behind every sector of its economy, subsidized it across the board, and that we failed to tackle, that we failed to win, and that is part of the biggest hole in this trade agreement.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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PC

John Horton McDermid (Parliamentary Secretary to the Minister for International Trade)

Progressive Conservative

Mr. John McDermid (Parliamentary Secretary to Minister for International Trade):

Mr. Speaker, I will try to reply to both my colleagues, the critics in the opposition Parties. First, my hon. friend, the Hon. Member for Essex-Windsor (Mr. Langdon), in his remarks which I was pleased to hear, spoke about American subsidies. All we hear normally from the Opposition is that we cannot subsidize any more in Canada; we cannot provide regional disparities any more; we cannot have health care any more; and we cannot have unemployment insurance any more.

When speaking about subsidy programs, the Americans said: "You guys up there in Canada, in the wild and woolly North, subsidize quite a bit." With that, Ambassador Reisman brought out a lot of the information my colleague mentioned today and much more. Had my friend from Essex-Windsor had two hours, he could have probably filled them very easily speaking about the subsidization that goes on in the United States. The Americans fast came to reality after the Canadian negotiators said: "Wait a minute. You subsidize down here as well. Let us sit down and talk about this." The Americans said: "We didn't know you had all that information. Let us sit down over a period of time and try to come to a conclusion about what a subsidy is, when a subsidy is a subsidy, when does it become an unfair trade practice, and when is a regional development, just that", and so on.

Both sides have agreed to sit down for a five-year period and, if they have not reached a conclusion at that time, they will sit down for a further two years to discuss the subsidy programs of both countries, including state subsidies and municipal subsidies about which the Hon. Member spoke about and all subsidies within our respective Governments in Canada and the United States. There are certain items, as was the case in the negotiations on the free trade agreement, that will be the policy of this Government not to negotiate away.

August 22, 1988

Canada-U.S. Free Trade Agreement

There is a wish list from the United States that my colleague, the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) and his Leader like to read around the country as if it were gospel. One minute they are knocking the Americans, and the next minute they are quoting the Americans as being gospel and saying "this is what will happen to us". It is a wish list and it takes two to negotiate. I think people understand that.

The Hon. Member spoke about the defence programs in the United States as being a form of regional development and subsidy. That is true. It is in Canada as well. It was treated that way by the Liberal Government. It is treated that way with the frigate programs.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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NDP

Steven W. Langdon

New Democratic Party

Mr. Langdon:

Smaller, much smaller.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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PC

John Horton McDermid (Parliamentary Secretary to the Minister for International Trade)

Progressive Conservative

Mr. McDermid:

The Hon. Member refers to a smaller size. It certainly is. We are dealing with the largest country in the world that is, on many fronts, protecting the rights of shipping in the Persian Gulf and so on in which Canada does not participate. To compare the two defence initiatives is like comparing David and Goliath. It is not the same thing at all. I agree.

I want now to get on to the first amendment about which my friend from Winnipeg-Fort Garry spoke. This is the Baucus-Danforth amendment that everybody speaks about as being such a terrible thing. I will provide evidence today, Mr. Speaker, that the Baucus-Danforth amendment is nothing but puffery. It is smoke and mirrors, I believe. The U.S. Government already had the powers which Baucus-Danforth gave. This was more for the folks back home than it was to do anything effective. I will also read into the record why we believe we have the answer. This is what I said in committee when giving testimony:

The Baucus-Danforth amendment does not extend new powers to the United States administration; it only spells out a process for gathering of information on subsidies and the possible use of this information in the context of existing United States trade law.

Canada currently has the ability to gather information on subsidy practices, to examine the competitive position of an industry, and to take countervail or other trade actions as appropriate. Let me quote the section to which I am referring in the Trade Act of 1974 in the United States. This is found on page 23:85 of the testimony as found in the Minutes of Proceedings and Evidence of the Legislative Committee on Bill C-130, dated August 4, 1988. I was speaking at that time to my friend from Essex-Windsor. Here is what section 305 of the U.S. Trade Act says:

The Trade Representative is required to make certain information available to any person requesting it. If information is not available from the Trade Representative or other federal agencies, the Trade Representative must, within 30 days, collect the information.

That was section 305 from 1974. The power was already there to collect the information and to do with it what one would. The Baucus-Danforth amendment is really puffery. It does not do anything new within the Act. It has different

wording, but the Americans have always been allowed to do the same thing.

In Canada the process is as follows, as I stated in committee:

If a Canadian producer is facing increased competition from subsidized imports and that competition is likely to cause deterioration in its competitive position, it can raise its concerns with the Minister of Finance.

In the United States it is raised with the trade representative. I went on to say:

He will talk to the Minister of International Trade.

In the United States it is with the Secretary of Commerce. The Minister of Finance, following consultations with the Minister for International Trade, will forward all reasonable requests to the Canadian Import Tribunal for an inquiry. Let me read some more of what I said:

Any decision by the Minister of Finance in forwarding the request does not prejudice or substitute for any action subsequently taken under the Special Import Measures Act or other trade legislation.

Here is the important part, Mr. Speaker:

The tribunal's reports will be available to the industry-

Free of charge. It will be collected by the Department and provided to the industry. It continues:

-and the industry will be able to request annual updates.

We have a comparable situation in Canada to this Baucus-Danforth amendment to the legislation in the United States. For the Hon. Member for Winnipeg-Fort Garry to stand up, again twisting the facts on this situation and saying that we have nothing comparable in Canada for our producers, is totally wrong. When he says that this Baucus-Danforth amendment kind of corners Canada and that we are the only one to be treated this way, it is total nonsense and the Hon. Member knows that. He fails to mention all this evidence that was presented at committee. He might not have been there at the particular time when it was presented. I do not know, but he could have read it afterward.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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LIB

Lloyd Axworthy

Liberal

Mr. Axworthy:

It was my amendment that was being debated.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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PC

John Horton McDermid (Parliamentary Secretary to the Minister for International Trade)

Progressive Conservative

Mr. McDermid:

Those are the facts on this instance. These two amendments that have been brought forward by the Liberal Party are totally unnecessary in this legislation because we already have them in our Canadian import tribunal legislation which protects Canadian producers from subsidized imports that are adversely affecting their industry. I will recommend to my colleagues that these two amendments be defeated.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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?

Hon. Chas. L. Caccia@Davenport

That is sad news, Mr. Speaker. If the Parliamentary Secretary had understood the point being made on this side of the House, he would have recommended support. He missed the point entirely in his expose this afternoon. He did not inform the House about how the United States will proceed in its legislation when it comes to a report on Canadian practices.

August 22, 1988

Within 60 days after the date of the enactment of the Act the U.S. is now advancing, but not later than December 18, 1988, the United States trade representative shall submit to Congress a report identifying, to the maximum extent practicable, major current Canadian practices and the legal authority for such practices that, in the opinion of the United States trade representatives, are not in conformity with the agreement and require a change of Canadian law and regulation, policy, or practice to enable Canada to conform with its international obligations under the agreement. This is sufficient not only to make us worried but to have us see the absolute necessity of taking an action to provide a balance to what the United States legislation is developing. This is why, when the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) spoke this morning about counterbalancing the U.S. legislation, he put forward a very convincing case.

We see something developing on two fronts. The United States domestic trade legislation developing in 1988 is stronger than any legislation it has ever had before. Second, U.S. legislation is becoming much stronger in relation to Canadian legislation.

For instance-and I regret very much that the Parliamentary Secretary had to leave-the United States legislation contains paragraph 409(b)(3) which requests annual reports on Canadian practices in any particular sector. It is quite true that this matter was debated in committee on August 4, 1988. The Hon. Member for Essex-Windsor (Mr. Langdon) raised it with the Parliamentary Secretary, and the discussion established the fact that the legislation available to the United States would permit it to offer information and valuable information to American industry.

This point was made on the same day by the Hon. Member for Winnipeg-Fort Garry when he put to the committee the fact that the investigation will be carried out in the United States upon the request of the industry affected, at the expense of the administration and not at the expense of the industry. It will no longer be required that injury be proven, as apparently was the case until now, but simply that deterioration in the competitive position of the United States is proven. I do not need to explain the difference between injury and deterioration. We in Canada must prove serious injury caused by imports.

If the United States petition were unsuccessful in this procedure, then the U.S. industry could go through any other trade remedy or law on the same issue because we do not have the same guarantees in Bill C-130. Very clearly, industry in the U.S. can petition the United States trade representative to do its work for it. This means the representative will do all the investigation into Canadian imports and whether they are subsidized. That provides an enormous opportunity for possible harassment because it will be cost-free to U.S. industry. It does not have to spend the money developing the research or putting together the information. It gets the Government to do it for it.

Canada-U.S. Free Trade Agreement

The purpose of Motion No. 39, as proposed by the Hon. Member for Winnipeg-Fort Garry, is in a way to reply to this piece of U.S. law. It provides that we in Canada would have an arrangement that would be similar and would put our industry in a position that would be parallel or at least comparative to the position the American industry will be in as a result of that legislation.

With respect to any Act, policy, or practice in Canada that is identified in the annual report submitted under this section in U.S. law, the United States representative has the power to include a number of measures, all related to information, it is true, though we know how important information is in trade matters and in competition. For instance, information with respect to the action taken regarding such Act, policy, or practice including but not limited to any action under Section 301 of the Trade Act of 1974, any action under Section 307 of the Trade and Tariff Act of 1984 and negotiations or consultations, whether on a bilateral or multilateral basis, can be included.

The combined effect of these two amendments would be to give us a chance to compete with the legislation south of the border which will give American competitors a very strong position with respect to knowledge about us. I would be very surprised to see government Members not taking into account the importance of these two amendments. I fail to understand why the Parliamentary Secretary, with his rather superficial analysis of the amendments, would simply slough it off as though it were something of secondary importance. It is of basic importance, in the light of legislative momentum that is being developed south of the border, that we equip ourselves with the legislative teeth that are essential in order to function.

Let me give some examples of what the legislation south of the border will provide the U.S. industry. There will be a working group to write a report within two years on the nature of the subsidies in Canada. Hon. Members will recall that the Parliamentary Secretary informed us that subsidies will be the subject of discussion in the next five years. There is a provision for a working group to write these kinds of reports on Canadian subsidies. In the Canadian legislation, there is nothing on this subject. There are no such provisions.

On the American side, industry can petition the United States trade representatives to carry out investigations on Canadian industry. On the Canadian side, all we have is Cabinet petitioning a tribunal. In other words, industry in Canada will have to undertake a political action rather than administrative action. It will have to initiate political pressures which, as we know, are time consuming and not as speedy as the petitioners may like them to be. Again, there is another advantage on the U.S. side.

Third, the U.S. industry would not have to prove injury, as we have already heard from the intervention of the Hon. Member for Winnipeg-Fort Garry. I see you are giving me a signal that my time is up, Mr. Speaker, and I thank you for your indulgence.

August 22, 1988

Canada-U.S. Free Trade Agreement

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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NDP

David Orlikow

New Democratic Party

Mr. David Orlikow (Winnipeg North):

Mr. Speaker, since the proposal for this so-called free trade agreement was brought forward, Members of Parliament and the people of Canada have been deluged with a barrage of so-called factual information from the Prime Minister (Mr. Mulroney), from cabinet Ministers, from that great negotiator, Mr. Simon Reisman, and from innumerable editorials in newspapers like The Globe and Mail of Toronto. The information was, first of all, about all the advantages that will accrue to the people of this country if we go ahead and complete the deal. Second, they warned us of all the things we Canadians will have to do to get our act together to get rid of practices incompatible with the way we will be required to do things after this agreement is signed. No mention is made by Mr. Reisman or cabinet Ministers or editorial writers about the things we are being lectured on, things we will have to do, ways we will have to change with respect to our economic life, things which are going on and will continue to go on in the U.S.

For example, we have had meetings of provincial premiers to discuss what we need to do to eliminate some of the ways in which provincial Governments, particularly some of the "have not" provinces, give advantage to companies in their own province doing business with the provincial Government or any of its agencies. Yet we find, according to information supplied to us by our own Department of International Trade, that 48 of the 50 states in the U.S. have legislation which ensures that when the State is making a purchase of goods or services, an advantage of up to 5 per cent will be given to any company located in the state making the purchase. If they impose a 5 per cent penalty against every other state in the U.S., can anyone really believe that they will not impose the same kind of penalty on Canadian companies wanting to do business with those states, regardless of this agreement? Of course there is nothing in this agreement to prevent that.

How many times have we been told that many, if not all our regional development programs, will have to be set aside when we finalize this trade agreement? The Hon. Member across the way shakes his head. I remember not so long ago when the Government of Canada and the Government of Quebec, through some very substantial financing, helped with the modernization of the GM plant in Quebec. We were told that once we had this free trade agreement we could not do that kind of thing because it would constitute an unfair practice. I am sure that if the Government of Canada and the Government of Nova Scotia were to propose to help financially in the opening of a new coal mine in Nova Scotia, the coal mining interests in the U.S. would say that was illegal and improper because it would be contrary to the provisions of the free trade agreement. There is talk now about major investment by the Government of Canada and the Government of Manitoba in upgrading and modernizing the pulp and paper plant at The Pas in that province.

This country, particularly the "have not" areas, have been helped immeasurably by regional development programs which will be endangered if and when this agreement is passed. The reason I raise this is that we have not heard a word publicly from our negotiators, from the editorial writers, from Mr. Reisman, or anyone else about the fact that the Americans do exactly the same thing. I have here a document entitled "U.S. Incentives for Construction of Foreign-Owned Vehicle and Satellite Parts Plants", prepared in the Department of International Trade. It was prepared by Mr. J. D. Miller, Planning and Analysis Division, Automotive, Marine and Rail Section, dated April 25, 1986. In the few minutes I have I am going to put on the record not my version of the facts but the facts contained in this document prepared by a senior public servant working for the Government of Canada. Let me try to summarize some of what he reports.

U.S. incentives for construction of foreign owned vehicle and satellite parts plants have included the Honda plant in Ohio and the Japanese supplier plants to Honda. For the motorcycle plant, incentives such as state grant number one, $5.2 million; state grant number two, $11.1 million. Union country tax abatement, present value of $1,004 million.

For their car engine plant, Shelby County tax abatement, $850,000. State training grant arrangements not yet made. For the car assembly plant, state grants, $74 million. City waste treatment plant, $7.5 million. Union County tax abatement, present value $4,259 million.

I do not have the time to go on with all the details, but let me turn now to what they have done for the Volkswagen plant in Pennsylvania. Loan from the State of Pennsylvania, present value of $25 million based on an interest rate of 8.5 per cent, a very favourable rate. Road construction, $20 million federal exempt tax bond. Railway construction, $10 million bond, likely federal tax exempt. Employee training grants, $3.8 million.

We can turn to the Mazda plant in Flatrock, Michigan. Tax abatement worth $101 million. To upgrade the roads, sewers, and water lines, $25 million. For the Nissan plant in Tennessee, according to a study done by the University of Tennessee, the estimated value of the subsidy, $70 million. Assistance for building the natural gas line, sewer improvements, water improvements, $20 million.

In the State of Illinois, the Diamond Star motor plant, a joint Mitsubishi-Chrysler project, the state acquired the land for $11 million. Pollution control state subsidy just less than $10 million. They classified it as a foreign trade sub-zone facility which will mean a subsidy of between $29 million and $60 million over the next ten years. Job training paid for by the state, $40 million over the next three to five years; most of that, incidentally, coming from the federal Government of the United States.

Toyota Motor Company in Georgetown, Kentucky: the state paid $30 million to acquire and prepare the site. Again they

August 22, 1988

classed it as a foreign trade sub-zone facility and that is worth $35 million to $70 million over the next ten years.

A very valid question could be asked of the people of Canada or the people of the U.S: Why is it necessary for the people, through their federal, state, provincial, or local Governments, to subsidize automobile companies which are among the most profitable corporations in the world? That is a very legitimate question.

Of course these multinational corporations have no loyalty to any particular country. They are interested in maximizing their profits as best they can and playing one country off against the other. If Canada or the United States will not help the construction of new plants through subsidies, the plants will not be built in Canada or the United States but rather in Taiwan, Brazil, the Philippines, or anywhere where the wages are lower and the taxes paid by the corporations are lower. One cannot blame the companies. Their main purpose is to make as big a profit on their investment as possible.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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LIB

B. Keith Penner

Liberal

The Acting Speaker (Mr. Penner):

Order, please. I regret to interrupt the Hon. Member, but I must advise him that his time has expired.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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PC

William C. Winegard

Progressive Conservative

Mr. William C. Winegard (Guelph):

Mr. Speaker, I have listened with great interest to the debate this afternoon and particularly to the remarks of the Hon. Member for Essex- Windsor (Mr. Langdon). It seems to me that my colleague has done a lot of hard work in this area. As far as subsidies are concerned, he is really catching on to the real situation. I congratulate him. He has given us figures this afternoon which should ease the fear of all those people who have been saying that Canadian subsidies are going to be attacked by the United States and we are going to be in great difficulty.

A few months ago the House of Commons Standing Committee on External Affairs and International Trade travelled across Canada to hear the concerns of people about the preliminary agreement. As it turned out, the final agreement was very little different. It was certainly not different in any major way from the preliminary agreement which the committee studied.

As we travelled the country we heard that we would not be able to subsidize any more and that our regional development programs would have to go, that those things would not be allowed under the free trade agreement. We heard that the Americans would challenge us and destroy Canada. It mattered not that the numbers involved did not in any way bear that out.

The committee took a quick look-quick because some members of the committee were not interested in studying it in depth-at the fishing case. You will remember, Mr. Speaker, that the American industry challenged us on 52 to 57 federal-provincial and provincial programs which they charged were subsidies. Unemployment insurance was among those.

Canada-U.S. Free Trade Agreement

Everyone made a big fuss about that. It did not take long for the Americans to throw that out. They knew that that was not a subsidy in the sense that anyone has used it.

Of the 57 some 5.6 per cent might have been charged to offset that subsidy. Of course, none of the 57 were in any way a subsidy because, as the Hon. Member for Essex-Windsor said, the Americans subsidize far more than do we. At last we are getting some perspective in this debate. It is about time.

We heard that our social programs would be challenged because of these subsidies. As we travelled across the country we heard that we would lose our industry because we would not be able to have these subsidies and would not be able to have regional development. That was spreading fear, as much of this debate has been. I am delighted that the Hon. Member for Essex-Windsor is now beginning to put proper things on the record. He has said that the Americans subsidize far more than do we. We tried in vein for weeks to tell the people the real truth but were not getting very far. At last, the Member has said that it is the Americans who subsidize. Canada does too, of course.

The Member who spoke before me said that we would not be able to subsidize certain things in the Maritimes. I want to remind all Members of this House that the value of the subsidy that would be charged is based on the total life of the subsidy, the total life of the plant, and the total amount of production over that period. When we consider those figures we will find that the subsidy is very small and would probably run at 1 per cent or 2 per cent. The Americans, of course, subsidize far more extensively than that.

We have no concerns about regional development programs because, as we heard the Hon. Member for Essex-Windsor say today, the Americans do it in a different way. They make no bones about the fact that they subsidize. Why then are we Canadians so fearful? Why are we backing away from a real study over a five to seven year period of what subsidies really are? I have heard opposition Members say that when these definitions are complete Canada would be the loser. At last today we heard who the loser may well be. It is likely, Sir, to be the United States of America rather than Canada.

Why would the United States want to challenge us any more extensively after the free trade agreement is in operation than they do now? They have the right to challenge us now and they do challenge us now. We have the right to challenge them and we do challenge them now. The free trade agreement does not change the right to challenge. It changes the rules of the challenge and what comes out of it. We have nothing to fear from that.

I would like to conclude by emphasizing that the last two speakers have done us a great service in this House by resolving some of the fear which has been spread in the debate over the last few months. The standing committee heard it and tried to put it down. Perhaps now we can set it to rest.

August 22, 1988

Canada-U.S. Free Trade Agreement

The Americans subsidize more than do we. Canada is on the good end of this. If we look at the numbers we will see that we have nothing to fear. The free trade agreement makes it better for us because at least the rules of the challenge will be clearer. Sometimes debate in this House indeed clarifies things. Again 1 congratulate my colleague from Essex-Windsor for at last getting it straight.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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LIB

Sergio Marchi

Liberal

Mr. Sergio Marchi (York West):

Mr. Speaker, the Hon. Member for Guelph (Mr. Winegard) has just concluded his remarks by saying there is nothing to fear on the part of Canada and Canadians in entering into the agreement which was recently signed by the Prime Minister (Mr. Mulroney) and the President of the United States. Yet there is an extraordinary amount of fear in the communities and on the streets across this country. One of the reasons for that fear is being tested today.

Motions Nos. 39 and 93, standing in the name of the Liberal trade critic, the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy), are important amendments. The failure of this Government and this administration to embrace these amendments is a classic example of why Canadians are very leery about the negotiating stance taken with the Americans by our Canadian officials.

If one was to check every public poll which has been taken in the last number of years, particularly public opinion surveys which asked Canadians who received the best end of the deal, the results would unfortunately show overwhelmingly that the United States is the winner and Canadians are the losers. Motions Nos. 39 and 93 recognize whose interests we should be protecting and promoting. Clearly, we in this Parliament should be defending and promoting the interests of our own society first. When it comes to economics, we should advance the cause of our own Canadian industries in any talks we have, whether it be with the Americans or with other members of the international community.

Therefore, when we see in the American enabling legislation with respect to this trade agreement that the United States requires the U.S. trade representative to submit a report to Congress outlining the major practices in Canada which are not in conformity with the agreement, when we see Section 303 which creates the authority on the American side to have this done on an ongoing and permanent basis, and when we see that Section 303 in fact provides for regular and annual reporting and in addition requires the U.S. trade representative to undertake corrective countervailing action, we say that if the Canadian Government wants to proceed with this agreement, we either have to match the American clauses within the FDA or, if we are not going to allow the same protection to our own Canadian interests, we must negotiate with the Americans to remove it. What we are saying is that not to do either would be very irresponsible. We should not sit back while the Americans protect themselves, while the Americans try to provide that window with respect to looking

at Canadian exports and harassing Canadian exports because they are a detriment to American industry.

Do Canadians not have the right to expect their Government to include in our enabling legislation the same vehicles by which American industry can trigger their elected representatives? Of course, every Canadian expects his or her own Government to stand up for our national interests and concerns, but this Government does not. This Government is prepared to yield to the Americans. It is prepared to stand idly by while the American elected representatives put in place a mechanism whereby safeguards will be offered to their American industries which we will not have.

The Government is not willing to enter into these like-minded clauses on our own side of the trade agreement. It does not have the fortitude of its convictions to try to sit down with the Americans and make it that equal playing field to which so many government members allude.

What we are talking about is giving Canadian industries the same rights, the same mechanisms, the same opportunities that American industries were granted by the foresight of their negotiators around the negotiating table some months ago. The Hon. Member for Winnipeg-Fort Garry moved Motions Nos. 39 and 93, to create those very like-minded clauses in our enabling legislation which would allow Canadian officials to monitor regularly U.S. policies and practices with a view to determining whether they deny benefits that should accrue to Canada and to report these findings to the Parliament of Canada. It would also permit Canadian businesses and workers to petition the trade tribunal in investigating U.S. policies and practices and allow us to get into the countervailing positions the Americans will no doubt, without any hesitation, exercise if they believe their interests are being underminded by some aspect of the trade agreement.

We are saying that the status quo as written in the trade agreement surrounding these particular issues is not good enough. We are asking, as we have asked repeatedly and repeatedly it has been denied for the Government to sit down again with the Americans and negotiate those areas which appear to us to be very lopsided in favour of the Americans. If the Government does not have the fortitude to sit down at the table with the American negotiators, then at the very least let us try to equalize the balance. We are not saying to tilt it in favour of Canadians.

We are not suggesting that we take the Americans to the cleaners or to be anti-American. All we are saying is that we are one of two negotiators, and the other negotiating side has seen fit to offer some safeguard whereby their American interests can be maximized in the face of their opinion about Canadian exports. What is so wrong in asking for reciprocal legislation on our side in order to equalize the balance and to send a message to the Americans that we are not going to take their aggression on any Canadian exports lying down. They have the vehicle, they have the ammunition, but so should we.

August 22, 1988

I believe that is very important in negotiating any treaty or any agreement with any international partner to send them a clear message that we are prepared to act and that we have the means with which to act. That is to what Motions Nos. 39 and 93 are speaking. I believe they are fundamentally important. I also believe that the principle at stake is that we should be protecting our territory and our country just as well as the Americans have protected theirs. That is a principle about which all Canadians, I believe, will be completely unanimous. In fact, it is an expectation and demand that Canadian citizens place on their Government when negotiating treaties, that Canada gets a fair shake and that we are not put in the position of being subservient to any other country.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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PC

Frederick James (Jim) Hawkes (Parliamentary Secretary to the President of the Privy Council)

Progressive Conservative

Mr. Jim Hawkes (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):

Mr. Speaker, we just heard a rather impassioned and eloquent statement about the need for protection. We have been told that these two amendments deal with protection and equity. I have a different explanation.

I think the two amendments are on the table today for what that Party believes to be good political reason. The definition of good political reason seems to me to be simply the utilization of propaganda techniques. Propaganda somehow or other to the Liberal Party and the NDP as it concerns the free trade arrangement seems to be their definition of good.

What is the essence of propaganda? It is to create fear, to create a smear. Disinformation lies at its heart. The reason the two amendments are on the table is to create a climate and an opportunity in the House to create disinformation. To stand up to say that these amendments provide protection which does not already exist is disinformation. It is simply not true. The first amendment is totally unnecessary. In a few minutes I think I can explain why. The second amendment runs against the agreement itself. It has nothing to do with protection.

The second amendment, Motion No. 93, simply violates the agreement. Then we hear: "We do not stand up for the national interest. Therefore we should do exactly what the Americans have done. We do not have the courage to stand in this Chamber. We as a Government do not represent Canadian interests. Therefore, we should do what the Americans do".

This is a different country. This is Canada. This is not the United States of America. We have a different system of governing. We have a different Constitution. We have a different set-up for our courts. We do not elect our judges. We appoint our judges, either for life or until the age of 75. We do that because we separate our judiciary in a different way. This is Canada. The legislation should be Canadian legislation to implement an international agreement, an agreement that we have reached with another country. We should inspect the agreement. If we do not like it, then we should vote against it, but we should not unilaterally violate it.

Canada-U.S. Free Trade Agreement

I lived in the City of Calgary when a federal Government unilaterally changed the policies that affected my city and my province, throwing people out of work. It created suicides and turmoil because a federal Government broke agreements that existed over a long period of time, without negotiation.

What the second amendment invites us to do is to break an agreement, part of a whole, part of a package that was arrived at. How was it arrived at? It was with the use of sectoral advisory groups. The most knowledgeable people in the country advised the Government every step of the way. If the area dealt with manufacturing, we had manufacturing advice. The same was true with respect to agriculture. They advised what would be good for Canada, what would be acceptable, and what would not be good for Canada.

To propose in the House that we violate the agreement is insanity. We worked hard at arranging an agreement that would be good for Canada. It will also be good for the United States of America, otherwise it would not have entered into it. Both countries see it as good, but it is a step into some unknown territory in some ways. We had the wisdom to insist on mechanisms that allow the agreement to evolve and develop, to be changed. We have processes in place such as the Canada-U.S. Trade Tribunal. On a daily basis it looks at how the agreement is evolving. Is it good for Canada? Is it good for the United States of America? Is there some little glitch in it that should be changed?

What we have done is put a process in place-and the Opposition never speaks about this. We have a six-month cancellation clause. If it is bad for Canada, we can get out of it unilaterally on six months notice. Members of the Opposition do not talk about that.

What they do is bring forward an amendment and do not tell Canadians that Chapter 18 in the agreement puts in place a Canada-U.S. Trade Commission to supervise on a daily basis the implementation of the agreement. If there are problems, they will surface and be worked out. That is the over-all sense of what is going on here.

Let us come to the next piece of legislation which already exists in Canada. We have a Special Imports Measures Act. We are not dealing with that today because it already exists. Section 48 of that Act gives inquiry powers to the Canadian Import Tribunal.

The NDP Member who spoke a few moments ago spoke about subsidies in the United States to automobile plants and whatever. This Government is so far ahead of the Opposition. If that is happening today, it can be complained about today. The tribunal can inquire into it today. The same will be true tomorrow. The same will be true the minute the new legislation is put in place. That does not change as a consequence of the legislation before us today. This Government has in place an inquiry mechanism, the Canadian Import Tribunal, to look into complaints about subsidies and unfair practices. It does not need an amendment. It is there.

August 22, 1988

Canada-U.S. Free Trade Agreement

I bring to the attention of the House the Tariff Board Act which is in place today. It is the law of the land. It has broad inquiry powers related to tariffs and tariff imposition. I refer in particular to Section 4 of that Act.

Before the House is Bill C-l 10 which has been on our plate for quite some time now. It has been filibustered by the Opposition. What does it do? It provides an even better mechanism than the Canadian Import Tribunal. That is what it does. We are trying to improve and we are out ahead. We started months ahead of time. With a little co-operation from the Opposition, getting away from propaganda, Canadians will understand. They go across the line and on many items in many places prices are lower.

A senior citizen can exist in comfort on a fixed income with a higher standard of living because prices are lower. This agreement and the enabling legislation is about lower prices in Canada, less costs to raise a child, less costs for a single mother, less costs for a senior citizen. That is what we are trying to do for Canadians-trying to reduce their costs.

At the same time reputable economic groups in the country tell us that there will be more jobs. The Government has created a million and a quarter jobs in four years. Here is another chunk with 100,000, 200,000, 300,000. No one knows for sure. But we know for sure that prices will be lower. We know for sure that there will be more jobs.

If we look at the history of all smaller nations which have entered into arrangements with larger nations, arrangements of this kind since the Second World War, we see that in every single case there are lower prices, more jobs, better paying jobs for the smaller nation. It is good for a less populous nation to enter into a trading arrangement with a larger nation.

If Canadians care about Canada, if Canadians are worried about dependence on the United States, then they should look at history. Today approximately 80 per cent of what we export, representing approximately three million jobs in this country, goes to the United States of America. If it sneezes, gets a cold, or rolls over, we feel it.

By entering into this trading arrangement we are doing something that other countries did, for example, the European Economic Community. That is what we are engaged in. What happens is that the trading dependence on the larger nation goes down. We will not end up more dependent on that larger nation; we will end up less dependent. Why, Mr. Speaker? When we can sell what it is we produce into a market that is ten times as large as the one available today, on a guaranteed basis, the cost of production in Canada goes down. The things we make and use go down, and they become more competitive on the international market-place. We can sell to Europe, to South America, and to Japan, because we can make enough of something, whatever it is, to get the cost per unit down and increase the market. In 20 years from today, instead of being dependent upon the U.S. for 80 per cent of our exports,

perhaps it will be 70 per cent or 65 per cent. Our ability to trade and to sell in world markets gets better because our costs are lower.

I urge Members of the Chamber to defeat these amendments. They are here on our table for propaganda reasons, not protection reasons. In the case of the first amendment, it is not necessary. In the case of the second amendment, it breaks the agreement. This Chamber should not pass an amendment which breaks the agreement.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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NDP

Abram Ernest Epp

New Democratic Party

Mr. Ernie Epp (Thunder Bay-Nipigon):

Mr. Speaker, I appreciate the opportunity to join again in the debate on some of the motions. As the Hon. Member for Guelph (Mr. Winegard) pointed out a few moments ago, a debate in the House serves to clarify things. It is important that it be a full and open debate. In response to the comments of the Parliamentary Secretary a few moments ago, opening great hopes for Canadians, there should be some close consideration of the industrial history of this country, and recognition of what is happening these days in the pre-trade deal climate with more and more consolidation of control of advertising companies, admittedly not manufacturing companies, but this deal opens the door to trade and services. At a time when that is happening, what can one say about having two great Canadian advertising agencies, ironically enough with political connections, one to the Liberal Party and the other to the Conservative Party, falling into close alignment with American companies.

In the globalization of business, one does not have stronger Canadian activities and enterprises being created in this context, instead one has companies being taken captive by American companies so that they will presumably never do anything outside Canada's borders and will recognize very clearly what is their territory.

The Parliamentary Secretary did not think carefully about the history of far too much of the manufacturing that has been carried on in this country over the years by subsidiaries of American companies. The fact is that these companies have been restricted in their trade policies so that they deal only with a parent or sell in Canada and are deliberately prevented from involving themselves in any other export trade. Surely that is a good part of the problem with Canadian industry. The closer tie to the United States represented by the trade deal will not bring us any gains at all.

The most important considerations this afternoon are a recognition of the Canadian situation in North America and in the world, what Americans do, what Canadians do, what Canadian and American industries do, how Governments deal with industries, and how our Government should have dealt with the situation that faced it over the last three years in arriving at this deal.

The motions before us, particularly Motion No. 39, will provide, if passed, for evidence on the subsidization of American industries to be made available to the Canadian

August 22, 1988

tribunal that deals with these matters. On both sides of the House it has been suggested that there is a great deal of subsidization of economic activity in the United States. Over the past three years that has not always been clear in the activities of the Conservative Government.

There has been a failure to recognize the extent to which American industry is driven by U.S. Government activities, particularly by what President Eisenhower called almost 30 years go "the military industrial complex", spending on research and development which strengthens American industry and which we all recognize spills into various areas of production, and recognition that that is as important as any element in the American industrial setting was surely necessary for any Canadian Government that wanted to deal with American activities. I mention that point very deliberately because if anything drove the Government on it was fear about American protectionism, and the particular actions undertaken by American Governments against Canadian industry.

We all know, some more keenly than others, and we in northern Ontario are keenly aware of American attacks twice in this decade on softwood lumber exports. Those in other parts of northern and southern Ontario are keenly aware of American attacks on Canadian steel exports to the United States. What did we have a Canadian Government do, the previous Minister for International Trade when the U.S. industry focused on softwood lumber? We did not see the Canadian Government fight the battle for Canadian producers all the way through, focusing on the realities of the Canadian industry and making it very clear to Americans that there was absolutely no basis for subsidies to be charged against the Canadian industry and for Canadian industry to be found to be unfairly subsidized against American producers. It would have been well worth saying to Americans that their crazy policy on driving the U.S. dollar up to very high levels against other currencies might make U.S. lumber producers uneconomic in comparison to Canadians. However, the Government did not fight the battle in 1986-87 through the U.S. courts and through the mechanisms that existed. Now, having created other mechanisms that are supposed to do the job, does one believe that is the case? I am not convinced that it will work.

The Government did not fight it through those means. Instead, it turned to the negotiations that led to a 15 per cent export tax on softwood lumber.

Whatever may be true in some other jurisdictions, we in Ontario have never regarded the timber that goes into the mills which is cut into lumber and exported to the United States as subsidized in the way the Americans charged us. In turning to the negotiations that produced this trade deal, this sell-out of Canadian interests on which the Government is now trying to put the best coloration with the paint that the Parliamentary Secretary was applying a few moments ago, he was not talking about U.S. subsidies at the time. In recognition of the importance of softwood lumber as a Canadian resource industry, the Government could have recognized that one area where there is massive subsidies of American production in the American

Canada- U.S. Free Trade Agreement

southwest is in the use of water at very low rates of cost. That water is charged to the growers at something under one fifth of what the water should actually be valued at.

I mention that advisedly, as I have before in the House, because if the American growers of vegetables, and particularly fruit, were charged a fair price for the water that they used, they would be much more careful in using it. If they were more careful in using water, they would be less tempted to turn to the possibility of getting water from Canada, and we in northern Ontario would not feel the same concern we do now about a massive sell-out of water resources through the deal, a sell-out which has been controversial in the House for months past and for which the Government has recognized there may be some danger and has responded to it.

In focusing on these particular instances of a failure on the part of the Government to fight the battle fairly for Canadian industry, by pointing out to the Americans where they subsidize, and by demonstrating in the American courts that we do not subsidize the Government in those particular instances demonstrated its failure to defend Canadian interests properly. So, recognizing those failures, we have every reason for supporting amendments of this sort. I am speaking now about my colleagues in the New Democratic caucus. We have every reason for supporting these amendments, particularly Motion No. 39, which would ensure that the evidence for subsidization is available to the board and provides a fair basis for determining what kinds of adjustment policies shall be followed. It may not be easy for those in an industry or for individuals even in a business association or a union to gather this evidence, but government could dedicate the resources to finding it.

In relating to subsidies for adjustment policies, I will deal with one of the most difficult points of this whole matter. The Government recognizes that there will be massive dislocations resulting from the trade deal. There are various estimates. One of the Government's own estimates has been a dislocation of 800,000 persons from jobs. As far as justifying that, we have been given a net gain of 125,000 jobs over 10 years as the amount of new jobs that we would have over and above all of those lost. Eight hundred thousand jobs involves a lot of people. These are full-time jobs. When these are good jobs that Canadians have lost, what is the Government going to do to ensure that those who lose their jobs have some kind of assistance in obtaining the new jobs that are wanted?

It is very nice, and the easiest thing in the world is to denigrate some of these jobs, to depreciate them, and to say that the people who are doing this work will be able to find new and exciting jobs in that high-tech future that the trade deal involves. Will that sort of thing read very well in the Spadina riding of downtown Toronto five years from now? What about the people who have lost their jobs in the clothing industry and are not able to get in on this high-tech future that

August 22, 1988

Canada-V.S. Free Trade Agreement

has been promised? It is without any provision for adjustments, with no promises made, with a very real danger because of mishandling of the subsidy issue, that any kind of action that the federal Government takes, that conceivably a provincial Government takes, is going to be regarded as one more unfair subsidy. What do Canadian workers have to look forward to in that kind of situation but a disaster that has been brought to them by the Mulroney Government?

So, recognizing the depths of disaster that could strike us, there is good reason to support this amendment, particularly Motion No. 39, get it into the Bill, as long as the Act is going to survive, and someone has noted the six-month termination clause. The Parliamentary Secretary was quite right. That is one that, at worst, we expect to see used. Let us get rid of the thing, if it ever passes, and get ourselves back to focusing on Canadian interests, building up Canadian strengths, as the Parliamentary Secretary has suggested we should do. He thinks that the deal will do it. I do not think that it will, but a Canadian Government certainly should be about those objectives. A New Democratic Government would do so.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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LIB

Maurice Brydon Foster

Liberal

Mr. Maurice Foster (Algoma):

Mr. Speaker, I am happy to have a chance to speak on Motion No. 39, because I think it is the report of the joint Senate and House of Representatives committee which first alerted us to what was being planned for the surveillance and monitoring of Canadian industry. This ultimately resulted with the United States legislation passed as the Baucus-Danforth amendment, which provides for a whole new regime to intimidate and to monitor Canadian industry. This is a very significant development because there has always been that situation where we had to have a coalition of groups and companies and so on to petition against an industry in Canada and to be willing to put up the money to do it. Certainly, in the free trade deal and the Baucus-Danforth amendment that whole situation changes.

In the softwood lumber case, for instance, we had the American Coalition for Fair Lumber Pricing that had to hire lawyers and assemble a group to petition the United States Government and to carry that petition through the Department of International Trade Commission to the Department of Commerce and so on. On the Canadian side, we had to do the same thing. The Canadian Forestry Association spent as high as $5 million or $6 million on reports to fight it through the courts, under this United States amendment, the Baucus-Danforth amendment. Now they will not have to go to all that expense, and it is very expensive. They will simply have an industry petition the United States trade representative to carry out an investigation, so there will be constant harassment regardless of how much injury there is or how much difficulty there is for the Canadian industry concerned. This is really the problem with the free trade deal. It is a bad deal as far as Canadian exporters are concerned.

At the present time with the GATT provisions, if an industry is going to be assaulted with a countervail or a dumping duty, if the case is strong against it, two weeks after

the petition has been filed one can go to the GATT and get a ruling, sometimes within four or five months. Many of our petitions have been very successful to the GATT over the last few years. Yet, with the free trade deal, we sort of set that option aside. I know that the Government will argue that it is still possible to go to the GATT. In the instances of the GATT ever hearing a case where there are two consenting partners in a free trade deal hearing a case, it just does not happen, and it will never happen. The difference for the Canadian industry is that when one goes to the GATT, the Government pays the shot.

When one fights it through the United States International Trade Commission, the Department of Commerce, to the International Trade Court, one pays the shot. It is any forest product that operates in my riding or the softwood lumber companies that operate in your riding, Mr. Speaker, that paid the shot in 1985 and 1986 on the softwood lumber case. They were shot down by their own Government about a month before the deal was consummated, by withdrawing the petition and the complaint to GATT. That is the way that the deal is going to be in the future.

If a Canadian industry has a countervail or dumping duty against it, what it has to do is get all other sectors of the industry to put together the money to fight it through the United States trade dispute mechanism and ultimately to the binational commission, which will have no power to rule on the law itself but just to see if the law was applied regularly and whether they were in conformity with the precedents and the practices in the case.

Members of the Reagan administration, which practically privatized the whole system of government in Washington by increasing the number of lawyers from something like 20,000 to 45,000, are just rubbing their hands in glee. They know that never again will a Canadian group be taking something to the GATT, paid for by the Government and Canada and accompanied by its lawyers. They will be going through the whole legal rigmarole in Washington at tremendous expense, for a longer period of time. Besides going through all the steps of the International Trade Commission and the Department of Commerce, there is up to a year beyond that for the binational commission.

What the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) is attempting to do is say: "Look, if you guys in the United States are going to set up a deal where any industry can just petition the U.S. Trade Representative's office and start a harassment of the Canadian industry, if that is sauce for the goose then it is sauce for the gander, and we will have the same thing for Canada." That is what the amendment before us today does.

I cannot imagine why the Government would not want to give our industries in Canada the same powers. They would not be used very often because most of the harassment is by

August 22, 1988

the United States. It was an historical event when we got a countervail duty on corn. We need to have the power so that if the softwood lumber industry, the raspberry industry, the steel industry, or the fishing industry started an investigation of Canada, we would have the power to do the same thing and doing it without costing our industry a lot of money. The Parliamentary Secretary argued that the powers are already there.

Let us do a comparison. Under the Baucus-Danforth amendment the U.S. industry can petition the United States Trade Representative for an investigation of the Canadian industry. Under the existing Canadian legislation only Cabinet can petition the tribunal. Governments do not do this often, but clearly industry likes to. If this U.S. legislation is implemented, and if we think we have had a lot of harassment in the past, we will have to face the fact that we will have an infinite amount in the future. What happened with the dumping duty on potash? Canadian potash producers did not appeal to the International Trade Court in Washington or New York. They did not take the matter to the GATT. They just sawed off a deal with the Department of Commerce in Washington or the International Trade Commission. Now potash which normally used to sell for $50 or $60 a tonne goes into the United States, but it goes in only if it is above $92 a tonne, which is a percentage of the dumping duty applied in that decision by the ITC in the United States. We should give our Canadian industry the same powers to ask for an investigation of a U.S. industry; in other words, level the playing field.

As well, the U.S. industry does not have to prove injury, only deterioration in its competitive position. Under Canadian legislation the industry must prove serious injury caused specifically by the imports.

Surely this is a reasonable amendment to be a mirror image or an approximate mirror image of the legislation which has already been agreed to in Washington for their side of the deal.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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LIB

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

Liberal

Hon. Herb Gray (Windsor West):

Mr. Speaker, 1 believe the amendments in Motions Nos. 39 and 93 deserve the support of this House. These amendments would add new authority, especially Motion No. 39, to the Special Import Measures Act. This Motion is key because it would mirror the type of authority that exists in both the United States free trade agreement implementing legislation and the omnibus trade Bill. If the Conservatives are not willing to accept the amendments that put into place the type of authority envisaged in these amendments, they are admitting, in effect, that they are unwilling to stand up to the United States by employing the same strategy the United States has and will employ if the Government's trade deal with the United States should ever go into effect.

What is the strategy, Mr. Speaker? It seems very clear if we look at Section 101 and Section 303 of the American implementing legislation. Section 101 requires the U.S. Trade Representative to submit a report to Congress outlining major

Canada-U.S. Free Trade Agreement

Canadian practices which are not in conformity with the free trade agreement by no later than December 15, 1988. Section 303 of the U.S. legislation creates authority to continue this monitoring and reporting function permanently, so there is a continuous surveillance, subtle and perhaps not so subtle form of harassment of Canadian exports to the United States that would be in effect if the trade legislation implementing the trade deal ever becomes law.

We have to look at Section 409 of the American legislation, the Baucus-Danforth amendment also. It is clear looking at Section 409 of the American trade legislation that the United States has developed a whole new process of trade harassment for Canadian exporters. Under Section 409, American industries may petition the U.S. Trade Representative to investigate any Canadian industry and retaliate against that industry or any other Canadian exports if the U.S. industry deteriorates in its competitive position. I use the words "deteriorate" and "competitive position" because these are exact quotes from the Baucus-Danforth amendment. The Canadian industry is defined by the U.S. administration as being "subsidized".

In other words, any American industry which is not competitive for whatever reason with a Canadian industry, and which is considered subsidized by the American administration according to its definition, can be identified under the Baucus-Danforth amendment, Section 409 of the U.S. implementing legislation and, therefore, apply for retaliation against Canadian industry. By the way, Mr. Speaker, there is no injury test. It is not necessary for the complaining American industry to demonstrate that it has in any way been injured by Canadian competition. Moreover, even if the American industry is unsuccessful in its petition under this amendment, it can still harass Canadian exporters through all the current American trade laws.

Canadian legislation in this Bill C-130 does not mirror in any way the American legislation. This Conservative Government has, as a result, put Canadian industry at a great disadvantage, vis-a-vis the Americans, assuming this trade deal should ever go into effect. Once again the Government is willing to put into effect a trade deal which is tilted toward the United States and against the interests of Canada.

The amendments we are proposing would mirror and match what the Americans are intending to do by their legislation. Motion No. 39 would create two basic types of Canadian legislative authority. The first would have Canadian officials regularly monitor American policies and practices with a view to determining whether they deny benefits that should accrue to Canada and to report regularly these findings to Parliament so that they can receive a public airing. This motion would go further by requiring Canadian officials to initiate countervailing action should they determine that Canadian benefits are in fact being denied by American policies and practices.

August 22, 1988

Canada-U.S. Free Trade Agreement

Motion No. 39 would also permit Canadian businesses and workers to petition our trade tribunal into investigating American policies and practices which are unfairly causing a deterioration in Canadian business. Should investigation determine that the American policies and practices are in fact creating unfair trading conditions, then our Government would be required to take corrective action.

Surely the Government should be willing to accept an amendment giving Canadian authorities these kinds of powers if it is sincere in saying that it wants a balance in benefits and responsibilities between Canada and the United States under this trade deal. If it is not willing to accept this amendment, it is admitting that it is quite ready to sell out Canadian interests in a desperate desire to get this trade Bill through and the deal connected with it put into law and implemented, even though it means allowing the United States to pass laws giving American businesses and exporters to Canada the authority to compel the American Government to harass Canadian exports for which there is no counterpart on the Canadian side.

Motion No. 39 would also allow Canada to introduce adjustment assistance for those workers and firms dislocated as a result of the free trade agreement. Every time we have said that if the Government is to go ahead with this deal which we think is bad for Canada, it should at least put into place measures which would help workers, firms, and communities that are dislocated as a result of this deal, the Government has backed away and said: "No, these measures are not necessary". Just last week, however, the provincial premiers met for their annual meeting and they unanimously said that Canada had to have an adjustment program for its workers before the free trade deal went into effect.

Even the Conservative premiers who are most committed to this deal said that there had to be an adjustment program. They do not agree with the Government when it claims that existing programs under unemployment insurance and retraining are enough. In this, the premiers are obviously correct. Even those premiers who are strong supporters of the deal see that there is bound to be very substantial dislocation if this deal goes into effect.

The Government has said that the Economic Council has forecast an additional 250,000 jobs. However, this is the net result over 10 years. The Economic Council also confirms that tens of thousands of workers will either lose their jobs completely or will lose their jobs if they do not get training to do jobs which will be very different or totally new. There is also the prospect that because of this deal, there will be no alternative jobs whatsoever in the regions where thousands of workers are now employed.

Premier Getty and Premier Devine have joined with all the other leaders of the provincial Governments in saying unanimously that the Government is wrong when it says that no adjustment program is required to account for the dislocation,

the harm, and the damage that will be done to tens of thousands of workers when the Government's trade deal is implemented. We want to make sure that the deal and the legislation implementing it would allow Canada to introduce adjustment assistance for workers or firms dislocated as a result of the Government's agreement with the United States. There has been no satisfactory explanation from the Government as to why, in a heartless and blind way, it is refusing to bring forward measures of adjustment to add to the programs already in place to help workers who, even in the opinion of the most committed supporters of the deal, will be dislocated and harmed if this deal goes into effect.

I also want to say a word about Motion No. 93 which would add to Motion No. 39-

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT MEASURE TO ENACT
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August 22, 1988