June 29, 1955 (22nd Parliament, 2nd Session)

?

Robert James Wood

Mr. Wood:

Yes.
That is clear enough and categorical enough. What those companies are asking is that the imposition of the tariff shall have the effect of handing over to them, both now subsidiaries of parent companies in the United States, the whole Canadian market for ethylene glycol. That to me is a dangerous situation, because when we consider the possibilities of what two big manufacturing outfits of that nature can do, to combine and set up a virtual monopoly in that field and then push up the price of their product to suit themselves, we can see that it certainly would not be in the public interest to take the step which is being proposed.
What about prices? Nowhere in the evidence was I able to find that either of these companies that asked for virtually the whole Canadian market for ethylene glycol presented its balance sheet or statement of profit and loss. At one point there was some question asked as to the financial position of one of the companies, and they declined to answer. Of course it is their own business if they wish to keep their balance sheet confidential. I am not going to argue about that so far as the tariff board hearings were concerned. But certainly when the government proposes an increase in the tariff item dealing with ethylene glycol for the benefit of two companies that are out to get the whole Canadian market, according to the statement of their own representative, then I think we have the right to demand and have the balance sheets of these companies laid before us in order that we might know just what financial position they are in, and whether they are justified in asking for this protection.
As to the retail prices of antifreeze, there is quite a range. I am going to give the figures that were presented by the tariff board itself as the result of a survey that was made in 42 centres in Canada in 1954, as presented in their report. They found that the retail prices ranged from $3.95 to $4.25 a gallon. On going through the evidence further I found that the manufactured cost of ethylene glycol in Canada in 1954 ranged from $1.45 to $1.65 a gallon. That is the same product that, when mixed with a few detergents and other chemicals to turn it into antifreeze, retails at from $3.95 to $4.25 a gallon. That is a tremendous spread, and in itself would indicate that these companies are in a position to make a pretty hefty profit.
I should like to refer to some of the evidence of the representative of Radio Oil Refineries, who have a plant in Winnipeg

and who are in the business of what they describe as canning the antifreeze; that is, they buy the base product and put it through whatever process is necessary and put it into cans for the wholesale trade. They put it through whatever process is necessary in order to prepare it for the wholesale trade. Mr. Hechter, who represented Radio Oil Refineries Limited, was reported on page 74 of the submission as saying:
Today, when you have only two companies in Canada which manufacture ethylene glycol, if you put a tariff on, you set up a monopoly.
That is pretty strong language from one who is so intimately connected with the trade and who I think would be in position to know.
Whether you like it or not that is actually what is happening.
Then on the next page of the submission:
Ethylene glycol brought into this country has to be treated and handled before it is fit for automotive use. Therefore, Mr. Chairman, I am personally very much opposed to the restriction of free enterprise by placing this tariff on and if you place this tariff on you are going to jeopardize us in western Canada by giving us a higher cost.
That is a categorical statement which sets out the opinion of the representative of that company. Of course I have not dealt with all the evidence, in the interests of brevity and in an effort not to hold up the work of this committee. But I submit it indicates that there is a good reason why this committee should be very cautious about allowing this item to slip through at this time. The government has not attempted to make a case for the imposition of a tariff on ethylene glycol, and the companies which appeared before the tariff board certainly made out no case so far as their financial position was concerned.
It is reported that Union Carbide paid in the neighbourhood of $5 million for the plant of Dominion Tar in November, 1954, which would indicate that in making an investment of that size at that time they must have expected to be successful in selling their product. It certainly would not indicate that the market situation was such that these companies were suffering from undue competition from the United States.
As I said, the companies did not make out a case which was satisfactory to me or to anyone who is interested in the consumer of this product. So far the government has made out no case. The statements of the representatives of these companies make it quite clear that the motive or objective is to corner the Canadian market. Under those circumstances I would suggest that we would be wise to leave ethylene glycol on the free list as before.
Customs Tariff
If the companies which have made this request will supply us with details of their financial position in an effort to show that they require protection in the future, then the matter can be brought before the house again. But on the face of the evidence given at the tariff board hearing and on the face of a situation where the two major companies in Canada are in position to form a virtual monopoly and restrict competition, I should think we would be well advised not to accept the proposal of the government. That is one ground on which this is a major change of policy.
Before I go on to deal with the other matter I have in mind I should like to mention that the tariff board report was not unanimous. Apparently one member of the board, I believe it was Mr. Leduc, submitted a minority report in which he opposed any change in the tariff items covering ethylene glycol and antifreeze. He stated his reasons for so doing, and that is an additional reason why the members of this committee should not at this time accept the proposal of the government. If one of the members of the tariff board who heard all the evidence given at all the meetings was not convinced as to the wisdom of this move, then certainly the members of this committee should hesitate before-

Topic:   CUSTOMS TARIFF
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