Mr. John Parry (Kenora-Rainy River):
Mr. Speaker, my application to be heard on the adjournment motion arises out
of a question which 1 directed to the then Minister for International Trade, the Hon. Member for Vancouver Centre (Miss Carney). It concerns the softwood lumber export tax that was imposed at the behest of the American lobby.
The reason I was dissatisfied with the answer was essentially that the Minister, while providing some information of a more or less relevant type, did not address the gravamen of my question. If I can quote, I asked: "What will the Minister do to attempt to ensure that the tax is not costing Canadian lumber producers Canadian markets?"
This is the major concern in the imposition of the softwood lumber export tax. It would not only reduce Canadian exports to the United States, but by the drastic changes that it involved in the cost of volume equations, it would lead to a much improved ability of American producers to compete in the Canadian market. That prognostication appears to have indeed come true.
I have some recent press reports which I think would be worth citing in terms of that projection. The June 4, 1988 edition of The Globe and Mail records that the President of the Council of Forest Industries of British Columbia, Mr. Apsey, is still calling for Canada to get out of this clause in the softwood lumber tax agreement.
The 15 per cent tax which was imposed on Canadian exports has allowed American producers, now that they have much more secure access to their home market, to increase their production, to drop their marginal cost, and therefore be able to sell into the Canadian market. The lumber tax is not just costing Canadian exports to the United States, but also Canadian shipments to the domestic market.
If I can quote another article on August 27, 1988, also in The Globe and Mail, about a company, Green Forest Lumber Corporation:
One or Canada's leading lumber wholesalers has turned to U.S. wood, U.S.
trains and U.S. dollars to help it stay profitable in difficult economic times.
It goes on to talk about what this company is doing, obviously in response to market forces and the desire, indeed the need, to make a profit, which is taking lumber that it buys in the United States, shipping it across the United States, west to east, and then selling it into the southern Ontario market, which of course is the largest market for construction weights of lumber in the country.
There are a number of other press reports that I can quote of mills shut down because of the 35 per cent tariff on cedar shakes and shingles. We then have the 15 per cent export tax on our softwood lumber exports to the United States.
It appears that we do not have the mechanisms to force the United States to bring, for example, the plywood standards dispute, which is another related and very serious issue, to the Dispute Resolution Tribunal. Under American law they can seek redress before the Federal Trade Commission against the application of that standard which they feel to be discriminatory-
September 22, 1988
The second supplementary question the Minister answered by stating that Canada was selling record amounts of lumber to the domestic market. That is certainly something we would want to look very closely at if we were to accept that statement. The second question was: "What is the Government prepared to do to ensure that we have our share of the Canadian market?"
1 would like to know from the Parliamentary Secretary, who is replying for the Government, what discussions in fact the Government has had with the United States Government regarding this problem of the export tax not only cutting Canadian exports to the United States but, in essence, making the reverse advantage also possible; that is, giving American producers a competitive advantage in selling to Canada.
Mr. Bill Kempling (Parliamentary Secretary to Minister of
Public Works): Mr. Speaker, during Oral Question Period on November 17 last, the Hon. Member for Kenora-Rainy River (Mr. Parry) directed a question to the Minister for International Trade (Mr. Crosbie) concerning the export charge on softwood lumber products and alleged increases in imports of U.S. lumber into Canada. In addition, on June 20, the Hon. Member directed a question to the Deputy Prime Minister (Mr. Mazankowski) concerning a legal action brought against the federal Crown by a group of lumber manufacturing companies, most of which are located in British Columbia. 1 am pleased to respond to the Hon. Member's request for comments on these matters.
The Hon. Member made the allegation in the preamble to his question of November 17 that the sale into Canada of U.S. lumber was de facto dumping and was obviously contrary to the spirit of the free trade agreement. There appears to be considerable confusion in the mind of the hon. gentleman since the case he cites seems to contradict both these statements.
In order for U.S. lumber to be dumped in the Canadian market, it must, by definition, be sold at a price which is lower than the price at which it is offered in the United States market, or sold at less than the cost of production. This is not the claim being made either by the Hon. Member or by the industry spokesmen to whom he referred.
In fact, the Hon. Member stated that the U.S. producers have been able to offer their lumber at competitive prices due to a reduction in their unit costs of production. All of us here would agree that if a company were able to lower its cost of production, it should be allowed to benefit from this achievement in the international market-place without undue restriction.
Canadians have always been able to purchase U.S. lumber on the open market and there have always been imports of U.S. lumber into Canada. These have been traditionally much smaller than the Canadian exports of lumber to the United States, but imports from the U.S.A. are not uncommon. The fact that these took place after the imposition of the export charge on softwood lumber products does not imply in any way that the U.S. products were dumped, and certainly not that the spirit of the Canada-U.S. free trade deal was thwarted.
Canadian exports to the U.S.A. have declined slightly, but this has been more than offset by growth in both the Canadian and other export markets. I note particularly that the Japanese market has taken much more of our lumber than it has in past years. The growth in exports and the buoyant domestic market in Canada have resulted in an over-all increase in Canadian production of softwood lumber in 1987 over a year earlier. While the 1988 market is off somewhat, the current high levels of production point to another reasonable year for the industry.
In summary, no evidence has been presented that Canadian producers are losing a share of the Canadian market due to unfairly traded U.S. lumber. On the subject of the legal action brought against the Crown, it would not be appropriate for me to comment directly on the issues now before the courts.
1 would like to comment briefly, however, on the agreement which is the basis for the questions the Hon. Member has raised. It is worth recalling that Canada entered into the Memorandum of Understanding as a means to resolve a major trade dispute with the United States and to avoid the imposition by the U.S. of a countervailing duty on our softwood lumber exports. As a result, provinces have retained the flexibility they need to make changes in their forest management policies. Revenues which would have otherwise gone to the U.S. Treasury remain in Canada. In the first year the export tax was in place, this represented approximately $400 million. This has been distributed to the provinces.
Moreover, all lumber produced in B.C. is exempt from the export charge following implementation of replacement measures by that province, and the charge has been reduced from 15 per cent to 8 per cent for exports from Quebec, the second largest producing province, again on the basis of replacement measures. In fact, most of the softwood lumber exports are now exempt from the export charge.
Topic: PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic: ENVIRONMENTAL AFFAIRS-FRASER VALLEY-EMISSIONS FROM BURRARD THERMAL GENERATING PLANT