Mr. Bernard Bigras (Rosemont, BQ)
Madam Speaker, I am pleased to rise in the House today to state the Bloc Quebecois position on Bill C-11 on the customs tariff.
The Bloc Quebecois is in favour of expansion of the free trade zone to all of the Americas, essentially to enhance our trade exchanges with other countries, Brazil and Argentina in particular.
We have already taken one step in this direction with the Canada-Chile free trade agreement. We believe Canada must continue along this path, which is a continuation of a long history of market liberalization, one which is accelerating as we approach the second millennium.
Free trade agreements in our time bring numerous questions to the fore. To provide a clear picture of the Bloc Quebecois position on this, I will begin with a reference to the steps leading to the recent liberalization of markets. I shall then move on to the sad record of Liberal promises on this subject. Lastly, I will set out the Bloc Quebecois position on Bill C-11.
On numerous occasions we have referred to the essential nature of the free trade agreement. We have often said that a major shift in direction is needed, and I believe we must continue to say so.
A review of numerous events in our history shows us that markets need to be opened up, as we have always believed. As far back as 1950, American capital was flooding into Canada. Since the War of 1914, the United States had replaced Great Britain as our principal source of foreign capital, funds which Canada could not do without. But the British contributed to the bonds issued by Canada and even to subsidiaries wholly owned by the Americans. So many Canadian companies were bought up by American interests in 10 years that the 1950s will be remembered as the decade of the big takeover. Entire industries, created by English Canadians to be sheltered from the tariff, fell into the hands of the Americans.
The Canadian government was facing two problems at the same time. Unable to rely on customs duties to direct industrial development, it had to abandon any initiative in that area or find new means of achieving the same ends. Also, with the Americans apparently set on buying everything out, should they be allowed to carry out their initiatives or should measures be contemplated to hold them back?
The answers came from the 1960s up until 1988. The policies that were set reflected a consistent effort to direct industrial development and to erect barriers against foreign control. Starting with the 1960 federal budget, the purpose of fiscal policies and subsidies was twofold: to direct investments toward preferential activity areas and to encourage investment in regions where both unemployment and the rate of growth was particularly high.
In this context, Canada was built and the early experiences were never forgotten. Without the government, the railways could never have been built in a country with such a small population. When people saw where commercial aviation was headed and set up Trans-Canada Airlines, the development of Hertzian waves for transmission purposes resulted in the creation of the CBC. The telegraph, and telecommunications could have developed along north-south lines, while railways were looking after the east-west link. Building a country by means of customs tariffs is inevitably a form of schizophrenia.
Naturally, without the burden of customs duties, factories sprang up, jobs were created, foreign companies that otherwise would have been content to sell to Canada, set up business here so as to avoid paying duties. From these perspectives, a protectionist policy helped increase provincial production and at the same time contributed to trade.
It is also true, however, that the consumer paid more than would otherwise have been the case if he had bought goods directly outside the country duty free. In addition, the establishment of many factories in a small Canadian market, with consumers demanding the same diversification of products as American consumers, meant that factories' production costs were much higher than in American factories, with correspondingly higher unit production costs.
As it developed, the Canadian manufacturing industry cut itself off from most export markets. It existed for the domestic market, but in most cases, it was not able to compete on international markets, and it should come as no surprise that attempts were sometimes made to point out the advantages of free trade over those of national production.
The attempts made by the Laurier government, before World War I, and those of the Mackenzie King government immediately after World War II, make no sense otherwise. But the imperatives of building a country and a national economy won the day.
The fifteen years following the end of World War II, however, were to profoundly, decisively, and in some ways irreversibly, alter the policies of organizing and developing the Canadian economy. The great depression of the 1930s led most national industrial economies to resort to extremely restrictive protectionist measures. With 20%, 25% or even 30% of the labour force unemployed, governments did not hesitate to reserve what was left of the domestic market for national businesses, by drastically increasing custom duties. Such a measure encouraged trading partners to do the same, with the result that, in the decade which preceded the world conflict, tariff wars proliferated.
From 1930 to 1935, protectionist hysteria between Canada and the United States knew no limits. Some traditional trade activities between the two countries completely disappeared. The same was happening all over the world. This period will be remembered as a crazy time when every country was trying to ruin its neighbour and ended up going bankrupt too. Nations came out of the war with a firm resolution to never let this happen again.
In 1947, the General Agreement on Tariffs and Trade, or GATT, was established. The setting-up of that remarkable organization resulted in a gradual lowering of custom duties, first among major industrial countries, and then between them and an increasing number of developing countries. Suffice it to say that, by the end of the second world war, average U.S. customs duties on American taxable imports stood at 30%, compared to barely 5% today. This gives you an idea of the progress that was made.
In Canada, changes may have been less spectacular but they were nevertheless significant. Eventually, it was realized that the very nature of the GATT agreements made it impossible to use customs duties to structure the Canadian economy. In fact, if the government still needs an industrial policy, it has to rely on instruments other than those that have been used so rigorously for close to 100 years. Customs duties are bound to be reduced or to remain at their current level.
To be sure, GATT regulations contain any number of derogatory clauses. We gradually learned how to use them, which was no small feat.
I have just described a significant part of the development of trade in Canada and in Quebec with other countries and between provinces. I feel it is important to specify as well that the federal government has not shown great efficiency in this connection, has not demonstrated any desire to move further with it, despite its lukewarm support of free trade in the past—we need only recall the battle over the free trade agreement.
Where improvement of dispute resolution mechanisms is concerned, for example, the three partners announced in March of this year that no progress had been made. In addition, the United States indicated that there would be no further discussions on this matter. By so doing, they drew attention to the false statements the party across the way was still making on the matter of free trade.
The same goes for energy. Canada has never obtained similar protection to what Mexico has under NAFTA. Instead, it has released a declaration setting out its interpretation of the NAFTA clauses relating to energy. This declaration, of course, is not an integral part of NAFTA, unlike the special Mexican reservations and clauses.
In response to Bloc Quebecois questions on the matter last winter, the Minister of International Trade at the time could do no more than take refuge once again behind the work of the task force, which was still incomplete. He told us in his response that he had not yet been able to meet with his U.S. and Mexican counterparts to examine the NAFTA committee report.
In his testimony before the Standing Committee on Foreign Affairs and International Trade, the minister recognized that he needed more time to come to an agreement with the U.S. over antidumping and countervailing measures. I need not remind you that such measures were often taken against Canada and that the so-called efforts of this government, which was looking for reforms in that area, never produced any concrete results.
The government's strategy, as stated by the minister responsible, was to sign a similar agreement with Chile, and later with Mexico, to put a little more pressure on our other trade partner, the United States. He added that progress was made and that a report will be tabled, which he will release as soon as he is given the green light.
I urge the government to table this document in the House of Commons now, if eight months was long enough to seek the necessary permissions to share this information with the elected representatives of the people of Quebec and Canada who are sitting in this House. However, it seems rather—
Topic: Government Orders
Subtopic: Customs Tariff