1958-09-02

Hon. G. R. Pearkes (Minister of National Defence):: Mr. Speaker, on August 25 I
announced that a decision had been reached to combine the medical services of the navy, army and air force into one unified medical service.
A further step is now being taken in the integration of the armed forces. In future the spiritual welfare of the navy, army and air force will be directed by a Protestant chaplain general and a Roman Catholic chaplain general instead of by six principal chaplains. They will be appointed shortly and will hold the rank of brigadier or equivalent. There will be a single headquarters of the chaplain service in Ottawa, five area command headquarters in Canada and one in Europe.
In reaching this decision I have consulted with the Canadian council of churches and the Roman Catholic bishop ordinary to the Canadian armed forces. I am satisfied that this is another step which will result in greater efficiency and economy.



BUSINESS OF THE HOUSE


[Stage Direction]
On the order:
Introduction of bills-The Prime Minister-Bill intituled: An act for the recognition and protection of human rights and fundamental freedoms.
Righi Hon. J. G. Diefenbaker (Prime Minister):: I ask that this order should stand, Mr. Speaker. So that the house may have some idea when this matter will be brought up, I suggest, if it is agreeable, that it be dealt with on Friday morning.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Minister of Labour):: Mr. Speaker, the hon. member for Vancouver East yesterday raised a question regarding a decision that was handed down in a Vancouver court in regard to a dispute in which
were involved members of the international brotherhood of electrical workers, local 213, and asked whether because of that decision they would be entitled to unemployment insurance.
I have checked with the department on the ruling in this regard, and the answer is that the question of whether a stoppage of work arising from a labour dispute is legal or illegal has no bearing on the payment of unemployment insurance benefits. No consideration whatsoever is given to the merits or demerits of the matter in dispute. According to the Unemployment Insurance Act, a person who loses his employment because of a stoppage of work due to a labour dispute is disqualified from the receipt of benefit for the duration of the stoppage of work unless he can prove that he is not participating in, or financing or directly interested in the dispute that caused the stoppage of work, and that he does not belong to a grade or class of workers any of whom are participating in, financing or directly interested in the dispute.


Mr. Winch:: That does not make sense.


Michael Starr: It means that unemployment insurance is not available to these persons.


Harold Edward Winch: It does not make sense if they are illegally locked out.



UNEMPLOYMENT ASSISTANCE


[Stage Direction]
On the orders of the day:
Mr. J. p. Deschatelets (Maisonneuve-Rose-mont): Mr. Speaker, I should like to address a question to the Minister of Labour. Would the minister inform the house if during the course of last year unemployment assistance in federal funds has been paid to the province of Quebec in respect of unemployable persons not qualifying for unemployment insurance?
Michael Starr: I am not able to answer that question without investigation. I will make inquiries and convey an answer to the hon. member.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Lucien Cardin (Richelieu-Vercheres):: I wish to direct a question to the Minister

Inquiries of the Ministry of National Health and Welfare. With reference to the minister's statement in the house on July 15, at page 2240 of Hansard, concerning the care of the mentally ill through the hospital insurance and diagnostic services program, can the minister tell the house what facilities for the treatment of the mentally ill have been provided or are contemplated under this scheme in the general hospitals of the provinces which have entered the hospital insurance plan as of July 1?


Hon. J. W. Monieith (Minister of National Health and Welfare):: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question, which refers to part of a statement I made in the house on July 15 last.
In referring to psychiatric wards in general hospitals I had in mind the generally accepted concept of this relatively new development, namely that they are units within a general hospital specially designed for the short-term care of mental illness. To date these units have been limited to teaching hospitals and large general hospitals, because they require highly skilled specialist supervision, and are presently being assessed in terms of the over-all mental health program in many of our provinces. These wards are not separately identified in the list of hospitals annexed to agreements signed by the provinces under the Hospital Insurance and Diagnostic Services Act, as they are considered to be integral parts of these hospitals.
I realize, Mr. Speaker, that the hon. member's question refers to the provinces which have entered the hospital insurance plan as of July 1, but I thought the above might help to clarify this matter. With regard to these provinces, a complete reply could only be provided after consultation with each province. However, the assistance provided under the health grants for the development of psychiatric wards in general hospitals will give a fairly good appraisal of the situation. This source would indicate that there are psychiatric wards in at least ten general hospitals in these provinces. I believe these wards usually contain 20 to 40 beds.
Future development will depend on a number of factors, including the priority placed by the individual provinces on these services, which in turn will depend on continuing appraisal as to their relative value as compared to other aspects of the mental health program. In order to assist with this appraisal I have asked my advisory committee on mental health to place the subject on the agenda of its next meeting and report the results of the discussion to me.



REPORTED VISIT OF JAPANESE FOREIGN MINISTER

[Stage Direction]
On the orders of the day:
Mr. G. J. Mcllrailh (Ottawa West):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. I regret not having an opportunity to give him notice, but from the nature of the question probably he will be able to answer it in any event. I want to ask him if the Japanese foreign minister is coming to Ottawa, as reported in the press this week, to discuss mainly trade matters. If so, would the minister give us any information he feels he can about the particular trade matters to be discussed?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, we are looking forward with anticipation to the visit of the foreign minister of Japan. He will be very welcome. The subjects that will be discussed when he is here I think will cover subjects other than matters affecting trade, but I would judge that we could have extremely useful conversations with him concerning trade between our two countries.


George James McIlraith: A supplementary question, Mr. Speaker. Are there any special trade matters that could be described as the purpose of his visit as far as our Canadian minister is concerned?


Gordon Minto Churchill: Mr. Speaker, I have no knowledge of the general purpose of the visit of the Japanese foreign minister. He arranged for the visit. We will welcome him and discuss any matters of mutual concern.


George James McIlraith: Thank you.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. John Pallell (Peel):: Mr. Speaker, may I direct a question to the Prime Minister. I wonder if the Prime Minister would be kind enough to inform the house as to the present position of the Icelandic-United Kingdom dispute with relation to the 12-mile limit, and also whether consideration has been given to placing the question on the agenda of the United Nations general assembly for discussion at its session?


John George Diefenbaker: Mr. Speaker, the hon. member was kind enough to give me notice of his intention to ask this question. Canada keenly

hopes that the NATO countries concerned in the Icelandic fisheries dispute will continue to try to resolve their differences and come to an understanding at this time pending the convening of a new international conference on the law of the sea, which we hope will be held at the earliest possible date.
It goes without saying that all NATO members and in fact all peace-loving countries should encourage the settlement of this dispute by peaceful means. There has been a suggestion that the Danish government has proposed a meeting to be attended by 15 NATO countries. Whether or not that will be achieved, I do not know.
However, with respect particularly to the question of the hon. gentleman that the general assembly take up this matter, it is already planned that the assembly will consider in a very short time-perhaps before the end of this month, and in any case during the course of this forthcoming session-the desirability of having a new international conference on the law of the sea convened. Canada intends to give its full support at the general assembly to the convening of such a conference and to take the initiative, if necessary; because we are hopeful that in such discussions a permanent solution can be found not only of the particular fisheries dispute as between Iceland and the United Kingdom but of the world-wide question of the breadth of the territorial sea and the coastal states' rights to the contiguous fishing zone.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, may I ask a supplementary question of the Prime Minister. Is it a fact, as reported, that the Icelandic government itself has already requested that this unfortunate dispute be put on the agenda of the forthcoming United Nations general assembly? If that is so, would it not be desirable to make perhaps a prior ministerial effort to settle this matter in the NATO council?


John George Diefenbaker: In so far as the NATO council is concerned, I think a day or so ago the minister mentioned in the house that NATO had not afforded a successful conclusion to this dispute. I think it is admitted that it is really up to the parties to the dispute themselves to come to a solution. While NATO itself has, of course, an interest, as have all countries, in the peaceful settlement of this dispute, it is doubtful whether the problem itself can be regarded as specifically a NATO problem and one for which NATO can provide a solution. The dispute is, as the hon. gentleman knows, essentially a 57071-3-282
Inquiries of the Ministry world-wide problem with world-wide implications, and it is for this reason that Canada put its confidence and faith in the possibility of having another international conference at an early date, at which all countries of the world could work out a solution of the question of fishing rights. In the meantime, I believe the proper course is to have the matter dealt with at the United Nations, and under its aegis a decision made for the convening of such a conference.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I think the suggestion that this matter be referred to the United Nations is an excellent one, particularly in view of the great success the United Nations general assembly has had recently in settling another very difficult dispute. On the principle of the question, I wonder whether I can ask the Prime Minister to say what Canada's general position is toward the 12-mile territorial limit, whether Canada has agreed that if that can be arranged by international agreement it is the preferable thing to do?


John George Diefenbaker: Well, Mr. Speaker, as to Canada's general position, that was made very clear at the time of the conference at Geneva. It would require quite a lengthy answer to give the details. Canada's stand was made very clear at that time and, as the hon. gentleman knows, there was for a time the belief that the views held by Canada in this regard would be generally accepted. However, as the conference proceeded divisions arose which made it impossible to bring together the various elements. When a new conference is convened, then we can at least hope that by building on the results at Geneva and the degree of unanimity that was attained there, there will be a higher hope for success than was apparent in the last few days of that conference.


Hazen Robert Argue: Can I take from the Prime Minister's statement that Canada's initial position at any rate would be in support of the 12-mile limit?


John George Diefenbaker: Well, Mr. Speaker, Canada's position was one of divergence from the general principles that were acceptable to one or two nations. We endeavoured to arrive at an intermediate position, as the hon. gentleman knows, without binding ourselves to the 12-mile territorial limit or any other broad limit.


Harold Edward Winch: Do not deviate from a good principle today.
4462	HOUSE OF
Estate Tax Act TRANSPORT


GREAT LAKES PILOTAGE-REPORTED U.S.-CANADIAN DISCUSSIONS
[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I should like to direct a question to the Minister of Transport. My question stems from a story in the Globe and Mail of this date to the effect that discussions between Canada and the United States are already under way at the state department level on the great lakes pilotage agreement. Has the minister any information to give the house on this matter from his department's viewpoint?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I wish to thank the hon. member for advising me of his intention to ask this question. There are no discussions at the state department level going on at the present time. We hope that such discussions will take place, but no final arrangements have been made yet.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, can the Minister of Labour give the house an assurance that the report of the conference on winter employment will be submitted to the house before the end of the session?


Michael Starr: Yes; I am expecting to table the report tomorrow.



ESTATE TAX ACT


[Stage Direction]
On the order:
Consideration of amendments made by the Senate to Bill No. C-37, an act respecting taxation of estates.-The Minister of Finance.
Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, the Senate has returned Bill No. C-37, an act respecting the taxation of estates, to the house with eight amendments. I may say, Mr. Speaker, that a situation in which there may be differences between the two houses is of a nature which has not arisen in the experience of parliament since 1947.
I may remind hon. members that the eight amendments are to be found in Votes and Proceedings of the house for Thursday, August 28, at pages 512 and 513. Of the eight amendments seven are perfectly acceptable so far as the government is concerned, and the

Estate Tax Act
tax purposes all parts of the income of the recipient of that superannuation or pension benefit equally, that is to say, is it going to be a pro rata calculation, or are we to assume that the income from the superannuation or pension benefit is either the bottom slice or the top slice of the recipient's income?
It is quite obvious that there is no guide whatever in this proposed amendment to indicate how the Department of National Revenue is to proceed in these matters. In this amendment there is simply nothing to define the basis upon which the calculation of assumed income tax is to be made. I am therefore obliged to say that this amendment, contriving as it purports to provide a new basis of calculation of capital value of these benefits, is quite unworkable. If it were enacted today one would simply not know how to go about putting it into effect.
In conclusion may I simply say that the problem of how most equitably to tax superannuation or pension payments in respect of their capital value at the date of death is a difficult matter. It is a matter which engaged our attention very fully before the bill was first introduced, and on it we received not only a large number of representations but I might say also the greatest variety of representations. There have been more representations on this subject in point of number than there has been agreement on the way in which this problem should be met, and we considered that in all the circumstances the most equitable way to proceed was to carry into the new bill the provisions of the present Dominion Succession Duty Act in this respect.
I may say that there is no finality to any tax legislation. Legislation of this kind must be constantly under review. I indicated in appearing before the banking and commerce committee of this house, as I did when I appeared before the banking and commerce committee of the Senate, that it is the government's intention to continue to bring under review this new legislation, when adopted, as well as other taxing legislation. There will always be differences of opinion as to the fairest and most equitable way in which to write the detailed provisions of taxing legislation. There is no finality to any such legislation. The Income Tax Act is a very good example. It was completely revised and codified in 1949, and every year since that time large numbers of amendments have been introduced.
While we believe that the present bill is a good bill and a major advance over the legislation in the present Dominion Succession Duty Act, I am quite prepared to say

that there is no such thing as a perfect taxation act, and it will be our intention to give continued study to any of these problems which have presented difficulty in connection with the language of the present bill. We are not keeping our minds closed on any of these subjects which have presented difficulties.
For the reasons that I have given, I submit to the house that the fourth amendment proposed by the Senate should not be accepted by the house. I therefore move, seconded by the Minister of Agriculture (Mr. Harkness):
That a message be sent to the Senate to acquaint Their Honours that this house agrees to the amendments made by the Senate to Bill No. C-37, an act respecting the taxation of estates, with the exception of the fourth amendment to which this house disagrees for the following reasons:
1.	It creates discrimination in favour of a particular class of property.
2.	The amendment is unworkable.
3.	The amendment will reduce government revenues, and will particularly tend to reduce revenues from estates of larger value.
And that the Clerk of the house do carry the said message to the Senate.


Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, I believe the Minister of Finance and the government have something of a fight on their hands with the other place, and I am not going to get into that fight. I think the other place is quite capable of standing up for its own views with respect to the points on which the minister differs with the amendment proposed.
On the other hand, I want to point out that the discussions in the banking and commerce committee of the other place were prolonged and thorough. Unlike our own banking and commerce committee, they did receive outside evidence. They received evidence from the chairman of the executive council of the Canadian Chamber of Commerce, from the associate general counsel of the Sun Life Insurance Company, from a representative of the Montreal Trust Company, a representative of the trust association of Canada, and from two or three representatives who I thought should have been heard by our own banking and commerce committee-and I said so not only in the house but in the committee-Mrs. G. D. Finlayson, of the national council of women, Mrs. J. F. Flaherty of the Canadian Federation of university women.
I do not want the house to get the impression which it might get from hearing a radio commentary, such as I heard this morning, that the criticisms of the estates tax bill in the other place came entirely from supporters of the Liberal group in the Senate. When this bill was introduced in the Senate and debated on August 14, any criticisms

I made concerning the bill in this place were certainly greatly improved upon and exceeded by such newly appointed senators supporting the government as Senator Brunt and a former member of this house, Senator White. They had firm and strong criticism of the bill to make, and I do say that this amendment came to us after very careful consideration.
I do not intend to elaborate at any length with regard to the merits or demerits of the amendment in dispute. Already in the banking and commerce committee I have pointed out the hardship which results from the imposition of double taxation on both successions and pension income therefrom. I simply want to express a view which I think is generally highly endorsed, a view which has been expressed by the Canadian tax foundation and a view which was put forward during the sittings of our banking and commerce committee after an additional review had been made of the revised estates tax bill. The bulletin of the Canadian tax foundation had this to say on this subject in examining Bill No. C-37:
It also seems to us that something might finally have been done to alleviate the heavy burden of tax on pensions, annuities and other periodic payments that are subject to death duties and income tax almost simultaneously.
In criticising Bill No. 248, which was introduced in the previous session of parliament, the general view in all the briefs which I believe were received by the minister after the bill became public were well expressed in the brief of the Canadian Chamber of Commerce, when they said this:
Comment is made here in our brief upon the whole question of the taxation of income rights, etc. This comment is made subsidiary to the general recommendation that pensions and death benefits be not subject to estate tax. Such rights are received over a term. It has always been undesirable that the tax on the capitalized value should be payable immediately when even the amount of tax itself may only be recovered by the recipient over a period or may never be recovered. In particular, it is invidious to assess and immediately collect tax based on a capitalized value, by the application of mortality tables, when the successor may not even live long enough to receive benefits equal to the assessed tax. It is excessively harsh that no account is taken of the impact of income tax when computing estate tax on such benefits and vice versa.
We do not propose, as I say, to make extensive comment on the conflict, if there is one, between the government and the Senate. I simply point out again that the criticisms in the other place were on a bi-partisan basis and that they reiterate and, I think, confirm criticisms which I myself and others advanced here when the bill was before us. I think those in our group will have to say
Estate Tax Act
"on division" with respect to the motion proposed by the minister.


Hazen Robert Argue: Mr. Speaker, I think the motion presented by the Minister of Finance should be supported not only on the ground of the main content of the motion, with which I am in complete and full agreement, but also to demonstrate, I would hope, as a result of its passing at this time that the House of Commons should be supreme in all matters affecting the revenues of this nation and the balance of ways and means.
The hon. member for Kenora-Rainy River talked about the government having a fight on its hands. I doubt very much if that is really correct. I would assume that the members of the other place, in their good judgment, in their certain sense of security and wel-being, knowing full well the stature of the Canadian House of Commons in the minds of the public of this country, would have second thoughts and would very speedily agree to this motion which will pass this house today.
We in the C.C.F. will not be saying "on division", because we support the motion and are quite prepared to vote for it.
This is the first time in my memory in this house that the other place has amended a bill of the House of Commons in a way which would reduce the revenues to the national treasury. I would hope that such amendments would not be forthcoming from the other place in future much as I, in a given instance, might like to see certain revenues and certain taxes reduced. I feel that the other place has made not only a mistake in substance but a mistake as far as the operation of our Canadian parliament is concerned.
I do not for one moment question at this time the constitutional right of the other place to do such a thing, but I do not think it should be done. I do not imagine the government has a fight on its hands in the other place even though the government party does not command a majority there; but I would say that if the other place should reject this motion then there should be a conference, as is provided under our rules, between this chamber and the other place to consider appropriate amendments to the constitution of this country to make it abundantly clear that the Canadian House of Commons has the overriding authority.
I believe that hon. members of the other place perform a certain function in that they are able to look over legislation and make amendments, but I think the amendments they make should be considered more as suggestions than as amendments. If it appears necessary I believe there should be a working out of the final formula and method of

Estate Tax Act
procedure to make it abundantly clear that in main constitutional questions and money matters the Canadian House of Commons is supreme.
I agree with the purport of the argument of the Minister of Finance. The minister has a tremendous command of the English language, and he can make a very excellent case when he is on solid ground. I enjoyed listening to him present his case this morning. Listening to his extremely strong statements and well chosen phraseology I was pleased, for the first time in my memory, not to have them directed particularly at the opposition in this house. While the Minister of Finance seldom wins an argument in this house by way of unanimous vote, I am hoping that following the passage of this motion it will be made clear that the minister has spoken for the House of Commons and the Canadian people, and that the members of the other place will agree that that is the situation.
The Minister of Finance has demolished the substance of the amendment by pointing out that it is discriminatory and would work to the advantage of well to do persons receiving benefits from large estates, and that these exemptions that are already in the act provide a good measure of relief to a very small proportion of the population who under difficult circumstances are fortunate enough to have an interest in an estate of a value above $50,000. I accept the minister's statement because of his knowledge and the advice he is able to obtain from his officials that the suggested amendment would be unworkable. It is perfectly clear that if it were to pass it would result in a reduction of revenue to the national treasury. Believing that revenues in this case on the basis of the merit of the amendment alone should not be reduced, and also on the principle that the House of Commons should be supreme in this matter, I shall certainly be very pleased to support the motion.


Donald Methuen Fleming: Mr. Speaker-


Mr. Speaker:: If the minister speaks now he will close the debate.


Donald Methuen Fleming: Mr. Speaker, I had hoped, like the hon. member for Assiniboia, that this house would be prepared in connection with this matter to speak with a unanimous voice. I had hoped that would be the message that might be carried to the other place. However, the hon. member for Kenora-Rainy River, the financial critic of the official opposition, has said the bill will be carried only on division. It is quite clear, therefore, that the official opposition opposes this amendment.

Let me very briefly make some comment on several of the statements the hon. member made. He sought to give the impression, I gathered from his remarks, that he had taken some consistent course on this subject which is in accord with the view expressed by a majority in the Senate in the terms of the present proposed amendment. Mr. Speaker, clause 26 of the bill has run the gamut of all stages in this house and extended hearings before the banking and commerce committee of this house, as well as having gone through the similar processes of the other place. I scanned the record, and I find that in the banking and commerce committee of this house in the presence of the hon. member for Kenora-Rainy River and others of his party this clause was carried without any challenge, without any division and without any indication of opposition from them; indeed, without any spoken criticism of this clause. I have also consulted the record of the committee of the whole and I find the same thing there.


William Moore Benidickson: Mr. Speaker, would the hon. member permit a question?


Donald Methuen Fleming: There was not even a word uttered by my hon. friend or by any of his party on clause 26 of the bill when it was before the committee of the whole of this house.


George James McIlraith: We could not be there in committee because of the hours the house sat. That is not fair.


William Moore Benidickson: Mr. Speaker, would the hon. member permit a question?


Donald Methuen Fleming: Mr. Speaker, I
have already said that the hon. member for Kenora-Rainy River was present in the committee when this clause was reached. As a matter of fact others of the party were also there. If the hon. member for Ottawa West did not find it possible to be there he should not try to leave the impression that it was not possible for others of his party to be there, because the financial critic of the party was there and he had a great deal to say.


George James McIlraith: Would the minister permit me to clarify what I said?


Donald Methuen Fleming: Mr. Speaker, the impression ought not to be left that the committee hurried over its work.


An hon. Member:: He is listening to himself just now.


Donald Methuen Fleming: It conducted its proceedings in a thorough manner and-


William Moore Benidickson: Mr. Speaker, would the hon. member permit a question? Will he not acknowledge that I asked in the committee

44G7
that the representations and criticisms of double taxation be read carefully from the briefs, and did we not afterwards hear from Dr. Eaton a certain comment as a result?


Donald Methuen Fleming: Mr. Speaker, the hon. member asked for a number of things in regard to the representations that had been made. I think he will be fair enough to agree that either I or the officials, depending on who was leading the discussion before the committee, put before the banking and commerce committee of this house the substance of all the representations we had received on all subjects, whether those representations were in accord with the terms of the bill or opposed to them. I think that ought to be said for the record and in fairness. We gave the committee the substance of all representations we had received.
Now, Mr. Speaker, I have one further comment to correct any possible wrong impression that may have been left by the remarks of my friend the hon. member for Kenora-Rainy River. He may have left the impression in the minds of some that this bill is going to create a severe hardship in the matter of the rate of payment or what is sometimes called the periodicity of payment of taxes with respect to those periodical payments in the form of superannuation or pension benefits. Where these benefits flow through the executor of the estate the estate tax thereon is a charge on the estate and not, under this bill, on the successor, the recipient of the superannuation or pension benefit.
That is the first point. I wish to make it perfectly clear that if payments of this kind flow through the executor, then no estate tax liability except in a secondary sense is laid upon the recipient of the superannuation or pension benefit.
In the other case, where the payment flows not through the executor but goes direct to the successor, the recipient of the pension or superannuation payment, provision is made in clause 15 of this bill for payment of the liability in six annual instalments. The present Dominion Succession Duty Act, which apparently was quite adequate in the view of hon. members opposite, has provided for payment over four years. We have enlarged that to six years. Furthermore, the hon. member for Kenora-Rainy River went far outside the scope of the amendment proposed by the Senate in talking about the basis of determining present value of future periodical payments of this kind for estate tax purposes.
I remind the house that the Senate has not attacked the basis of determining the capital value of those periodical payments. That was discussed in the Senate committee,
Estate Tax Act
but the Senate has not attacked it. The hon. member for Kenora-Rainy River went completely outside the scope of the amendment in introducing that subject. The Senate has accepted that basis of calculation. It has been established for a long time, and it is simply carried forward in this present bill. I wish to make perfectly clear, Mr. Speaker, that the basis of calculation upon which he undertook to deliver some strictures this morning is not attacked in the Senate amendment, and is not involved in the Senate amendment.
This amendment has the one purpose and the one effect which I described in speaking earlier, and with great respect to those in the Senate who supported this amendment and those who drafted it, I do wish to say it is quite clear that the amendment they have proposed is quite unworkable. I have placed the position that we have taken on this amendment on the merits of the amendment. We are not inviting any clash or difference or dispute with Their Honours in the other place. We have placed our position on the merits of this amendment, and I did hope that we might have a unanimous expression of opinion of this house to support us when this message goes to Their Honours in the other chamber. But if we cannot have, as we are told by the hon. member for Kenora-Rainy River, a unanimous expression, then I do express the hope that we shall have support as nearly unanimous, or as strong an expression of support for the bill in this respect, as is possible.


William Moore Benidickson: Before the minister concludes will he just inform the house as to the procedure, which I am not clear upon, with respect to the conference procedure between this house and the Senate. Does the conference follow the report at this stage if the Senate continues to persist in its views? Is it after this motion is carried that the conference procedure comes into play? I recall that some years ago there was such a conference. Three members of the administration meet with three representatives of the Senate, I believe.


Donald Methuen Fleming: Mr. Speaker, my hon. friend I think is away ahead of the rest of us at this stage of the proceedings. What the house is being asked to do this morning is to say that we reject the fourth amendment proposed by Their Honours in the other chamber and, in accordance with the practice, the message contains the reasons for our rejection. We hope that when Their Honours receive this message from this house they may in their wisdom be prepared to concur in the position which has been

Estate Tax Act
taken by this house. My hon. friend is talking about a stage which we trust may never develop.


George James McIlraith: Mr. Speaker, I wonder whether I may ask the minister a question which is bothering me a bit about the actual motion itself, the language of it. As I read the motion it gives me some difficulty, because we are making findings about the reasons for rejecting paragraph 4 of the proposed amendments. Is it necessary to make all these findings? The one that bothers me is that the amendment is not workable. For my part I am quite prepared to reject the proposed amendment, but I dislike having to approve the language put in the motion by the Minister of Finance. How does he view this motion? Is it simply a rejection of the amendment that he wants rejected? How will our vote on this thing be interpreted by him?


Donald Methuen Fleming: Their Honours will have the message of this house before them in the terms of the motion if the house sees fit to adopt it.


Lester Bowles Pearson: May I ask the minister a final question. Is it not true that in this motion he is asking us to accept his categorical statement that this amendment is not workable? That categorical statement of fact, that finding and its expression may give rise to some doubt in the minds of hon. members on this side who are not supporting the Senate amendments at all.



CUSTOMS ACT


Hon. George C. Nowlan (Minister of National Revenue) moved: the second reading of Bill No. C-51, to amend the Customs Act.
He said: In his budget speech my colleague the Minister of Finance announced that I would shortly submit a bill to parliament to amend the valuation provisions of the Customs Act. The present law is adequate to deal with most cases of dumping or distress selling, but does not provide a safeguard against sales at prices below cost-plus. It appears to us necessary to rectify this

situation in order to protect the Canadian economy against unfair competition and the virtual importation of unemployment as a result of goods being brought in at prices which are below the cost of production plus a reasonable addition for selling cost, administrative cost and profit. This, then is the primary reason for revising the present law.
Experience over the years with the current valuation provisions of the Customs Act has indicated a want of certainty as to the true meaning of certain phrases and indeed sections, bringing about resultant difficulty not only for departmental administration but also placing an undue burden on both the tariff board and the exchequer court. Developments have been such as to point up the desirability of clarifying and rendering beyond question the meaning of the provisions which have been giving difficulty. It seems prudent, therefore, to take this opportunity, when the valuation sections are being amended, to resolve this problem and at the same time to regroup the various sections in more appropriate order.
In this regard, the proposed wording of the bill does not contemplate any material departure from current practice. The cardinal principle of valuation which has been in effect since confederation and which is to continue to apply is based upon the fair market value of like goods when sold in the home market in similar circumstances. A number of subsidiary and clarifying rules have been laid down with a view to establishing a more workable procedure for determining value for duty.
In his budget speech my colleague the Minister of Finance also stated that I would submit a bill to amend the Customs Act in the matter of appeals from our decisions under item 1201 of the Customs Tariff Act. This item is the one which prohibits the importation of material of a treasonable, seditious, immoral or indecent character. In a recent judgment the tariff board questioned whether it is the appropriate body to hear such appeals. The government shares this doubt, and accordingly provision is being made in the new bill which is before us today for appeal in such cases to be made to the courts.
Section 45 of the Customs Act deals with appeals to the exchequer court from decisions of the tariff board. At this time the opportunity is being taken to revise and clarify the procedure, which should make for a more orderly disposition of cases coming before this body. Three main changes are involved as follows:
(a)	The appeal period has been increased from 30 days to 60 days.
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(b)	The necessity for the appellant and the deputy minister to obtain leave to appeal has been eliminated, but persons who entered an appearance at the tariff board must still obtain such leave.
(c)	A complete code of appeal procedure, including right of cross appeal.
Those, Mr. Speaker, include the salient points which are embodied in the bill now before the house. Later on in the day, when the debate is completed, I will have an opportunity to deal with any arguments which might be raised for or against the bill and also, of course, in committee to clarify any matters in respect of the various sections.


Lester Bowles Pearson: Mr. Speaker, the minister in introducing this bill took five minutes to deal with one of the most important customs measures introduced into this house in many years, a bill which could have a far-reaching and harmful effect on our trade and, indeed, on Canada's trading relationships. He took five minutes.


Mr. Harkness:: An example of the beauty of brevity.


Lester Bowles Pearson: That was a quarter of the time which was required in this house this morning for an unnecessary division, and that is all we are being given by way of explanation of the bill and analysis of its contents, which as I have said is of very far-reaching importance. Indeed it is probably as important as any customs bill which has been introduced into this house for many, ma'ny years. The minister has said, of course, that this bill is really confined-and I believe these are the words he used-largely to subsidiary and clarifying rules. I hope, however, to demonstrate that it is far more than that and I regret, though perhaps not as much as I would have regretted half an hour ago, that I shall have to take a certain amount of time to give the views of our party on this matter.
The bill before us deals with the problem of the determination of the value of imported goods for duty purposes. It is a subject which is as complex as it is important because, as hon. members know, a valuation for duty purposes can be as important as the duty itself. It is because of this importance that it is necessary for an objective and sound basis to be established for the determination of value. The necessity for that is obvious.
It seems to me that three requirements should be met in establishing this basis. Firstly there is the necessity of preserving the rights of parliament over taxation because, as we know, a duty is a tax and a valuation can be a duty. If parliament

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determines a rate but the valuation is left to a minister or his officials, or both, then parliament's rights over this form of tax are reduced accordingly and may be nullified by administrative action.
Second, there is the requirement to prevent unfair discrimination between those who, as consumers and taxpayers, are bearing the tariff burden, unfair discrimination which could result from arbitrary valuations through administrative action. Finally there is the requirement to create and maintain orderly conditions for international trade. I believe it would be quite impossible to meet that requirement if nations customarily used arbitrary valuations for customs purposes, that this would stop trade expansion and would introduce rigidities and restrictions into trade.
To meet these three requirements, as I have said, an objective and equitable basis of valuation for duty purposes must be established. I realize, of course, that such a basis applicable to every case which might arise is very difficult to find indeed, and I suppose it is impossible; but a fair basis for general application must be found and must be embodied in our law. If an alternative is required it should be used only if the primary basis cannot be applied; should be used only in special cases. That principle has been recognized in the present customs law.
I agree with the minister that the basis which we have established in this country over the years is fair market value, though I am not sure it will remain fair market value if this bill becomes law. Fair market value in accord with prices in the country of origin is the best and fairest basis obtainable. This we have found in the light of experience. This principle is included in GATT and is generally accepted by the members of GATT. I admit, of course, that there are other bases included in GATT and, indeed, in our law, but they are for use only when fair market value cannot be applied.
I know, as the minister knows, that arbitrary valuations are permitted under article 19 of GATT. This is, of course, an escape clause, I agree. We have, however, more than once protested, and vigorously protested, when that article has been used in a way contrary to the spirit and objectives of GATT. We have always taken the position in our negotiations under GATT that this article should be restricted to real emergencies and used only as a last resort. If it is not if it is used in some other way, then it invites retaliation which can destroy GATT, can restrict trade and can even hurt the country which is applying the other form of valuation.
The present Canadian law on this matter is designed to meet the three requirements I

have mentioned. It is in conformity with the spirit and the objectives of GATT except possibly for one section of the present law, namely section 38, to which I shall return later. Incidentally that particular section, No. 38, was put in by the Conservative government of Right Hon. R. B. Bennett. It was, I admit, retained by Liberal governments after 1935 to be available in a genuine emergency. But the fact that the Liberal government had that and only that in mind in retaining this particular clause is shown by the fact that in the 22 years of Liberal administration that clause was used only once and then, perhaps ironically, after the general election of June 19, 1957. The only time that clause was used was, I believe, in connection with the importation of strawberries.
The new bill, however, changes all this. It alters drastically, and not in a subsidiary or unimportant way as the minister indicated, the present system of valuation. I hope I will be able to convince the minister of that before I finish.


George Clyde Nowlan: It will take a lot of speeches to do that.


Lester Bowles Pearson: You have no idea how long this is going to be.
It embodies a new and wrong approach. Furthermore, the government must intend to use these new powers which it is requesting, else what whould be the purpose of making these changes? I suggest that if this bill becomes law, fair market value is likely to become an exception rather than the rule. Therefore this bill in its provisions prejudices that objective basis which I have mentioned and it widens, I think in a dangerous way, the application of arbitrary valuations. It does that first of all through a greater use of the cost of production test-and I will have something to say about that test later

and second, through wider discretionary powers given to the minister, to the governor in council and to officials.
How then is this principle on which we have based our law for so many years, this principle of fair market value, to be restricted in this bill? It is to be restricted in at least three ways. I intend to deal with this matter now only in a general way because this is the second reading stage, but when we come to the committee stage we on this side will deal with each clause as it arises, and I think we can show how these clauses will restrict the fair market value principle. If hon. members will look at clause 39 of the bill, for example-I single this out as one glaring illustration-they will find that it reads:
Where the minister is satisfied that material injury has been or may be caused to any industry-

I draw those words to the attention of the house-"has been or may be caused"-
-in Canada or any portion thereof, by reason of the importation of any new or unused goods or class of such goods at a value for duty less than the cost of production thereof, plus a reasonable amount for gross profit, he may so report to the governor in council, and, notwithstanding anything in this act, the governor in council may order that the value for duty of those goods or that class of goods shall be increased to an amount equal to the cost of production thereof plus a reasonable amount for gross profit, having regard to the gross profit generally earned in that trade in the country of export, to be determined in the manner prescribed in section 37.
This means that in all cases, not only where injury has been caused but where injury may be caused, the minister and the cabinet will have full discretionary powers to determine the value for duty purposes.
Then there is clause 38, subclauses (b) (c) and (d) which I will not quote, but in which provision is laid down-and we will come back to this in detail during the committee stage-that the value for duty shall be determined in such a manner as the minister prescribed. And in these cases, fair market value even when it can be determined will not be used. In my opinion those clauses, or certainly part of them, are contrary to our obligations under GATT. They give the minister far-reaching discretionary and arbitrary powers to use.
There is another clause, clause 37, which again I will not quote, but I will come back to it later. It states that when comparison for duty has to be made with similar goods the value for duty, unlike the provision in the present legislation, is determined by cost of production plus gross profit. Again, fair market value is abandoned. Clause 36 also contains some new conditions which must be met before the fair market value rule can be applied, just as clauses 37, 38, 39 and 40 lay down some new limitations on that rule.
To sum up, the cardinal principle for determining value for duty which has been used in this country for so long, that is to say the fair market value of like or similar goods sold in the home market in similar circumstances, is being so greatly weakened in this bill as to become almost valueless. It will become, as I have said, the exception rather than the rule as the government uses the new provisions. It is being replaced by cost of production plus gross profit or reasonable profit, or by the discretionary and arbitrary power of the minister to fix valuation.
The cost of production test is an impracticable basis for valuation, often an impossible basis; therefore we are left with arbitrary valuation. I say, therefore, that because of this development and because of what is 57071-3-2831
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implicit and explicit in this bill, parliament's right to tax and to control taxes is being prejudiced and weakened. It puts the executive in control. It increases the dangers of discrimination as between taxpayers, and it ignores both the spirit and the objectives of GATT. In consequence we oppose this bill, and we oppose it strongly. We will do our utmost to defeat it and we will do our best, if we cannot defeat it, to amend it and to make it at least a better bill.
This is important because so much now will depend on the administration of this measure, and because that is so it is important to ascertain its purposes, in so far as we are able to do so, in the eyes of the government as well as to trace, as I propose to do, the legislative history of these provisions.
The Minister of Finance in his budget speech indicated that these provisions which are before us now were designed to protect Canadian producers against dumping. This party and the governments of this party have always supported, and we still support, legitimate anti-dumping measures. Our record in this connection when we were in power is shown by the inclusion in the Customs Tariff Act of the anti-dumping provision in section 6; it is shown by the inclusion in the present Customs Act of sections 38(1) and 35(12). It is shown in the bill we passed in 1950 dealing with seasonal rates of specific duties.
So we are not opposed to anti-dumping legislation. We have supported it in the past and we have enacted it in the past. But we are opposed to extending the power of the executive in this way in the guise of adding to anti-dumping legislation. The Minister of Finance-and I quote from page 1247 of Hansard of this session-had this to say:
The government intends to defend Canadian producers against the practice of dumping, whatever form it may take. This will require the strengthening of the present valuation provisions of the Customs Act and their effective enforcement. To this end my colleague, the Minister of National Revenue (Mr. Nowlan) will shortly submit a bill to parliament amending the valuation provisions of the Customs Act-
This is the bill now before us. I continue:
-to add a provision to section 35 along the lines of the legislation in effect prior to 1948-
I will show what that means later. I continue:
-requiring that, where appropriate, the value for duty of imported goods shall not be less than the cost of production plus a reasonable advance for selling cost and profit.
The Minister of National Revenue who has introduced this bill made a statement in this house on July 3, and repeated it this morning, in which he related the problem of unemployment to this bill. On that date he

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said that the amendments which are now before us would help to deal with the unemployment situation by dealing with goods brought into this country at below cost of production. As reported at page 1892 of Hansard at that date the Minister of National Revenue said:
After all, the term "fair market value" must surely have some meaning, and it must be remembered that it has been determined time and time again that the market value has really had no reference whatsoever to fair market value, and that anyone by making a few sales in the country of origin could then send the goods here, avoiding dumping duty. And when such goods are sold superficially below cost they threaten not only Canadian industry but, what is more important, the employees of Canadian industry.
With the objective of that statement, the protection of Canadian industry against unfair competition brought about by dumping as it was understood in the past, we of course have no quarrel. In fact we support it. But we do question the minister's view that you can curb unemployment in this country by trying to export it. Some of us will remember very well that this was the remedy adopted by Mr. Bennett and his government from 1930 to 1935. From what the minister has said it is clear that the government attaches importance to these amendments not only as an instrument of protection but as a cure for unemployment. I venture to state the results in that respect will not be good, and the experience of the period 1930 to 1935 to which I have already alluded strengthens these doubts in my mind.
Perhaps I should now make a short historical review which will help to explain why we have such strong doubts about the wisdom and value of these amendments. In making this review, of course, we must keep in mind a clear distinction between the dumping provisions in the Customs Tariff Act and the valuation provisions as they exist in the present amendments to the Customs Act.
The anti-dumping provisions of the Customs Tariff Act are in section 6 of that act, and I believe were first introduced in this country in 1904. Those provisions in the present act over the years became the standard for other countries who adopted them, and indeed they became the standard for GATT where they are embodied, I believe in articles 6 and 7. The word "dumping" is defined in the Customs Tariff Act in these words:
-sale In Canada of goods at a price lower than the fair market value in the principal markets of the exporting country.
When dumping was proven under those provisions a duty was charged on the higher price and a penalty of not more than 15 per

cent was imposed. These provisions, we should remember, are not affected by the present amendments which deal with valuations for duty under the Customs Act.
Let us look at the valuation provisions of the present Customs Act. Subsection 2 of section 35 of the Customs Act is the present basic valuation provision. It reads:
The value for duty shall be the fair market value, at the time when and place from which the goods were shipped to Canada, of like goods when sold in like quantities for home consumption in the ordinary course of trade under fully competitive conditions and under comparable conditions of sale.
That concept of fair market value-and the house will pardon me if I go back a little in Canadian history-goes back as far as the Galt tariff of 1859. It continued unchanged and indeed was adopted by other countries, which is a tribute to its wisdom and value, until 1921 when the Conservative government of that year amended the Customs Act to introduce a new principle; cost of production plus reasonable profit, as the value for duty. I believe that was the first time that principle was introduced into our customs legislation, and it was done under Mr. Meighen's government. It did not last very long and was repealed the next year by the Liberal government which came into power in 1922.
The reasons for that action are set out very clearly in the House of Commons debates of that time, when Mr. Fielding said this was an attempt to boost the tariff without letting the people of Canada know what was being done by creating a fictitious price in order that the government might increase the duty. He argued that cheapness of itself was no reason for keeping out goods, and should be distinguished from dumping. That clause was repealed.


Mr. Fulton:: Was any substitution made?


Lester Bowles Pearson: Yes, there were substitutions but nothing based on cost of production. There were various measures introduced, and I shall come to some of them.
Mr. Speaker, may I call it one o'clock?
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Lester Bowles Pearson: Mr. Speaker, before one o'clock in developing my arguments against the provisions of this bill I had shown that in 1921 the Conservative government introduced the principle of cost of production into valuation for duty; that their act in this regard was repealed by the Liberal government in 1922, and that this cost of production formula did not reappear until the

government of Right Hon. R. B. Bennett came into power in 1930, when it was used as a formula to combat unemployment by increasing protection.
This Bennett formula, if I may call it that, provided that the value for duty of new and unused goods in no case was to be less than the cost of production of similar goods at date of shipment direct to Canada plus reasonable advances for selling costs and profit, that the minister should be the sole judge of what constituted a reasonable advance in the circumstances and that his decision thereon was to be final. The leader of the opposition of that day strongly opposed those provisions as we are opposing the provisions of this bill today. The leader of the opposition at that time, Mr. Mackenzie King, stated as reported in Hansard for 1930 at page 213, and I repeat it today in connection with this bill-
The government proposes ... to take power to fix an arbitrary valuation for customs purposes on whatever articles it likes, and to continue it as long as it likes.
I submit, Mr. Speaker, that the same criticism could be levelled against this legislation as an open invitation to arbitrary valuations and to administrative protection. In 1930 Mr. Mackenzie King argued, as I am attempting to argue today, that the power to impose a duty is the power to tax; that this power belongs to the Commons and should not be parted with or delegated to any government whatever, except in a strictly limited way for a genuine emergency. The then leader of the opposition, Mr. Mackenzie King, said at that time:
The bill

He was referring to the 1930 bill.
-is wholly subversive of responsible government in every sense of the word and should not for one moment be countenanced.
We take the same position in regard to the bill before us. Mr. Ralston, a leading member of the opposition at that time, continued the attack and objected because the tariff-making authority was being shifted from parliament to the executive. This is one of the main bases for our objection to this bill. He argued, and the argument can be used against this bill-
It is simply an enactment for the purpose of providing that the government without any cheek or control by parliament may make tariffs to suit the situation or to suit their own particular tariff ideas.
Now, Mr. Speaker, the Liberal warnings at that time, warnings of the effect of this kind of legislation on our economy went unheeded, but they were later proven to be right, and they have since, I think, been fully vindicated in the attitude they took at that time. It is
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the attitude we are taking today in regard to this bill. A recognized Canadian authority on customs matters who is now a member of the tariff board, Professor Elliott, had this to say in his book "Tariff Procedures and Trade Barriers", at page 187, talking about the provisions of the Bennett legislation:
This set of administrative provisions was Canada's distinctive contribution to the trade barriers of the great depression.
Later on he said:
That Canada's methods were effective in obstructing trade is attested by the complaints of British and foreign exporters and of Canadian importers; by the reports of a Canadian royal commission and of the United States tariff commission; by the pains taken to obtain concessions for empire goods at the Ottawa conference and by the fact that the govern-men was able to pacify Canadian manufacturers while making concessions; by the United States' threat to exclude Canada from the benefits of the earlier treaties under the trade agreements act; and finally by the provisions of Canada's trade agreements with the United States in 1935 and 1938.
This is what Mr. Elliott had to say. Another Canadian customs authority, Professor Blake of Winnipeg, in his study of Canadian customs administration reached similar conclusions when he said in regard to this earlier legislation:
An enormous increase in the power of the Minister of National Revenue over the tariff, and a concomitant decline in the power of parliament, resulted from the legislation of 1930.
Later on he said:
It was decided to place the tariff weapon in the hands of the "war cabinet", and this was accomplished, neatly and effectively, through the Customs Act. By a process of extending, amending, and increasing the Canadian executive presented to the world a customs barrier which in many of its aspects resembled the crudest form of mercantilism.
I submit, Mr. Speaker, that again we in this house in 1958 are being asked to go back to 1930 in the amendments to the bill before us, amendments which are in the view of the minister merely clarifications but which, as I have said, in our view go very much beyond that. The fact is that the cost of production as a basis for customs evaluation is an arbitrary and subjective valuation test. What is it? The cost of production in Canada or the cost of production in the country of export? How is it to be ascertained? Which of many differing costs is to be used, and what is reasonable profit? Why, the minister who introduced this bill is himself on record already in this session as to how arbitrary in his opinion is the concept of cost of production. At page 1803 of Hansard of July 1 the minister had this to say; we were talking about coal:
They talked about producing coal at cost and using it for producing power. As the hon. member for Inverness-Richmond said, "What is cost?" It could be anything.

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The minister told us on July I that the cost of production could be anything. We say that under this legislation it can be anything the cabinet arbitrarily decides it to be, that in doing so they establish the value for duty, and that is the power to make and increase tariffs at the will of the executive.
But we cannot leave the problem at that point. In the discussion of this very matter in 1930 the minister of national revenue of that time, Mr. Ryckman, left no other conclusion in the minds of members of the house of that day but that the cost of production he had in mind was the cost of production in Canada. He stated at that time that he could quite conceive, as can everyone else, that goods might be sold in Canada at below the cost of production in Canada, and that this might be what he would call unfair or piratical trade. At another point in the debate of 1930, as found at page 288 of Hansard of September 16, the minister of national revenue of that day said:
If goods manufactured in another country were sold continually in Canada at a price lower than they can be produced here our manufacturers would be driven out of business.
So, Mr. Speaker, we wonder whether the present Minister of National Revenue subscribes to the point of view held on this matter by his predecessor who had the misfortune to introduce similar legislation almost three decades ago. On this particular point Mr. Ralston was quick to point out, as I should like to point out now, that the philosophy proposed at that time by the minister of national revenue would endanger the whole basis of international exchange of goods. Mr. Ralston said then, and I believe he was right, as found at page 289 of Hansard of September 16, 1930:
Canadians are selling many of our exports at a price below the cost of production in the country where those goods are sold. That is the reason we are selling them there. We are not building a barbwired fence around Canada and swapping jack-knives with ourselves. We are selling all over the world.
That is something we have to keep in mind in this country as we discuss customs matters. The use of this test of cost of production as a method of valuation has led us into difficulties in the past and we fear it will do so again. The historic position of the Liberal party is opposed to it. Liberal spokesmen, as we have seen, pointed out its dangers in 1921. In 1922 the Liberal government repealed a provision based on this test. The Liberal party fought it again in 1930 and, as soon as it came into office in 1935, the arbitrary valuations were removed through trade agreements with the United States and then the arbitrary valuation provision was repealed in 1948.

That point perhaps requires further elaboration in view of the statement of the Minister of Finance in his budget speech. The Minister of Finance has already pointed out, and quite correctly, that the cost of production provision as a basis for valuation was not repealed by a Liberal government until 1948. But he did not go further and point out that this cost of production feature of our tariff law had declined in importance and that its use had been restricted by trade agreements made by the Mackenzie King government after 1935 until it had become virtually inoperative. True, its formal repeal was not made until 1948, when it was formally done in order to reconcile our law with the requirements of the general agreements on tariffs and trade. But steps had been taken long before 1948 to render its provisions, as I have said, virtually inoperative.
The trade agreement between Canada and the United States at that time, 1935, involved an exchange of notes relating to this very point. In that agreement both governments gave undertakings that the fair market value should be taken for duty purposes. That was the first step to do away with this iniquitous cost of production test and arbitrary valuation feature of the Bennett legislation. The Liberal government removed about half the arbitrary values on United States goods on January 1, 1936.


George Clyde Nowlan: 1936?


Lester Bowles Pearson: Yes, that was when removal took place; and the remaining dumping valuations on United States goods were removed in the second United States-Canada trade agreement in 1938. Similar action was taken in all the other trade agreements we signed during that period when our trade was again on the upgrade. But, as I have just said, this particular provision in the legislation was not formally removed until it was rescinded in 1948, although it had been virtually inoperative for many years before that.
Surely it should now be clear, Mr. Speaker, to all hon. members that this particular technique about which I have been talking has been a favoured and exclusive instrument of commercial policy used by Conservative governments. It is now being reintroduced with its background of failure and its association with the depression period of Conservative rule from 1930 to 1935.
At this stage I am not going to make a detailed examination of the provisions of the bill, but I wish merely to use one illustration to show the kind of arbitrary powers the government would have if the bill were approved by parliament. Let us suppose for the sake of argument, and perhaps it is a realistic argument, that it is felt desirable to

give more protection by executive action outside parliament to the Canadian primary textile industry against United States competition. If the government decided to do that it could choose from three courses of action which are permitted under three different sections of the bill.
In the first place, under new section 40A (7) (c), if the governor in council, the cabinet, is satisfied that United States textiles "are being imported into Canada under such conditions as to prejudicially or injuriously affect the interests of Canadian producers or manufacturers, the governor in council may authorize the minister to determine the value for duty"-


George Clyde Nowlan: I know the Leader of the Opposition wants to be fair. He is not quoting from the bill when he refers to United States textiles being imported.


Lester Bowles Pearson: Of course not. My quotation began with the words, "are being imported into Canada under such conditions as to prejudicially or injuriously affect the interests of Canadian producers or manufacturers, the governor in council may authorize the minister to determine the value for duty ... or may authorize the minister to prescribe the manner in which the value for duty shall be determined ... ". Those last words are new.
In the second place, the government could use the new section 39 which says that-I quote from the section, having already quoted from it this morning-"where the minister is satisfied that material injury has been or may be caused to any industry in Canada ... the governor in council may order that the value for duty of those goods ... shall be increased to an amount equal to the cost of production thereof plus a reasonable amount for gross profit..."
Those are two ways in which the government could proceed. But there is a third and simpler method of preventing foreign competition in the field of semi-manufactured goods, such as primary textiles often are. I refer the minister to section 38, which says:
Where in any case or class of cases...
(b) the goods imported.. .are intended to be... further manufactured in Canada or are intended to enter into the course of manufacture in Canada... the value for duty shall be determined in such manner as the minister prescribes.
Surely there is no further need to show that the government, the executive, has taken far-reaching powers unto itself in these provisions, in these amendments, to deal with customs valuation, thereby dealing with customs duties and thereby dealing with taxation. In this last provision I mentioned, section 38, there is no need even to show that material injury has been or may be caused, or to get authority from the governor in council.
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Under this section the minister can act on his own initiative-indeed, he will have no alternative but to act on his own initiative- in all cases described in section 38 unless the government decides to invoke the other sections, 39 or 40A(7)(c), which I have mentioned. In fact, it is true to say that the powers given the minister under section 38 are even wider than those given to the governor in council to deal with similar cases under section 39 or section 40A (7) (c).
Then there is one other point I want to mention, namely the effect of this legislation on the British preferential tariff. This is certainly a point which deserves to be raised at this stage, because it has a direct relationship to our imports from the United Kingdom. Under section 38 of the old legislation, which under the proposed bill, with one change, becomes section 40A (7) (c), it will be noted that the so-called anti-dumping valuation cannot be used for goods "entitled to entry under the British preferential tariff". That exception or that qualification appears in the present legislation, namely section 38 of the present bill.


George Clyde Nowlan: The present act.


Lester Bowles Pearson: Yes. Section 38 of the present act, which I think is clause 40A (7) (c) of the bill we are now considering. The government in this new bill, in its amendments, are maintaining that provision giving British goods exceptional treatment. They are maintaining that provision, but it now has no real significance of any kind because it is probably not its intention to use that provision very much since there are other provisions in this bill which give the government full power without such a qualification. I refer to the new section 39 under which-and this is an important change, which according to the government is to be a safeguard against dumping -goods entitled to entry under the British preferential tariff are not exempted.
Surely, Mr. Speaker, that is another blow at British exports to this country just a few weeks before the commonwealth economic conference. But that is not the worst thing. From now on, under section 38 the value for duty of all British goods which are not fully manufactured products will be determined in a manner prescribed by the minister, so the government will be in a position to discriminate against such British goods as woollen textiles, whether or not dumping practices have been used. That is under section 38 of the new bill.
In s*.:ort, Mr. Speaker, this is bad and dangerous legislation, especially when it is viewed in the light of economic history. It requires parliament to surrender many of its rights in this most important field of taxation. It gives

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wide and arbitrary powers to the minister and the governor in council. It threatens the best interests of Canadians consumers, importers and exporters who are already bearing a heavy burden imposed by our tariffs. It will be a hard blow to GATT, and it can expose our country to damaging retaliation by other nations.
We do not know, of course, Mr. Speaker, the intentions of the government in applying these regulations. We do not know what are the industrial sectors that the government intends to protect with these wide and arbitrary powers. We do know, however, that once it has yielded to pressures in one sector, it will be extremely difficult not to do the same for others. We do know also that the first industrial sector would likely be that of primary textiles, according to previous statements made by members of the government.
Hence in conclusion, Mr. Speaker, I should just like to say a word about this particular problem. We all know that our primary textile industry in this country has been going through great difficulties for a long period of time. We know that in fact it has enjoyed real prosperity only when Canadian demand was abnormally high and foreign producers were not in a position to take advantage of our market.
I am not going to attempt at this stage, Mr. Speaker, to analyse the sources of weakness of this most important Canadian industry in terms of production and employment. Most of the causes of these difficulties have been indicated in two special studies which were prepared for and under the auspices of the Gordon commission. One is entitled "The Canadian Primary Textiles Industry" and the other "Canadian Secondary Manufacturing Industry". The reports of the tariff board are also interesting in this respect.
I want to emphasize, however, that these difficulties which are being experienced, and which have been experienced now for many years, are not due to the lack of Canadian skill or efficiency in this field or to the prevailing wages in this industry in comparison with the over-all level of wages in Canada. The causes are much deeper and more basic. For instance, the size of the domestic market, the great variety of tastes of Canadian consumers who are influenced, of course, by United States fashions; the lack of specialization within our own industry and technological changes are some of the factors that have brought about the present difficult situation.
I myself am convinced that some form of government assistance and encouragement will be needed in order to maintain this important Canadian industry and increase its

productivity. But we on this side of the house do not feel that government assistance of this kind should take the exclusive form of ever-greater protection against foreign competition, because such a remedy does very little indeed to cure the industry of its basic difficulties.
I obviously cannot outline now what are the other forms of government assistance that might be adopted, but I hope to have, before long, an occasion to do so. I firmly believe, however-and I want to emphasize this-that if the government feels at present that the industry needs more protection, it should have the courage to follow the only normal democratic method and ask parliament to increase the tariff either against ordinary foreign competition or against dumping, rather than trying with this bill in effect to by-pass parliament, to ask for wide and discretionary powers and impose arbitrary values. That is not the way to do it, Mr. Speaker. This approach, in our view, is the wrong one not only from the point of view of our democratic and parliamentary institutions but also from the point of view of our best long term economic interests in promoting orderly commercial relationships.
The bill now before us purports to protect Canadian industry against dumping and, as I said before lunch, with that purpose we are in agreement. Our good faith in that respect is shown by the measures introduced by Liberal governments in the past to give Canadian industry bona fide protection against illegitimate dumping, but this bill goes much further than that. It is a restrictive measure, as we see it, and puts restrictions on trade expansion; indeed, it is obstructive of the expansion of trade. In addition it gives unnecessarily arbitrary powers to the minister and the cabinet which entrench on the rights of parliament in this most important aspect of taxation policy.
I therefore move, seconded by the hon. member for Ottawa West (Mr. Mcllraith): That all the words after "that" be struck out and the following be substituted therefor:
That this bill be not now read a second time because of new provisions for arbitrary valuations which transfer the tariff-making authority from parliament to the minister and the cabinet, contrary to the principles of responsible government and the essential right of parliament to tax."


Edmund Davie Fulton: Mr. Speaker, on a point of order I would refer Your Honour to Beauchesne's fourth edition, citation 202, subsection 12, which reads as follows:
An amendment proposing a direct negative, though it may be covered up by verbiage, is out of order.
Nothing, Mr. Speaker, could be much clearer than that hon. gentlemen opposite once

again are seeking to do indirectly that which they cannot do directly, namely to move a direct negative under the guise of an amendment. With whatever verbiage they cloak their amendment I suggest to you, sir, that it becomes perfectly obvious that, without saying so, they are merely trying to move a negative and thus disguise their real reasons for what they hope will be a defeat of the bill.


Hon. J. W. Pickersgill (Bonavista-Twillingate):: Mr. Speaker, in reply to what the Minister of Justice has just said, I would draw to your attention two things. In the first place, I point out that on September 16, 1930, when similar legislation was introduced in a previous parliament, Mr. Stewart of Edmonton moved an amendment in the following terms:
The character of this bill is such as to transfer to the government the authority of parliament over taxation, which is contrary to the principles of responsible government.
Your Honour will therefore see that in substance, though not precisely in words, that amendment is on all fours with the amendment just moved by my hon. friend the Leader of the Opposition. There was no challenge of the validity of that amendment at that time, and it is therefore a precedent which I feel we must respect in this house. I would also remind the Minister of Justice and recall to Your Honour's mind citation 382 of Beauchesne's fourth edition, which is directly related to amendments on the second reading of a bill, and of which the relevant part reads as follows:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill, or expressing opinions-
I think that is the relevant portion, and I do not wish to detain the house unnecessarily.


Mr. Speaker:: It is perhaps not always easy to draw the line between an amendment which is simply a negating of the principle of the bill and an amendment which is declaratory of a principle. It is clear that on second reading an amendment can be moved which declares a contrary principle, as has been-


Edmund Davie Fulton: May I address you on that point, sir?


Mr. Speaker:: Yes.


Edmund Davie Fulton: I think the form of amendment which Beauchesne had in mind when referring to an amendment declaratory of a principle is where the mover of the amendment seeks to substitute for the bill some
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other principle, so that if the amendment were adopted there would in fact be some other principle being followed in the legislation, but not simply advancing in the form of an amendment of reasons or alleged reasons for opposing the bill. This is because the alleged reasons for opposing the bill are, of course, matters of argument and not matters to be incorporated in an amendment.
My hon. friend the Leader of the Opposition in his speech gave what he said were valid reasons for opposing this bill. He alleged that the effect would be to transfer control over taxation from parliament to the executive, and those are matters of argument. He has now sought to incorporate the same argument into his amendment and he has merely asserted reasons why he believes the bill should not be adopted. He has not set forth a principle which, if his amendment were adopted, would be substituted for the principle of the legislation which the Minister of National Revenue has introduced.
It will be perfectly obvious that if the amendment were adopted it would in fact be a straight negative of the bill. I have not the amendment before me, but as I recall it it says in effect that the bill should not be adopted "because", and then proceeds to assert matters which are argument and which, I submit, are so clearly an expanded negative as to fall 100 per cent within the citation of Beauchesne which I have read. This citation has been the over-all guiding principle of this house for many years in spite of the precedent referred to us by the hon. member for Bonavista-Twillingate. I suggest that a temporary aberration is not sufficient to override a principle of long standing.


John Whitney Pickersgill: Mr. Speaker, if I may address myself to the remarks which have just been made by the Minister of Justice, which were to the effect that this was not an amendment declaratory of a principle different from the bill, it does seem to me that it is declaratory of the principle that the tariff-making authority belongs to parliament and that this bill seeks to transfer that tariff-making authority from parliament to the minister and the cabinet-


Edmund Davie Fulton: That may be a reason in the mind of the hon. member.


John Whitney Pickersgill: -that this is contrary to the principle of responsible government and the essential right of parliament to tax. It does seem to me that no more fundamental principle could possibly be asserted in the House of Commons than the principle asserted in this amendment.

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Mr. Fulion:: If perhaps the amendment were phrased in the form that the bill should not now be read a second time but that it be resolved that some other proposition be substituted therefor and then there followed the proposition which the hon. member alleges, then I submit the amendment might- if it did not fall on some other ground-be in order.
But that is not what is said in this amendment. What is said in this amendment is that the bill should be not now read a second time because of new provisions for arbitrary valuations which transfer the tariff-making authority from parliament to the minister and the cabinet. In other words, nothing could be clearer than that what has happened here is that my friends have inserted their arguments into their amendment. But they have not moved in this house that some other principle be substituted for that which they allege to be the principle of this bill.


William Moore Benidickson: A return to this standard principle.


Mr. Alexis Caron (Hull):: Mr. Speaker, may I say a word on this point of order. The Minister of Justice cited Beauchesne's fourth edition, section 202, subsection 12. If he had gone on to cite subsection 13 it would have been a little different. It says:
An amendment to alter the main question by substituting a proposition with the opposite conclusion is not an expanded negative and may be moved.
And section 201 says:
A motion may be amended: (a) by leaving out certain words; (b) by leaving out certain words in order to insert other words; (c) by inserting or adding other words.
I think from these citations it is clear that the amendment should be declared in order.


Mr. Speaker:: I thank hon. members for their views with regard to this proposed amendment. It is true that the effect of asserting a principle is to deny the bill and therefore, perhaps, this is a negative resolution as has been argued by the Minister of Justice. I think that is the necessary consequence of moving an amendment which asserts a principle. I might refer the house to the Parliamentary Dictionary which has a paragraph on an amendment which gives reasons, as this one does. The amendment proposes that the bill be not read a second time now, and it goes on to give reasons. This is what is said on that subject by the Parliamentary Dictionary at page 162. This is in the edition of 1956:
Reasoned Amendment: A reasoned amendment may be moved on second and third reading of a bill and on certain other occasions, as stated below. This form of amendment seeks, by substituting other words for those of the question

"That the bill be now read a second (third) time", either to give reasons why the house declines to give a second or third reading to the bill, or to express an opinion with regard to its subject matter or to the policy which the bill is intended to fulfil.
Furthermore, we have a clear precedent already referred to of an amendment which is about as close as one could expect to find to the amendment which is proposed today, and that is the one which will be found in the Journals of the house for September 16, 1930 at page 23, which was accepted without objection. In my opinion this amendment satisfies the requirements of the rules.


Hazen Robert Argue: Mr. Speaker, we in the C.C.F. feel that this matter should not be proceeded with at this time. There are a great many reasons why we feel it is a mistake, and we will endeavour to put those reasons on record.
Canada, perhaps more than any other nation in the world, is dependent for a prosperous economy on the continuance of large scale trade and an expansion of trade, and I think perhaps more than any other nation we should be most careful to do nothing which would impede trade and prevent its expansion. I have in my hand Trade of Canada showing exports for December 1957, and I see that our exports in 1957 amounted to the very large total of $4,840 million. Anything that is likely to result in the reduction of our exports because we set up barriers to trade should not be lightly entered upon. Many of our main industries depend very greatly for their prosperity on a large export market.
In 1957 the value of agricultural and vegetable products going into export amounted to $831 million; animals and animal products, $302 million; fibrous textiles and textile products, $27 million; wood, wood products and paper, $1,456 million; iron and its products, $520 million; non-ferrous metals and their products, $1,006 million; chemicals and allied products, $195 million, and other miscellaneous commodities $154 million.
Canada was for many years the third exporting nation of the world, but according to information given to the Gordon commission and contained in the report, The Future of Canada's Export Trade, by 1955 Canada had dropped to fifth position, behind the United States, the United Kingdom, the Federal Republic of Germany and France. I submit that it would not be in the interests of our economy to take any steps which might result in a reduction of our exports and a general reduction in our trade.
Thus we have to look at this bill most carefully, and we find in it certain principles

to which we object. We object to the principle of the valuation of imports into this country on the basis of an arbitrary cost of production to which is added an arbitrary gross profit. We object to this bill because the decisions that will be taken will be decisions flowing from the cabinet or from the minister. How often in the past have we heard the Prime Minister object to government by order in council, government by cabinet decision? Hansard contains innumerable such references by the Prime Minister. And if there was one thing which beyond any other factor resulted in the Conservative party obtaining office, I believe it was that they were able to sell this principle to the Canadian public; that parliament should be supreme, that the supremacy of parliament should always be maintained, and that the governor in council should not be given authority to set in an arbitrary way such things as tariffs.
Under this legislation the governor in council will in certain circumstances arbitrarily establish a cost of production plus gross profit price with regard to goods entering into this country and for the purpose of establishing tariffs. This government is apparently going to acquire much more detailed information about the cost of production in foreign countries than it has been able to obtain regarding the cost of production at home. We have on the statute books the Agricultural Stabilization Act, in which the government has agreed to set certain floor prices for Canadian agricultural products based on the cost of production.
When we have asked whether these statistics on the cost of production of important agricultural commodities are available we have been informed that they are not. When farm organizations have come to Ottawa and asked that these figures be produced they have been informed that they are not obtainable because it has been impossible to ascertain the cost of producing these agricultural commodities. If that is the case, how much more impossible will it be for Canada to decide on the cost of production of goods coming into this country from foreign countries?
Another reason we feel this bill is not well timed is that it is being proceeded with just a few weeks before the forthcoming commonwealth conference. How can we reasonably expect an expansion of trade with commonwealth countries, and how can we reasonably expect the conference to succeed, if two weeks before the conference takes place parliament by passing this measure increases trade barriers against goods coming into this country from the commonwealth?
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As has already been pointed out, section 38, subsection 1 of the existing Customs Act now provides for certain arbitrary powers, as follows:
38. (1) Where at any time it appears to the satisfaction of the governor in council on a report from the minister that goods of any kind not entitled to entry under the British preferential tariff or any lower tariff are being imported into Canada either on sale or on consignment, under such conditions as prejudicially or injuriously to affect the interests of Canadian producers or manufacturers, the governor in council may authorize the minister to fix the value for duty of any class or kind of such goods, and notwithstanding any other provision of this act, the value so fixed shall be deemed to be the fair market value of such goods.
Here is an arbitrary fixing of values, but it is an arbitrary fixing of values limited to those goods not entitled to enter under the British preferential tariff. This new bill removes this section and by section 39 allows the same arbitrary valuation of all goods coming into this country, no matter from what nation. One of the most significant purposes of this bill is to make it possible for the governor in council to erect further barriers based on arbitrary valuation against goods coming into this nation from commonwealth countries. We feel that the principle of this bill is wrong, and we believe most strongly that it should not be invoked against British goods by removing this exemption.
There has been a long history in this country of enactment of legislation such as we have before us today. In spite of the very learned statement by the Leader of the Opposition and the many excellent facts he brought forth, it has not always been the Conservative party which took the initiative in this direction. The record of the Liberal party is not without blemish. In 1922 under the prime minister of that day, Mr. Mackenzie King, the following amendment was placed on the statute books of this country. Section 3 of chapter 18 of the 1922 statutes reads as follows:
3. The said Customs Act is amended by inserting the following section immediately after section 47 thereof:
"47. (a) If at any time it appears to the satisfaction of the governor in council on a report from the minister of customs and excise, that natural products of a class or kind produced in Canada are being imported into Canada, either on sale or on consignment, under such conditions as prejudicially or injuriously to affect the interests of Canadian producers, the governor in council may, in any case or class of cases, authorize the minister to value such goods for duty, notwithstanding any other provisions of this act, and the value so determined shall be held to be the fair market value thereof.
The same kind of arbitrary valuation about which the Leader of the Opposition complained so effectively this afternoon is found in the statutes of this country in 1922, placed there by a Liberal government. But

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in those days the tables were completely turned; the situation was not that which we find in parliament today. At that time we had as leader of the opposition the Right Hon. Arthur Meighen who had many interesting and important comments to make about this section. I should like to quote from Mr. Meighen's remarks as recorded at pages 3414 and 3415 of the House of Commons debates of June 22, 1922. This is what Mr. Meighen had to say:
This provision applied to natural products-
Oh, I am on the wrong line.


William Moore Benidickson: You had better get back on the party line.


Hazen Robert Argue: Mr. Meighen had this to say:
I do not know whether this is fully understood or not by the hon. gentlemen to my left; but I admit that it is fully understood by me. This provision is protection personified. This is the last emanation from the government that denounced protection two or three days ago. For purposes of valuation the minister can fix the value where he likes, and any basis he likes, on any principle he likes, to suit any interest he likes, as low as he likes, as high as he likes, and when he likes. In a word, this simply puts into the power of the minister the whole elevation of the tariff of this country.
If Mr. Meighen were in the house today sitting on the opposition side he could use exactly the same words. He went on to say:
He-
The minister. I continue.
-can put on any valuation he thinks fit. In other words, it virtually enables him to fix the tariff where he pleases, and the house is asked to support the minister in that. We are asked to do so by a government who have denounced protection, but who, nevertheless, are introducing the most distinctly protectionist measure ever submitted to parliament. There has never been anything that embodied every element of protection so clearly as does this clause , . . the house is being asked to support an administration that takes to itself the power virtually to fix the tariff by order in council-an administration composed of gentlemen who howled for months against the ordinary functions of order in council.
-Now, let me repeat, if ever a government came down to parliament with a measure distinctly, emphatically, superlatively protectionist, that measure is the one now proposed.
.. .That hon. gentleman-
Referring to Mr. MacKenzie King.
-is now standing up and asking parliament to give him power to exercise a degree of autocracy unknown in any country in the world.
Those were statements made by a Conservative leader against a Liberal government which introduced a measure to provide for arbitrary valuation in the case of the importation of natural products. In 1958 the tables are turned. This government is introducing a measure which provides the same objectionable arbitrary powers, but not only 
against the importation of natural products into this country but of all products. Therefore, if Mr. Meighen was right in 1922, how much more would he be right in making the same kind of statement against a bill which is much wider in scope than the amendment to the Customs Act of 1922?
There is one section in this bill that I have noticed with particular interest, namely the section which has to do with natural products. I refer to subparagraph (b) of subclause (7) of clause 40A, on page 5 of the bill, having to do with the importation of fruits and vegetables into Canada. It is well known that the producers of fruits and vegetables in this country from time to time face very severe competition from the importation of such goods, mainly from the United States. This particular clause might give some protection or might alleviate in a minor degree for a short period the great difficulties that those producers face; but I think there is a better method of dealing with the situation that faces those producers than by embodying a provision in an act such as this.


Mr. Speaker:: Order. In view of the amendment that is now before the house, it seems to me that the proper course to follow is to debate the principle which is enunciated in the amendment until the house has had an opportunity to deal with it, and that principle is limited to the objection that the bill transfers the tariff-making authority from parliament to the minister and the cabinet, contrary to the principles of responsible government. I think it would be out of order to debate any other principles of the bill except the one embodied in the amendment.


Hazen Robert Argue: Mr. Speaker, that would be a rather severe limitation of the scope of debate.


Mr. Speaker:: The hon. member will appreciate the fact that when the amendment is disposed of he can then debate the other matter.


Hazen Robert Argue: That is what I was coming to, Mr. Speaker, I had not intended to make a second speech in this debate. If I am unable to proceed in this way at this time- and I want to refer to it only briefly-I am quite prepared to make a second speech. I am not endeavouring to adopt a course that is either objectionable to the house or will extend the scope of the debate.


John George Diefenbaker: I am sure that if the house was asked whether or not the hon. gentleman might be allowed to continue his general speech and not be limited to the

terms of the amendment it would certainly feel favourable to his proceeding.


William Moore Benidickson: At this stage of the session.


Mr. Speaker:: Of course, if it is the wish of the house to debate the entire question as one I have no reason to object to that course. Does it commend itself to the house that members speak only once on this bill?


John Whitney Pickersgill: Your Honour, I do not think we could accept that limitation. I think the spirit of the Prime Minister's suggestion is one that we would all agree with.


John George Diefenbaker: I was not in any way
suggesting that there would be any limitation in that regard because that, of course, is far removed from my wishes at the moment. I thought the hon. gentleman was building his argument, and I think the house would agree. Your Honour is strictly right in your interpretation, but I feel that the tenor and the feeling of the house is that the hon. gentleman should proceed.


Mr. Crestohl:: Does that also apply to subsequent speakers following the hon. member for Assiniboia?


Mr. Speaker:: I am not very clear. It is a
bit difficult for the house to express its view about having a debate on this subject as well as on the bill we have before us, but I shall allow the hon. member to proceed on the basis that he is speaking only once. If he rises again, however, I will be more severe with him.


Hazen Robert Argue: I did not intend to volunteer that I would not speak again but I am quite willing to accept the speaker's suggestion as to the course I should follow.
I want to thank the Prime Minister for the statement he has made. I think it is an indication that perhaps the session has not many more days to go, and in a general co-operative spirit and with the feeling of good will amongst the members we can agree on an innovation in the rules that would seem to expedite the business of the house.


George Clyde Nowlan: And that we are not arbitrary.


Hazen Robert Argue: Not arbitrary so far as the rules of debate are concerned, but I would not want my remarks to be interpreted too widely.
I did point out that producers of certain fruits and vegetables in this country had faced very severe competition from time to time and that the clause enunciated in this bill would not provide for those producers the kind of marketing arrangements that I felt would be in their best interests and that they would like to have. I was about to say that I thought the policy put forward in this
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house the other day by the Minister of Agriculture (Mr. Harkness) in regard to peaches, in that a floor price was established, and the minister indicated that assurances could be provided to peach producers that adequate canning facilities and markets were being provided, was much better than anything that is contained in this bill.
We are most anxious that producers of fruits and vegetables in this country, along with other primary producers, should have the chance to market their products in an orderly fashion and at reasonable prices. Rather than the section of this bill we would suggest the full use of the Agricultural Prices Stabilization Act by the establishment of such minimum prices. This could be applied particularly to fruits and vegetables and more especially to peaches, apricots, plums and prunes. This has already been done in the case of peaches. Positive steps should be taken to assure adequate and continuous operation of canning and processing facilities.
Further we would suggest that an annual federal-provincial agricultural conference, attended by representatives of the federal and provincial governments, producers organizations, producers marketing and sales agencies and processors, for the purpose of orderly marketing and processing of fruit and vegetable products, should be arranged. We feel that this is an important provision. We would suggest the encouragement of international co-operation between Canadian grower organizations and United States grower organizations to undertake negotiations and discussions for the orderly marketing, on an agreed basis, of fruit and vegetable products between our two countries. We understand that to a degree such co-operative policies are already in effect. They provide at certain times of the year for the orderly importation into Canada of certain fruits from the United States and conversely orderly export of certain Canadian fruits during certain other parts of the year into the United States.
We feel that the provisions which this bill contains should not be proceeded with, and particularly not proceeded with at this time, in the light of the coming commonwealth trade conference. Canada, as one of the major trading nations of the world, is in no position to start down the road that leads to increased trade barriers and a worsening of our trade position.
We feel that there is another reason why we should not embark on such a policy at this time and that is the growing threat in the field of international trade as a result of the current Soviet economic trade offensive. It is not wise for Canada, it is not wise for other countries of the western world to undertake measures which will make trade

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more difficult at a time when the Soviet union and the countries associated with it have embarked on a very aggressive program of expansion of international trade. We feel, Mr. Speaker, that the problems which this measure endeavours to deal with should be dealt with in other ways.
In introducing the measure the Minister of National Revenue (Mr. Nowlan) said that he thought it would help employment in our country. I am very fearful that any such measure which can result in increased trade barriers will have the very opposite effect and that it will result in more unemployment and further difficulties for the major export industries of our country which are so important to our economy and to which our nation owes so much. For these reasons we oppose the bill in principle and suggest alternative proposals for the industries that it is claimed the bill would help.
(Translation):


Alexis Pierre Caron: Mr. Speaker, may I, at this stage, enter the debate on the bill introduced by the Minister of National Revenue (Mr. Nowlan)? The minister also reports to the house for the C.B.C. and after hearing him, I feel that he should be a member of the C.B.C. performers' guild, for he introduced this legislation, which he knows to be of vital importance, with a nonchalance implying that the bill contained nothing important.
The fact remains, though, that this bill is a superlatively protectionist step, and is well in line with Conservative tradition.
It has been said in certain quarters that the Minister of National Revenue was no more enthused over the prospect of introducing this legislation than was the Minister of Finance (Mr. Fleming), but that the Prime Minister was anxious that it be brought forward at this time in order to prove that, though he had been a Liberal until 1928, he has really become a one hundred per cent Tory. In fact, if we study the history of the Conservative party, we will see that it has at all times identified itself with protectionism. When the party was being led by Sir John A. Macdonald, it was a protectionist party but its protective legislation was introduced in the house itself, and it was the house and not the cabinet that arbitrarily decided upon a given tariff that set the valuation of goods for duty.

In those days Sir John A. Macdonald could well have definite reasons to follow a protectionist policy, because the population of this country was predominantly rural, to the extent of 70 per cent, and agriculture in those days was a family operation, and just enough was produced for personal requirements.
It will readily be understood that, in those days, customs duties were more a source of revenue for the country than a means of protecting industry, which, at the time was, to all practical purposes, inexistent, or very limited. The same thing held true about the United States. Indeed, at that time the United States, like Canada, had a protectionist policy because of the influence of its 70 per cent rural population. Today, the converse is true. The population of industrial cities represents about 70 per cent of the entire population, and even the farming industry-we describe it as such because it has achieved the status of industry-is comprised of all kinds of co-operatives which enable it to produce enough not only to provide for family needs but also to supply large national and international markets.
If Sir John A. Macdonald were back with us, I am convinced that, as a man of acknowledged superior intelligence, he would look upon tariff protection with a different eye than does the present Prime Minister.
Today, the government is taking devious means to reach an objective that they do not wish to admit. Tariffs are not being increased and we might be told in a moment, when the minister replies, that the government does not intend to raise tariffs and that this is meant simply to protect industries going through temporary difficulties. To my way of thinking, to adopt a particular tariff, or to provide under the bill for some way of arbitrarily setting the valuation for duty purposes of goods so that their price at entry will be higher than the original cost is in fact a tariff increase, even if the rate of duty is not raised.
If today the Conservative party chooses to use this roundabout way to introduce a protectionist policy, for which it is well known, it is because it fears representations from the west and from the maritimes which require foreign markets for their expansion, cannot be satisfied with domestic markets, and will have to seek foreign markets.
Under this bill, the minister is given unlimited powers. I will not deal with the sections of the bill, which is allowed only in

committee, but I find that the different sections are so drawn as to give to the hon. minister and to the government the power to increase the valuation of goods especially on the basis of their cost of production plus a profit.
The cost of production is something that is extremely hard to determine intelligently. Let us take the case of two manufacturers. One of them uses old methods and outdated machinery; he leaves his business to its fate, good or bad. As a consequence his cost of production is much higher than in the case of an industrialist who takes advantage of new methods and new machinery and keeps his business under close supervision. Thus, if the government were to abuse its arbitrary powers and wanted to protect a mismanaged industry, it would at the same time increase the revenue of well organized industries, that is of big industries because in most cases the lesser industries are the ones that are not so well organized.
In any event I feel I can say that this bill is the fulfilment of an election promise, even if the government does not dare admit it. That explains why this devious method is being used to invest the Minister of National Revenue with such extraordinary powers.
I have here a translation of an article published in Saturday Night for May 10 and signed by John A. Stevenson. I quote:
One hundred and seventeen out of the 208 Progressive Conservative members in the new parliament come from Ontario and Quebec. Most of these 117 have been elected under specific pledges to work for the better tariff protection of industries in their constituencies which are suffering from foreign competition, and the prevailing volume of unemployment will supply them with ammunition for fortifying their pressure upon the government for remedial action.
Accordingly there are signs that ministers are in a serious quandary about their policy in regard to trade and tariff. They know that any policy which gave the protectionist forces in the United States congress an excuse for passing damaging retaliatory legislation would be a very dangerous adventure and so they have been singing very low about the project for a diversion of our import trade. The Prime Minister has lately broken a long silence about it by an explanation that he had merely said that a diversion of 15 per cent from the United States to Britain would cure the present lack of equilibrium in Canada's balance of trade with the United States and whoever had represented him as having given an explicit pledge to accomplish this had been guilty of what Sir Winston Churchill once called "a terminological inexactitude."
And further:
Every Tory member for a seat which has a textile plant within its bounds will be aggrieved if some succor in the form of higher duties is not forthcoming when Mr. Fleming submits his first budget.
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This article therefore clearly states that the devious way in which things are being done at this time is designed to avoid irritating the west, irritating the east, irritating those extremists which come from the central provinces, Quebec and Ontario. In any event, every time a Conservative government has been in power the same thing has never failed to happen. The same devious method was always resorted to in order to achieve that end.
And still farther on:
At the moment the Canadian Tariff Board is working overtime to deal with an abnormal flood of applications for higher protection for domestic industries.
In 1921, as the hon. Leader of the Opposition (Mr. Pearson) pointed out a few minutes ago, the same legislation was passed, under which the minister was given power to establish the value of production costs, and to add a reasonable profit. That is mainly what makes this legislation bad. We do not object to the minister having certain powers, but if he is enabled to exercise those powers for increasing tariffs, without this house or the Canadian people being informed, I say that this is wrong, and that we should therefore not support the legislation.
The Liberal party had to revoke the act in 1922. However, exactly the same legislation was enacted in 1930 by the Bennett administration, when the tariff was based on the valuation of production costs plus a set profit. Moreover, the minister had some discretionary powers which went beyond all limits; it was a protectionist power. Anyhow, as the Minister of National Revenue (Mr. Nowlan) said on another occasion, "What are production costs?" They may be anything and everything. This is perfectly true, and how will the minister be able to establish the value of a product in an efficient way at the best possible price?
Is it up to the government to protect an industry which does not look after its own business? Is it up to the government to protect an industry which is not well organized? No, but it is up to the government to safeguard an organized industry, not only so as to enable the owner to make a profit but so that those who are buying the goods may also benefit. Even the best government cannot be, any more than is the minister, in a position to determine a reasonable production cost with a reasonable profit. That is why we are opposed to the passage of this bill, as were the Liberals in 1921 and in 1930,

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since we recall that in 1922 and in 1935, they had to repeal those bills, otherwise the United States would have kept on establishing tariffs themselves, as a reprisal measure against Canadian trade. Besides, that was one of the reasons for clause 38 of the former Bennett bill, which the Liberals wanted to repeal in 1948, in connection with British preferential treatment. Today, this provision is being kept in the bill, precisely through arbitrary powers granted to the minister, with regard to the determination of production cost, as well as through arbitrary powers placed in the hands of the minister, with regard to the determination of that cost and the establishment of related tariffs. This bill, therefore, ignores British preferential treatment.
Besides, let us not forget that Canada is an exporting country, which produces much more than it is able to consume. Canada needs markets, and if every change in government must give rise to difficulties as a result of the establishment by the party in power, through devious means such as this, of a protection tariff, I think unemployment, resentment and hardship will follow. A measure like this was adopted in 1921, and was followed by a slight business slump. Thank God, Canada put the Liberal party back into office, and the party created new markets after opening up the older ones. Unfortunately, in 1930, Mr. Bennett came back into power with his slogan that he was going to "blast his way into the world markets" through those devious means, and we saw what the consequences were for Canada.
Furthermore, advantage is always taken of any slackening in the tempo of business to have these same arbitrary measures and methods adopted. I put it to you squarely that I am concerned for Canada; I fear our industry will not be able to go on selling its products abroad, and that this will give rise to a production surplus, and a production surplus will give rise to unemployment. And when you get unemployment, the way to meet it is not to adopt that sort of measure, any more than to hand out unemployment insurance on a silver platter, but to clear the way for the marketing of our goods so that we have no surplus.
There has been talk lately of the important problem of textile products. The textile industry is exposed to difficulties, and is having trouble in riding the storm. Is it because of overproduction? Or dumping? I say no.


Mr. Tremblay:: It's because of the Liberals!


Alexis Pierre Caron: What is the hon. member saying?


Léonard-David Sweezey Tremblay: It's a political stalemate.


Alexis Pierre Caron: I would never have thought that a university professor could display such ignorance!


Léonard-David Sweezey Tremblay: Much loud talk but all meaningless.


Alexis Pierre Caron: The textile industry is going through a bad period. It is not by means of arbitrary measures like this one that we shall end the problem. It is all very well to be able to help the industry with this measure, but what is the use of doing so if it means throttling the country's economy in the process? To begin with, the textile industry is in difficulties in Canada, just like it is in the United States, England, Italy and indeed the whole world. Markets have changed, conditions are different, and one of the main difficulties confronting the textile industry arises from its having come into being in Canada at a time when communications facilities were poor and we hardly produced enough for ourselves. Today, however, there are fine communications facilities throughout the world, and the textile industry is in difficulties because, to begin with, we in Canada lack the raw materials, we have to import them from abroad, we must shoulder the transportation costs, and then re-export the finished product. Accordingly, production costs and sales prices are higher, and we have a hard time competing with prices prevailing on the American market. Indeed, the American market has had its own difficulties. Manufacturers in the state of Maine moved their industry to the south of the United States so as to be closer to the source of their raw materials because of dual transportation costs and some American industries even moved to South America.
We cannot solve this problem by adopting this arbitrary provision proposed by the government. Setting the cost of production against the market value is really bad and arbitrary powers conferred upon the minister are hardly any better. Encroachment upon the rights of parliament is the reason why we cannot accept this measure and why this amendment was moved.
When he was in the opposition the Prime Minister used to stand in the defence of rights of parliament whereas, today, he would

have us confer arbitrary powers upon the minister and the government. After censuring government by orders in council, he is the first one to resort to this method.
He, the first to condemn such a practice, gives his ministers powers which never before in Canada were exercised even by Conservative ministers. This we must oppose because it constitutes a threat to our trade with the world. Moreover, it is incompatible with the Geneva agreements and may lead to all sorts of difficulties in our trade with several countries. It is not in accordance with the spirit of GATT. While imposing on other countries, by indirect means, higher tariffs on the importation of goods into Canada, even though it may be contrary to the spirit of GATT, we do not like to see other countries react in the same way and resort to the same means for their own protection.
Well, here is one section which goes far enough since it states:
Where the minister is satisfied that material injury has been or may be-
Those words are beyond me.
-caused to any industry.
This means that when the minister thinks some prejudice may be caused, he has by that very fact the right to order the enactment of a tariff equal to production costs which will make the importation of some foreign commodity to this country practically impossible.
Section 38 says:
The value for duty shall be deemed to have been duly fixed by the minister pursuant to subsection (1) if the same is fixed on a basis or by a method prescribed by the minister.
That is to say not in the manner it should normally be dealt with on the world market, but by a method prescribed by the minister. It is inconceivable that the government should think of such an action, more particularly after everything that had been said by our hon. friends opposite especially during the last few sessions. Heaven knows how shocked they were when they were sitting on the other side of this house and the Liberal government was ruling by order in council. And now they themselves want to impose their point of view in this matter.
If you look the budget speech over again, you will see that the Minister of Finance announced that he wanted to determine the production cost plus a reasonable amount for gross profit. His mind was therefore made up even before the election! As it was said in an article published in Saturday Night, that
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decision was taken to please some members from Ontario and Quebec. The production cost was going to be established, plus a reasonable profit, but nobody wanted to ask for a raise of tariffs in this house because nobody wanted to displease people both east and west. The minister may well answer that the fair market value can be fictitious. That may be so. But nobody will ever find a way to know what the market value will be in other countries. We know it in the case of British articles imported in this country. We knew their market value; we know their value on the English market; if we didn't know, we could easily find out by asking the Board of Trade in London. But who is going to tell us how to determine the cost of production plus profit? And if you leave it in the hands of the minister, and he does whatever he wants to do, unbeknownst to parliament, what will happen? The Canadian people might very well pay more without knowing why, and without the house being told why!
Here is the definition of dumping in section 35:
Sale in Canada of goods at a lower price than the fair market value on the main market of the exporting country.
I know it is not too difficult to determine fair market value, but when it is claimed that the tariff is the cause of disquiet in the textile industry, I cannot help quoting the following article by Grant Dexter, in the Winnipeg Free Press:
(Text):
The tariff board report showed that the Canadian woollen mills were in difficulty but that the cause did not lie with imports. The chief causes were: More intense competition from synthetic fabrics and the heavy loss on inventory due to the fall in prices in 1953-54.
(Translation):
I could go on and give clear proof that, even according to the tariff board, textiles are not in that position.
We are asked at this time to give arbitrary power to support the textile industry, or so it is claimed. But who is to say where those in authority will stop? Who will tell us if, under pressure, the minister will not be induced to act in a way in which he would not normally act? He is as human as anybody else, and the cabinet ministers form a group who, like the rest of us, are subject to bargaining and to political difficulties. In order to make friends, they might well act in a way in which they would not act if they had to render a frank and honest accounting to parliament in this respect.

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Well, we of the opposition have fought this legislation today because the point at issue is a transfer to the government of the powers of parliament. How will the cost of production be determined? Nobody knows. The Department of National Revenue as well as the Minister of National Revenue are quick in admitting that the cost of production may be anything at all. Since there is agreement on that score and since the minister is being vested here with arbitrary powers, it does seem to me that the government should accept the amendment put forward at this time and which is designed, to a certain extent at least, to change part of what we are asked to approve. In fact, the very principle of the bill endangers all those agreements which, up to now, have benefited this country.
Canada is an exporting country. As such it cannot afford to let the minister endanger our foreign trade by indulging in arbitrary decisions.
Personally I am somewhat inclined to free trade. I wonder why, with the arbitrary power which is being given the minister, how he will be able to meet with British parliamentarians with representatives of the government of the United Kingdom, when they will arrive in Montreal later this month to discuss agreements with the Canadian government, especially if account is taken of the fact that they have already suggested free trade.
Those people are not fools and, upon reading the bill, they will soon discover its hidden faults.


An hon. Member:: The hon. member for Hull could certainly not do that.


Alexis Pierre Caron: Besides, we have had an extraordinary experience in the field of free trade. Indeed, before Newfoundland entered confederation, the British preferential tariff applied between the two countries and our exports to Newfoundland amounted to about $60 million a year. Since Newfoundland joined confederation, tariffs have completely disappeared and I am told that we now sell Newfoundland goods to the value of $200 million, which is a substantial increase and shows that free trade is not likely to affect a country with a sound economy.
In my opinion, such discretionary and extraordinary power is something that we cannot accept and which most parliamentarians who do not have blinkers could not accept.
I was reading recently the report of the 47th conference of the interparliamentary union which was held in Rio de Janeiro on July 24. Here is what Mr. Herbert Morrison, former labour minister in the British government, had to say in this report:

(Text):
It is not healthy for parliamentary life that parliament should be run by the government coming along with a policy or a decree, parliament forthwith holding up its hands and agreeing.
(Translation):
Mr. Speaker, I believe that, following what the government proposes now, parliamentarians will have only one thing to do in the face of arbitrary decisions taken by the minister, and that will be to raise the hand and approve the requests made.
I therefore urge members of the government-and I am afraid that they will accept it because the Prime Minister is bent on having this bill passed-to recall what they said when they sat on this side of the house. I especially ask the Prime Minister to recall the moving statements he made in connection with respect for the rights of parliament, when he was sitting on this side of the house. I make the same request to all members of the cabinet and, if they care to recall their past statements, I am convinced that, if they do not postpone passage of this bill until the next session in order to improve it, they will at least move some amendment themselves in order to make it more acceptable and more agreeable, not only to members of the opposition, but also to the public at large.
(Text):


Leon David Crestohl: Mr. Speaker, I should like to say a few words on this matter from another standpoint altogether. The hon. minister is a lawyer and he may, like his other legal confreres in the house, appreciate what puzzles me. It is one thing to write a law; it is another thing to interpret it and to apply it. It is quite simple for the minister to write regulations but I wonder whether he has ever given thought to his colleagues on the bench who may be called upon to interpret those regulations. It is from that standpoint that I should like to speak.
I am not critical of the draftsmanship of the bill but I confess I find it extremely difficult to understand the various clauses of the legislation. I address myself to all members of the house irrespective of the side they are sitting on, and ask them whether they can say in all honesty and frankness that they have read all the various clauses of this bill and understood them. I find it very difficult to vote for a measure which I must honestly admit I do not understand. There are clauses set up at great length consisting of one sentence sometimes extending over two pages, and by the time one reaches the end one cannot trace any connection with the beginning. I do not want to think of myself as

a representative of the society for the prevention of cruelty to lawyers and to judges nor do I want to suggest that the members of the bar who may have to deal with these clauses will need to take post graduate law courses in Philadelphia, but that is the way I look at this legislation. Let me quote, as one illustration, clause 40 which is a relatively brief clause:
Where sufficient information has not been furnished or is not available-
I underline those words "and is not available".
-to enable the determination of cost of production, gross profit or fair market value under section 36, 37 or 39, the cost of production, gross profit or fair market value, as the case may be, shall be determined in such manner as the minister prescribes.
Now, Mr. Speaker, if such information is not available will the minister assume the role of having divine power and being a seer? Where will the minister get the information to determine this cost if the information is not available? That question, Mr. Speaker, a judge on a bench may at some time have to determine. The information is not available, and that is why I say in all frankness that sometimes I cannot understand the legislation. The measure points out in one clause after another-it is the protective phrase which runs all through this legislation-that where it is not possible to determine value it shall be done in such a manner as the minister prescribes.
It would have been a simple matter for the minister to have written this law by saying the value shall be determined as the minister prescribes, and nothing else. What is the purpose of writing a full page of a clause which then concludes by saying: "If this is not possible, the minister shall determine the method by which value should be established". It would have been simpler to have written one sentence: "Value for duty purposes shall be that which the minister shall prescribe or determine."
Similarly, on the question of appeal, I see that section 45 is repealed and replaced, and reference is made to appeals on a question of law. I address myself directly to the minister. A man is entitled to appeal on a question of law. Is it a question of law to determine cost of production? That is purely a question of fact. It is almost an elementary question of fact. Cost of production is not a question of law. If it is so difficult to determine cost of production why should one not have the right to appeal on a question of production cost?
Fair market value is not a question of law. The minister will surely admit that fair market value is a question of fact after
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determining a great many elements which go into the determination of fair market value. Why should not one be permitted to appeal a matter of fact such as fair market value?
Let us consider gross profit. Is that a question of law? It is not a simple matter from all these clauses to determine how gross profit will be established. If it is so difficult to establish gross profit the procedure of establishing it can be only by examining the facts. Why should not one be permitted to appeal the question of gross profit? The same thing applies to value for duty. It seems to be referred to very frequently and is almost the basis of the entire measure.
In my dealings with the department I have found the departmental officials most cooperative, congenial and anxious to serve. If a member of parliament can express a preference as to what department out of all the departments of government he prefers to deal with, my choice would certainly be the Department of National Revenue and the customs branch. I find them most cooperative. I also find, however, that they are placed on the spot in having to interpret. I do not like to press them for various interpretations. I believe the minister should not have created such a complicated vehicle to attain the objective he seeks. The protectionist objective could have been achieved in four or five sentences rather than in page after page of complex clauses that are practically all one sentence. He makes it extremely difficult for the officials of the department. I know they will have further difficulty in interpreting. They are constantly trying to divine what is in the mind of the minister.
I wish I could understand this measure. If I could I would perhaps deal with it in another fashion. Although I agree with everything my leader has said about the merits of this type of legislation and the principle which underlies it, in view of the fact that the legislation is not clear and is most confusing I cannot vote for it. Perhaps it was intended to be confusing and if it represents an attempt to cover up something the minister wishes to say but cannot say directly, I must say that not understanding the law I cannot in all good conscience vote for it.


William Moore Benidickson: Mr. Speaker, I wish to address myself fairly directly to the amendment that has been proposed by the Leader of the Opposition (Mr. Pearson). I hope to take another opportunity, perhaps in committee, to discuss some other aspects of tariffs and protection. I quite well realize that pressure is increasing in the country when there is something in the nature of a recession to keep out foreign goods. This amendment is not concerned with

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the problem of dumping. Dumping is a cry that is always raised by protectionists whenever they cannot meet certain situations on merit.
What we are discussing with respect to this amendment is a question of parliamentary authority over the fundamental principle of taxation something I suggest we should be zealously guarding at all times. The power to tax traditionally belongs to parliament and not to a minister or the executive and that is the main point, as I see it, in the amendment that has been advanced and which is before us at the moment.
The new government is proposing to go back to the experience with which most of us are familiar and one that was associated with the previous Conservative administration under Mr. Bennett. I would suggest to hon. members of the government, particularly those from constituencies in western Canada and the maritimes, that if the electors in those areas had any idea that the result of the election would be a return to arbitrary valuations such as they rejected so emphatically in 1935 the outcome of the election would not have been as it was on March 31. I suggest that those hon. members whose geography I know best who come from the prairie provinces should give very careful consideration to this.
I should like to draw to the attention of certain hon. members and particularly those from sections of the country where primary industry depends on trade the desirability of considering some of the practical results of this policy when it was promoted in the thirties under the last Conservative administration. I have in my hand a rather classic and up to date textbook with respect to customs administration in Canada, written by Gordon Blake, and appearing as one of the Canadian studies in economics, No. 9 of the series. At pages 102 and 103 of this volume which is an analysis of our tariff system under the heading "Reaction Against Administrative Protection", when reviewing the situation in the thirties, the author states:
Official valuations were used also to impose very heavy duties on textiles. Values were listed on the basis of cost of production plus a reasonable advance for selling cost and profit, which in turn was based on the New York spot raw cotton price of seven cents per pound.
I wish to give illustrations of what happened before and after the issuing of a departmental letter of April 7, 1932. That is all it was but it represented the power to tax. Speaking of this the author states:
A departmental letter of April 7, 1932, to collectors and appraisers gave instruction as to values for duty to be applied to various qualities of cotton fabrics, when imported from the United States.

Here is the result. The figures are taken from invoices that appeared in evidence before the United States tariff commission when they were, under their more liberal trade policy, prepared to exclude Canada from any of the benefits of that new policy. Prior to the letter we had an invoice value in Canadian currency on a textile imported on April 6, 1932, of $55.32. I shall not go into the detail of how the duty was calculated but the total duties, regular, special and excise tax, amounted to $28.69, still a very substantial portion of the invoice value of the goods. Then, a month later, following this mere writing of a letter with no authority from parliament other than parliament surrendering its authority by giving it to a minister, on May 8, 1932, on goods with an invoice value in Canadian currency of $51.66 the total duties, regular, special, and excise tax amounted to $49.08, approaching the full value of the goods.
This is in practical form what results when parliament surrenders its rights to decide upon the over-all levels of taxation and certainly a tariff levy is a tax. It is a tax immediately on the importer but the importer, as we all know, immediately passes that tax on to the ultimate consumer. I suggest it is important that this government and paricularly its backbenchers should consider that they now have the largest majority that has ever been returned to parliament in the history of this country and there is nothing to stop them expressing out in the open and in a proper legislative form their views as to what tariff rates should be. I suggest it is completely improper for them to remain silent in this respect and I again point out that the electors in many parts of Canada would not have elected them if they felt the government they support was going to use this back door method.
I suggest that it is perfectly proper to indicate to the administration what these rates on these commodities should be. It should be made known; it should be something of public knowledge; it should be the law of the land and not something that is a back door, hole in the corner, secretive, arbitrary type of taxing solely at the discretion of the Minister of National Revenue.
There are strong feelings with respect to this type of taxation and impost of cost, which I say are very quickly passed on in the form of cost on working men's overalls, or the cost of children's clothing, or those various things. This is something of utmost importance. I do not think I have read a better expression concerning this right to tax than an article which appeared in the Victoria Times of July 30, which had this to say:
Foreign goods must not be sold here-

Apparently it had reference to announcements which were forecast in the budget. I continue:
-unless their selling price is as high as the cost of production, plus a reasonable profit.
How can the cost of production be determined? Will every foreign manufacturer tell the Canadian government how much he is spending on production or what profit margin he is earning? Of course not. Besides, the production costs and profits of every manufacturer are different.
Since the facts are unobtainable, the government will dream them up for itself. It will guess what it costs to produce a certain article, it will add an imagined reasonable profit and then levy import duties on the resulting figure.
Now, as I say, addressing myself simply to the amendment, I want to ask hon. members, particularly those from the prairie provinces and the maritimes and from northern Ontario, where we produce almost entirely for export markets, and in the past on a large and expanding two-way trade, whether or not they really want to vote for something that is hole in the corner, back room administration, resulting in taxation by simply writing a letter, as the most practical thing that might be the law of the land rather than a tariff rate expressed by parliamentary vote.


John Whitney Pickersgill: I thought the minister was going to reply, but since he is not I should like to make a few remarks that are strictly relevant to the-


George Clyde Nowlan: I was going to speak briefly before the amendment was put but I certainly do not intend to make a speech.


John Whitney Pickersgill: I do not intend to make a speech, either. In fact, what I intend to do mainly is to repeat a part of an excellent speech made in this house 28 years ago by another Liberal, sitting at that time in opposition, which I happened on and which I would add is far better than I could have done myself. But I wanted to say, first, Mr. Speaker, that after I read the bill, which is now before the house, I remembered the great interest that the Prime Minister always took when he was on this side of the house in King Charles' head which is relevant to the question which is before us now. The minister will remember, of course, that King James I, when he sought to liberate himself from the financial control of parliament, hit upon the bright idea that since duties were a tax on foreigners and not on the subjects they were not under the control of parliament. The Minister of National Revenue, of course, remembers the history of a merchant named Bate who was seeking to import currants. This became a very celebrated case in parliament and it led ultimately, in King Charles' time of course, to different and other methods of trying to get around parliamentary control of taxation.
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It led to the famous provision in the petition of right which I do not hesitate to mention here, sir, because it is one of the great charters of our liberties which I understand we are going to seek to confirm or start confirming later in the present week. It is something odd that as a prelude to that confirmation we should have this deliberate front door attempt to take the control over taxation away from parliament.
I really was tempted to get up to speak on this mainly by the fact that, in the speech of the hon. member for Assiniboia, the ghost of the progressive party walked through this house this afternoon with Mr. Meighen's temporary cloak over him. It was very interesting to hear what I suppose, if one went through all his speeches, must have been the only Liberal speech that Mr. Meighen ever made. I daresay it was made purely as revenge because his arbitrary legislation of the year before was being taken off the statute books. At the time that other legislation was put on, Mr. Ian Mackenzie said, as reported at page 257 of Hansard of September 16, 1930, in seconding Mr. Stewart's motion, to which reference was made earlier this afternoon, and what is completely relevant to the matter before us:
This legislation definitely deprives parliament of all control over our system of taxation in Canada. The fabric of our taxation system in this dominion, as in other countries, is concerned with our revenues and expenditures. What is the situation? By section 4 we are delegating to the cabinet council of Canada the complete right and authority to fix valuation, without limitation, on any article whatsoever imported into the dominion.
I am going to leave out a bit because it really has not any relevancy and go on:
The only argument adduced by the minister- The minister on that occasion had adduced a little more in the way of argument than the minister has adduced today. I continue: The only argument adduced by the minister in defence of this legislation is the tu quoque argument;-
Apparently, Tory governments never change. They either say, "You did it or you did not do it". That is their argument. I continue: The only argument adduced by the minister in defence of this legislation is the tu quoque argument; he says, "You hon. gentlemen, when you sat to the right of the Speaker introduced a special section 43, or section 37a,-
That is the section on natural products to which the hon. member for Assiniboia referred this afternoon. Mr. Mackenzie went on: -whatever it may have been, and you gave the same authority with regard to natural products." Now, although I do believe that the fruit industry of British Columbia is in need of protection, I believe at the same time that there may be far better remedies to meet the difficulties of the fruit growers of British Columbia than giving them the protection which is given by this government.

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That is very similar to what was said by the Leader of the Opposition (Mr. Pearson) with reference to textiles. Then, Mr. Mackenzie went on:
I am opposed to the principle of the old section 43, or 47a. I do not believe that parliament should give up its supreme authority and delegate it to any cabinet council, be it Liberal or Conservative, farmer or labour.
As I imagined the minister intended to refer to this matter when he replied, I thought it desirable to put on the record now that Mr. Ian Mackenzie in 1930, speaking for the Liberal party, repented at that time and we think he was right to take the position he took at that time. He took the position that the legislation of 1922 was objectionable, not as objectionable as this bill, but it was objectionable, and we agree.


George Clyde Nowlan: Mr. Speaker, I have no intention of making two speeches as such on this bill. I suspect that when second reading is concluded I will speak at some length and deal with the arguments which have been advanced. In so far as the amendment before the house is concerned, I simply say that in no way is this bill before us in any way a violation of parliament or a transfer of the powers of parliament to the executive. Ninety per cent of this bill is drafted to cover only executive rulings and administrative practices which have grown up in the department throughout the years and which were practised at the time hon. gentlemen opposite were sitting over here. If this is a violation of parliament, then, to use the tu quoque argument, they are the ones who are responsible for it.
The government cannot accept this suggestion in any way, shape or form and we cannot accept the amendment.


Mr. Speaker:: It being five o'clock the house will now proceed to the consideration of private and public bills, the former having precedence.



PRIVATE BILLS

Mr. Arthur Maloney (Parkdale):: Mr. Speaker, with unanimous consent I wonder if item No. 29, which is second reading of Bill S-17, of which I am sponsor, might be

considered first. It is a non-contentious bill respecting the change of name of the board of trade of the city of Toronto.


Mr. A. R. Smith (Calgary South):: Mr. Speaker, I am standing in for the hon. member for Simcoe East (Mr. Rynard), who also has a private bill on the order paper, and I regret that I must object.



CONSIDERED IN COMMITTEE


[Stage Direction]
Bill No. S-16, respecting Westcoast Transmission Company Limited.-Mr. Morton.

[Stage Direction]
The house in committee on Bill No. SD-231, for the relief of Kenneth Herbert Gregory- Mr. McCleave-Mr. Rea in the chair.
On clause 1-Marriage dissolved.
Mr. Peters:: This bill for the relief of Kenneth Herbert Gregory is another bill which has brought before the house many of the faults and failings of the committee handling these bills. In this particular case a number of things occurred which should not have occurred in normal procedure. The Senate committee when hearing this particular case-and it is a contested case-heard evidence on clauses 12 and 14. It will be noticed that there are 16 clauses and that allegation No. 12 reads as follows:
That on October 29, 1957, respondent committed adultery with the said Ernest Meyers at the Tudor hotel, 599 Shelberne street, in the city of Toronto in the province of Ontario.
And No. 14 reads:
That on Monday, April 28, 1958, respondent committed adultery with the said Ernest Meyers at the Queen's hotel in the city of Montreal, in the province of Quebec.
Senate report No. 239 discusses the allegations contained in clauses 12 and 14. The clause following the allegations reads:
Wherefore your petitioner humbly prays that your honourable house

Well anyway it is not in that section.


Some hon. Members:: Oh, oh.


An hon. Member:: Louder.


William Arnold Peters: On page 8 the report says:
It was resolved to report to the main committee that:-"Your subcommittee find as a fact that, according to the evidence adduced, the allegations contained in paragraphs 1 to 16 both inclusive and particularly that the respondent committed adultery as alleged in paragraphs 11, 12, 13 and 14 of the said amended petition, have been proved."
It would appear to be rather difficult to find out from the report of the subcommittee of the Senate how the allegations in clauses 11 and 13 could have been proved, because
Private Bills
there was no evidence on those two particular allegations. They say that the allegations have been proved and that it was only fair and just that when an objection was made to the decision of the committee of the House of Commons they should be able to re-open this case on these two allegations which they had not previously discussed and that when they presented these allegations then they could come before the House of Commons committee. They brought evidence through new witnesses and presumably the evidence of those witnesses must have been the evidence on which the case was decided.
This, in my opinion, points up one problem facing the committee which should certainly be resolved before the committee sits again, for here we have the Senate ruling on divorce procedure and handling a case while hearing two allegations out of four and yet ruling on four of them that they had been proved, therefore making it necessary when an appeal was made on the two allegations which had not been heard before the House of Commons committee, that they should be able to reopen the case. I feel this is unfair to the House of Commons and it is unfair to the people involved. It is unfair to Mr. Gregory and to Mrs. Gregory, both of whom are involved in this case. They are being tried on two allegations and the decisions are made on those allegations, which are re-investigated before the house and a decision is made and then the case is again re-opened. Then we hear two different allegations which were not discussed at any length previously. We hear from witnesses on the second two allegations and in this case a different decision is arrived at.
In arriving at this decision another question was brought to light and that is that neither of the two lawyers, who are considered competent lawyers, both the lawyer for the petitioner and the lawyer for the respondent, after hearing the evidence on the second two allegations, presented very much of a case. It could be inferred, I think, because of the fact that cross-examination was not conducted as it had been in the previous allegations, that a settlement had probably been arrived at, and this was the reason for the basis of the divorce. If this is so I think the section here which says the petitioner in no way connived at or condoned the adultery committed by the respondent and that no collusion exists between the petitioner and the respondent to obtain a dissolution of the marriage does not apply if there was an arrangement between the petitioner and the respondent I suggest there was collusion in that case and that this section of the Senate evidence was disproven.

Private Bills-Divorce
It has been said in one of our recent cases, I assume it was this one, that these two people have no intention of living together again and therefore we should do the charitable thing and dissolve the marriage as they were asking. I do not think we are constituted as a committee to grant this divorce simply because the two people are not going to live together and I do not think we should be in a position where we are going to do it because the settlement is satisfactory or not.
This case points out another problem: are the petitioner and the respondent fit people to obtain a private bill in this House of Commons. The evidence of the petitioner in this case indicated certain facts to the committee. I believe everybody who heard the petitioner was not too impressed with his sincerity or his mental attitude and there may be some justification for the fact that this lady is now an alcoholic and has been treated on a number of occasions for this affliction. It could be suggested that part of the affliction from which this lady is now suffering was a result of the years during which she lived with this particular man.
In the second case where we heard the last two allegations on sections 11 and 13, there was a lady who testified as to the adultery having taken place. Her evidence before cross-examination was very good evidence, I should say. She testified very straightforwardly, remembering the complete case, the hours, the dates and the times. She was very concise and straightforward in her particulars of the case. It was only after the lawyer concerned failed to crossexamine her to any extent, and her own lawyer did not lead her in any direction, that the members of the committee did ask a number of questions and establish the fact that though she remembered these particulars very well she did not remember some of the other things. It was brought out by the committee that the petitioner in this case had contacted this lady within a few days of her appearing before us and discussed the case with her, and the implication was that arrangements had been made for her to testify in this case. If this is so I think it points out another implication that collusion did take place in this particular case.


Some hon. Members:: Shame.


William Arnold Peters: I was not involved in the collusion. I think, the house should feel ashamed if they are going to pass this type of case and I think it points out the need for a closer examination of these cases. In my opinion if the lawyers in these cases are not going to carry them to a conclusion

and I think the committee will agree there was very little questioning on the latter allegations, there is always in people's minds the opportunity for the inference that there may have been some arrangement arrived at.
I think that this man does not deserve this divorce but I do think that probably the adultery charge has been proven. Certainly it was not disproved by the committee. I think the committee should have the right to make the decision in the first place and that when these allegations are cited the case must rest on the allegations they attempt to prove in the first place. If there are any allegations left over those allegations cannot be reheard because it would appear that if you are going to have a contested divorce you are going to be hearing these cases eight or ten times if they want to put in seven or eight allegations and have them heard each time. I am sure the chairman would agree that we do not want to get into a position that we got into this time where we are going to hear allegations that were not heard before.
Again it points out that when we are hearing new witnesses evidence should be taken down so that a final dispensation on the evidence can be made if the need should appear from something that happened later. The evidence should be taken down in a written form as it is now in the Senate. Also, we should have some direction on this committee from the House of Commons in setting up and constituting it. If we are going to have these divorce cases, as we have, we are going to have to have some pattern set up which will enable us to handle them in a proper manner and this particularly points this up. If we think that the man is not a fit subject to obtain a divorce I think the committee should obtain direction along that line. That should be part of the direction given to the committee when it is constituted the next time.
I am of the opinion that this particular case is a case where the allegations have not been completely proved. I am not satisfied in my mind that these people should have a divorce. I would say that we did not in my opinion prove or disprove the evidence that was given in the last two allegations in obtaining the divorce, so for that reason we are not objecting to the passing of this particular bill.


Mr. McCleave:: The hon. member who has just spoken has made several points before the House of Commons which, if he had held a strong enough opinion on them, could have been made equally well before the committee.

There is the question of the character of the petitioner in this case, and whether the character of the petitioner was such as to entitle him to come before parliament and ask for relief. That was the ground on which the respondent's lawyers originally made an objection, but later it was withdrawn. In my handling of this case before the committee, before the evidence was completed and before the petitioner left the room I told the committee that if anyone had any questions regarding the man's merit to receive a divorce I would see that those questions were answered by the man when he was before us. When the committee came to consider its decision-a decision which was unanimous and included the vote of the hon. member who just sat down-that point was raised and no vote was taken upon it. We then dealt with the prime issue of the case, whether the allegation of adultery had been proven and we disposed of that, again unanimously.
On the matter of the procedure followed, it is perfectly true as the hon. member pointed out that the petitioner had two bites at this case. First, the hotel evidence. The two allegations were disposed of. Second, on the instruction of the House of Commons, where the hon. member might have made his objection, it came back before us and we heard evidence concerning two other allegations. I have learned something from that experience. Next year when we have counsel before us in these contested cases if they are going to rely on only two allegations out of a number of allegations they will be asked to either give positive evidence on the other allegations or close off their cases at that point so the experience we had this year will not be encountered in similar circumstances next year.
Some emphasis was laid by the hon. member on the question of collusion. It is an unhappy fact in divorce law that two parties cannot get together and enter into a written agreement on separation. Legal action has to be taken in that regard subsequent to the divorce being granted. In this particular case the lawyer acting for the petitioner and the lawyer acting for the respondent came before me. We discussed the matter at some length. It was clearly stated by these men who are reputable Queen's Counsel that no such agreement could possibly exist. It was unfortunate. They would have liked to have seen one exist in this case because the woman involved was an alcoholic and will obviously need some care before this chronic condition of hers is overcome. But the state of the law being as it is these lawyers could not make an agreement which would have been beneficial to the parties concerned, would have made the 57071-3-284
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task of our committee a much happier one and would have been of benefit to society as well.
There is no possible evidence of collusion and to raise that question in the House of Commons is to question the reputations of two reputable lawyers by suggesting that they acted in a way in which they could not have acted and continue to maintain their standing in the bar associations of their respective provinces.


William Arnold Peters: If, as the hon. member who just sat down states, there has been no settlement in this case then I would oppose the passing of this bill. I would assume there has been some arrangement made. I failed to ask that question in the committee and therefore I am partly to blame for not being able to say there had been some type of settlement in this case. If there was no agreement between the two parties-and we can only guess about that-then I am very much opposed to the divorce being granted on the simple ground that this woman will be left completely dependent on the mercies of the province in which she lives or whoever may be looking after her welfare. I am of the opinion she still has a serious medical problem that remains to be solved. I would submit that this problem is not entirely her own responsibility. From my encounter with the petitioner I believe some of the blame must be shared by him.
There is another matter about cases of this kind which I shall not discuss at length. I have no objection to what the lawyers do in these cases. After all, they are in this type of business and it is a smart business. The lawyer reopened the case on certain grounds. In my opinion he would have been well advised not to have pursued the matter. He knew it could not be pursued to any extent. I think the other lawyer felt the same way about the matter and did not pursue it but I believe some hon. members of this house who are members of the medical profession would have liked to have gone into the matter.
This case illustrates the problems we have to face. If we are going to hear divorce cases we should have a certain procedure to follow. The Senate has a procedure which it follows and a set pattern under which it operates but the House of Commons does not operate under that type of pattern. In my opinion we should be advised of settlements in these cases. If by means of a private bill we are going to dissolve a marriage after a number of years we should have the opportunity of making an assessment of the situation and assuring that an arrangement is made for the continued support of the woman in the case.

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If the hon. member who just took his seat is saying that no decision has been made I would be very much opposed to the divorce being granted. I am not asking him to say that. He does not have to defend the lawyers. It is my personal opinion-as his was a personal opinion-that a settlement has been arrived at in the case. Although it would be nice to keep these people together so they could not ruin the lives of other people I think we should grant the divorce.


The Deputy Chairman:: Shall clause 1 carry?


Robert Jardine McCleave: Mr. Chairman, 1 have to answer that point. When we discussed this matter with the lawyers they said no written settlement had been reached between them. The husband has some amount of money and if after the divorce because of his wife's alcoholic condition he wished to make some financial provision for her that course would always be open to him but there could be no agreement reached between them beforehand or that would have constituted collusion.


Leon David Crestohl: Mr. Chairman, I do not know any of the facts in this case nor do I know the parties but I am rising as a result of a statement made by the hon. member for Timiskaming. If I correctly understood his remarks he made a statement that creates something of a paradox for the House of Commons. He appeared to insinuate that there may have been some sort of collusion or some sort of deal made between the lawyers that a divorce be granted. The hon. member constantly used the word settlement and said that a settlement was made as a result of which he would like to see the divorce granted.
I do not know if I correctly understood the ambiguous remarks of the hon. member but they appear to create a paradox for parliament. Under the law if there had been any collusion or if a deal had been made between the parties for a divorce to be granted the hon. member cannot properly say he will vote for the granting of that divorce. I do not know who were the solicitors in the case but I certainly do not think we should reasonably allow a reflection to be cast on them to the effect that a deal had been made and as a consequence parliament will grant the divorce.
The chairman of the committee on miscellaneous private bills assured this committee that no such indication was given and that indeed no collusion existed between the parties and that would be a better basis on which to pass this bill.
Clause 1 agreed to.
Clauses 2 and 3 agreed to.


[Stage Direction]
Title agreed to.
Charles Edward Rea: Shall I report the bill?


William Arnold Peters: On division.
Bill reported on division.


Robert Jardine McCleave: the third reading of the bill.
Motion agreed to and bill read the third time on division and passed.



MID-CONTINENT PIPELINES LIMITED

Mr. A. R. Smith (for Mr. Rynard):: Mr. Speaker, I am standing in for the hon. member for Simcoe East (Mr. Rynard) who unfortunately was injured in a motor accident today and I would like to proceed. I therefore move the second reading of Bill No.S-15, respecting Mid-Continent Pipelines Limited.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, this company has had a most interesting life history since 1952. Those hon. members who were in the house at that time will recall that the charter legislation sought by this company in 1952, and later, was most vigorously opposed by prominent members of the present government, by some members of the Liberal party and by the members of the C.C.F. Those who were here at that time will recall that there were some very interesting and at times caustic debates surrounding this legislation. For the information of the newer members who might not know the background and the history of this company which has presented this bill to the house for its consideration at this time, may I say I have taken some pains to prepare some rather careful notes so that I will condense the telling of the history of this company in as short a space as possible. After doing that I intend to quote from the speeches of various members of the government to illustrate to the house how they fought at that time for the protection of the interests of the Canadian people.
From our point of view, Mr. Speaker, and I think from the point of view of those gentlemen who opposed this pipe line bill so vigorously in years past, the history of this company is not particularly good. This bill marks the third separate and distinct proposal that this company has made to parliament.
The first occasion was in 1952, when, under the name of the Boundary Pipe Line Corporation, this company came before parliament with a bill that would have authorized them to construct a pipe line within Alberta, Saskatchewan and Manitoba or outside of Canada. Their declared aim at that time was to pipe natural gas from the area near

Medicine Hat to Winnipeg, with the possibility of exporting gas to a United States pipe line company from that point.
The next year they came before the house with a new bill masquerading under a new name, something like political parties do on occasions, the Mid-Continent Pipelines Limited, and a new proposal, namely to build an all-Canadian pipe line to transport natural gas from Alberta to central Canada. Actually, this new proposal seemed to be a mere gambit, in my opinion, in order to secure the approval of the House of Commons and the passage of the bill, for evidence before the House of Commons committee on railways, canals and telegraph lines shows that the company had not spent any money on economic surveys, and so forth, other than, if I remember correctly, the $25,000 that had been spent before the 1952 bill was presented to this house. The Minister of Public Works (Mr. Green) was most critical of the bill at that time and on a later occasion, on March 3, the present Minister of Public Works had this to say:
I believe it was felt last year by many members of the house that these applicants were merely trying to get a charter for its nuisance value. If they could get a charter and then by hook or crook get permission to export gas from Alberta ahead of other pipe line companies, they would be in position to call the tune. There would be no doubt that they would have a most valuable asset. I believe the same position exists today with these applicants applying again for a charter.
This was on their second application. I continue:
Another ground on which we opposed the application last year was that the gas was to be taken to the United States.
It seems rather clear that this new attempt to secure powers to build a pipe line outside of Canada has a similar motive. When the bill was in the House of Commons committee on railways, canals and telegraph lines in 1953 it was amended on the motion of the present Minister of Public Works and various words which the company now wants restored were struck out. The bill was amended at that time to prevent the company from doing the very thing that it proposes to do in the bill before the house at this ime. I remember very well how prominent members of the government, prominent members of the party and the former leader of the Progressive Conservative party fought this proposal most heartily. A sidelight is that as the company's parliamentary agent, Mr. D. K. MacTavish, said at the time these amendments were quite acceptable to the promoters. He said that the amendments proposed by the members on this side who were opposing the bill were quite acceptable then. What I want to know is, why are they no 57071-3-2841
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longer acceptable? The reason lies in the failure of the promoters of this company to get the blessing of either the Alberta government or the federal government so far as the trans-Canada pipe line project is concerned.
The promoters were not able to capitalize on their nuisance value. As 1 understand it, they were not able to call the tune and so they have set their eyes on a different project. Now they come before parliament with their plan to build an oil pipe line from the Edmonton area to Chicago. Most of the pipe line companies have provisions restricting them from building pipe lines outside of Canada. The Interprovincial Pipelines is one exception. If Mid-Continent Pipelines Limited were able to get this bill through, then they would indeed be in a very powerful position-this is one point I want to bring to the attention of the house-if at any time in the future such a pipe line route becomes generally acceptable.
A bargaining position is certainly all that the promoters of this company are trying to attain. So far as the members of this group can understand, I do not think that anybody can pretend that access to the Chicago market could be obtained without deals with United States oil and pipe line interests that would almost certainly involve very substantial United States control of this company which proposes to transport Canadian natural resources. Mid-Continent Pipelines Limited may be a Canadian company now and it may propose to set up a wholly-owned subsidiary in the United States to operate that portion of the pipe line built in the United States, but we can be sure that if and when this project comes to reality the parent company would itself become United States-controlled. An example of the kind of thing that could happen is in Westcoast Transmission where, in order to obtain a large sales contract with Pacific Northwest Pipeline Corporation, the company was advised to sell Pacific Northwest Pipe Lines approximately 25 per cent of its stock, making the matter of Canadian control of this company a rather open and debatable question.
In order that new members of the house can understand the background of the bill and know the opinions expressed by prominent members of the government, the former leader of the Progressive Conservative party and prominent members of the Liberal party, I intend to quote from Hansard for the 195253 session. One gentleman whom I have pleasure in quoting on this occasion is the

Private Bills
present Minister of Public Works who had this to say as found on page 2582 of Hansard for March 3, 1953:
In effect, the only thing he has said is that if they get the charter they intend to build a gas pipe line from Alberta through different Saskatchewan centres to Manitoba; and then he said something to the effect that they intend to go on to eastern Canada. I must admit at the commencement of my remarks that if I really believed that was the intention of the applicants, I would have little objection to this bill. But because I do not think that is as yet their real intention, I propose to make a few remarks with regard to the bill.
The hon. member for Vancouver-Quadra of that day went on to say:
A similar provision was written into last year's bill in committee; but unfortunately that provision does not mean very much, if anything, where a pipe line company proposes to run its line down to the United States boundary and then sell the gas to an associate company incorporated under the laws of the United States.
The hon. member for Vancouver-Quadra of that day also said:
Furthermore I believe that the people who are behind these applicants are the same people who were behind the bill presented in 1952. They were listed in the other place, and one of them was stated to be the Fish Engineering Corporation of Houston, Texas. In effect that company was the main applicant for a charter last year, and I believe is the main applicant behind this present bill. It is worth noting that this same corporation, the Fish Engineering Corporation of Houston, Texas, is today putting up a very bitter battle before the United States federal power commission to prevent the Westcoast Transmission Company Limited from taking Peace river gas into the northwest states. The very company which comes here now asking for this charter is trying to prevent Peace river gas going into the states of Washington and Oregon. It is doing so through another subsidiary, known as the Pacific Northwest Pipe Line Corporation.
He goes on to say:
I believe it was felt last year by many members of the house that these applicants were merely trying to get a charter for its nuisance value. If they could get a charter and then by hook or crook get permission to export gas from Alberta ahead of other pipe-line companies, they would be in position to call the tune. There would be no doubt that they would have a most valuable asset. I believe the same position exists today with these applicants applying again for a charter.
That is Boundary Pipeline Corporation, the people applying under the name of MidContinent Pipelines Limited. As found on page 2704 of Hansard for March 6, 1953, the present Minister of Public Works said:
Then if there is an exchange agreement the result will be that Ontario and Quebec will be subject to the federal power commission of the United States.
He further says on the same page:
I suggest that an exchange agreement is completely impracticable, particularly as there is a time element involved.

Further, he says:
In conclusion may I say that I believe it will be a great tragedy if this western gas is not used to supply Canada first.
Those are the remarks of the present Minister of Public Works. Then we had a very active member of the Liberal party opposing the bill on that occasion. As found on page 2706 of Hansard for March 6, 1953, Mr. Cruickshank, at that time the member for Fraser Valley, had this to say:
You may have noticed in the papers of the day before yesterday that Fish interests behind this bill have instructed their lawyers to. take a new line of protest to prevent the movement of gas from Alberta and the northern part of our own province. They instructed their lawyers at Washington to see that under no consideration was any of this great natural resource being produced in Canada to be utilized for the development of Canada.
During the debate on that bill on March 10, 1953, Mr. Drew, the former leader of the Progressive Conservative party, had some very strong things to say about the bill presented at that time and I want to quote briefly from his remarks as found on page 2809 of Hansard for March 10, 1953. He said:
We will know then that we are dealing with a reality instead of simply the incorporation of a company which they have no intention of ever permitting to operate within any measurable period of time.
He went on to say on the same page:
Let the bill which permits the incorporation of pipe lines be amended to provide that a corporation dealt with in that bill shall be incorporated under the Companies Act of Canada. Then any applicants complying with the ordinary provisions of the Companies Act can make their applications for a charter, and the charters will be granted if they have complied with the basic requirements.


Mr. Speaker:: Order. I am not sure that what the hon. member is reading is relevant to the bill we have before us. There are two principles in the bill, one having to do with a revision of the capital stock and the other the extension of powers.


Herbert Wilfred Herridge: I am dealing with the previous debate on a bill which was brought before the house under the same name by the same interests. I was trying to indicate for the information of new members of the house the attitude of prominent persons in the house who spoke at that time.


Mr. Speaker:: May I remind the hon. member that the principle under debate then was different. We have before us Bill No. S-15; and the previous history of the company is only relevant in so far as it relates to the two matters which Bill No. S-15 brings before the house, the changing of its capital and the extension of its powers.


Herbert Wilfred Herridge: The hon. member for Vancouver East has suggested a point I was just about to raise. Are we justified, Mr. Speaker, in accepting this bill or trusting this company in view of its past performance and the expressions of opinion by prominent people in the government at the present time who suspected the company greatly on that occasion of not having the capacity to do the things it said it would do to the advantage of the Canadian people? I am doing this to illustrate their attitude towards the company with respect to its ability to do the things that it said it would do. In the first instance it came here and sought to be incorporated as Boundary Pipeline Corporation. Then it came here and sought incorporation as MidContinent Pipelines Limited and at that time it was proven in the committee that regardless of the great claims of the company as to what it was going to do regarding the export and transmission of gas or oil it had only spent $25,000 in a preliminary survey of the area for which they were seeking incorporation at that time. I just have a few more quotations, Mr. Speaker. Personally, my attitude to the bill is that it should go to a committee. I am taking this opportunity so that members of the committee will know what the attitude of prominent members of their own parties was with respect to former legislation with which this company was concerned. With your permission, Mr. Speaker, on that basis I should like to deal with two or three more citations before concluding.


Mr. Speaker:: As long as they are relevant to the principles of the bill I have no objection.


Herbert Wilfred Herridge: I have one here from Mr. Drew which I think is relevant to the principle of pipe lines in general. As found on page 2810 of Hansard for March 10, 1953, Mr. Drew said:
Already on different occasions we have indicated our belief that there should be an over-all declaration of policy by the government that the interest of Canadians will be the first consideration, subject always to the soundness of the application itself and those backing it, and subject also to the ordinary economic conditions which require to be considered in a case of that kind.
we also ask that a policy be clearly declared that in any future instance pipe lines carrying Canadian oil to the east will follow a Canadian route instead of through the United States as is now going to be the case.
That is still the case in this bill. The intention of the company is still the same, as I understand it, in that respect. I just want to finish by quoting the present Minister of Justice (Mr. Fulton) who was a great opponent of this bill at that time. I hope that the members of his party will listen to his words of wisdom on this occasion.
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As found at page 3160 of Hansard of March 20, 1953, he had this to say:
We have also asked for the assurance that Canadian needs, wherever they might exist and wherever they might be served potentially by the gas transported in the pipe line, would be served, before any export was permitted to the United States-
Our position-
By that he means the position of the Progressive Conservative party.
-is that parliament must ensure that the Canada first policy is pursued, so that the needs of Canada will first be served.
I have quoted at some length from these various members' remarks when a somewhat similar bill was before the house in 1953. I did so in order that new members of the house will have some understanding of the background of this bill and of the opinions expressed by various members in the House of Commons.
Before concluding I simply wish to say that I want this bill to go to the committee. I hope that the members of the standing committee on railways, canals and telegraph lines will take advantage of their opportunity thoroughly to examine this bill and to get all their questions satisfactorily answered by the officials and other witnesses provided by the company or by other persons from whom they may be interested in obtaining information.


Mr. E. Nasserden (Rosthern):: There are some questions I should like to ask about this particular bill. I should like to know who the directors are, what their addresses are and also where the head office of the company is.


George James McIlraith: We are not in committee yet.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Question.


Mr. Speaker:: The hon. member will have opportunity to ask questions in committee. There is no scope on second reading for the asking of questions. By rising and asking questions he has exhausted his right to speak. If the hon. member for Calgary South (Mr. Smith) wishes to speak, he may do so but he will close the debate.


Arthur Smith: Mr. Speaker, at this point I would prefer not to speak.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.

Arthur Edward Martin Maloney: the second reading of Bill No. S-17, respecting the board of trade of the city of Toronto.

Customs Act


Mr. Speaker:: Does the hon. member for Parkdale wish to say something?


Arthur Edward Martin Maloney: Yes, Mr. Speaker. With the unanimous consent of the house I would request that the bill be considered in committee, reported, read the third time and passed and that the usual practice of requiring the bill to be referred to a standing committee be dispensed with.


Mr. Speaker:: Does the house give
unanimous consent to the procedure proposed by the hon. member?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee, reported, read the third time and passed.
At six o'clock the house took recess.
[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


[Stage Direction]
The house resumed consideration of the motion of Mr. Nowlan for the second reading of Bill No. C-51 to amend the Customs Act.
Louis-Joseph-Lucien Cardin: Mr. Speaker, it has been said in this house, and I think rightly so, that although the government was elected on a Liberal ticket it has been administering the country with old and worn-out Tory policies with about the same alarming results which were obtained by previous Conservative administrations.


William Moore Benidickson: Back to Bennett.


Louis-Joseph-Lucien Cardin: This return to Tory policy has been evidenced in the government's general attitude toward international trade.


Mr. Bell (Carleton):: It has been increased, has it not?


Louis-Joseph-Lucien Cardin: And more particularly it is evidenced in this bill to amend the Customs Act where under the guise of anti-dumping regulations the government is once again returning to the traditional Tory policy of protective trade barriers used by the Conservative administration decades ago with the deplorable results of which we are all aware.
We on this side of the house do not for a moment underestimate the dangers of dumping practices in this country, nor are we

against anti-dumping regulations which will effectively stop this very unfair and piratical form of trade.


Richard Albert Bell: Then vote for this legislation.


Louis-Joseph-Lucien Cardin: It is quite evident that the previous government was not against antidumping regulations because it included in its legislation under the Customs Tariff antidumping regulations and we are completely in favour of any legislation which might curb this very nefarious practice. We are, however, opposed to legislation which, under the guise of anti-dumping regulations, is in fact a not too subtle return by the government to Conservative protectionism against normal competition or competition which is known throughout the world as being on a fair basis. We are opposed, as we have been opposed for a good many years, to the Conservative theory which the government is apparently re-introducing by this bill of the evaluation of duty based on cost of production plus a reasonable amount of gross profit and where the minister has the widest discrimination of guessing what is the cost of production and what a reasonable amount for gross profit might conceivably be and then fixing a completely arbitrary value for duty on such goods as he may deem fit.
I submit that this legislation is no longer anti-dumping legislation but is laying the foundation for the old Conservative protectionist theory. It seems to me that we should remember the experience of the Conservatives with this type of legislation. History does not warrant for one single moment a return to that type of protection. As a matter of fact, it seems to me that everything points to the contrary, and that beween 1930 and 1935 I think everyone will agree that this same type of legislation was not at all successful. It did not for a moment protect industry, nor did it solve the unemployment problem of that time and it certainly did not help our export trade. As a matter of fact, it was detrimental to the export trade and moreover it increased the number of unemployed during that period and today, when all the nations of the world, even those who in the past have been most reluctant to do so, have embarked upon policies of freer and freer trade-


George Clyde Nowlan: Which ones?


Louis-Joseph-Lucien Cardin: 
Richard Albert Bell: The hon. member is too intelligent to make such a stupid argument.


An hon. Member:: The hon. member should make his own speech.


Louis-Joseph-Lucien Cardin: I would recommend that the hon. member not only make his own speech but that he should look very carefully over the record of what happened from 1930 to 1935.


Some hon. Members:: Hear, hear.


Mr. Chevrier:: What about clause 39 of the bill; take a look at it.


William Moore Benidickson: Arbitrary powers.


Louis-Joseph-Lucien Cardin: Personally I do not believe that the basic cause of the textile industry's problem is low tariffs; I do not believe that the true solution to the textile problem lies in high tariff protection against normal competition. To me the problem is far more basic than that and the solution to be brought forward in order to solve that problem cannot be a superficial or temporary one such as the solution offered by the present government.


Richard Albert Bell: Such rot!


Louis-Joseph-Lucien Cardin: This does not mean that the government should not give assistance and encouragement to this very important and responsible industry in Canada, but it does mean that the government should give assistance which is more aggressive and more imaginative and that it should be aimed at making the industry itself more competitive and more economical, rather than offer, as this bill provides, a passive assistance by
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protection which will in time stifle, smother and finally destroy the industry by making its existence impossible in this highly and increasingly competitive and hard-bargaining world.
I feel sure that Canadian manufacturers and industrialists realize, as we all do, that for some years now we have been witnessing a veritable revolution in world trade practices and policies. We see that we cannot successfully meet the serious challenge of new trading conditions by counting exclusively on the artificial and outdated forms of protection. Although I may scandalize certain people in this house and in the country I sincerely believe that the successful adaptation of the textile industry and other industries to present trading conditions can only be achieved after careful, complete, objective and honest scrutiny has been given to ascertain whether the industry either in whole or in part in its present form and with the present market is economically viable and sound.
If it is not, I submit that it is in the true interest of employees and manufacturers alike to face the situation as it really is and not as they would like it to be, and work together in order to change the method of production, the market or the product in order to make this industry economically sound and viable in present trading conditions. If the industry is economically sound and viable, then notwithstanding the serious difficulties and problems which now face it I submit that government, management and labour must consider together what steps should be taken to bring prices into line with those of other countries not only in Canada but on the world market. I feel that the basic problem facing the textile industry is not so much the problem of dumping but normal competition which is considered in the world as fair competition.
If the industry is to continue to exist I submit that normal competition must be met. There is really no easy way out of this problem. This bill, popular though it may be among some hon. members of the house and some people in certain industries in some areas, will not, in my opinion, solve the problem. It can only assure the complete disappearance of the industry by making it a misfit in present conditions and rendering it incapable of continued existence.
I believe that it is most unwise, most unsound and even dangerous for the government to assume, as it does in this bill, the role of protector of free enterprise at the expense of the general economy and by jeopardizing our vital export trade without giving in effect any real protection to the

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industry. Of course, the government has a responsibility and a definite interest in helping those industries which are now in difficulty to readapt themselves to completely new conditions. That help should be sound, objective and effective and it should also be completely in accord with the true interest of the general economy of this country.
I do not pretend to be an expert on either the textile industry or the custom structure but I cannot help feel there must be some measure other than the unsuccessful and obsolete protectionist method embodied in this bill, which might offer a more effective solution to the problem, and which would be far more in keeping with our concept of free enterprise. It seems to me that if the government were to grant to the textile industry and to other affected industries an accelerated rate of depreciation allowance on machinery in order to permit the industry to reequip with the latest machinery and techniques so as to reduce the cost of production it would be a far more effective approach to this problem than the artificial protection contemplated in this bill.
I also believe that if the industries themselves lessened their diversification of production and concentrated on producing as cheaply as possible one or two qualities or patterns of goods in greater quantities they would be far more competitive than they are today. Then, through our Canadian trade missions throughout the world, the industry should cater to world trade. It should seek out potential world markets and organize themselves to compete in those markets with reduced diversification rather than cater to the home market exclusively with its limited purchasing power and its demand for highly diversified products. Most countries of the world have in recent years geared their industries to the home market, if you like, but with a keen and watchful eye on the world market and on world demand. In Canada, perhaps because our country is comparatively young, we have geared our industry to supplying the needs and tastes of the home market, despite its exigencies, neglecting the fact that the world market offers a great opportunity of stabilizing those industries which are now in difficulty if the necessary steps were taken to adapt the method or production and to set the cost of production in accordance with world demand rather than limiting operations to the very restricted and very exacting demands of the home market.
The former government foresaw this very marked trend toward freer and freer world trade, and because the former government did realize that the world market offered a very good solution to the problems which

are accompanying our economic expansion, Canada became not only a signatory to the general agreement on tariffs and trade but a very active and enthusiastic member of that extremely important international organization which I consider to be essential if we are to have free trade in the world. It may be useful to put on the record once again the introductory paragraph of the general agreement on tariffs and trade. After citing the different countries which are signatories to the agreement we read, and I quote:
These governments . . . recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods.
Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce-
I submit, Mr. Speaker, that the cost of production formula which is the key note of this present bill for establishing value for duty is contrary to the objective and spirit of GATT, a portion of which I have just read. It is true that the present legislation does provide for the use of the cost of production method as a technique of last resort but under the present legislation we can have recourse to the cost of production method in evaluating duty only after we have gone through and exhausted the six or seven other methods that must be followed. Only when it is impossible to arrive at a value for duty, according to the present legislation, are we allowed to follow the cost of production method.
But under this bill the cost of production is given a competely new status. It is no longer a residual method of determining value for duty but is an alternative method under which the minister is no longer required to exhaust the other methods of determining value for duty but is given the widest discretion of guessing what the cost of production may be on certain items and imposing that as the value for duty.
I submit that this theory is a form of high tariff protection. It is a barrier to trade, discriminatory in practice, and contrary to the objective and spirit of GATT. It also conflicts very strongly with section 2 (a) of article 7 of GATT which establishes that value for customs purposes, and I quote:
-should be based on the actual value of the Imported merchandise on which duty Is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.

Part (b) of section 2 of article 7 of GATT makes it quite clear, and again I quote:
-actual value should be the price at which, at a time and place determined by the legislation of the country of importation, and in the ordinary course of trade, such or like merchandise is sold or offered for sale under fully competitive conditions.
Therefore, I submit, GATT lays down a natural price in the market of export as the basis for the value for duty and the price is not a guess on the part of the minister or any one else as to what the cost of production may be. All of this, Mr. Speaker, to say that the type of legislation now brought before the house is not compatible with GATT.
In support of my contention I have the great pleasure and honour of citing a person who to my mind is one of the greatest authorities on this matter, the Right Hon. Louis St. Laurent, who on December 16, 1953, as reported at page 976 of Hansard of that date, said:
Our interpretation of our obligation under GATT is that we cannot resort to the cost of production price, if there is another way of determining what is the fair market value. It is only when we are prevented from using other ways of determining the fair market value that we feel that under GATT we can resort to investigation of the cost of production.
Later in the same debate, as recorded on the same page of Hansard, Mr. St. Laurent said:
We undertook to allow the importation of goods at the tariff rates based upon fair market value, and this form-
Cost of production. I continue:
-of determining value was discussed in the negotiations and discarded. It was urged that that was not fair market value and that the cost of production might have very little relation to the actual market value of the goods.
Later, as reported at page 977, Mr. St. Laurent said:
Mr. Chairman, it is not the government that the hon. member would have to satisfy that you can go back to the pre-1948 practice and still comply with GATT. It is the other members of GATT. They would regard a return to the 1948 situation as a clear violation of the undertakings of GATT.
I submit, Mr. Speaker, that what this legislation is doing is going back to the pre-1948 practice. I also say that as a result of this legislation retaliatory action on the part of other signatories of GATT, provided for under the agreement, could be imposed against Canada and this, of course, would be very prejudicial and have dire consequences on our foreign trade and our general economy in Canada. At a time when there is economic difficulty and unemployment in Canada I submit we cannot afford to risk any further deterioration in our economy by introducing legislation which was so unsuccessful in the past. For these 57071-3-285
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reasons, Mr. Speaker, I would move, seconded by the hon. member for Levis (Mr. Bourget):
That all the words after "that" be struck out and the following substituted therefor:
this house reaffirms the adherence of Canada to the spirit and objectives of GATT, which are clearly violated in the provisions of this bill.


Edmund Davie Fulton: Mr. Speaker, I think it is probably hardly necessary for me to raise the point of order-


William Moore Benidickson: No, it was ruled upon earlier.


Edmund Davie Fulton: -that this amendment is out of order under the provisions of subsections 3 and 5 of citation 203 of Beauchesne's fourth edition. Subsection 3 of citation 203 reads:
An amendment setting forth a proposition dealing with a matter which is foreign to the proposition involved in the main motion is not relevant and cannot be moved.
Subsection 5 of this citation reads:
An amendment was ruled out because it raised a new question which could only be considered on a distinct motion after notice.
I believe the argument of my hon. friend who just moved the amendment defeats his amendment because if as he says this is a complete violation of GATT then obviously the proposition involved in GATT is foreign to the proposition involved in this bill. I do not of course accept his argument but that was his argument and therefore his amendment is out of order under both subsection 3 and subsection 5 of citation 203.


John Whitney Pickersgill: Mr. Speaker, I would cite again to Your Honour-and perhaps it is almost redundant to do so-the relevant words of citation 382 of Beauchesne's fourth edition:
It is . . . competent ... to move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill-


Edmund Davie Fulton: It must be relevant thereto, though.


John Whitney Pickersgill: Of course. I am sure Your Honour could not entertain for a moment the suggestion that a bill which seeks to provide in the Customs Act items that are different from those to which we agreed at GATT is certainly not relevant to GATT and GATT to it.


Louis-Joseph-Lucien Cardin: I am not an expert on
procedure but I would like to read from "May's Parliamentary Practice", sixteenth edition, at page 530:
It is also competent for a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move what is known as a "reasoned amendment".

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I consider, Mr. Speaker, that what I moved was a reasoned amendment. Paragraph 1 of this section, speaking of an amendment, says:
It may be declaratory of some principle adverse to. or different from, the principles, policy or provisions of the bill.
I submit, Mr. Speaker, that the principle in this particular case was GATT and the policies in the bill which are adverse to GATT are the cost of production. I really believe in my own mind, Mr. Speaker, that my amendment is completely in order.


Mr. Speaker:: The Minister of Justice makes the proposition that the amendment deals with a matter which is foreign to the proposition involved in the main motion. Perhaps he would like to elaborate on that. We have been referred to treaty obligations under GATT which relate to the method of valuing goods for duty purposes and that this bill deals with that same subject matter. I do not consider it as self evident, as the minister seems to do, that this is a foreign principle. It is an adverse principle. The question is whether it is relevant as being related to the subject matter of the bill or whether it is foreign.
Then, the other point which the minister may make is that it raises a new question and therefore requires notice. Perhaps he wishes to deal further with the question of relevancy. What he has said scarcely establishes that principle.


Edmund Davie Fulton: Mr. Speaker, I rely, of course, entirely on the citations in Beauchesne and the past rulings of Speakers of this house which are to the effect that when a minister introduces a bill which is an amendment to existing legislation, then it is not open to another member to introduce by way of amendment a proposition which raises a new question and is in that sense not relevant to the bill before the house.
Let us consider the position. Here we have a bill to amend the Customs Act. My hon. friends who have advanced a number of propositions by way of argument as to why that bill, in their opinion, should not be approved on second reading are again, I submit, seeking to put forward now argumentative matter under their amendment that it is not open to them to do. They have advanced a number of propositions which in their view indicate that the bill should not be supported.
But an amendment to the Customs Act, by their own arguments, has nothing to do with GATT whatsoever. They say it is a breach of GATT. We, of course, do not accept that argument but that is a matter of argument. Now, they are leaving the principle of the bill and

advancing an entirely new proposition which is that "this house reaffirm the adherence of Canada to the spirit and objectives of GATT, which are clearly violated in the provisions of this bill." That has nothing to do with the proposal made by the Minister of National Revenue (Mr. Nowlan) in the legislation before the house. By their very own arguments it has nothing to do with it. Therefore, it is a matter entirely unrelated to it. What they are seeking to do are two things:	one, to advance an argumentative
matter by way of amendment; and, two, to introduce a proposal which has no relation to the subject matter of the resolution before the house.
I recall time after time in my experience when hon. members have sought to introduce new subject matter not related to the principle of a bill and they have been ruled out of order by successive Speakers-I recall Mr. Speaker Macdonald, particularly-on the basis that an amendment setting forth a proposition dealing with a matter which is foreign to the proposition involved in the main motion is not relevant and cannot be moved. We had just yesterday an example of a proposition which advanced new subject matter which was not relevant, and as I submitted at that time-I recall the point of order was raised by Your Honour-an amendment not relevant could only be introduced after notice. That is the very reason for the provision in the rules that amendments which raise new matter can only be introduced after notice so that the house will not be taken by surprise.
I submit very firmly that this amendment sets forth a proposition which certainly deals with a matter which is foreign to the proposition involved in the main motion, and is shown to be so by the very arguments by the hon. member who has moved the motion and as such it raises a new question which could only be considered on a distinct motion after notice. Notice has not been given. I rely on the clear words of subsections 3 and 5 of citation 203 in the point of order which I put forward.


Lester Bowles Pearson: Mr. Speaker, on the point of order, this bill is one to amend the Customs Act in respect of valuations for duty and in no other respect. Each clause in this bill is concerned only with valuations for duty.


George Clyde Nowlan: Not wholly.


Lester Bowles Pearson: It is concerned with valuations for duty. The GATT agreement, to which Canada is a party, also has very important clauses dealing with this matter of valuation for duty and nothing could be more relevant to the clauses in this bill than the obligations we have undertaken under GATT

in respect of the procedure for determining value for duty. If it is felt, as we do feel, that some of those valuation provisions contravene obligations we have undertaken under GATT, then surely it is relevant to this bill to move an amendment along the lines of the amendment which has been moved by my hon. friend. To say that our obligations under GATT in respect of valuations for duty are not relevant to this bill which deals with valuation for duty seems to me to be a completely unrealistic position to take.


John Whitney Pickersgill: I have just one observation I should like to make on the point raised by the Minister of Justice. He referred to the decision made by Your Honour yesterday. I suppose it is hardly necessary to recall that it had relation to a resolution and not to a bill and that Your Honour drew the attention of the house to that fact and in doing so pointed out that it was competent to move this kind of amendment on the second reading of a bill but that you did not feel it was on a mere resolution of that character.


George Clyde Nowlan: Mr. Speaker, before you give your ruling on this matter, the Leader of the Opposition has said this bill deals with matters of valuations for duty. That is true in part. There are sections here dealing with valuations for duty but there is also a section here dealing with the power of the minister with respect to censorship and procedures which should be followed with respect to books which are pornographic or seditious. Is that a violation of GATT or is that a violation of the Bible? Just where does the amendment come in with respect to that?
Again, there are several sections here dealing with the appeal procedure and that certainly has nothing to do with GATT. I suggest to you, Mr. Speaker, that if there are specific sections here which, in the opinion of members of the house, are a violation of GATT that matter can be raised when we are dealing with the section itself, but the bill covers composite matters involving customs administration, customs procedure, valuations and other kindred things. Therefore I suggest that the amendment is entirely out of order. In case you should rule otherwise, Mr. Speaker, while I am on my feet I should say as well that the government certainly recognizes the spirit and objectives of GATT just as much or more so than do hon. gentlemen opposite.


Lester Bowles Pearson: If you did you would not
have introduced this bill.


Mr. Speaker:: As this is the second time
today we have had to consider the relevancy of an amendment on second reading perhaps
57071-3-285J
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I might take a minute to refer to the principles that should govern the house in its procedure at this time. I think they are well stated in May, 16th edition, at page 530, referred to by the hon. member who moved the amendment to the motion for second reading.
May refers to the usual six months hoist amendment, which is one type, at some length, and I will not read that. He then goes on to the second category of amendments into which this amendment must fall if it is to be sustained and calls them reasoned amendments. He says:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move what is known as a "reasoned amendment". . . . A reasoned amendment is placed on the paper in the form of a motion and may fall into one of several categories.
(1)	It may be declaratory of some principle adverse to. or differing from, the principles, policy, or provisions of the bill.
That is the first test, that it declares an adverse principle.
(2)	It may express opinions as to any circumstances connected with the introduction or prosecution of the bill or otherwise opposed to its progress.
(3)	It may seek further information in relation to the bill by committees, commissioners, the production of papers or other evidence.
At page 531 the following appears:
The following rules, govern the contents of reasoned amendments:
(1)	The principle of relevancy in an amendment governs every such motion. The amendment must "strictly relate to the bill which the house, by its order, has resolved upon considering."-
(2)	The amendment must not be concerned in detail with the provisions of the bill upon which it is moved, nor anticipate amendments thereto which may be moved in committee.
That is the point the Minister of National Revenue raised, that this matter might more appropriately be dealt with by amendment in committee as it relates only to certain sections of a bill which has a broader principle. I continue the quotation:
Nor is it permissible to propose merely the addition of words to the question, that the bill be now read a second time, as such words must, by implication, attach conditions to the second reading.
(3)	An amendment, which amounts to no more than a direct negation of the principle of the bill, is open to objection.
On hearing what has been said and from a perusal of the bill I would have thought it would have been possible to frame an amendment which proposed as an adverse principle that the bill was in contravention of the treaty obligations of Canada under GATT, subject to what the Minister of National Revenue says about that perhaps being a matter relating to specific sections rather

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than to the whole principle of the bill. I would have thought that such an amendment could properly be framed within that meaning and form the subject of a debate on the principles involved, focusing attention, as it were, on that particular objection to the bill and thereby providing an opportunity for a directed and perhaps limited debate.
But I must say that this particular amendment seems to me to go about the matter from the other end. It begins by reaffirming the adherence of Canada to the spirit and objectives of GATT and that seems to me to be going outside the matter that is before us at this time. That involves a new, different and quite extensive proposition that could scarcely be entertained in a debate on the second reading of this particular bill. As an afterthought the following words are tagged on, "which are clearly violated in the provisions of the bill". In the form in which it is presented I am of the opinion that the amendment does not meet the requirements of the practice of the house.


Herbert Wilfred Herridge: Mr. Speaker, I want to have a few words to say on this most interesting and important bill intended by the government, we presume, to prevent unfair competition for certain manufacturers and industries in this country and certain agricultural producers. Before proceeding further, I must say that we think the minister means well so far as this legislation is concerned and we give him full credit for that.
The minister said today that the principle of valuation had been in effect since confederation with modifications from time to time to meet certain conditions and circumstances, but a reading of Hansard and amendments to legislation throughout the years indicate that it has had a zigzag course and the fundamental problem that existed when the Liberals gave effect to dumping legislation in 1922 remains with us today. I remember the 1930 election when the Conservative party campaigned in the fruit districts of the interior of British Columbia and suggested that improvements in dumping legislation would bring stability to the fruit industry, and I am quite sure they intended to do that. They received a very heavy vote in the Okanagan and the Kootenays at that time because of the desire of the fruit growers to find some security so far as their marketing problems were concerned.
But that has not been the result. While I freely admit that this bill is intended to provide some measure of relief to fruit producers and others, the basic problems of these producers-I am speaking now particularly of the fruit industry of which I have some

knowledge-are still with us because we have failed to face them and have relied from time to time on legislation like this. As I read the record, this course of action was commenced by the Liberal government in 1922 and at that time was denounced by the Conservatives. The legislation was then extended and improved under the leadership of Mr. Bennett in 1930 in accordance with his promises to the fruit growers in his campaign of that year. At that time the Liberals opposed Mr. Bennett's amendments to the legislation most vigorously. However, the Liberals continued to support the legislation in principle after their return to office in 1935. Therefore from our point of view we cannot understand how the Liberals can logically oppose or criticize legislation which in principle was begun by them in 1922.


Lester Bowles Pearson: Oh no, not at all.


Herbert Wilfred Herridge: I think that statement is correct.


Lester Bowles Pearson: No, quite incorrect.


Herbert Wilfred Herridge: We are not in the habit of making statements without checking the facts beforehand. I suppose we should view this legislation as an attempt by the government to provide a temporary expedient to cover certain conditions and circumstances with respect to marketing problems so far as the fruit industry is concerned that have occurred frequently throughout the year. None of this type of legislation has finally solved those problems. As I said before, this bill may provide some remedy, some slight improvement but the basic marketing problem of the fruit industry of British Columbia and the rest of Canada remains with us today.
While the type of industry-I mean the manufacturing industry-affected by this bill is generally found in eastern Canada and, as far as western Canada is concerned, in the larger centres, there is included a section in response to the representations of the fruit growing interests in Canada and certain of the vegetable growing interests. No doubt that is why the government has included this section in the bill.
On this question I can speak with some experience. I come from a family that came to this country to grow apples and grow rich. I may say that we certainly have not grown rich except in experience. I know all about bringing the virgin forest into production, planting an orchard and working it into shape. We planted a small orchard of about five acres of apples. I remember in the first instance when it cost us $500 an acre to clear the land in the early days. I remember marketing our first box of apples. No one will realize the thrill one gets when

marketing their first box of apples when they are produced from virgin soil. As to the first box of apples we marketed, I was sent by my father to borrow 10 apples from a neighbour in order to make up the box. You can understand what a celebration it was for us with our trying experience, and our experience was the experience of many others.


An hon. Member:: Did you ever return the 10 apples?


Herbert Wilfred Herridge: I mention that only to indicate the hope, labour and capital that went into developing the industry and to indicate that I have some knowledge of the industry in British Columbia from the grass roots up, and that I am very sympathetic indeed to the fruit growers' problems and have a thorough understanding of them.
I also happen to have been a representative of the Kootenays on an organization committee that organized and agitated. That was in a period when respectable Conservatives and Liberals, lay down on the railroad in Kelowna and refused to let the trains move and carried placards around. Actually they acted like members of the working class under similar circumstances. Anyway, we in this group know that, whether they were Conservatives, Liberals or C.C.F., they were in a difficult position. I was on the committee representing the Kootenays that first organized and agitated the fruit growers into action. As a result there was finally placed on the statute books of British Columbia the first marketing legislation which has been a model for the rest of Canada and which the people in Ontario, Quebec and other places have seen fit to follow and to pattern their legislation upon. So, Mr. Speaker, I speak with some interest in and some concern for the welfare of my fellow fruit growers, with a knowledge of production and marketing problems of tree fruit growers in British Columbia.
I know of their efforts to improve production methods, to improve their marketing practices, I realize that they have done practically all that can be done by an intelligent group of growers to organize their production which is on a very excellent basis indeed and to organize their marketing processes. What is required now, both in the federal and in the provincial field, is government action to supplement these self-help efforts that have been going on for the last forty years if the fruit growers not only of British Columbia but of the rest of Canada are going to receive a fair return for their product.
I know that this bill is introduced by the government as an attempt to do something on a temporary basis to meet a very critical situation so far as the fruit industry in British Columbia is concerned. Fruit and vegetables
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are very difficult crops to market compared to some other agricultural commodities. You can store beef; you can store grain; and you can store other farm commodities easily; but there are certain fruit crops, such as soft-stone fruits which you cannot store and which must be marketed often under difficult conditions. They are subject to quick and wide price fluctuations due mostly to changes in weather conditions which cause rot or delayed maturity. For instance, a short crop may mature all at once and cause a glut on the market. Bad weather, unseasonable rains, abnormal temperatures, all these things can put a fruit grower in a very difficult position. Crops which affect Canadian producers start in the southern United States and gradually work north. We have that experience every year with respect to certain crops. The early production from such areas usually brings a fair return, which return ensures the producer the over-all cost of production plus some profit in those circumstances. Canadian production commences and must meet competition from the height of the season production from the border states. Certainly our growers seldom enjoy the higher returns they are entitled to from their early production.
We are affected by climate. We are affected by geography and we are affected by the vicissitudes of the fruit industry so far as storage and marketing are concerned. However, conditions respecting a certain group in the producing area in the United States with which they are competing in our market reach the point quite frequently where sales are made at prices which give no return whatsoever to the producer. That is the situation that the government aims to do something towards remedying by the introduction of the particular clause in this bill that deals with fruit. While I recognize that one section of this bill particularly is the government's response to the representations of fruit and vegetable growers, I am sure the majority of them after their experience since the days of the first world war-and I have attended a good many meetings-recognize the fact that it can only be a temporary and a partial remedy to their basic problems and does not provide a comprehensive and long time solution to their marketing problems.
Mr. Speaker, I speak as a free trader in principle. I was brought up in a free trade family. As a matter of fact, my father was a Liberal free trader, my mother was a Conservative free trader and I am a C.C.F. free trader. You can therefore well understand that free trade policies flow through my system. However, regardless of what can be done under this bill, I think if we examine it thoroughly in the light of present world and national conditions, we must recognize that

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the principle of this bill, first of all goes in a direction contrary to the spirit of the times with respect to international markets and the spirit that is being expressed by progressive people in the world who realize that world prosperity depends on an increased flow of goods across international boundaries and so on.
Second, as the previous speaker mentioned, in our opinion, regardless of the best intentions of the government and of the minister, it violates the spirit and the objectives of GATT.
Third, it places potential restrictions on trade with the United Kingdom and other commonwealth countries. I am sure that an examination of the effect of this bill will indicate that.
Fourth, over a period of time this policy, if carried to its logical conclusion, can invite economic retaliation from the countries directly affected.
Therefore, Mr. Speaker, regardless of what the government is trying to do at the present time, I hope that this measure is considered by the government only as a temporary stopgap that will provide time and opportunity for the government to develop a policy in step with the urge and the demand for the extension of international trade as the basis of prosperity for all producers in Canada and all producers in other countries.
As I have said before, this problem of which I am speaking particularly now has been with us since 1922 and in our opinion it will not be solved by the section in this bill that is intended to relieve the situation at this time.
Having expressed our criticism of the bill and our sympathy .for the fruit growers and without questioning in the slightest the motives of the minister, I think we are now called upon to present an alternative policy. If you criticize you must also be prepared to say what you would do if you were in office. I suggest a program along the lines mentioned this morning by the leader of this group, and which I now want to repeat and to mention one or two other aspects relating to the situation which I understand from experience.
We say that we are going to have to tackle the basic problems of these fruit and vegetable growers and I am particularly dealing with that group. It is a funny thing, but I have always noticed at the many conventions I have had the pleasure of attending, both of the fruit growers and of the livestock breeders, that it is very easy to find evidence of the difficulties faced by these people. One can find such an illustration by looking at the physiques of the men attending the conventions. When you attend a livestock convention they are all well padded and of good

weight, whereas those attending the fruit growers' conventions mostly look like me.
We suggest the full use of the agricultural prices stabilization legislation for the establishment of minimum prices. I may say that the stone tree fruit growers or the soft tree fruit growers of British Columbia were very disappointed indeed that the government had failed to recognize in any way their present need by failure to grant any deficiency payments for the 1957 crop. That sort of stabilization is very necessary and I particularly emphasize that this does not apply to apples only but it is also necessary for the stone tree fruit growers because they have to deal with fluctuations in climate, and in marketing conditions caused by geographical conditions, to a greater extent than any other tree fruit growers or, as a matter of fact, any growers of the fruit marketed from this area.
Secondly, we suggest that positive steps be taken to assure adequate and continuous operation and maintenance of processing facilities. I want to say a few words on that when the Minister of Finance (Mr. Fleming) brings forward his item of $30,000 for the employment of an administrative staff intended to help small business in Canada under present circumstances. We do suggest that both this government and the provincial governments get together with the processors and the canners of this country and get them to recognize their responsibilities to the fruit and vegetable industry across the country and not to allow the continuation of the purchase of the canneries and processing plants in Canada by United States interests and then to have them close them down while the growers in question are in a price squeeze resulting in very little return for their labour.
Thirdly, we believe the federal and provincial agricultural conference which is attended annually by representatives of the federal and provincial governments and which in the past has dealt mainly with production problems should be called and should include representatives of the producer organizations, the marketing and sales agencies and the processors and canners for the purpose of obtaining-


Mr. Speaker:: Perhaps the hon. member's remarks would be better directed to the clause when it is in committee. If the principle of this bill is to help the fruit growers then it is to help them by tariff action and not by the countless other ways which the hon. member is attempting to describe. I think he is trespassing on the time of the house by going into these various other remedies.


Herbert Wilfred Herridge: Mr. Speaker, the principle of my speech is to help the fruit growers, but

I am just concluding. We are sure a very great deal could be done in this respect rather than accepting the principles adopted in this bill as permanent policy.
Look what we have done in defence. When we have to get together on an international basis things are done quickly and definite action is taken. We want the same sort of action for the farmers and the producers of this country, and I think we should also give encouragement to co-operation between Canadian and United States grower organizations to work out together some of these problems. There has been limited success in that respect in the tree fruit industry and there is a great avenue for exploration in that direction.


Some hon. Members:: Order.


Herbert Wilfred Herridge: In conclusion, I say that rather than introducing this legislation the government shoud give a lead to action along the lines I have suggested as best I could while trying to remain in order.


Edward Nasserden: I did not
intend to take part in this debate but in view of the challenge voiced by both Liberal and C.C.F. members in respect of their remarks concerning the welfare of the fruit industry of this country and those who are concerned with it, I cannot help but feel compelled to say a few words in regard to the action proposed by this government.
Something was said by one Liberal member in regard to what Louis St. Laurent had accomplished by his trade and export policies during the time he was in power in Canada. If I recall correctly he was named leader of the Liberal party in 1948, and I have a publication which I received the other day from what I believe some members of this house consider a reliable organization. It is Canadian Labour, the official journal of the Canadian Labour Congress and I would like to take the time of the house for one moment to read part of an article, which has a bearing on this particular matter, which reads as follows:
Take rubber footwear, in which labour costs account for more than 50 per cent of total factory costs, as an example. Canadian production declined from more than 24,000,000 pairs in 1947, to about
12.500.000	pairs in 1956, and employment in Canadian rubber footwear factories fell from about
7.000	workers to 5,000 workers, as a direct result of the almost total loss of a large export business, as well as a substantial part of the Canadian market to foreign competitors.


Mr. Speaker:: I hope the hon. member will relate what he is reading very directly to the bill because it does not appear to me to have any bearing upon it. He is talking about exports and this Customs Act relates to imports.
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Edward Nasserden: I am getting down to that, Mr. Speaker.


Mr. Speaker:: I am expressing the hope that the hon. member will get down to it.


Edward Nasserden: Thank you very much. It went on to say:
There appears to be little prospect of a reversal of this sorry trend, and we have to assume that henceforth the fortunes of the Canadian rubber industry will depend almost entirely on development in its home market.
Protection of Industry is Essential
There is every reason to fear that a similar trend is developing in waterproof rubber footwear, and that unless the government takes action to protect the Canadian manufacturers and their remaining 5,000 workers against price competition, based on wages as low as from four cents to 15 cents an hour in Hong Kong, the rubber footwear industry is doomed.
If the kind of thing that the Liberals and the C.C.F. members of this House of Commons do not want to see this government do is protect those who are engaged in labour in this country then I think that is a new page in the history of this country as far as those two parties are concerned. All I want to say is that I think every member of this House of Commons can support this measure. It is a measure designed to give our industry and our labour a fair share of the dollars being made here in Canada. I was certainly surprised to hear some hon. members, particularly in the C.C.F. group, rise on this occasion to take the stand they have taken in view of the stand they took across this country with regard to their desire to work in the interest of labour.


George James McIlraith: Mr. Speaker, I will speak briefly at this stage because I believe that is the sense of the house, but I must say I regard this measure as perhaps more important than any which has come before us during this session of parliament. I say that because of its implications in relation to the foreign trade of this country on which so much of our prosperity depends. I will try not to repeat anything in the course of my remarks which has been said already in the speeches which have been made so far and to present in the briefest way possible the arguments I wish to make. I must say that I would wish to speak at greater length on this subject because of my feelings with regard to it, but sensing the feeling of the house I will not do that. I am concerned with the principle of this bill, and I must say this measure has been presented in a strange way to the house because the minister took exactly five minutes on the motion for second reading, three minutes in replying to a proposed amendment and less than one minute in speaking to a point of order.

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In speaking to that point of order he raised a question as to what was the principle of the bill. I had assumed until that time that this was anti-dumping legislation, legislation aimed at preventing the trade practice commonly known as dumping, a term which is probably ill-defined but which is well understood by everyone concerned with trade. In any event I want to point out that the principle of a bill can only be determined through a study of what is actually included in the bill. In this particular measure there are five clauses. Clause No. 1 repeals sections 35 to 40 of the Customs Act and substitutes new clauses in their place. The new clauses which it is proposed to substitute begin with clause 35 which reads:
(1) The value for duty of goods imported shall be determined in accordance with the provisions of sections 36 to 40B.
And so on. The next new clause to be substituted is clause 36 which begins:
Subject to section 38, the value for duty shall, notwithstanding any invoice or affidavit to the contrary-
And so on.
The next new clause to be substituted is clause 37 and it goes on to say:
Subject to section 38, where like goods were not sold for home consumption, or were not sold for home consumption in the circumstances described in section 36, but similar goods were so sold, the value for duty shall-
And so on. That is the subject matter of that particular clause. The new proposed clause 38 starts off this way:
Where in any case or class of cases.. .the value for duty cannot be determined . . . the value for duty shall be determined in such manner as the minister prescribes.
I will only read a sentence of clause 39 to illustrate my point. It says:
Where the minister is satisfied that material injury has been or may be caused to any industry in Canada or any portion thereof.. .the governor in council may order that the value for duty of those goods or that class of goods shall be increased-
And so on.
The proposed new clause 40 reads:
Where sufficient information has not been furnished or is not available to enable the determination of cost of production, gross profit or fair market value under section 36, 37 or 39, the cost of production, gross profit or fair market value, as the case may be, shall be determined in such manner as the minister prescribes.
Then the proposed new clause 40A goes on to set out the whole procedure with regard to valuation and uses the expression, beginning at line 29:
The value for duty shall be the amount for which the goods were sold, less the amount, if any, by which the fair market value of the goods has decreased between the time of purchase and the time of exportation.
[Mr. Mcllraith.j
We could go through every subclause and find a similar reference to value for duty. The proposed new clause 40B begins:
If the value for duty as determined under sections 36 to 40A does not include-
And so on. Clause 2 of the bill deals with section 45 of the act. It repeals that section and substitutes a new one. This procedural clause reads as follows:
Any of the parties to an appeal under section 44-
Section 44 is not dealt with in the bill, but it starts off this way:
A person who deems himself aggrieved by a decision of the deputy minister
(a) as to tariff classification or value for duty.
Clause 3 of the bill substitutes a new section 46(1) and this again deals with valuation or tariff classification. Note the term "valuation." And then 46A makes reference specifically to sections 43, 44 and 45 of the act, all of which refer to valuation for duty.
Clause 4 of the bill now before us deals with invoices and the fair market value of goods determined in accordance with sections 36 to 40B, every one of which sections refers to value for duty.
Now we come to clause 5 of the bill. Clause 5 refers to paragraph (b) of subsection (7) of section 40A of the act. It will be found that that also brings in the question of value in paragraph 5 which is concerned with the proclamation of the governor in council.
What I want to point out is that every clause in this bill deals with the matter of value for duty of goods being imported into this country and that every proposed new section of the act deals with that subject. From this we can arrive at only one conclusion: notwithstanding the argument of the Minister of National Revenue (Mr. Nowlan), which he made in the course of a discussion on a point of order, that this does not deal with value for duty, it does, and it deals with nothing else.
That is the whole principle of the bill. I do not think the minister should deal with it other than on that basis.
After recognizing the bill as being an antidumping measure, a measure providing means for fixing the value for duty purposes, I wish to place on the record two clauses of the GATT agreement, clause 2 (a) and 2 (b) of article 7, which read as follows:
2. (a) The value for customs purposes of imported merchandise should be based on the actual value of the imported merchandise on which duty is assessed, or of like merchandise, and should not be based on the value of merchandise of national origin or on arbitrary or fictitious values.
(b) "Actual value" should be the price at which, at a time and place determined by the legislation of the country of importation, and in the ordinary course of trade, such or like merchandise is sold or offered for sale under fully competitive conditions. To the extent to which the price of such

or like merchandise is governed by the quantity in a particular transaction, the price to be considered should uniformly be related to either (i) comparable quantities, or (ii) quantities not less favourable to importers than those in which the greater volume of the merchandise is sold in the trade between the countries of exportation and importation.
I could go on reading other clauses from the GATT agreement to illustrate my point but perhaps these are sufficient for that purpose to the extent to which they deal with value for duty.
That brings me to this point. As indicated in the remarks of the Leader of the Opposition (Mr. Pearson) in the early stages of the debate on this bill, this measure is one in which the government is asking added powers for the executive to fix value for duty purposes. It is requesting extraordinary additional powers. I will not develop that argument further because an amendment was advanced on that point which has been disposed of by the house. As indicated by the vote the house wants to proceed with the bill notwithstanding the points outlined by my leader. I shall not reopen the argument in that respect.
The minister has made no case for seeking these extraordinary powers. He has not argued nor illustrated the inadequacies of the existing legislation. He made no case on that point whatsoever. The measure before us does not simply deal with changes in the existing legislation but it extends the right of the executive to fix values in the way indicated in the argument presented by my leader this morning. The effect of granting these powers is going to injure our trade. I ask hon. members to bear in mind what I said about the government having put forward no case whatever concerning why the executive should be granted these additional arbitrary powers. My fear is that Canada's trade will suffer. Canadian trade sharply increased since 1946. Perhaps it is unnecessary to place on the record all the figures I have before me relating to this point. I shall put only the total exports on the record. In 1946 Canada's total exports amounted to $2,339 million and in 1957 they amounted to $4,934 million.
That vast trade was built up by this country with a great number of other nations. It was built up at a time when efforts were being made to free and increase trade all over the world. One of those efforts was the general agreement on tariff and trade to which we should adhere. That may come as news to some hon. members of this house but I do not want to argue that point. Nevertheless, that is how the trade was built up. We are now being asked to jeopardize our relations with all the foreign countries with
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whom we trade. We are now putting them in the position where they could argue that we have violated the agreement to which we are a signatory. Why? No reason has been given to us by the government and we are entitled to have reasons given. If there is a fear of the evil of dumping then the house should be told about it. This is a drastic and serious remedy we are seeking; but a remedy against what? Nothing. There is no evidence of the inadequacy of the existing legislation or, if there is, it has not been put on the record.
I feel that something should be said in reply to the argument advanced by the hon. member for Rosthern (Mr. Nasserden) and I shall reply very briefly. The hon. member tried to indicate that this bill would help labour. This bill is the very antithesis of help to labour. It is the very thing that will increase unemployment in this country and unemployment is a worrisome problem to many Canadians at this time. I want to remind the hon. gentleman that the method of determining value for duty incorporated in part in the bill now before the house is the method that was brought into the house and enacted into legislation by a Conservative government headed by the late Lord Bennett, in the 1930's. If the hon. member will look at Canadian trade statistics he will observe what happened to Canada's trade under that type of legislation. If he studies the problem he will see the severity with which dumping legislation was administered at that time. It undoubtedly contributed to tensions in international trade and to the reduction of trade.
When the hon. member talks about pay for labour let me remind him that coming from Rosthern he knows what the term "Bennett buggy" means. He also knows what hon. members of this house are talking about when they refer to the time when labour in this country got 20 cents a day. He understands those references.


William Moore Benidickson: Trade was cut off.


George James McIlraith: Do not let hon. members
from the west be mislead about the dangers inherent in this bill. The dangers are that the bill will interfere with and lessen Canada's trade. If the government wants to make changes in the procedures affecting the existing dumping legislation let it bring in amendments. This bill will not accomplish that because it goes much further. In fact, I have often wondered if it does not go much further than the minister wanted or intended it to go, but perhaps that is not properly debatable at this stage.


Edward Nasserden: That is not what labour
thinks.

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George James McIlraith: For all the reasons I have asserted, Mr. Speaker, and holding the views I do about the inherent damage that will be done to our foreign trade, and particularly because of the incompatibility of this bill with our obligations under GATT, I move, seconded by the hon. member for Levis (Mr. Bourget):
That all the words after "that" be struck out and the following substituted therefor:
This house declines to proceed with a bill the fundamental terms of which are repugnant to the spirit and objectives of the treaty obligations of Canada under GATT.


Mr. Speaker:: The point raised by the Minister of National Revenue is the one that bothers me most about this amendment; that is, that this alleged conflict with GATT could be dealt with at the committee stage; but having gone through the bill, I find the only section which does not relate to value for duty is the procedural sections and to some extent these sections are related to the method of appeal from valuations for duty. If the minister or any member wishes to speak they will have to convince me that this is not so.


George Clyde Nowlan: I do not think it takes much convincing in the form in which it is put. It is far different from any other amendment. It says, "This house declines to proceed with a bill". Have you ever seen an amendment before which says that the house declines to proceed with a bill? It is a sheer negative to express reasons possibly to show that the house declines to proceed with a bill the fundamental terms of which are repugnant. I suggest in the first place the form of the amendment is completely out of order.
In so far as the bill itself is concerned, Your Honour said you were somewhat troubled by my reference to the division of legislative powers contained within the bill. What the hon. member for Ottawa West said, of course, is perfectly right. Certain subsections here deal with valuing procedures. I point out to Your Honour that this bill contains only three sections.


George James McIlraith: Five.


George Clyde Nowlan: It is true that one of them is longer than any other two. One section, and only one, deals with valuation for duty.


George James McIlraith: No.


George Clyde Nowlan: Absolutely, only one section deals with valuation procedure. We turn to section 3. Section 1, of course, is something which provides for repealing sections 35 to 40 of the Customs Act, and we go on to various subsections set forth there. Then, we come to section 3 which gives power to

the deputy minister to refer any question to the tariff board. That deals with appeal procedures. That has nothing whatever to do with GATT or anything of the kind. Then, the next section has to do with importation of goods. Any seditious material comes under section 3, and section 4 is also a matter having no reference whatsoever to valuations. Your Honour is in this position. One out of the four sections of this bill deals with valuation procedure. The Leader of the Opposition shakes his head, but that is correct. It is true that section 1 sets forth five old sections or new sections of a bill.
In so far as this bill is concerned, that is the situation. I want to emphasize this, Mr. Speaker. Of those five sections only one is new; only one can be construed as a violation of GATT, section 39, and when we come to 39, either tonight or tomorrow, we will be perfectly prepared to argue with those who wish to argue whether 39 is a violation of GATT or not. All of the other subsections, except subsection 39, are simply administrative practices which have been carried on under government administration and all that they do is to clarify the matter. There is no change in principle whatsoever.
There is no point in extending the argument on this, Mr. Speaker. You can make your ruling and it, of course, will be dealt with and we will deal with the amendment as Your Honour sees fit to rule, but I do say very strenuously that this bill does not in itself constitute a violation of GATT. It has three different parts, but the main part is the longer part, consisting of four or five pages. There is only one subsection in that which could possibly be construed as an amendment of GATT and that can be argued, I submit to Your Honour, when the section is dealt with in the committee and not before. Surely the bill should not be ruled out of order, or the house decline to proceed with it, because one subsection of the many may or may not be a violation of GATT.


George James McIlraith: Mr. Speaker, on the point of order briefly and on only one aspect of it, I think there was some misunderstanding about the provision for appeal. It is subject to section 44 of the act which deals with valuation for duty as well as with other things. Therefore, we have the extraordinary situation that value for duty is not only dealt with in every clause of the bill but as well in each of the new sections of the act embodied in these clauses.


John Whitney Pickersgill: Mr. Speaker, I do not know whether Your Honour wishes to hear argument on the other point raised by the Minister of National Revenue-


Mr. Speaker:: I prefer to hear argument from the other side of the house. If the Minister of Justice has had a chance to look at this-he was concerned with the previous amendement-he might want to direct himself to it.


Edmund Davie Fulton: Mr. Speaker, I have been out looking up some of the previous occasions on which amendments have been ruled out of order on the grounds either that they raised new matter which could only be raised after notice or else that they were irrelevant to the terms of the bill. I have not Hansard before me; the volumes are coming in, but on second reading of a bill the principle is established most clearly that any amendment must be strictly relevant to the principle of a bill.
This is a bill to amend the Customs Act. My hon. friends have sought twice now to move an amendment which alleges that the bill is contrary to the spirit and objectives of GATT. That, Mr. Speaker, is a matter of argument that may be in order but as an amendment it is not relevant to the principle of the bill. Your Honour has already ruled out of order the last amendment which read:
That all the words after "that" be struck out and the following substituted therefor:
"this house reaffirms the adherence of Canada to the spirit and objectives of GATT, which are clearly violated in provisions of this bill."
As I say, this is a matter of argument which may be in order but as a matter of amendment it is not relevant to the principle of the bill. Now they are trying to do the same thing by alleging that:
This house declines to proceed with a bill the fundamental terms of which are repugnant to the spirit and objectives of the treaty obligations of Canada under GATT.
There are a number of occasions, and especially in the parliament from 1949 to 1953, where Mr. Speaker Macdonald ruled that on all occasions amendments with respect to the principle of motions or bills must be strictly relevant. He dealt with the argument put forward by my hon. friends opposite that the amendment might advance a proposition which, as they say, asserts a principle different from or opposed to the principle of the bill. In every case Mr. Speaker Macdonald ruled that while that is a principle of amendment nevertheless the amendment must be so phrased that it is strictly relevant to the principle of the bill itself.
I have not had much time since returning from the library to find the most apt amendment. I have four occasions here before me and perhaps I might refer Your Honour to them. There is October 17, 1949, pages 856 and 857; April 21, 1952, pages 1438 and 1439.
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William Moore Benidickson: Give us the circumstances.


Edmund Davie Fulton: Perhaps this one is more relevant here. On November 15, 1949, there was an attempt made to amend the National Housing Act. The then hon. member for York South moved that the bill be not read a second time but rather that the house should resolve that consideration be given-


William Moore Benidickson: You had better read it first.


Edmund Davie Fulton: I am trying to find it.


William Moore Benidickson: Read it first for the first time, I mean.


Edmund Davie Fulton: I told the hon. gentleman I had been to the library reading these precedents.


Mr. Habel:: Dispense.


Edmund Davie Fulton: The amendment was in these
words:
That this bill be not now read a second time but that it be resolved that in the opinion of this house the government should give immediate and prior consideration to rescinding the order announced on November 3 providing for increases in domestic rents.
My hon. friends would certainly attempt to argue that increases in domestic rents were related-


John Whitney Pickersgill: To build new houses.


Edmund Davie Fulton: -to the matter of the National Housing Act and to the amendment of the National Housing Act. That is on all fours with the argument they are putting forward tonight that the treaty obligations of Canada under GATT are relevant to the principles of this bill. The one is just as relevant as the other. Mr. Speaker Macdonald dealt at length with that point. He said that it was indeed in accordance with citation 657 of Beauchesne's third edition. He said that it was competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill to move as an amendment to the question a resolution declaratory of some principle adverse to or differing from the principles, policy or provisions of the bill, or expressing opinions as to any circumstances connected with its introduction or prosecution or otherwise opposed to its project.
But he went on to say that he would refer hon. members to citation 354 of Beauchesne's third edition which reads as follows:
An amendment setting forth a proposition dealing with a matter which is foreign to the proposition involved in the main motion is not relevant and cannot be moved.
Accordingly he ruled that the amendment dealt with a matter which was foreign to the proposition dealt with in the motion.

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The motion was for amendment of the National Housing Act and yet the Speaker ruled that a matter dealing with the rate of rents-


John Whitney Pickersgill: On old houses.


Edmund Davie Fulton: -was so foreign to the proposition involved in the motion before the house that it was out of order and could not be moved notwithstanding citation 657 of Beauchesne's third edition.
There are other occasions both with respect to bills and resolutions. Another occasion I have before me was on November 23, 1949, when there was a motion before the house for the second reading of a bill to amend the Combines Investigation Act. Once again the amendment moved on that occasion by the present Prime Minister, who was then the member for Lake Centre, set forth a different proposition, suggested that the bill should not now be read a second time but that certain different courses should be followed. In this case the amendment was as follows:
That all the words after "that" to the end of the question be deleted and the following be substituted therefor:
"While this house is at all times anxious to assist in remedying any defects in the law with respect to combinations in restraint of trade that operate against the public interest, it regrets that His Majesty's ministers have failed to comply with the mandatory requirement of publication of reports under the Combines Investigation Act and that before inviting parliament to enact the said bill have failed to give any assurance that there will be no similar breach of the constitution in respect of this or any other act passed by the parliament of Canada."
Here, Mr. Speaker, was an amendment which dealt with the conduct of the government with respect to the requirements of the Combines Investigation Act which was then being amended by the bill before the house. Mr. Speaker Macdonald ruled that the amendment raised a matter which was different from the principle advanced in the motion before the house, that it was not relevant and was therefore not in order. I submit that what the opposition is trying to do here is exactly on all fours with that occasion. They are in effect condemning the government for introducing a bill, as they allege, which is repugnant to the spirit and objectives of GATT. In other words, they are expressing an opinion on this bill in relation to GATT in exactly the same way as the hon. member for Lake Centre, as he then was, introduced an amendment expressing an opinion with regard to the government's actions under the Combines Investigation Act but with relation to a different subject. Yet on that occasion the Speaker ruled that the amendment was

not relevant and could not be introduced notwithstanding the provisions of citation 657 of Beauchesne's third edition.
I am satisfied, Mr. Speaker, that if Your Honour will look at the whole trend of decisions, particularly during the parliament from 1949 to 1953 and also in the parliament from 1953 to 1957 and earlier parliaments, Your Honour will find that the trend of the rulings has been that amendments introduced may not raise a matter which should really only be raised after notice because otherwise the house would be taken by surprise, and the rule that requires that all matters of debate must have proper notice would be set at naught.
My hon. friends are introducing an amendment here which seeks not to debate the merits of the principle of the bill before the house but to debate the merits of the GATT treaty. I submit to you, sir, on that ground that in general such amendments are out of order. I also submit that it is out of order on the same grounds that you ruled the previous amendment out of order, namely, that these are matters which may be made the subject of amendment in committee; that any specific provision which can be shown in committee to violate any particular of Canada's treaty obligations can be made the subject of an amendment in committee. What my hon. friends are seeking to do here is in particular to anticipate a discussion which should be raised in committee on the clauses.


Mr. Speaker:: If the house is ready for the question I shall attempt to dispose of this matter right away.


Lester Bowles Pearson: I will be very brief on the point of order.


Mr. Speaker:: I do not know whether anyone wishes to speak on the amendment. Otherwise I might defer my judgment until tomorrow. If not, I will give my decision now.


John Whitney Pickersgill: Let us have it.


John George Diefenbaker: In view of the importance of this matter and the apparent desire of the opposition to continue with a series of amendments that require the fullest consideration, I suggest, with the obvious purpose in mind that this matter should be given very full consideration by Your Honour, that the decision might be made whenever we return to a discussion of this matter. It is obvious that we are not going to be able to conclude by 10 o'clock this evening, the automatic closing hour. I would not want to do anything to prevent the opposition from advancing those things that are regular. But in view of their general attitude today, I feel that the fullest consideration should be given to this matter.


Lester Bowles Pearson: On the point to which the Prime Minister has spoken, Mr. Speaker, may I say that I do not know what the purpose is in his mind. He has no right to attribute to us any purpose in the production of these amendments. We are trying to produce an amendment which will improve this bill. I do not know why the government is putting up such a long and hard fight to restrict the rights of the opposition to move an amendment.


Mr. Speaker:: Order. I agree that the discussion has taken a turn which is not warranted. As I say, if there are any hon. members who wish to speak to this amendment, I will defer my decision and give it in the morning. I will even hear further argument now on the point of order. But if the house is ready for the question, I will give my decision now.


Some hon. Members:: Question.


Mr. Speaker:: If no other hon. members wish to speak, I will give my decision. This is the third time I have had to deal with this matter today. I will not repeat what was said previously. The first question which must be considered is relevancy. I think the Minister of Justice (Mr. Fulton), in acknowledging that it would be relevant to debate whether the sections of this bill are in conflict with our obligations under GATT, thereby acknowledges that an amendment directed to that same purpose is relevant, because if it is relevant to debate it,-if the amendment is otherwise good-it is relevant to move an amendment declaratory of a principle to the same effect.
I am troubled by the minister's statement that this is an argument. It is an argument; any assertion of principle would be an argument. Hence I do not think the issue should be determined on that ground at all.
Then the Minister of National Revenue (Mr. Nowlan) rather underplays the importance of the value for duty part of this bill. In what he said I think he in effect acknowledged that it is the one substantial change in the bill.


George Clyde Nowlan: Not at all.


Mr. Speaker:: Many changes are made but they are more or less procedural changes. They are not important changes until you come to section 39 which is new and which is an important change. The other items are procedural. It therefore seems to me that the value for duty strikes at the basic principle of the bill. On that ground I do not think that the principle of the amendment should be deferred for consideration in committee.
It remains then to consider whether this amendment is different from the one that I
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ruled out earlier. The earlier amendment called on the house to adhere to its GATT obligations, and opened the door to a very extended debate which might have nothing at all to do with this bill. This amendment calls on the house to refuse to read this bill the second time because its terms are repugnant to the spirit and objectives of the treaty obligations of Canada under GATT, thereby declaring a principle which is to my mind relevant and which is adverse to the principle of the bill. The amendment certainly is opposed to the terms of the bill in that it calls on the house to decline to proceed. To my mind it is not a mere direct negative. It meets all these tests. It seems to me that on second reading, where the house has the acknowledged right to debate the principles which are involved in the bill, it is preferable not to be too restrictive in the type of amendment which brings before the house in specific form and emphasizes the principles which are involved, the principle in this case being that the sections of this bill may be adverse to the spirit and objectives of the treaty obligations of Canada under GATT. I therefore rule the amendment to be in order and I shall now put the question.


Mr. Speaker:: I declare the amendment lost. The question is on the main motion. Is it the pleasure of the house to adopt the motion?


Some hon. Members:: No.


Mr. Speaker:: On division?


Lester Bowles Pearson: No.


Some hon. Members:: Question.


George Clyde Nowlan: Before the question is put I have some things I should like to say in reply-


Some hon. Members:: Ten o'clock.


Mr. Speaker:: I must inform the house that if the minister speaks now he will close the debate.


Joseph-Alphonse-Anaclet Habel: Mr. Speaker, I move the adjournment.


Mr. Speaker:: I understood that the hon. minister rose to speak without objection.


Joseph-Alphonse-Anaclet Habel: No. I move to adjourn the debate. It is ten o'clock.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the leader of the house what the business is for tomorrow?


Mr. Green:: Tomorrow we will take, first, the estimates of the Department of Trade and Commerce, then the estimates of the Department of Public Works, the Post Office Department and the Department of Finance. Hon. members should be prepared to consider also any of the items in the further supplementary estimates.


Lionel Chevrier: May I inquire what the minister intends that the house should take up on Thursday?


Howard Charles Green: I am afraid I cannot give the hon. gentleman that information this evening.
At 10.19 p.m. the house adjourned, without question put, pursuant to the order of the house passed on August 4.

Wednesday, September 3, 1958