1986-05-13

ROUTINE PROCEEDINGS


Mr. Jean-Guy Hudon (Parliamentary Secretary to Minister for External Relations):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table in both official languages the Governement's response to the following six petitions: Nos. 331-4488 to 331-490 inclusive and 331-492 to 331-494 inclusive.


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, it is a pleasure to present a petition on behalf of a number of residents of Kamloops, British Columbia, who are still very much concerned about the decision of the Minister of Employment and Immigration (Miss MacDonald) that after December 31, 1985, pension benefits will be deducted from unemployment insurance benefits, thus effectively eliminating the benefit to the worker of the pension package. They therefore call upon the Government to ensure that all retired employees receive unemployment insurance benefits without deduction of pension income.



MULTICULTURALISM


Hon. Ray Hnatyshyn (President of the Privy Council):: Mr. Speaker, there have been consultations between the Parties. I think you will find a disposition to accept the following motion by unanimous consent. The motion will also be passed by unanimous consent without debate. It reads as follows:
That, notwithstanding the Order made on Thursday, February 27, 1986, the operating expenditures of the Multiculturalism Directorate under Vote 1 of the Main Estimates for the fiscal year ending March 31, 1987, of the Department of the Secretary of State in the amount of $24,846,000 together with the grants made by the said Directorate under Vote 5 of the Main Estimates of the said Department in the amount of $15,282,000, as well as the contributions made by the Directorate under the same Vote in the amount of $3,465,000 be withdrawn from the Standing Committee on Secretary of State and be deemed referred to
the Standing Committee on Multiculturalism pursuant to Standing Order
82(15).


Mr. Speaker:: Is there unanimous consent for the motion to be introduced?


Some Hon. Members:: Agreed.


Mr. Speaker:: The House has heard the terms of the motion. Shall the motion carry?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Ramon John Hnatyshyn: Mr. Speaker, I would like to indicate to the House that I want to designate tomorrow as an allotted day.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Jean-Guy Hudon: Mr. Speaker, Question No. 516 will be answered today.


Mr. Manly: Was an agreement signed between Canada and the United States in respect to allotted sharing of time at the test range at Nanoose Bay in British Columbia and, if so (a) in (i) 1981 (ii) 1982 (iii) 1983 (iv) 1984 (v) 1985, what percentage of time did Canada use (b) how much of Canada's unused time was taken by the United States (c) what compensation has Canada received for unused time?


Mr. Robert S. Wenman (Parliamentary Secretary to Minister of National Defence):: Yes. (a) (i) 1981-14.4 per cent, (ii) 1982-18.1 per cent, (iii) 1983-12.4 per cent (iv) 1984-18.8 per cent, (v) 1985-(first three-quarters)-30.3 per cent.

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(b)	(i) 1981-61.8 per cent, (ii) 1982-67.2 per cent, (iii) 1983-83.8 per cent, (iv) 1984-61.4 per cent, (v) 1985- (first three-quarters)-58.5 per cent.
(c)	(i) 1981-$280,152, (ii) 1982-5407,415, (iii) 1983- $433,203, (iv) 1984-$381,559, (v) 1985-(first three-quarters)-$236,739 (subject to audit).
[ Translation]


Jean-Guy Hudon: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Speaker:: The question enumerated by the Parliamentary Secretary has been answered. Shall the remaining questions stand?


Some Hon. Members:: Agreed.
[DOT] (mo)



GOVERNMENT ORDERS


Nelson Andrew Riis: That this House urges the Government not to proceed with any free trade talks with the United States Government unless that Government rescinds existing countervailing duties and guarantees that such duties will not be used in the future, given the current threat of U.S. countervailing duties in the Softwood Industry-an industry in which free trade now exists.
He said: Mr. Speaker, in the last few weeks we saw the role that Parliament has played in dealing with the former Minister of Regional Industrial Expansion, the Member for York-Peel (Mr. Stevens). As a result of persistent questioning on behalf of Members of the Opposition, we finally saw a move toward justice in this country.
I believe we have another opportunity for the House of Commons to play a significant role in the pending free trade discussions that begin next week. On the eve of these talks, one of our largest and most important industries in Canada is about to enter a crisis situation. The forest industry of Canada is a $26 billion a year industry which employs 300,000 people directly and another 700,000 indirectly. We are talking about one million people in this country who are employed in an industry that earns more foreign exchange for Canada than agriculture, the fishery, mining and the automobile industry combined. It is a major industry of immense proportions which contributed $ 11 billion to our balance of trade last year.
Currently we are witnessing one of the biggest con jobs ever perpetuated by the Government on the people of Canada. It is a sell-out of the major industry and a sell-out of the regions of Canada for the sake of the industrial heartland. We are witnessing the traditional heartland-hinterland thesis unfold again in our country. The Prime Minister of Canada (Mr. Mulroney) and his cohort, the President of the United States, have either been making deals which will prejudice the forest industry or the Prime Minister has naively believed President Reagan when he says not to be concerned because the forest industry in Canada and the United States will be dealt with to everyone's satisfaction. Anyone who believes that probably believes in tooth fairies as well.
In the last number of hours the coalition of forest industries in the United States has begun the process of launching a petition to the International Trade Commission and the Commerce Department that, if successful, would result in a countervailing duty amounting to $53.65 U.S. per thousand board feet in Canada. Today, wood futures are trading on the Chicago Mercantile Exchange at $184.50 U.S., SPF-1. The tariff on our exports of softwood lumber to the United States would be 29.1 per cent, which would mean the end to vast areas of the forest industry in Canada as we know it today, particularly in British Columbia which is the main source of softwood exports to the United States.
Where do Members opposite stand on this issue, particularly those from lumber producing constituencies? The United States is about to launch a countervailing duty on our lumber exports that will literally close down dozens of mills across the country, the majority of which will be in central British Columbia. We are seeing a catastrophe unfolding. This industry is represented in Atlantic Canada, Quebec, Ontario, parts of the prairie provinces and the West Coast of Canada. The industry is experiencing unemployment levels of 25 per cent to 35 per cent right across Canada. Thank goodness we have an Opposition Day on which we can debate what is taking place in order to show Canadians the con job that is being perpetuated and how this industry is being sold out. This is taking place on the eve of free trade talks next week.
While our negotiators supposedly enter into preliminary discussions toward free trade, the United States forest industry, with the support of the U.S. administration, is moving against an industry in which free trade has existed for half a century. Our industry is able to compete so well in the free market that our producers are able to log and mill our lumber in northern British Columbia and export it as far south as Georgia and outbid them.


Mr. Brisco:: Ask why.


Nelson Andrew Riis: Somebody says to ask why. One reason is that the companies in Canada have modernized their mills. They have invested heavily in the mills of British Columbia, whether they are in Clearwater, Kamloops, Merritt or Salmon Arm. They have modernized their mills at tremendous expense in order to make them some of the most competitive sawmills in the entire world. This modernization has taken place at a very large cost to the workforce in our country because 20,000 IWA workers in British Columbia alone have lost their jobs. In my constituency, 500 people are no longer employed in the forest industry as a result of the technological change that has occurred through modernization of our sawmills.
May 13, 1986


Robert Hylton Brisco: Give us the corollary to that.


Nelson Andrew Riis: On top of the sacrifice, our forestry workers have developed their expertise to become among the most productive workers in the world. We have modernized our sawmills. Our employees in those mills and in the forests are among the most efficient and competitive in the entire world. We now represent some 34 per cent of the softwood markets in the United States.
Our free enterprise friends in the United States are saying that they cannot compete any longer because their mills are antiquated and their employees and operations are less productive. Since they cannot compete with their counterparts, they say that they will stop this free trade nonsense and impose a countervailing duty of 29.1 per cent on Candian exports of softwood to the United States. The American image of free trade is that it is acceptable as long as the Americans benefit. However, the minute that we are able to compete successfully in their market-place, they no longer will accept that competition.
Do Members opposite really believe the President of the United States when he says they can trust him because he will resolve this issue? Recently, we became aware of a letter sent by the President of the United States to the Senate Finance Committee Chairman, Mr. Robert Packwood, in which he promised: "-to press for an expedited resolution to this problem-" he calls it a problem: "-independent of the comprehensive trading negotiations." Mr. Reagan and his administration will resolve this problem of our competition in their markets, quite independent of what is taking place.
What is the Government of Canada doing about it? Nothing. It is making the forest industry of Canada the sacrificial lamb in the trade talks. That is the industry the Government will toss out and those are the regions of Canada that the Government is abandoning, perhaps in a vision of some benefits to the industrial heartland as a result of free trade. The Government has abandoned the forest producing areas of this country.
The President went on to promise to take unilateral action if the bilateral lumber talks fail. What is the Minister's response? It is to send an envoy at the eleventh hour to the United States to do a little PR work. He will make deals, give concessions, agree to some form of a countervail because the President of the United States made it perfectly clear that he and his administration are going to resolve the problem of our competition in their market-place. The only way that problem can be resolved to the satisfaction of the United States is for our Government to cave in. If one looks at members of the Government, one can see that the knees of their suits are all worn out because they have been down to Washington on their knees so many times. Next we will find that knee pads will be mandatory for Conservative Members of Parliament. That is the kind of negotiations we see going on with respect to this issue. If anyone believes that our forest industry is going to come out of this unscathed-and when I say "unscathed", I
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mean the price we will have to pay will be tremendous-they are wrong. The President of the Canadian Lumbermen's Association was talking the other day about the loss not of hundreds of jobs, not even of thousands of jobs, but of tens of thousands of jobs in every region of this country. At a time when that industry is experiencing 25 per cent to 35 per cent unemployment, the best we can do at this critical hour, during this moment of crisis, quite frankly, this process of sell-out and con job of the people of Canada, is to send an envoy.
Has the Minister of State for Forestry (Mr. Merrithew) included the provincial Ministers in this decision? Have the provincial Ministers been consulted and involved in what this set of concessions will inevitably be? I notice the Minister of State for Forestry managed to find enough money to pay for five or six people to deal with the wood issue in this coming year. That is what his budget to deal with this crisis will allow.
The industry itself spent $10 million last year trying to work through this matter to a successful resolution. But the Minister of State for Forestry, representing all the regions of Canada, managed to come up with perhaps five or six individuals. We are up against a giant in the United States. We are up against one of the most sophisticated mainline lobby groups in the United States ever encountered by the administration there and our Minister of State for Forestry comes up with five or six people and, to be fair, $500,000 to fight this issue. At the same time he could find $4 million to advertise forestry. The other day we received buttons, seeds and so on as a result of the Government's efforts to raise the consciousness of Canadians about our forest industry.
I ask the Minister of State for Forestry what the point is of raising the consciousness of the people of Canada for forestry if we do not have a forest industry to support? Unless some strong action is taken we are going to see President Reagan cut off the Canadian forest industry. We are going to hear this Government, again in co-operation with the President of the United States say: "I guess this is the price we have to pay for free trade talks".
I am looking forward to the debate today. I will be interested to listen particularly to the Members of Parliament from British Columbia and to Hon. Members from the forest producing areas of this country. I would like to see them stand up and tell us what they are doing about this countervail threat. What have they already done about the threat in the red shake and shingle industry? It has already gone before the ITC. It has already been recommended to the President of the United States to go ahead with the 35 per cent duty charge. What has the Minister done on this particular issue which will again cost hundreds and hundreds of jobs even in just the southern part of British Columbia?
One Hon. Member stood up the other day and in one line of his statement indicated that Mr. Reagan should know what this will do to jobs in British Columbia. But that is not good enough. The Government has been given the responsibility,

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surely, to stand up for Canada's number one industry, our forest industry. But all we have seen so far is ample evidence that, again, the Prime Minister (Mr. Mulroney) naively believed the President of the United States when he said: "Listen. I'm making a deal with those senators in the Finance Committee. I want to get these trade talks on to the fast track. To do that I have to buy them off. I've got to appease these people somehow". What he really said was: "Don't worry, those of you from the lumber producing States, particularly in the Pacific northwest, I'll support you in your bid for countervail. Don't worry about it". He said, if necessary, he will take unilateral action if the bilateral talks fail and he will be pressing for a resolution to this problem.
The problem is that we are able to compete in that market. The United States perceives that as a problem in the same way as it perceives the fact that our red shake and shingle industry was able to compete successfully in its market is a problem. The United States realized it was receiving real competition from Canadians and it had to do something about it so it has asked for the imposition of a tariff.
This concerned our Party in terms of what it means for free trade, enhanced trade or improved trade. If it means that once we have a level playing field as we have had in the soft wood industry now for 50 years, if the playing field is levelled and Canadians are doing well in the United States market, and if its response is to come in with a countervail every time we do so, what is in it for Canadians and for Canada? Yet that is the only conclusion we can draw. That is why we say in this motion that free trade talks cannot continue as long as the United States administration plans to have a countervail continuously hanging over our heads.
We are going into free trade talks next week and over our heads hangs an axe. The axe is the threat of the imposition of a 29.1 per cent countervail on soft woods going into the United States from Canada. That is not the kind of good faith in which I think Canadians had envisaged we might enter these talks. This is not the kind of environment, the kind of milieu, the kind of open discussion we were anticipating with our friends to the south.
In closing I want to say we feel, as New Democrats, that the Government has essentially decided to sell out the forest industry of our country. It has decided to sell out our forest industry which is represented in the hinterlands of Canada. It has either entered into a deal knowingly with the President of the United States or it has acted naively thinking that the President will act in the best interests of our forest producers. That is why we feel very strongly and have suggested today in an Opposition Day motion that this issue be debated, that the Minister explain what studies he has and to show evidence of what these countervailing duties which will be imposed on Canada will do. We want to know what kind of studies, what kind of information he has and has he involved the provincial Ministers responsible for our forests. When we think of this critical industry and when we think of the brink to which it has
been brought in the last number of days, we must, as parliamentarians, ask ourselves these questions.
As my hon. friend for Skeena has indicated many times the Government of Canada should have taken advantage of the hundreds and hundreds of articulate experts in terms of the forest industry who should have been in the United States lobbying every Senator and every major decision-maker in every conceivable State in the United States. It should be indicated very clearly we are competing in a free market situation. We have no subsidies in our particular industry. We are operating sort of on a toe-to-toe, nose-to-nose basis. The fact is we have invested heavily both in terms of job loss through technological change and modernization of our plants. We are doing very well, thank you. That is the kind of action which should have been taken, not the kind of non-action or the mealy-mouth approach of this Government in terms of protecting Canada's number one industry.


Mr. Caldwell:: Mr. Speaker, I think this could prove to be a very interesting day. We may find out where the New Democratic Party actually does stand on enhanced trade. Would the Hon. Member comment on a quote from The Toronto Star yesterday by Marion Dewar of the New Democratic Party. She said, and I quote:
The real alternative for Canada (and for the United States, I might add) is a policy that emphasizes self-reliance and puts an end to the no-win contest. A nation's economy must stop being based on the illusion that it is possible for every nation to export more than it imports. It does not add up.
Does the Hon. Member agree with that comment? Is this the way the NDP is going? Does the Hon. Member think that we should not be in the export market but simply produce for ourselves and place a border around Canada?
[DOT] (U30)


Nelson Andrew Riis: First, I agree 100 per cent with that statement, Mr. Speaker. Unless there were parts of the statement not read, I did not hear the Hon. Member suggest that she said we should erect trade barriers around Canada. I did not hear the Hon. Member say that she said we should not participate in international trade. What she did say was that we should strive to be more self-reliant, to do what any self-respecting country would do; that is, to take advantage of our own resources, to process our own resources, and not get into a sell-out mentality.
I know that if Marion Dewar were in the House today-and she might be one day-she would be standing in her place saying that the Canadian forest industry is too valuable and too important to use as a trade-off or a sacrificial lamb in free trade talks. That is what she believes and that is what she thinks. Quite frankly, she thinks that there should be more of an effort made for Canadians to become self-reliant in these areas. That is the type of initiative most progressive countries are taking. Of course, hand in hand with that goes some obvious trade initiatives which any major trading country such as Canada would obviously launch.
May 13, 1986


Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, it is worth noting at the outset, with respect to an issue which has been promoted by the Government as being one of the most important international economic initiatives, that the first opportunity for Parliament to debate the topic is on an opposition motion well over one year after the initial proposal was launched. This only underlines the basic philosophy which, unfortunately, is the hallmark of the Government; that is, keep people in the dark. I suppose the Prime Minister (Mr. Mulroney) was raised on too many mushrooms as a young child. He became addicted to the fact that mushrooms are grown in the dark by throwing a lot of manure at them to make sure they flourish. That is the problem we have in this debate.
Perhaps there will be an opportunity today to cut through much of the confusion, many of the contradictions and the deliberate camouflage which has been raised about trade matters. They have only confused many Canadians with respect to what the objectives of the Government are and what the end results will be. What passes for debate is the Prime Minister calling people names. When one does not have a good argument one resorts to name-calling. There has been no specific set of mandates placed before Parliament which can act as the basic parameters for our negotiators. There have been but a series of incredible ironies and contradictions between Ministers and between the parties in the negotiations. The end result is that each time we turn around we are losing a bit of the edge in terms of the trade negotiations.
The passive, convoluted approach which has been taken thus far has placed us in a trade position which puts us on the defensive, as the Minister for International Trade (Mr. Kelleher) has admitted. We have been placed in a position in which we must respond, as opposed to being able to take the initiative. Nowhere is that clearer than in the issue as it relates to lumber.
Three or four weeks ago an interesting debate took place in the Senate Finance Committee of the United States about whether or not the committee would approve a fast track approach. At a late hour, after last minute log rolling took place, the Prime Minister swept down the grand staircase of the Langevin Block, like some apparition out of the time of Marie Antoinette, to announce that it had been a great victory. He said that it was a clean launch, that there were no preconditions and that everything would be wide open. However, as we looked at the fine print we saw that Mr. Reagan had promised the Finance Committee that he would send it a letter about lumber in which he would assure members of the committee that their deep concerns about their constituencies would be properly met.
We asked some questions about that matter the next day and the Prime Minister, as only he can do, rose to the height of his pomposity to say: "Oh no, don't worry. It was a clean launch and there were no problems". We now have a copy of the letter sent by Mr. Reagan to his Senators. Not only does the letter include the words expressed by the initiator of this
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motion, but Mr. Reagan went even further to say that he wants a solution to the problem before he can recommend comprehensive negotiations to the Senate Finance Committee. He said there is a clear declaration that there will be separate negotiations on lumber and other irritants. That was confirmed last night at a meeting of the External Affairs Committee when Deputy Chief Negotiator, Mr. Ritchie, said that there will be separate negotiations in this area. That statement puts the statements made by the Prime Minister three or four weeks ago into total disrepute. Once again, we are faced with a problem of not being able to accept the word of the Prime Minister because it does not hold for more than 24 hours.
We are now in an incredible situation in which the Government is launching a negotiation on comprehensive free trade at the same time as it is negotiating with the Americans. They are demanding more tariffs, more controls and more limitations on free trade. Yet the Government is telling us that the answer to our problem is in this comprehensive negotiation, except in the problem areas which have been identified by the American Government as being specific irritants. They are pharmaceuticals, intellectual property and lumber. In those areas they want separate negotations. Those separate negotiations are designed to limit trade and to restrict it. They will bring the barriers higher and not lower. Yesterday, the Minister said in the House that that was the very reason we started comprehensive negotiations. Many of these irritants will not be included as part of the negotiations. They will be subject to separate negotiations which must be resolved, according to President Reagan, before he recommends a comprehensive agreement.
Goodness, gracious, what is going on? What type of convoluted intellectual gymnastics is the Government going through that it can persuade itself that it will solve the problem on lumber through comprehensive negotiations while at the same time it agrees, through a special envoy, to get into separate negotiations on that very same subject? It is hard to believe that grown-up, mature men and women holding positions of responsibility in the Government could actually delude themselves into thinking that somehow they have a solution to a problem when they have created an even bigger one.
All we want to do in this debate is find out where the Government stands. Are we back to where the Prime Minister said we were? Are we back to having no preconditions, no separate negotiations, with everything on the table as part of the bilateral comprehensive negotiations? Or is President Reagan right when he says in his letter that he will start separate negotiations and that he will reach a separate deal before he recommends anything back to the committee?
Our Prime Minister and the President are supposed to be good friends. They are supposed to have a little phone which they can pick up everyday and wish each other good morning or good night. Surely, they might decide to get together and at least arrange to have a common position. If they do not have one, something which I suspect is more the case, then we have

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already acceded to those American requests for separate discussions.
According to today's headlines, the Canadian Ambassador in Washington said: "We are now recommending special envoys, a eupehemism for special negotiations, but we are not going to tell the Canadian people that". We in the House of Commons will rise and beat our breasts and say that we have made no deals, that there are no preconditions and that it is a clean launch except that there are a few other things about which we have not bothered to tell the Canadian people. The end result of that is what we have seen time after time over the past two years; we give things away.
The Prime Minister has told the Canadian people at least
5,000	times what a wonderful labour negotiator he was. I would sure hate to be one of his clients. What did he give away before we even got started with the negotiations? He gave away the NEP. That went right down the tubes. Then FIRA went away and we got nothing in return. Now we are giving away the pharmaceutical industry and we will get nothing in return. This is before we have even entered into negotiations.
What is the limit of the Government's generosity? Does it consider the United States to be a charity case, that it has to be given all these concessions with nothing in return? Would it not have been somewhat more effective if, in giving away all these bones of contention, the Government had asked for some clear statement of principle and a commitment to no further incursions on the lumber industry?
The Minister for International Trade, the Prime Minister and the Secretary of State for External Affairs (Mr. Clark) have said: "Oh, but we have such a good friend in the U.S. administration. We can trust Mr. Reagan. We don't know if we can trust those guys in Congress but we can trust the administration". However, the President is now siding with all those people, saying very clearly that when it comes to lumber he will negotiate separately, and if he does not get what he wants he will start a countervail action, and if he still does not get what he wants then he will hold as ransom his request for comprehensive agreements until such time as Canadians accede. So much for a friend in camp. Who knows what our enemies would do under those circumstances.
This is not a matter of merely making debating points. As we well know, the softwood lumber industry depends upon its export trade. Not only has the lumber industry expanded and modernized, but the other major factor it has going for it is the exchange rate. Nowhere have the Americans conceded lightly that that is the factor that enables us to provide competition. Therefore, it raises a very clear suspicion that once we get into the so-called comprehensive negotiations the exchange rate will also be on the table and the Americans will start demanding a harmony in exchange rates or compensation for that exchange rate as part of the trade deal. That sends out a very serious warning signal, not only for the lumber industry but for
many other exporting industries which have been using that comparative advantage to some very substantial effect.
Again, we have heard nothing from the Government about the importance of the exchange rate as part of the competitiveness of our lumber industry and the advantage it provides. What is the Government going to do about it? Is it going to concede, make deals, have the special envoys get together and negotiate how we may provide for some compensation in that area?
Let me deal with another warning signal having to do with subsidies. We have now seen three or four cases of this come before the International Trade Commission. The subsidies that are applied by the federal or provincial Governments toward regional expansion in disadvantaged industries, whether they be the fishing industry in Atlantic Canada, the softwood lumber industry on the West Coast or transportation subsidies for western grain, are a part of our domestic right to reallocate resources and opportunities across Canada to meet regional inequalities. That has always been clearly stated. The Americans have now said, through a variety of trade suits, that those subsidies are considered to be countervails and unfair trade practices. If that becomes a standard argument that will enter into the comprehensive negotiations, we are in deep trouble as a country. We will then be forced to start bargaining away our freedom of action as a country to decide where and when we want to allocate resources to help the less fortunate regions and those industries that we believe should be our competition loss-leaders and provide comparative advantage in international markets.
Do not kid yourself, Mr. Speaker. These negotiations really are not about tariffs. They are about non-tariff barriers. The primary non-tariff barrier put forward by the Americans is the question of Canadian subsidies. We have seen this in the fishing industry, in the softwood lumber industry and in the grain industry. All those industries that provide a large part of our export dollar are now being challenged on the basis of the subsidies we provide and the supports we give to those industries.
Let me deal with a third area that is part of this resolution and perhaps goes to the very heart of the trade debate. That is the issue of countervailing powers. If memory serves me correctly, the Secretary of State for External Affairs, in answer to a question put to him in the House, agreed that the negotiations that are being launched would be of no purpose whatsoever unless we were to receive major concessions from the Americans to limit their ability to provide countervail action through the ITC and the Commerce Department under the U.S. Trade Bill of 1979. He said that that was the heart of the talks and that if we do not get that special exemption, then what is the point of the talks themselves. I agree with that. There is no point getting into those negotiations if all the harassment that we now endure simply continues. What is the point of giving away the edges if the major problem of access to the market is constantly in danger?
May 13, 1986

Three weeks ago the United States administration agreed to start comprehensive negotiations, but today it agreed to support a countervail action on lumber, an action which will have devastatilng effects on that industry. How can the Americans start negotiating to reduce countervail powers and then three weeks later clearly signal that they are going to continue to use those countervail powers to protect their own industries in the United States? We should have known this.
Last week, in a television interview, Peter Murphy, the chief U.S. trade negotiator, said it is highly unlikely that they would even consider negotiating countervail powers.
We can look at this from an historic point of view. When the United States negotiated a so-called free-trade agreement with Israel it excluded any limitation on United States countervail action. What the Americans got from the Israelis in return was an agreement to limit subsidies down the road, but the Americans did not concede, give up or surrender any limitation whatsoever on countervail action. That is why we have been making the case that the best way to ensure against unfair countervail action is to strengthen the GATT process under the multilateral system, a system which clearly defines subsidies according to international standards, not standards set by the U.S. industry alone. Yet this Government has gone against that particular stand and argues that if it gets a deal with the Americans first, then it can try to incorporate it in the GATT. Why is the Government giving up what it already has as a more effective protection rather than trying to strengthen it through the multilateral international system? That is the way to deal with the problem of countervail and subsidies, the two major issues at the heart of the trade negotiations.
The Government has gone topsy-turvy. It is going the wrong way. It is heading off in the wrong direction to achieve its goal. As a result, it is contributing to the weakening of the GATT process. It is contributing to the erosion of the international trading system through a clear declaration that it is putting its bucks on the development of a bilateral continental trade agreement that will be discriminatory against other nations. That is the real problem we have with the trade position.
Not only is the Government a poor bargainer and negotiator because it gives away everything and gets nothing in return, but the option it has chosen to secure Canadian markets in the United States and elsewhere is the wrong option. It has surrendered a basic foundation of Canadian trade policy, the utilization of the multilateral system as the most effective means of protecting Canadian interests as opposed to relying on a continental bilateral system. That is the fundamental problem and that is why we are going to be paying a very heavy price in the negotiations.
What we see on the table today is that the Americans feel free to give all kinds of broad endorsements to a comprehensive negotiation as long as they can force this country to get into separate negotiations or make separate concessions on the problems that are the real irritants.
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Last summer a Commons-Senate committee was asked by the Government to study the trade issue. It made a report to the House which was endorsed by all members of all Parties. It contained a very clear warning to the Government. It indicated that the irritants must be resolved before we started the comprehensive negotiation, or we would be held up for ransom. That was the recommendation of Conservative Members, New Democratic Members and Liberal Members of that committee. The Government chose to ignore the recommendation of that all-Party group and went ahead on its own sweet way.
What do we have in front of us now? It is a very clear contradiction. The American President, the U.S. administration, and Congress are short-circuiting and are demanding satisfaction on the lumber issue. This puts in jeopardy a major industry in Canada. The Government's panacea, which was to get into the comprehensive negotiation, has been put aside until that is resolved, clearly in the words of the United States President.


Mr. Benjamin:: We have been had again.


Lloyd Axworthy: That is right. Once more we have allowed ourselves to mistake hard-nosed bargaining for good intentions. As a result, not only the people in the lumber industry will pay the price, so will the entire country.


Robert Hylton Brisco: Mr. Speaker, I have painfully listened to the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy). I should like to make a couple of comments and to direct a couple of questions to him. I think he should be singled out as probably the most anti-U.S. Member of Parliament in the Liberal caucus. I certainly get that impression from his comments, not only today but in the past.
There was the absence of a reference to trees in his last sentence or two, a very substantive part of the debate. I do not think the former Minister is too well informed on trees in any event. He made reference, and unkindly so, to mushrooms. I will leave that one alone. Clearly the bottom line is that he and his Party demonstrates an absence of intestinal fortitude when it comes to the subject of free trade. It is an anti-U.S. syndrome. It is an anti-intestinal fortitude syndrome. He wants everything our way. His negotiating process is 100 per cent our way and zero the U.S. way. There is no accommodation; it is our way or no way.
The Hon. Member expressed rightful concern over countervail. I share that concern, as did the Hon. Member for Kamloops-Shuswap (Mr. Riis) who led off the debate. Contervail should be on the table, and all elements of it should be removed as a starting point. What would he do with the Canadian countervail? What position do we take vis-a-vis potato growers? What position do we take with berry farmers? What position do we take with apple growers? What position do we take with the silver, lead, and zinc industry? What position do we take on those issues which have caused the United States to respond, and what position do we take on the

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other side of the coin? Do we tell our potato growers and fishermen that we will not support them? Is that what the Hon. Member would do? Would he tell the farming community that we will not support it? I would like to know what position he would take on the other side of the coin.
While he is at it, he might also tell us the last time in the House his Liberal caucus, or any member of his caucus including the forestry spokesman, ever addressed the subject of forestry.


Lloyd Axworthy: Mr. Speaker, I would be most happy to respond to that diatribe. The last significant economic treaty which was negotiated and signed between Canada and the United States was done by myself when I was the Minister of Transport. It was done on the basis of proper negotiation and of defending the interest of Canadians. It succeeded in repairing a major problem which had been around for 20 years between the two countries.
It would be useful if the Hon. Member would allow himself from time to time to examine the facts as opposed to dealing simply in his own form of mass hysteria. The fact is that for the many years the Liberals were in Government we were able to negotiate successfully a wide range of trade arrangements and agreements with the United States. Also it may be of interest to note that when we left Government we had a $20 billion surplus with the U.S. which the Tories have fortunately been able to maintain but not build upon; in fact it is now going down.
The Hon. Member claimed that we did not know what we were doing in trade and that we had all the wrong approaches. We resolved a number of trade issues on a bilateral basis because we knew how to negotiate and how to bargain. I was one of the Ministers who got one of those treaties signed, and the Minister of Transport (Mr. Mazankowski) has been unable to do that as yet. The Hon. Member might want to look at the contrast and compare who was and who was not successful.
When it comes to countervail, I ask the Hon. Member to read what I had to say as reported in Hansard. The genesis of Canadian trade policy has been the recognition that the best way to protect our interests when dealing with a number of large trading partners which dwarf us in economic terms is to rely upon the multilateral system. We were the authors of that system back in 1948 and one of the architects of the GATT rounds. We have been one of the major promoters.
Part of the system is that definitions are provided within the rules as to what requires subsidy. It has been made very clear that countervail can be exercised when there is a direct export related subsidy, and that subsidies related to economic development or regional equity are perfectly acceptable. If they had only followed the GATT rounds, we would not be in trouble on the lumber issue. We should be strengthening that principle and those kinds of rules, as opposed to getting into a bargaining position with a much bigger partner, which is
bludgeoning us to death on this one and for which we will pay a heavy price.
We are talking about protecting Canadian trade because that is what we were elected to do. Perhaps the Hon. Member thinks that he was elected to represent the lumber interests of the United States. Maybe that is what he is talking about; maybe that is his definition. I happen to think that I have been elected to represent the interests of Canada. Of course that means maintaining as good relations as we can with other countries but never forgetting that we were elected to protect the national interests of Canada. I am afraid too many Tory Members have forgotten that because they have taken the example of the Prime Minister whose first political lesson was dancing for a song for Colonel McCormack, and he is still dancing today.


Mr. Lesick:: Mr. Speaker, it was very interesting to hear what the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) enunciated this morning. I find it difficult to believe many of the things he said. I do not think he believes most of it himself. It was like the rhetoric between two wrestlers before getting into a match who say many things, but once they get into the ring that is truly what counts.
Negotiations have not started but we are preparing for it. Yet we heard all this rhetoric about the problems and about not accepting the word of the Prime Minister (Mr. Mulroney) when the Prime Minister has given his word and it has been kept. He has assured us that the lumber and wood industry of Canada, in particular of British Columbia and Alberta, will be protected. He has made that statement numerous times, so why should the Hon. Member for Winnipeg-Fort Garry say something completely different and out of context?
Then he talks about the sellout of the NEP. The Hon. Member for Winnipeg-Fort Garry is still under delusions that the NEP was of some value. It was some value only to the Party and it created havoc not only in western Canada but throughout the rest of the country. The pharmaceutical industry is not going to be sold out. We are still in the negotiation stage. This is rhetoric before the Fight, just like two wrestlers. We are looking for an assured market. We are struggling and we are going to obtain it. GATT is a process that will take time.
The Hon. Member mentioned that irritants must be removed according to the committee composed of Senators and Members of Parliament of last summer. That is what we are doing now, removing the irritants so that we can get on with the process of free trade. I suggest to the Member, why not consider and offer the positive aspects of what can be done, what is being done and what we are offering, having the best possible people available, with complete consultation right across the country among industry, labour, government and the provinces. We are using a process that has not been used before, and we feel this is the effective way of doing it. I ask
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for some positive aspects with which the Hon. Member can feel happy as well as the people of Canada.


Lloyd Axworthy: Mr. Speaker, I would first draw to the Hon. Member's attention that unlike he and his colleagues, when we say something we mean it.


Some Hon. Members:: Oh, oh!


Lloyd Axworthy: I want to draw to the attention of the Hon. Member what has transpired in this House in the last two weeks. There is a clear case that when we say something we mean it, but we are not so sure about the Government. When its members say something, we never know what they mean.
We are deeply concerned about what is taking place. We see statements by the Prime Minister not in any way in accord with the reality of what is going on. We are given those assurances and we are asked to take them at face value, but we then turn around and read a letter from the President of the United States who contradicts them. The Member says "Don't pay attention". Is this the new policy stance that you do not pay attention when the President of the United States puts something in writing that contradicts our own Prime Minister and his position? Are we not supposed to pay attention to that? Are we supposed to say: "Come on. Boys will be boys. They are just kidding". The President has made a commitment to the Senate Finance Committee. We know that he is insisting upon a deal on softwood lumber that will restrict imports, that will restrict the ability of our own industry to maintain its economic viability. That will be the price and the condition which the President will impose in order to get a trade deal. This Member has the gall and the nerve to ask Members to ignore that. God knows, we are in trouble.


The Acting Speaker (Mr. Paproski):: Order, please. I regret to inform the Hon. Member that his time has expired.


Hon. James Kelleher (Minister for International Trade):: Mr. Speaker, if I may very briefly, before I begin my speech, address one or two points made by previous speakers.
First, I would like to make it very clear to this House that as of now no countervailing petition has been filed in the United States against Canada's lumber. Second, the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) seems to find it strange that discussions are being held independent of the Canada U.S. trade negotiations which will commence shortly.
The Hon. Member will know that Mr. Yeutter and I met last December long before there had been any agreement to the commencement of Canada U.S. trade discussions. At that time lumber was, as it is now, a serious problem between our two countries. It was agreed then that we would begin discussions to see what we could do to resolve the problems. Those talks have continued and are continuing. We have met monthly: January, February, March and April, and there is another discussion tomorrow.
It is nothing new that we are having discussions independent of Canada-U.S negotiations. These talks were agreed to last
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December and the agreement to them was made public at a press conference at the time. I was also questioned in the House. There is nothing new or untoward in the continuation of those discussions. Nothing is being given away. What both countries recognize is that there is a problem that must be addressed.
However, Mr. Speaker, I will grant members of the Opposition one point. Without any doubt, countervailing duty actions are a serious threat to our access to the U.S. market. They are a serious threat to Canada's economy. No Member of this House knows that better than I do, for I have had to spend a great deal of my time as Minister for International Trade fighting the various outbreak of protectionist rashes in the United States, and countervail actions are one of the most serious and chronic of them all.
In recent years, the U.S. Commerce Department has carried out countervail investigations on Canadian exports of softwood lumber, tubular steel, Bombardier rail passenger cars, live hogs and pork products, raspberries, and fresh groundfish and fillets. All told there have been six major countervail investigations since 1982 affecting billions of dollars of exports.
1 would point out that an investigation, in and of itself, is not a sanction. Of these actions only two, the ones on our live hogs and fresh groundfish, have resulted in the application of actual countervail duties. At the same time each new countervail action, no matter what the outcome, takes its toll. Each one represents a threat to our trade, a threat that restrictive action might be taken, and each one must be fought, which brings on heavy legal expenses. On top of that, each new threat of trade restrictive action does real but immeasurable damage to the investment climate in Canada.
At the moment the U.S. has a large trade deficit. Congressional elections are coming in the fall and Washington abounds with rumours of new complaints aimed at Canadian exports. The loudest rumour is that American lumber producers will file another countervailing duty action against Canadian softwood lumber. If they do, it would be their second filing in three years. They lost the first.
Maybe I should give this resolution the benefit of the doubt. Maybe it shows the dawn of enlightenment. I would like to believe that, misguided though it may be, it at least shows that Members opposite finally recognize the need for a better set of rules for the conduct of our trade and economic relations with the United States. Maybe I am an incurable optimist.
The problem, however, is nonetheless real. The resolution we are debating today on the other hand is not. It is naive and unrealistic. What it would have us do is tell the American administration that if it does not stop its lumber interests from filing a countervail action, Canada will refuse to enter negotiations that might lessen the likelihood of all kinds of trade restrictions, including countervail, between us in the future.
It is clear, Mr. Speaker, that current international rules do not provide the certainty and security of access to the U.S.

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market which Canadian producers need to plan and invest. It is also clear that the existing rules can be improved only through international negotiations and that there are two avenues along which negotiations can take place. One is bilateral with our principle trading partner. The other is multilateral under GATT. This Government is pursuing both actions.
As Members opposite are aware, the General Agreement on Tariffs and Trade is the current contractual basis of our trade relations with the United States. It represents a careful balance of rights and obligations. The GATT recognizes that subsidies may have harmful effects on trade and production. It, therefore, permits the application of countervailing duties in situations where subsidized imports are found to be injurious to domestic producers of the same product.
Detailed international rules were negotiated in the Tokyo round of multinational trade negotiations, rules aimed at ensuring that these countervailing measures do not unjustifiably impede international trade. That relief is available to local producers adversely affected by foreign subsidies. The Tokyo round also established an international framework of rights and obligations for countervail actions. Indeed, from Canada's perspective, one of the most important achievements of the Tokyo round was agreement by the United States to incorporate an injury test in its countervailing duty law. As a result, several longstanding countervail findings against Canada were wiped from the records. Both Canada and the United States have equipped themselves to exercise their right under the GATT to apply countervailing duties to protect their domestic industries.
A few moments ago I mentioned that the resolution which we are debating is naive and unrealistic. It ignores the facts. The countervailing duties which are currently being applied by the United States to our exports of live hogs and fresh ground-fish are not the result of a political act by either Congress or the administration, but of a quasi-judicial proceeding under the U.S. laws and the rules of GATT. The only immediate recourse is through the U.S. courts, an option which Canadian producers concerned are currently pursuing. The U.S. administration simply does not have the authority to rescind a quasi-legal finding, whether it agrees with it or not. Similarly,
I am sure the Opposition in this House agrees that it would be inappropriate, and indeed impossible, for the Canadian Government to reverse a decision by a similar quasi-judicial proceeding in Canada. We still respect the rule of law.
With regard to the threat of yet another U.S. countervailing duty action on softwood lumber, I have conveyed to the U.S. administration at the cabinet level the Canadian Government's strong objection to the initiation of another investigation. I have made it plain that Canada considers there are no grounds for the U.S. Department of Commerce to accept a new countervailing duty petition. The Commerce Department has already determined in 1983 that Canada is a fair trader in
softwood lumber and that there are no grounds for countervailing duties. There have been no significant changes since then in government policies and practices in Canada which affect our lumber producers and there have been no changes in American countervail law which would justify a new investigation.
Members of this House can rest assured that this Government is prepared to take all appropriate actions to defend Canadian interests in the event U.S. lumber producers try to countervail again, despite everything. It might be well to point out that the U.S. has no monopoly on countervailing actions. Canada too has equipped itself through the Special Import Measures Act to deal with injurious subsidized imports. We are determined in administering this legislation to ensure that Canadian producers can obtain relief from injury caused by subsidized imports.
The Canadian Import Tribunal is currently investigating whether imports of subsidized beef from the European Common Market are injurious. There have also been indications in the press and elsewhere that the Ontario Corn Producers Association intends to request a countervail investigation against corn imported from the United States. Canadian agricultural producers are acutely aware of the massive subsidies made available to the U.S. farmers by their Government. Should a countervail investigation be launched against American corn it would be the first such case involving imports from that country. Surely the Opposition would not suggest that Canadian producers should be unilaterally denied their right to seek relief from injury while the trade negotiations with the United States are under way.
Finally, Mr. Speaker, let me reiterate for the benefit of the Members opposite that the Government recognizes the threat posed by U.S. countervailing duty actions for Canadian exporters. The Government has launched a major initiative to negotiate a better framework for the conduct of our trade relations with the United States. The U.S. and Canada have the most extensive business relationship in the world. Because that relationship is so large and so broadly based there are bound to be occasional scrapes and abrasions in our business with each other. There have always been and there probably always will be. A key objective of these negotiations will be to negotiate better rules to resolve our disputes. These include rules to ensure that countervailing duty actions do not impede our exports to the United States or theirs to us.
If the members of the Opposition are genuine in their concern for Canadian lumber workers, they will lend their support to this important endeavour. Let me ask them one thing, Mr. Speaker. What would be the result if the House carried this resolution? Would it resolve the softwood lumber issue? I suggest it would not. Would it resolve anything at all, or would it simply be a sterile exercise in partisan futility like an angry hockey fan shaking his fist in the stands? I ask the Members of the Opposition to consider this question seriously for the benefit of Canadians, if not for the cameras.
May 13, 1986


Some Hon. Members:: Hear, hear.


Mr. Tobin:: Mr. Speaker, 1 found the response of the Minister of International Trade (Mr. Kelleher) to this motion to be totally unsatisfactory. The Minister talks about naive presumptions on the part of the Opposition. Yet, during the course of his comments he conveniently forgot that it is none other than the President of the United States who said, with respect to the Canadian softwood lumber problem, in his letter dated May 8, but received only yesterday: "I intend to press for an expedited resolution to this problem independent of the comprehensive negotiations. If this cannot be achieved through bilateral negotiations then I will take such action as may be necessary to resolve this problem consistent with U.S. law".
That is not an idle statement of interest by the President to the U.S. lumber industry. That is not an idle comment that he shares their concerns or empathizes with their frustration or that he understands some of the things they are talking about. That is a clear commitment: "If this cannot be achieved through bilateral negotiations then I will take such action as may be necessary to resolve this problem consistent with U.S. law".
This motion intends to place some resolve in the backbone of the Government. It even assists the Canadian administration because it allows it at least to go to the United States and play the same game south of the border as is being played with our negotiators. If the Government does not have intestinal fortitude, in the Minister's words, and does not have the basic understanding of the tough and rough poker game which is being played, to talk tough at the table, then at least carry to the U.S. administration the feelings of the Canadian Parliament and Members of that Parliament on both sides of the House in all three Parties.
I cannot believe that there are members on the Government side from the Province of British Columbia who are prepared to put a $3 billion industry and tens of thousands of jobs on the line in the hands of a special set of envoys. The last time we used envoys it was on acid rain and we all know the result. The U.S. President admitted that bird droppings do not cause acid rain. He has not yet quite determined what does.
I cannot believe we are prepared to make a separate deal on lumber which will sell our people short in order just to sit at the table of free trade talks which are not guaranteed to be successful. Is this Government determined to lose the vital softwood lumber industry of British Columbia and elsewhere as it symbolically lost the Provinces of P.E.I. and Newfoundland when it put out its free trade propaganda kit? Is that the kind of competent negotiations we are going to see?


James Francis Kelleher: Mr. Speaker, one need only look at the record of this Government to realize that it will never sell Canada short. Never will this Government sell short the lumber interests of British Columbia or any other province. We have been acting like rational people. When there is a problem we
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sit down and try to resolve it by discussing it with our neighbour and biggest trading partner. Surely there is nothing whatsoever wrong with that. I just do not understand the attitude of Members opposite. They do not want to sit down and discuss a problem like civilized human beings.
I would like to point out again that they do not seem to understand the import of this resolution. It is naive. If we expect for one moment that the Americans will withdraw their right to impose countervailing duties such as those imposed to date, then surely they are going to say in return, if they even considered the question seriously, "are you prepared to withdraw yours"? I ask the Hon. Member and others opposite, are they prepared for the next several years while discussions continue to withdraw our right of imposing countervailing duties against American goods which might be dumped in this country? Who in fact is selling the people of Canada short? It is certainly not Members of this Party. It is Members opposite, not this Government. We will not treat Canadians that way.


Brian Vincent Tobin: Supplementary.


The Acting Speaker (Mr. Paproski):: I have five questioners. A very short supplementary, then I will recognize the Hon. Member for Essex-Kent (Mr. Caldwell), the Hon. Member for Cape Breton Highlands-Canso (Mr. O'Neil), the Hon. Member for Skeena (Mr. Fulton), the Hon. Member for Kamloops-Shuswap (Mr. Riis), and I will try and get the Hon. Member for Essex-Windsor (Mr. Langdon) in. Please use discretion.


Brian Vincent Tobin: Mr. Speaker, the Minister's bombast and rhetoric will not hide the fact he is dragging a red herring across the floor of this House. The Government of Canada is not entering into an agreement to drop our right to impose countervailing duties if the Americans drop their right to do so. What the Government is entering into now is a bilateral negotiation by appointing trade envoys. The U.S. administration said to Canada that the price of a free trade discussion, not an agreement, is a deal on lumber. That is what is happening. The U.S. administration has singled out one particular industry, the softwood lumber industry, and said, we have to have a deal. The way we are going to get that deal is to name envoys. We are going to do a backroom political deal and you are going to pay before the talks start. The Minister knows he sold out the people of British Columbia and elsewhere who are involved in the softwood lumber industry. He has done it in the same way he gave away Newfoundland and P.E.I. on the map of Canada.


James Francis Kelleher: Mr. Speaker, again the Hon. Member has difficulty listening to me, for whatever reason. However, I will not get into that. We are not entering into negotiations with the Americans on lumber. This is a process we agreed to last December, long before the two countries ever agreed to the commencement of trade negotiations between our two countries on a bilateral basis. We have been meeting regularly since last December. Everyone knows that. It has been quite

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open. It has been discussed and debated in this House. Indeed, we are having another meeting tomorrow to discuss this issue. I think that is proper and sensible. I have never regarded sitting down and discussing a problem with somebody else as a giveaway or sign of weakness. I think it is a sign of maturity in this Government.


James Eber Caldwell: Mr. Speaker, I would like to ask the Minister the same question I asked the Hon. Member who proposed this motion. It concerns the statement made by the President of the NDP, Marion Dewar, who indicated that a nation's economy must stop being based on the illusion that it is possible for every nation to export more than it imports. It does not add up. Does the Minister agree with that statement? Does it mean that Canada should not worry about exporting lumber and simply use it to build our own homes? As well, what would happen if we simply disregarded exports and simply imported what we needed? Would our economy suffer very much?


James Francis Kelleher: Implicit in that statement is a suggestion that Canada should indeed become fortress Canada. No country in the world can survive that way. Canada exports almost one-third of its GNP. No other country in the world except West Germany exports as much of their GNP as we do. That is why we have a standard of living almost second to none. We are an exporting nation. We have to export more than we import. If we fail to do that it will cost us thousands and thousands of jobs. Perhaps Members opposite do not care about that, but this Government does. We intend to create jobs for Canadians through trade.


Mr. O'Neil:: Mr. Speaker, I would like to congratulate the Minister on his remarks and for his initiative on this important issue. It is interesting to see the two socialist Parties, appropriately seated on my left, now supporting the trade agreement with the U.S. In the first part of this debate the NDP and Liberals were against jobs for Canadians resulting from trade with the Americans. They would rather see the people of Nova Scotia and Atlantic Canada unemployed than working in factories which make products to be sold to the U.S. All this because of their dogma. These people would rather see Canadians out of work than selling products to the Americans.
The people of Nova Scotia are very pleased with the initiatives of this Government which is moving to protect the sale of fish products to the U.S., as well as the important forest industry in Nova Scotia where we export so much to the U.S. We in the Conservative Party want to keep Atlantic Canadians working. We prefer to have them employed in factories than sitting home drawing benefits from social programs.
I would like the Minister to comment on whether we have rights under the GATT and why we do not take this issue to the GATT?


James Francis Kelleher: Mr. Speaker, the Hon. Member is quite correct. Canada does have rights under the GATT and we are exploring those rights at this time. If indeed we cannot resolve this problem with our American neighbours and they take
some action that we consider harmful to our interests, then of course we would explore very carefully our rights to take action under the GATT.


Mr. Fulton:: Mr. Speaker, my question to the Minister concerns the proposal to have envoys discuss the matter of softwood lumber between Canada and the U.S. I would like to know the names of the provincial Ministers responsible for forests from those provinces involved in the agreement to have envoys on this issue. Will the Minister expand on exactly what will be included in the discussions between the Envoys? Does it include any limits on exports or anything related to export price? Will he name the Ministers and the provinces that have been involved in this proposal and exactly the nature of those discussions between the envoys?


The Acting Speaker (Mr. Paproski):: The Hon. Minister of International Trade has 30 seconds.


James Francis Kelleher: Mr. Speaker, it is very difficult to expect a politician to say anything in 30 seconds. All I can tell you is that on Monday the provinces were involved in discussions with us on this matter. Last evening I sent telegrams to the various Ministers of Forestry and Trade. We will be discussing this further in Washington tomorrow, when I will be getting back to the Ministers of the relevant provinces. At that time we hope to have some resolution to the mandate and who the envoys might be.


The Acting Speaker (Mr. Paproski):: The period for questions and comments is terminated. Debate.


James Ross Fulton: Mr. Speaker, I am very pleased to have an opportunity to participate in this debate. Contrary to what the Minister for International Trade (Mr. Kelleher) would have Canadians believe, the only debates in the House on the issue of lumber and the forest industry since September, 1984, have been started by the New Democratic Party and never by the Government or the Official Opposition.
The fact that the Minister said that no countervail has been filed indicates that he is not completely aware of everything that is going on. In fact, the International Trade Commission and the Commerce Department have agreed that the clock started running yesterday in terms of the countervail action being taken in the United States against Canadian softwood. Technically, the countervail is already in process.
The Minister indicated that he has been in touch with the provinces regarding the appointment of envoys and what will be substantively discussed between the two envoys. However, it seems to fly in the face of what has really gone on in terms of this issue.
We learned today that the forest companies in the United States are proposing a $53.65 U.S. countervail duty per thousand board feet against Canadian SPF. My friend, the Hon. Member for Kamloops-Shuswap (Mr. Riis), pointed

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out that today wood is moving at $184.50 on the Chicago Mercantile Exchange. That represents a 29.1 per cent countervail to be taken against Canadian wood. When I toured the country last year 1 learned from most of the majors in this country that anything remotely above 10 per cent would put most of the mills and most of the softwood production in this country completely out of business. A 29 per cent duty would have a dire effect.
I want to point out exactly what has gone on and what has been said with respect to this issue. When our Prime Minister (Mr. Mulroney) appeared before the Canadian Forestry Association on April 9 in Ottawa, he indicated the following:
The Reagan Administration has agreed to the concept of a "clean launch" for the talks but some members of Congress from lumber-producing states are trying to link the broader trade discussions to the lumber dispute.
The Prime Minister goes on to say:
I refuse to accept the proposition advanced by some in the United States that the softwood lumber issue must be resolved in favour of the United States prior to the talks beginning.
Who is the Prime Minister kidding? Either the President of the United States has not been telling our Prime Minister exactly what is going, on or our Prime Minister has not been telling Canadians exactly what has been taking place.
President Reagan's letter to Senator Robert Packwood, Chairman of the Senate Finance Committee, is very blunt and clear. It runs completely contrary to what the Prime Minister has been peddling in the House and across the country. In the President's letter to Senator Packwood, dated May 8, he said:
I am committed to finding a rapid and effective solution to the Canadian softwood lumber problem which restores for the American lumber industry a fair opportunity to compete.
To this end, I intend to press for an expedited resolution to this problem independent of comprehensive negotiations.
We must gain an understanding of what is being said in the United States. The President has made it very clear that, if necessary, he will take actions quite independent of the comprehensive trade negotiations between Canada and the United States that are to start in the middle of next week.
There was not a clean launch and that is what the people involved in the forest industry in British Columbia have been saying in the last 48 hours. It was a dirty launch because clearly there was linkage.
Furthermore, a 10-10 tie vote in the Senate Finance Committee is about as close to a failure as one can get. According to their system, a tie goes in favour of proceeding with fast track. Furthermore, the reason there was a tie is that the President and the administration had been leaning on various Senators from Hawaii and other areas of the United States to make sure that there would be at least 10 votes.
Let us examine these developments more closely. The President promised that he would provide some kind of mechanism that would satisfy those lumber state Senators and members of Congress who were concerned about Canadian wood. The President has done that by making it clear that he
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will take unilateral trade action if the bilateral lumber talks fail.
What did our first Minister in Washington, Mr. Roy, have to say yesterday? He is very knowledgeable about this issue and said that this envoy offer has not been officially presented to the United States adminstration, but is not expected to include Canadian concessions to limit exports or raise the export price. That is exactly what I hope he would say. However, it seems that the Government has not really understood this process which has been going on for so long.
Last year I accompanied an all-Party delegation to Washington where we met every member of the House and the Senate who had any kind of protectionist legislation related to the forest industry. All of us returned to Ottawa with the firm understanding that some very strong action would be taken by the United States. There was only one solution to that problem then, but unfortunately we do not have enough time left to take the intelligent option the Government should have used. That option which I presented almost a year ago in the House was to convince those in the United States, who could impress upon Republicans and Democrats, that it is important to maintain the relationship we have on wood because Americans buy Canadian SPF preferentially at a higher price because it is a better product. They also buy it preferentially because our market involvement has tracked the U.S. dollar absolutely parallel for a number of years, to the point where we are at 33 per cent or 34 per cent.
Who is kidding who? Either the Prime Minister knew that there would be this kind of linkage or the President did not tell him. If that is the kind of relationship the Prime Minister has with the President, I am not sure where these so-called trade negotiations will lead this country.
The Senate Finance Committee made it clear that it intends to fully maintain the power of countervail. It has made no indication that any of that will be on the table in relation to this deal.
Let us examine this issue seriously. This is the largest industry in Canada which has had absolute free trade with the United States for half a century. The President of the United States is saying that this big ticket free trade item will have to be dealt with before free trade negotiations begin. He is saying that the Americans will have to bring a countervail against it in order to bring Canadians to their senses.
The Government should have been considering all kinds of information but has not been doing so carefully enough. Sam Gibbons has a Bill before the U.S. Congress which I believe is very likely to be the trigger mechanism in the present process. In an interview last February he said:
We ought to come to the rule of law instead of putting the ambassador in the terrible position of having to negotiate.
That is in relation to wood. The article goes on to say:
While Yeutter said the U.S. administration will keep plugging away with "blood, sweat and tears" to resolve what he called the unglamorous lumber
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dispute, Gibbons said the matter should be settled through legislation, not negotiations.
It appears that this is what is likely to occur. That is what Sam Gibbons said to me two months ago. Some time in late May or June his Bill, or some omnibus Bill like it, will move to the floor of Congress and will move on through. I think now the deal will likely be that the President of the United States will get the Republicans to fully endorse and put their support behind that kind of omnibus Bill.
1 find it preposterous that the Government has done nothing about such an important industry. It continues to say there was a clean launch, but there was not a clean launch. It is very clear now from what the President of the United States is saying that at least in his mind-because he was putting pressure on members of the Senate Finance Committee the day of the 10-10 vote-he knew full well there was no intention of going forward with a clean launch. Now we know there was not.
Let us take a look at the industry which is now at such great risk and examine what the implications are likely to be. It is amazing to find out from discussions I have had with the two Ministers, the Minister of State for Forestry (Mr. Merrithew) and the Minister for International Trade, that there is no study being done even now of the impact or implications of a countervail, or of the changes proposed in the Gibbons Bill, or of any of the independent postures referred to by the President of the United States.
This is the largest industry in Canada which employs directly 300,000 persons and indirectly another 700,000 persons. We have the largest single industry which is worth $26 billion per year. We know it has troubles with insects, forest Fires, over cutting, bad provincial replanting programs, and so on, but the fact is the federal Government is supposed to carry the ball on these kinds of issues. The Prime Minister and the Government have clearly dropped the ball on this issue. This is the most important free trade issue Canada has, and our Government is allowing it to slip through its fingers. It continues to make concessions.
This Friday, I understand, the Bill to spend a couple of hundred million dollars on generic drugs will be reintroduced. That is something else the U.S. wants, so it gets it. The last time we had envoys on acid rain, as my friend in the New Democratic Party pointed out, the former Premier of Ontario gave us zip. He gave us absolutely nothing on acid rain. Whatever happened to cleaning up the Niagara River? What has happened on a lot of other bilateral disputes? Nothing.
The Minister has the audacity to rise in this House and say the softwood issue is a serious problem. The reason it has become a problem is that he and his Department, and his colleagues in Cabinet, have done nothing about it. The U.S. pushes the button; the United States says it is a problem and all of a sudden, bing, he stands up in the House and reads another pre-typed speech saying it is a serious problem. When
Canadians have a problem with the United States it is very rarely even raised in the United States. No one in the United States Congress ever stands and says this is a terrible problem.
I wonder who is writing these speeches for the Minister. Perhaps he simply does not understand what this issue is all about.
I would like to put on the record a few reasons why this is such an important issue and why it is going to continue to be raised, and hopefully we will bring about some action from the Government. Seventy two per cent of our exported softwood goes to the United States, 12 per cent goes to Europe and 6 per cent to Japan. Our net trade surplus last year from softwood was $11 billion. Right now we hold 33 per cent to 34 per cent of the U.S. market. That has traditionally been about the amount of the U.S. market we have held. It has been free for over 40 years. We have had fully free trade between Canada and the United States. Yet on the eve of the so-called "free trade" negotiations" with the United States, our largest freely traded commodity is what is under attack by the Reagan administration. Has anyone not woken up to that yet? I just cannot believe Hon. Members on the Government side think these so-called "free trade" negotiations are going to go anywhere when our largest most consistently freely traded commodity is what is under attack.
We exported $3.3 billion in softwood to the United States last year. The overwhelming majority of that softwood came from British Columbia. It reached the point in some States such as Georgia, which is why there is a political issue being raised in the U.S., where 50 per cent of the wood used is spruce, pine, and fir number one from British Columbia. Again, it is exchange rates which are at the root of this problem and the fact that consumers in the United States, particularly contractors, preferentially purchase our SPF, particularly over southern yellow pine.
I want to deal now, Mr. Speaker, with why what is happening is a carefully calculated execution by the United States. It is not something which has suddenly been popped on us, although I am sure many journalists, when a Bill is finally passed through Congress in the next six weeks, will say: "Good grief, how did this get popped on us? We suddenly have this Gibbons Bill on our backs. How can this happen? Tens of thousands of Canadian workers are going to be put out of work and we have to come up with a dramatic new budget and new ways of dealing with this problem", and all of this kind of gobbledygook.
We have known for a long time that this was a serious political issue in the United States and we have done nothing serious to deal with it. We have had the little tour to Prince George. We have talked about the size of plywood and what kinds of insect repellants we are putting on the ends of two-by-fours, and so on, but we have not got down to the brass tacks of dealing with the United States in a way it expects every other country in the world to deal with it. We have to get our message across.
May 13, 1986

The present administration of the Conservative Government has simply not done the job. What other country in the world would not have a Minister directly responsible for the largest industry in its country? Only Canada. What kind of Cabinet would agree to only allow a very hard working Minister $500,000 in his budget to deal with this issue? I have talked to the Minister's Department and he only received less than a half a person year to deal with this issue. I do not want to condemn carte blanche how many other Ministers are left in Cabinet, they have been dropping so fast. How many is it now, Mr. Speaker, 38?


Brian Vincent Tobin: Mr. Reisman got $500,000 for his office.


James Ross Fulton: That is right. That is just for office rent. Why would the rest of Cabinet not support someone who understands the industry and really wants to get out there and protect it? Why would the Government not give him any money or an opportunity to have his views brought to the United States where they could actually have some impact?
Let me deal once again with the issue of studies which the Government has not done and steps which should have been taken to deal with this issue. We have seen countervailing action effectively taken against hogs, blocking them from the U.S. market. We have seen that happen to our fish, 5.8 per cent on whole groundfish. We have seen this happen to berries, steel and all kinds of commodities. The Government has not responded, in my view, the way it should. Our workers in the forest sector, and the forest industry, have spent over $10 million lobbying on this issue in Washington while our own Government has done almost nothing. It certainly has not given the right kind of tools to our trade consulates to use in the United States. Why would our Government not do any studies on what kind of effect different options which a large trading neighbour was planning to take against it would have? Why would it not undertake an evaluation so it could determine what kinds of steps it should be taking itself?
I suppose the envoy proposal will go ahead. It's a way of buying a little time. Someone will be appointed and that person will meet with a well known American. They will drink a little champagne and eat some caviar and agree they are good pals. Our envoy will come back and make some kind of proposal in order to buy a week or two weeks of time. But the President of the United States has made it clear to the U.S. Senate Finance Committee, and to Republicans and Democrats in the United States, that there is a timetable on this issue. The countervailing duty process started yesterday.
The Minister says the envoy is going to go to Washington tomorrow. He sent telegrams out to the Forest Ministers last night. That is all very marvellous. But the fact is, if you want to know what is going to happen, Mr. Speaker, this process may go ahead through the existing countervailing process because there have already been changes. Since the administration has accepted it, it may move along fairly quickly. It may be moved forward and they may come up with a countervail. However, if those key people such as Packwood and
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Gibbons, and others in the United States, do not think going that countervailing route will be significant enough to protect them from the politics about which I am speaking, the grassroots politics-they have large amounts of unemployment in their states, although it is nowhere near as high as what we have or have had in recent years as a result of technological change-the Gibbons Bill will move forward. It is an omnibus bill directed to resource subsidies. It will have direct support from the President, the administration and the Republicans. It already has the support of most of the Democrats. So those are the two scenarios. There is the countervail scenario, or a countervail approach through new legislation, which seems to be the preferred route.
I must say that I was sorry to hear the speech by the Minister for International Trade. I think this issue is far more significant and far more ominous than his speech writer obviously felt last night while he was writing it. I hope that the Minister of State for Forestry will have more to say on the dilemma in which we are now involved.
Even the head of the Canada Lumbermen's Association predicts that 75,000 more jobs will be lost. These are the jobs of buckers, fallers, skidder operators-people who work in the bush. I am not talking about secondary and tertiary industry. We are facing a very dire dilemma. Either the President of the United States has gone back on his word or our Prime Minister has not told all. In either case our forest industry faces a very serious and debilitating situation with a near 30 per cent countervail proposal coming through the Department of Commerce.


The Acting Speaker (Mr. Paproski):: Are there questions or comments? The Hon. Member for Sarnia-Lambton (Mr. James).


Mr. James:: Mr. Speaker, I guess I am a little confused as to where the Hon. Member for Skeena (Mr. Fulton) is coming from. He seems to be arguing in many different ways. First, it is as if we had never heard that the U.S. industry has maintained that our stumpage policies were not advantageous. That is not new. It has been going on for years. It is something about which we have fought. To listen to the Hon. Member it is almost as if the Government brought it on. The Hon. Member seems to be tying this matter to the bilateral trade negotiations. Just last night the Deputy Chief Negotiator, Mr. Ritchie, reconfirmed that it is a very separate and distinct negotiating situation. It has nothing to do with the preparation for bilateral negotiations.
The Hon. Member refers to going down to the U.S. and having consultations. Yet he does not seem to want us to consult with the U.S. and negotiate. The Hon. Member cannot have it both ways. Perhaps it is because I am new here and the Hon. Member has been here longer than I that there does not seem to me to be any direction to all this.

May 13, 1986
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The Hon. Member is blaming the current Government for not selling the lumber issue, which is a very important issue. On the other side of his discussion he says we should not be negotiating with the U.S. on settling our trade situation. I think the Hon. Member knows that even in the current situation under GATT there can be countervail even when there are free duties. We have repeatedly said that one of the very important reasons for getting into a negotiated agreement with the U.S. is to settle the countervail situation. That is what the Hon. Member has said is so very important. He has said that the Minister did not say it was important enough. The Minister has repeatedly said that countervail is one of the main concerns we have, and one which we should be settling in a negotiated agreement. Perhaps the Hon. Member will set me straight as to where in the world he is coming from.


James Ross Fulton: Mr. Speaker, first, I would like to deal with the Hon. Member's questions regarding the 1982 countervail situation which the Canadian forest industry was successful in beating back. As the Hon. Member likely knows, in that case there was what is known as a de minimus ruling. This means that the amount of subsidy found in the Canadian industry was less than 1 per cent, thus no countervail was forthcoming. What the Hon. Member is likely unaware of is that the rules of the game have dramatically changed since that countervail process took place. In fact, it will now be a much more difficult case for the Canadian industry to deal with as a defendant as effectively as was the case three years ago. I know that people in the Canadian forest industry to whom I have spoken are much more worried about the countervail clock which started running yesterday than they were three years ago.
In relation to the U.S. Senate Finance Committee, I am sure the Hon. Member is aware that it has made it very clear that it is the intention of the committee to fully maintain the powers of countervail in relation to the International Trade Commission. The committee has made it clear that that is quite a separate issue, apart from the bilateral trade negotiations which were supposed to start next week in the United States. I am surprised that the Hon. Member is not aware of these two matters.
In relation to the Government not selling this issue in the United States, I think that will be found to be true by the historians who will take a look at this issue this fall. Once the fall-out comes home to roost here it will be found that that in fact was the largest single oversight of the Government in relation to the whole issue. It was raised with me by senior people at our embassy in Washington. It has been raised with me by senior observers far closer to the issue than I. It has been pointed out that the largest single problem has been that there has never been a lobbying effort, or as many lobbying firms working on Capitol Hill in Washington as there have been working for the Coalition for Fair Lumber Imports in Washington. Tens of millions of dollars have been spent on that effort. Our industry has spent $10 million in Washington to try to deal with this issue. There has not been a two-tiered approach to the issue in the United States. There have not
been well-informed trade initiatives and good spokespeople going to the radios, public meetings, et cetera, dealing with state and federal legislators in states such as Georgia where this is a very important issue.
This was pointed out to me by Senator Mack Mattingly at a meeting just six weeks ago when he said: "Look, Fulton, if you were standing up in Prince Rupert and 50 per cent of the wood being used in your constituency was from Georgia and you had lines of fallers, buckers and skidder operators outside your constituency office, what would you be saying about Georgian wood?" 1 said that I understood that. I told the man that I was not born at six o'clock that morning and that I understand that type of politics. I understand how lobbyists work in the United States.
What we have not become aware of is the fact that lobbyists in the United States are efficient and effective. I am not saying that this is just a problem of this Government. It is something which has gone on for more than a decade in the country. I am not just referring to lobbyists on Capitol Hill. They fan out through ads in magazines, radio and television. They get to legislators. We should have gone to those states and put forward the position that our wood is preferentially purchased and that it is a better wood. The reason for the prices is that we have been tracking the U.S. dollar. These are powerful, accurate and substantiated arguments which we should have put forward. It is exchange rate oriented as opposed to subsidy oriented.
On the other side of the coin, some 75 per cent of our gross trade is with the United States while some 25 per cent of that country's trade is with us. Some two million Americans go to work with their lunch pails every morning and come home every night with a pay ticket which is directed related to the commodity they are making which is sold in Canada. These people are easy to identify. We should have gone to them and we should have said: "Look, here is a freely traded commodity. It is preferentially purchased in your country and there is a lot of hogwash being peddled by Democrats and Republicans on the grassroots politics of the issue". I think the largest single failure has been that we have not gotten that message out as clearly as we should have gotten it out.


Brian Vincent Tobin: Mr. Speaker, when the Minister of International Trade was on his feet he suggested that we won the countervail case in 1983. I think what he was really telling us is that we should not be worried because we won it in 1983 and we will win it again. Personally, I see that the circumstances have dramatically changed. I say this because of the U.S. Commerce Department's interpretation of what compromises an unfair trading practice, by the omnibus bill in the United States today, the trade bill, and in other areas as well, including the president's letter and his implicit support. I am not convinced of the view the Minister seems to be putting forward, that in the final analysis if nothing else works they will make a countervail complaint again and we will win again. That is nothing but a recipe for a very unpleasant surprise for the Minister and the Government.
May 13, 1986


James Ross Fulton: Mr. Speaker, the Hon. Member is quite correct. The rules of the game have been substantially changed. I do not think we should look in isolation at the countervail clock on wood which started running as of yesterday, without looking at the matter of fish. I say this because the 5.8 per cent which has been taken against whole groundfish is well worth taking a close look at. If it is taken against the whole fish-and the overwhelming majority, some 85 per cent, of provincial and federal subsidies have gone to processing plants-and not against the filets, then it is a matter of politics. There is a large dose of politics coming our way, both in terms of the countervail clock which is running and the Gibbons bill.


The Acting Speaker (Mr. Paproski):: I regret to inform the Hon. Member that his time has expired. When the debate resumes 1 will recognize the Hon. Member for Humber-Port au Port-St. Barbe (Mr. Tobin).
It being one o'clock, I do now leave the chair until two o'clock this day.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.

[Stage Direction]
[ Translation]

Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, every year, the magnificent gardens at the residence of Canada's Governor General attract thousands of visitors from all parts of Canada and from all over the world.
Rideau Hall, a symbolic institution dear to the hearts of Canadian men and women, has seen many people walk through its gates to admire this splendid residence or simply for the pleasure of walking on the Governor General's lawn.
A decision has now been made to restrict access to the public areas of Rideau Hall to groups that have received prior authorization. The only justification given as yet has been the possibility that the safety of the Governor General of Canada might be at risk. If that is the case, I fail to understand why, in 1986, here in Canada, we cannot both protect our head of State and provide access to this lovely expanse of green that belongs to Canadians.
It would be unfortunate if because of fear of some incident, we were to restrict our freedom, our civility and the long tradition we have in this country of encouraging people to move freely-


Mr. Speaker:: Order, please. Sixty seconds.


CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION DENIAL OF PUBLIC SERVICE TELEVISION LICENCE IN MANITOBA
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, I have to raise concerns regarding the decision made by the CRTC to deny a licence to a community based nonprofit organization in favour of yet another commercial television station in southern Manitoba. This is an important matter because the winner of the fourth English-language service in southern Manitoba is receiving the last available VHF station. The decision means that Manitoba will be the only province west of the Maritimes not to have a public television station.
The board which made the Manitoba public television application includes representatives of two universities, the mayor, the President of Great West Life, representatives of native and multicultural organizations, as well as other private interests. The CRTC states that it supports the concept of wide ethnic and community involvement in proposed programming but could not appreciate the fact that a community based station could not give the same financial guarantees, at least initially. Undoubtedly there were pros and cons for each application but I have to express my concern that so little attention was paid to the public-


Mr. Speaker:: Order, please. Sixty seconds.


ABORTION
Mr. Jim Jepson (London East):: Mr. Speaker, a harmless classified employment ad in this weekend's Toronto Star offered positions for two counsellors and three nurses. The employers wanted warm, caring applicants with a sense of humour. There is nothing unusual about a job offer like this except that this one was from Toronto's second free standing abortion clinic.
Dr. Robert Scott was charged along with Henry Morgental-er for the operation of Toronto's Harbord Street abortion clinic. Although these doctors openly acknowledge their violation of the Criminal Code's abortion provisions, Dr. Scott obviously feels that he has a green light to perform abortions with utter impunity.

May 13, 1986
If a criminal offence can be promoted without any response from either the police or legislators, then our country should ask itself why it bothers to have laws at all. The answer to that question is obvious. We have laws to protect those who cannot protect themselves, in this case, defenceless babies in their mothers' wombs. It is time for Parliament to make sure that our laws are enforced.
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MEMBERS OF PARLIAMENT
Mr. John Reimer (Kitchener):: Mr. Speaker, the Canadian people are not amused. In fact the childish conduct of Members of Parliament, both in the House and in committee, leaves Canadians justifiably disillusioned and disgusted.
No one will deny that careful analysis, perceptive and probing questioning, and lively debate are the legitimate tools of any Member of Parliament. However, when analysis becomes innuendo, questioning deteriorates into thinly disguised accusations, and debate degenerates into a pathetic, egotistical free-for-all, then Members have abused their privileges and abdicated their responsibilities.
It is essential that we remember who we are, where we are, and why we are here. Surely all Members want Canadians to be proud of their democratic institutions and of their elected representatives. Therefore, I urge all of us to render ourselves more worthy of this House by demonstrating greater respect and common human decency.
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THE ADMINISTRATION
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, on September 9, 1985, the Prime Minister (Mr. Mulroney) sent an open letter to Members of Parliament and Senators. He also made what was affectionately known in the House as his deathbed repentance speech on patronage. In the letter that he sent to Members of Parliament, he said the following concerning the conflict of interest guidelines:
In carrying out that responsibility the Government is directly accountable to Parliament and through Parliament to the people of Canada. You will find no quasi-independent agencies in this Code that will allow the Government to shirk its responsibility by saying that the problem belongs to someone else.
Some eight months later the Government and the Prime Minister once again betrayed the people of Canada.


REGIONAL ECONOMIC DEVELOPMENT
Mrs. Lise Bourgault (Argenteuil-Papineau):: Mr. Speaker, last weekend, the Outaouais Socio-Economic Summit was held at Mont Sainte-Marie. For nearly 18 months, participants from the Papineau area in my riding have been preparing development plans and asking their provincial and federal representatives for help in implementing projects such as Highway 50, the potato packaging co-operative, Oueskarini Park, the Centre d'observation de courte duree, Fromagerie Agrodor, the Papineauville gymnasium, and so forth.
Mr. Speaker, all these people have volunteered their time to help improve the economy of their community. Of course, many projects will not be carried out right away, but this fine show of consultation and co-operation has given all parties involved in the Outaouais a chance to get to know each other and express their needs.
This is an experiment that bears repeating, because I think these summits are an excellent way to avoid wasting time and money. I earnestly hope that the federal Government will consider this kind of regional consultation as a model for discussions with the provinces.


PROPOSED YOUTH GUARANTEE PROGRAM
Nelson Andrew Riis: Mr. Speaker, for Canada, unquestionably the richest country in the world, to have so many of our young people out of work is nothing short of immoral. The Government should not tolerate any youth unemployment in Canada. It would be well advised to initiate the proposal put forward recently by the Leader of the New Democratic Party in British Columbia who proposed a youth guarantee program which would guarantee every young person in British Columbia a choice of a full-time education, full-time training, or the opportunity for full-time steady employment. It virtually guarantees the young people of British Columbia a minimum of two years of full-time educational or on-the-job training, or a full-time job.
The $150 million cost of implementing such a program would result in more personal taxes being paid, in more sales taxes being collected, in more corporate taxes being paid, and in more excise taxes being collected. In the end it would actually be cost effective for the Government of Canada.
To have so many of our youth on UIC, welfare, or jobless, must be considered intolerable and unacceptable. The program which Bob Skelly suggests for British Columbia young people should be implemented across Canada forthwith.
May 13, 1986


FISHERIES
Lawrence I. O'Neil: Mr. Speaker, I rise to draw the attention of all Hon. Members of the House to special problems being experienced by Nova Scotia fishermen.
Over the weekend a storm damaged the boats and gear of fishermen in the region. I urge the Minister of Fisheries and Oceans (Mr. Siddon) to do all possible to ensure that his Department responds quickly to these special circumstances. Fishermen in my riding are just getting their fishing efforts under way and have been hit with this major set-back.
A second major problem for area fishermen is the absence of sufficient quota to ensure a full season of fishing. An agreement must be reached with the mobile fleets to ensure that fishermen living and fishing in 4 VSW are left some quota. Perhaps trip limits are the answer. I urge the Department of Fisheries to direct its officials to find an answer to this serious problem.
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[ Translation]


AUTOMOTIVE INDUSTRY
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, I would like to share with all Canadians the results of an important study on adolescent pregnancy by Planned Parenthood of Ontario, entitled "Progress in Prevention".

The study's findings demonstrate how useful preventive action is. Sex education for children and family planning clinics are a must if we are to stop teenage pregnancies.

The study shows that access to voluntary termination of pregnancy services has not increased sexual irresponsibility and has not caused adolescent pregnancy to rise.
The authors of "Progress in Prevention" prove that the costs of not reducing adolescent pregnancy are enormous.

Government attempts to reduce the deficit by making cuts in preventive programs are self-defeating.

Treatment costs far exceed prevention costs and fail to address the causes of the problem.

Mr. Speaker, this is an excellent reason for promoting prevention programs. An ounce of prevention is ...


Mr. Speaker:: Order, please. The 60 seconds are up.


Mr. Guy Ricard (Laval):: Mr. Speaker, although over
40,000	jobs were created in Montreal in the last twelve months and the unemployment rate has gone down by 1.2 per cent, the Montreal region is still suffering the effects of an imbalance in economic development compared with other regions. To correct the situation we need the help of people in the community. The economic partners of our governments must make a commitment and get involved. Governments alone cannot do everything.
Montreal's economy will recover only if its leaders want it to recover. For instance, in Quebec, automobile production accounts for only 5 per cent, while the province buys more than 43 per cent of the automobiles produced in Canada. It is unthinkable that a country as industrialized as ours should not have a domestic automobile industry, spread equitably across the country. Why isn't Canada's automobile industry expanding? That is the question we must ask ourselves. We should stop expecting governments to do everything. Let's act now and the rest will take care of itself.


ORGAN TRANSPLANT DONATIONS-SUGGESTED CENTRAL REGISTRY
Mr. Howard Crosby (Halifax West):: Mr. Speaker, recent attention focused on the donation of human organs for transplantation has shed light on a serious defect in the process. At present many Canadians complete a donation card but fail to notify their family members or personal representatives. The consequence is that in many tragic deaths no steps are taken to implement the donation.
There is a simple solution. Organ donations could be recorded with the Canadian Police Information Centre and the donor fully identified. There is access to CPIC all day, every day, through police forces across the land. All that is needed is

May 13, 1986
the authorization of the Solicitor General (Mr. Beatty) and the police authorities.
Let's make it easy to give the gift of life.


AIR TRANSPORT
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my office has confirmed with Wardair its purchase of three South African jumbo jets and that delivery is expected in August of this year.
On September 13, 1985, the Secretary of State for External Affairs (Mr. Clark) announced an embargo on air transport between South Africa and Canada. How then are these planes to get here? Is it possible that Wardair is unaware of the embargo, or are we unaware of some convenient arrangement that Wardair has with the Government?
We have ample evidence in recent weeks of Tory cronyism transcending principle. Will this be another example?

[ Translation]


SHIPYARDS
Mr. Louis Plamondon (Richelieu):: Mr. Speaker, Canada's shipyards are facing a serious crisis. It is becoming increasingly clear to all parties concerned, whether they belong to the public sector, the private sector or labour, that a rationalization policy is necessary. I hope such a policy will be based on the fundamental principle this Government has always defended, namely that of free enterprise. In fact, any other approach would merely serve to extend the life of the "lame ducks", to the detriment of shipyards that are already reasonably competitive.
Mr. Speaker, in the past, Governments that were more concerned about their voters than about providing this country with sound economic management had no qualms about controlling the way government contracts were awarded. This solution is no longer acceptable today, and I think that from now on, the process of awarding contracts should be based on the free market system and thus on the fundamental principle, in a capitalist system, of having the right to bid on a contract.


AGRICULTURE
Mr. Gilles Bernier (Beauce):: Mr. Speaker, for 20 months this Government has been taking some very important measures in the agricultural industry. From assistance to drought-stricken farmers to establishing a new dairy policy and abolishing all federal taxes on fuel for family farms, our Government has shown a depth of understanding never seen before in Canada. The new measures adopted by the Farm Credit Corporation were well received by farmers in Beauce, Quebec and Canada. Speaking of farm credit, the Liberals strangled many farmers with their exorbitant interest rates. Just look at the number of farm bankruptcies caused by the federal Liberals' failure to understand the problem.
A number of sound measures were taken recently by this Government and there are more to come. As a Conservative Member, I believe in the future of the agricultural industry, and we are doing what is necessary to help this industry prosper. Beauce farmers can count on my co-operation and understanding.


FEDERAL-PROVINCIAL RELATIONS INVITATION TO QUEBEC TO ADHERE TO CONSTITUTION
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Hon. Members will recall that last Friday, Mr. Remillard, Quebec Minister of Intergovernmental Affairs, made a new proposal to the federal Government that would bring Quebec closer to signing the Canadian Constitution. Unfortunately, contrary to what the Prime Minister promised during the last election campaign, this elicited an immediate refusal from the Secretary of State. Mr. Speaker, one of the requests made by the Government of Quebec was that the Government withdraw Bill C-96, whose purpose is to penalize the provinces.
I therefore urge the Prime Minister and all Members from Quebec to think about this question and make sure they do everything they can so that Quebec adheres to the new Constitution.


CANADIAN BROADCASTING CORPORATION
Mr. Bob Pennock (Etobicoke North):: Mr. Speaker, the Minister of Communications (Mr. Masse) asked the President of the CBC to reply to my allegations that the song Neat to be Dead could encourage teenage suicide. In response to my
May 13, 1986

charges Mr. Juneau wrote, without seeking professional opinion:
I find it hard to believe that curiosity about this fundamental human question translates into an invitation to teenage suicide.
You may find it hard to believe, Mr. Juneau, but let me quote from the written opinions of two doctors who specialize in this field. First, Dr. Huessman wrote:
It is clear that highly publicized suicides increase the likelihood of others committing suicide.
Dr. Marshall wrote:
It is my professional opinion that the material in "What It's Like to be Dead" could possibly stimulate a seriously discouraged teenager to act upon his suicidal thoughts.
Mr. Juneau, you acted irresponsibly by not seeking professional advice before you replied. You now owe it to the people of Canada to demand that this song not be aired again.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is for the Deputy Prime Minister. He has been a Member of the House for a long time and knows that issues of ministerial responsibility are better left to Parliament. Yet the Prime Minister is suggesting that he is going to appoint an outside inquiry to deal with the conduct of the former Minister of Regional Industrial Expansion.
Why would the Prime Minister announce such an outside inquiry, which he says will be impartial, while saying in the same breath that he is fully confident that the former Minister will be vindicated? Would the Deputy Prime Minister not agree with me that that statement of the Prime Minister already undermines the confidence of Canadians in any such outside inquiry?


Hon. Erik Nielsen (Acting Prime Minister):: Mr. Speaker, it should come as no surprise to the hon. gentleman that we are breaking new ground here.


Mr. Broadbent:: Yeah, right.


Erik Nielsen: That was quite evident last September 9 when the whole package with respect to the Code of Conduct was tabled, and in the open letter to Members and Senators, which was signed by the Prime Minister, explaining that circumstances may arise from time to time which would warrant the appointment of an impartial person to investigate the facts in given circumstances. It is no news that that new proposal was there. The hon. gentleman has had a long time between last
Oral Questions
September and now to comment on it. I suggest to him that, in light of all the circumstances, this is the best way to proceed for this institution itself.


REQUEST FOR CLARIFICATION OF PRIME MINISTER'S POSITION
John Napier Turner: Mr. Speaker, the Prime Minister has reasserted his opinion that the Minister has done nothing wrong and that he will be able to resume his post in Cabinet. On what as yet unpublished facts is the Prime Minister's opinion based? And if there are new developments, why doesn't the Prime Minister of Canada reveal them, so that all Canadians will know what they are?


Erik Nielsen: It is precisely for that reason, Sir, that the impartial person is being sought for the purpose of conducting the investigation, a process which was explained last September. The hon. gentleman, as a former Prime Minister and the present Leader of the Opposition, should be the first to realize that the bitter and very highly partisan atmosphere which now surrounds this matter is a circumstance which compels one to the conclusion that the only impartial method of dealing with the matter is by the process contemplated last September.


PRIME MINISTER'S KNOWLEDGE
John Napier Turner: Mr. Speaker, if the Prime Minister is making a prejudgment about the reputation of the Hon. Member for York Peel being vindicated, why would he not have shared those facts with the House of Commons or allowed the Minister, as he then was, to make such a statement? What facts does the Prime Minister have, that Canadians generally do not know about, which affect the situation?


Erik Nielsen: Sir, it is not I
who is prejudging, it is the hon. gentleman by the very nature of his question.


John Napier Turner: The Prime Minister is prejudging.


Erik Nielsen: The hon. gentleman has a responsibility, as Leader of his Party, to ensure the proper standards of conduct by some members of his own caucus with respect to this institution and its committees.


Jean-Robert Gauthier: We'll look after that, Erik, thank you very much. We don't need you to tell us what to do. Look after your own.


Mr. Andre:: When are you going to start?


Mr. Speaker:: Order, please. Order!

May 13, 1986
Oral Questions CONDUCT OF INQUIRY


Hon. Bob Kaplan (York Centre):: Mr. Speaker, my question is also for the Acting Prime Minister. He tells us that new ground is being broken in the use of this impartial inquiry. The Prime Minister is picking the commissioner. The Prime Minister is setting the terms of reference. Yet the Prime Minister is also telegraphing the fact that his Minister will be vindicated and brought back into the Cabinet. How can you possibly break new ground and have an impartial inquiry with that kind of prejudgment by the Prime Minister?


Erik Nielsen: Mr. Speaker, the hon. gentleman should know, he has been here long enough, and certainly his Leader knows, that we are dealing with a unique and exclusive responsibility of the Prime Minister concerning conflict of interest. He should also know or have concluded, if he has not by now, that whatever the report of that inquiry, it will be made public. There is that safeguard as well.


PRIME MINISTER'S OPINION
Robert Phillip Kaplan: Will the Prime Minister make public the reason, the facts he has, which justify saying, as he did in Korea, that the Minister will be vindicated and brought back into cabinet? What was he talking about?


Erik Nielsen: There is no analogy there at all. The former Minister has said and continues to say the same thing. It is only Members opposite who are foreclosing any option other than guilt. Their minds are closed to any other possibility. That in itself demonstrates the compelling need for impartiality.


PRIME MINISTER'S STATEMENT
John Edward Broadbent: Mr. Speaker, surely what we are talking about here are impartiality and fairmind-edness. When I asked him yesterday quite deliberately whether he and the Prime Minister maintained their view that the former Minister was innocent of conflict of interest, the Deputy Prime Minister said both he and the Prime Minister "would not prejudge the outcome of the inquiry". Is that answer consistent with the view expressed by the Prime Minister last night in Seoul, Korea, when speaking to the media, that he was convinced at the outset, before the evidence is even considered, that the Minister would be totally vindicated? Are you loading the dice in advance in this inquiry?


Erik Nielsen: I said no such thing. What I was trying to convey to the Leader of the NDP, in response to questions by his supporters and those of the right hon. gentleman opposite, was that they should have the decency to allow a process of impartial investigation to proceed without loading the dice, which they obviously want to do.


PRIME MINISTER'S FORECAST
John Edward Broadbent: Mr. Speaker, we on this side are quite happy to have what the Deputy Prime Minister supported when he was on this side, namely, a consideration by the Standing Committee on Elections, Privileges and Procedure. It is not we who are loading the dice.
Does he not think that a Prime Minister who is trying to get an impartial, fair-minded person to look at this is really loading the dice and establishing a prejudicial position? Is he not doing that when he says at the outset that the Minister is going to be vindicated? That is loading the dice.


Erik Nielsen: Not at all. Implicit in the question is the assumption that nowhere in this country can there be found a person of sufficient national reputation and integrity to conduct an impartial investigation as to the facts. I do not accept that whatsoever.


John Edward Broadbent: It would be nice just for once if the Minister would answer a question he is asked.


INQUIRY WHY MINISTER DOES NOT ADOPT APPROACH HE ADVOCATED THREE YEARS AGO
John Edward Broadbent: Mr. Speaker, my last question to the Minister is as follows: When he was on this side of the House as Leader of the Opposition three years ago, he moved a motion to have the Committee on Privileges and Elections examine the question of Ministers and conflicts of interest. That was three years ago.
Why didn't the Minister take the same approach in this case?


Erik Nielsen: Mr. Speaker, I believe we are doing precisely that. If the Hon. Leader of the New Democratic Party would revisit the processes that were outlined in the September 9 tabling of the Code of Conduct, it anticipated circumstances which might call for the appointment of an impartial person to investigate the facts. It did not preclude the publication of the report, once made. I have already indicated-


John Edward Broadbent: For Privileges and Elections?


Erik Nielsen: It did not preclude the option of a reference to a standing committee of the House-it might be that one- when the report is made. But surely, to anticipate beyond that is going a little too far with respect to the integrity of the process itself.

May 13, 1986


REQUEST FOR CLARIFICATION OF PRIME MINISTER'S PROPOSAL CONCERNING INQUIRY
[Stage Direction]
Mir. Jacques Guilbault (Saint-Jacques): Mr. Speaker, my question is directed to the Deputy Prime Minister. The Government is proposing an inquiry, to be conducted by a so-called independent investigator appointed by the Prime Minister. The inquiry's terms of reference will also be determined by the Prime Minister, by the same Prime Minister who announced last night that the Minister will be fully vindicated.
How does the Government expect us to believe that an inquiry organized by the Prime Minister would be preferable to, and as impartial as, an inquiry conducted in public by a committee of this House?
Erik Nielsen: Mr. Speaker, that is the same question that was asked by the Leader of the New Democratic Party and by his own Leader. The same answer applies. The hon. gentleman is inferring in his question that there is no person of sufficiently high repute and integrity in this country who can conduct an impartial investigation. I do not accept that and I really do not believe that he, in his heart, believes that no such person can be found in Canada.


INQUIRY WHY GOVERNMENT WANTS TO CONDUCT INQUIRY OUTSIDE PARLIAMENT
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, all I want is a straightforward answer. Why conduct an inquiry away from Parliament, headed by a Government appointee and operating under terms of reference determined by the Government? Isn't this just a way to cover up an affair that has become an embarrassment to the Government?


Erik Nielsen: Mr. Speaker, after reviewing the questions that were received yesterday, I have given Hon. Members the assurance that whatever statements or allegations have been made in the House of Commons, however temperate or intemperate, will be the subject matter of those terms of reference. The Code of Conduct will be part of that. The Prime Minister's letter of September 9 will be a part of that reference. How much fairer can one get than to remove the matter from the bitterness and partisanship of the House of Commons to an impartial investigator who will make the report public, with the outstanding option of referring it to a committee? Is that not the fair course to follow in all the circumstances?


REQUEST FOR PARLIAMENTARY INQUIRY
Mr. Ian Deans (Hamilton Mountain):: Mr. Speaker, my question is directed to the Acting Prime Minister. Is he suggesting that it would not be possible to construct a panel of members from Members of the House of Commons who would
Oral Questions
be capable of conducting a fair and independent inquiry, as has always been the case in matters such as this?


Erik Nielsen: Mr. Speaker, in all fairness, if we followed that course within our normal processes, and if the committee or panel were to come down with a favourable report, his colleagues would be the first to accuse the parliamentary majority of government Members and would call it a whitewash.


REQUEST THAT INVESTIGATOR'S REPORT BE REFERRED TO COMMITTEE
Ian Deans: Mr. Speaker, does the Deputy Prime Minister not recognize that he is prejudging the outcome?


Some Hon. Members:: Oh, oh!


Ian Deans: In the interest of satisfying the needs of Parliament, will the Acting Prime Minister make a commitment to the House today that the report of the independent inquiry, by a motion of the House will be referred to a committee of the House for study and that that report will deal only with factual information and make no recommendations of any kind?


Erik Nielsen: Surely it is the Hon. Member who is prejudging the matter, not I. Surely he would not wish an impartial person to investigate the facts in any constrained and limited way. Surely he would want to clothe that impartial person with the broadest possible terms of reference-


John Edward Broadbent: That's not what your regulation says. It's not what it says.


Erik Nielsen: -including all of the matters which have been raised in the House of Commons with respect to these circumstances-


Ian Deans: No.


Erik Nielsen: -including everything which has been raised in the media, including the Code of Conduct-


John Edward Broadbent: Read the Prime Minister's letter.


Erik Nielsen: -including the Prime Minister's letter. Surely the Hon. Member would not want to restrict those terms of reference but rather to broaden them.


REPLACEMENT FOR MINISTER WHO RESIGNED
Ms. Sheila Copps (Hamilton East):: My question is directed to the Deputy Prime Minister. When the Minister of Fisheries and Oceans resigned, he was replaced by the Deputy Prime Minister. When the Minister of National Defence resigned, he was replaced by the Deputy Prime Minister. This time, why

May 13, 1986
Oral Questions
did the Prime Minister ask the Minister of Transport to take over from the former Minister? Is it because like all Canadians, the Prime Minister has lost confidence in our Deputy Prime Minister?


Mr. Wilson (Etobicoke Centre):: What a childish question.


Erik Nielsen: Mr. Speaker, if that question deserves the dignity of an answer, it is only to point out the outstanding capabilities of the Acting Minister, the Minister of Transport.


Some Hon. Members:: Hear, hear!


REQUEST FOR RESIGNATION OF DEPUTY PRIME MINISTER
Sheila Maureen Copps: Mr. Speaker, I ask the Deputy Prime Minister again is it not true that he has become a liability to this Government?


Some Hon. Members:: Order.


Sheila Maureen Copps: -and in fact the Prime Minister was forced-


Some Hon. Members:: Order.


Mr. Speaker:: Order, please. Has the Hon. Member a question for the Minister in his ministerial responsibility?


Sheila Maureen Copps: And the only way we are going to


Mr. Speaker:: Order, please. Is the Hon. Member just going to continue the statement or ask a question?


Sheila Maureen Copps: I am going to ask a question.


Mr. Speaker:: What is the question, please?


An Hon. Member:: Ask her to resign.


Mr. Speaker:: What is the question?


Sheila Maureen Copps: Does the Deputy Prime Minister not believe that the only way the stink is going to be lifted from this House is when he resigns?


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order. The Hon. Member for Nickel Belt.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: Order, please. Hon. Members have the right to ask questions in this House. The Chair will decide whether they are in order. That is the fair way of doing it.


REQUEST FOR COMMITTEE REFERRAL
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, my question is directed to the Deputy Prime Minister. In light of
the fact that all the precedents in the past, the Mackasey precedent, the Axworthy precedent, the Murdock precedent in 1924, asked for a reference from the House of Commons to the Standing Committee on Privileges and Elections, did the Deputy Prime Minister suggest to the ex-Minister that he should have followed that route of precedents and asked the House of Commons for a reference to the Standing Committee on Privileges and Elections?


Erik Nielsen: No, I did not, Mr. Speaker. If the hon. gentleman for Nickel Belt had read carefully the package which was tabled last September 9, 1985, he would recognize that there was a new process set out of which the Prime Minister may avail himself if circumstances justify adopting it.


Ian Deans: They don't.


Erik Nielsen: Those circumstances, in the view of the Prime Minister, exist.


John Edward Broadbent: I thought it was Stevens who suggested it.


Erik Nielsen: That is the course which is being followed here. I would suggest in all of the circumstances that it is the fairest possible and most impartial course to follow without closing off any options to refer the report of the impartial investigator to a Standing Committee of this House.


Ian Deans: Erik, you would never have said that from this side of the House.


DEPUTY PRIME MINISTER'S POSITION
John R. Rodriguez: Mr. Speaker, in light of the fact that these circumstances are no different in principle from the previous ones, why is the Deputy Prime Minister taking away the right of Parliament to look at the ethical behaviour of Hon. Members of this House? Why are you doing that?


Erik Nielsen: Mr. Speaker, that is simply not being done in any way, shape, or form.


John R. Rodriguez: Well, you are.


Mr. de Jong:: Absolutely.


Erik Nielsen: I can be helpful to the Hon. Member by suggesting that he goes beyond, historically, the September 9, 1985 tabling, back to the Starr-Sharp report and back to the circumstances which gave rise to the preparation of that report. He might then have a different comprehension than he does now about the correctness and appropriateness of the course being followed in the circumstances.


Ian Deans: Totally inappropriate.
May 13, 1986


EXTERNAL AFFAIRS
Lloyd Axworthy: Mr. Speaker, I hope it is all right for a "precedent" to ask a question. I would like to direct my question to the Deputy Prime Minister. We heard yesterday from the Secretary of State for External Affairs that Mr. Doucet of the Prime Minister's Office had made an offer of employment to Mr. Deaver-


An Hon. Member:: He never said that.


Lloyd Axworthy: -when he was in the White House, albeit a lightheaded one. Now we have had a further revelation that Canadian officials met 15 times with Mr. Deaver when he was in the White House. Both cases are clearly in violation of American law.


An Hon. Member:: Question.


Lloyd Axworthy: Knowing this, would the Deputy Prime Minister tell us why the Government offered a contract to Mr. Deaver knowing it would violate American law? And who authorized that kind of offer to be made? Was it the Prime Minister or the Secretary of State for External Affairs?


Erik Nielsen: Mr. Speaker, the Secretary of State for External Affairs, who is unavoidably absent, responded to some questions yesterday on that subject matter with respect to the details of a contract entered into by the Secretary of State for External Affairs and Mr. Deaver. I would have to take notice of that question and get whatever details the Hon. Member wishes.


REQUEST FOR COMMITTEE HEARING
Lloyd Axworthy: Mr. Speaker, I appreciate that offer. In making that request, may I also make a request that the Government divulge all records and information relating to the hiring of Mr. Deaver and at the same time make available Mr. Gotlieb and Mr. Doucet before the Standing Committee on External Affairs so we can properly examine how the Government goes about hiring foreign lobbyists and what rules should be applied?


Erik Nielsen: Mr. Speaker, of course, in the examination of the estimates of External Affairs before that committee, it is open to the hon. gentleman to make the request for the appearance of the ambassador and other witnesses he may wish to have.


John Napier Turner: If we have your support it would make it easier.


Erik Nielsen: I will certainly carry the remainder of the Hon. Member's representations personally to the Secretary of State for External Affairs.
Oral Questions SHIPBUILDING


FUTURE OF INDUSTRY IN QUEBEC
Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. I have a letter from Mr. Peter Paul Saunders, the Chairman of Versatile Corporation, in which he informs the Quebec Minister of Industry and Commerce that he had been named by this Minister and by the former Minister of Regional Industrial Expansion, to negotiate a plan for the reduction of the shipbuilding industry in Quebec, which included the closure of Marine Industries in Lauzon. Why was Mr. Saunders given that particular responsibility? Was it not a conflict of interest for this Minister and the former Minister of Regional Industrial Expansion to ask a president of one Quebec shipyard to develop a plan which would involve closure of one of its major competitors?


Hon. Andre Bissonnette (Minister of State (Small Businesses)):: Mr. Speaker, it is clear that in Canada today there is surplus capacity in our shipyards. At the time, the Minister of Regional Industrial Expansion examined a plan for rationalizing the shipbuilding industry in Canada. The discussions that took place between Mr. Saunders and representatives of other shipyards in Quebec are continuing, and rationalization will come later.


REQUEST FOR CLARIFICATION OF NEGOTIATION THAT WOULD IMPLY CLOSURE OF COMPETING SHIPYARD IN PROVINCE OF QUEBEC
Michael Morris Cassidy: Mr. Speaker, could the Minister explain the conflict of interest... Why was the director of a shipyard appointed to negotiate a reduction in the industry's capacity which would involve closing down his major competitor in the province of Quebec? Is it appropriate for a company to make a decision involving the shutting down of another company in an industry that is so important to Quebec?


André Bissonnette: I think the Government asked the parties to talk and to arrange a rationalization strategy amongst themselves, before taking any measures whatsoever.


BANKS AND BANKING
James Kenneth (Jim) Jepson: Mr. Speaker, my question is for the Minister of Finance. We are happy to see the continual decline in Bank of Canada interest rates. However,

May 13, 1986
Oral Questions
at the same time we do not see these rates being passed along by the chartered banks as quickly as when the rates go up. Why are these decreases not passed along to the consumers as quickly as are the increases? Why does a four-point spread still exist?


Michael Holcombe Wilson: Mr. Speaker, quite rightly, with some enthusiasm the Hon. Member notes the drop in interest rates in Canada over the past three or four months.


Some Hon. Members:: Hear, hear!


Michael Holcombe Wilson: I have been watching the spreads between the bank rate and the bank prime rate. The spread is not four points, but less than that. I think it is something in the order of two points. However, during the month of January is was narrower than normal. It is now somewhat wider than normal. I am watching the matter very closely. As we monitor the situation I think we can expect that some alleviation will occur and that we will have a drop in rates.


EXTERNAL AFFAIRS
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, since the Government came to power we have heard the Prime Minister continually sing the praises of the ever deepening friendship with the United States. In the absence of the Secretary of State for External Affairs my question-not about specifics-is for the Deputy Prime Minister. Given this new glowing friendship, does the Minister believe it is necessary to spend over $100,000 of Canadian taxpayers' money to hire one American to promote Canadian interests in the United States? Has our policy come down to "Leave it to Deaver"?


Erik Nielsen: Mr. Speaker, the short answer to the latter part of the hon. gentleman's statement, or question-however it might be described-is no. I think that it is a reality, a fact of life these days in which we are now living that there are lobbyists here in Canada, as well as elsewhere in the western world. To my recollection, that has been the situation for at least 15 years or more. So I can see nothing improper with recognizing the process of lobbying.
I might point out as well-


Mr. Speaker:: Order, please.


HIRING INQUIRY
George Baker: Mr. Speaker, the Canadian people have a right to know what Mr. Deaver did or promised to do to earn that massive salary of over
$100,000. Are there other dealers-excuse me, Deavers-on the Canadian payroll?


Erik Nielsen: Mr. Speaker, that was one of the first matters which the Government decided required some attention. Therefore, as he well knows, as part of that September 9 package, again, the question of lobbyists was addressed. There is a paper which is before a committee. I understand that House Leaders have discussed the registry of lobbyists. All of these matters are now in train. We believe that there should be that type of public disclosure available with respect to lobbyists in the system.


AIRPORTS
Leslie Gordon Benjamin: Mr. Speaker, my question is for the Minister of Transport. As I understand it, Burns Security Services at Dorval and Mirabel Airports are being replaced, or have been replaced. Has the Minister's Department or have the airlines awarded a contract, or are they in the process of awarding a contract, to Metropole Security Ltd. for airport security at Dorval and Mirabel Airports? Did he or any of his officials carry out any investigation of Metropole Security Ltd.?


Hon. Don Mazankowski (Minister of Transport):: Mr. Speaker, the answer to the first part of the question is no. My information is that Metropole Security Ltd. is not employed by Air Canada but that the firms of Metropol Airport Security Services Ltd. and Metropol Base-Fort Airport Security Services Ltd. are, in fact, employed by Air Canada. Yes, there was an investigation made as to the ownership of these companies by the Department of Transport.


AWARDING OF CONTRACT
Leslie Gordon Benjamin: Mr. Speaker, was the provision of these security services tendered? Is Air Canada in a consortium with other airlines or is this arrangement only with Air Canada? Did any-I repeat any-of his cabinet colleagues have any discussion with him or any officials in his Department at any time about the provision of security services at those airports?


Donald Frank Mazankowski: Mr. Speaker, I am not aware of any such discussions, other than the fact that Burns Security Services indicated its intention to withdraw from providing that service. Air Canada undertook to make arrangements with the other two firms.
May 13, 1986


THE GOVERNOR GENERAL
Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, my question is directed to the Minister of Public Works.
Last week, the entrance gates to the Governor General's residence were closed to the public, and I would like to know who requested this and why, and whether the gates will be opened to allow the public immediate access.


Hon. Roch La Salle (Minister of Public Works):: Mr. Speaker, I welcome this opportunity to remind the House that it is customary to limit access to official residences.
As part of its new responsibilities, the NCC has decided to apply the same policy to the Governor General's residence.
I would like to remind the Hon. Member who is showing a great deal of concern for those who visit the residence that it will always be possible for Canadians to visit the Governor General's residence on the special and specific occasions when this was possible before.


John Barry Turner: Supplementary question, Mr. Speaker.


Mr. Speaker:: The Hon. Member for Notre-Dame-de-Grace-Lachine East.


EMPLOYMENT
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is for the Minister of Employment and Immigration. Will the Minister explain why since April her Department has virtually closed down the Job Development Program in that her officials across the country have been telling project applicants that there are no funds available or that the funds are frozen? After announcing this program with such great publicity, why is the Minister not giving it the funds it needs to do the job?
Hon. Flora MacDonald (Minister of Employment and Immigration):: Mr. Speaker, the Hon. Member will be interested to know that since April 1 some $120 million worth of new activities have been committed by the Government under the Canadian Jobs Strategy, $40 million of that in the Province of Quebec alone, with $10 million of that going into Job Development in the Province of Quebec.


TREATMENT OF APPLICANTS
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, I am talking about job development and
Oral Questions
not the Jobs Strategy. Why is it then that the Minister's officials in Montreal, Toronto, Hamilton, Ottawa, Windsor, New Brunswick and British Columbia, even this morning, have been telling project applicants that there are no funds available? Why are they telling these applicants that, if what she is saying is correct? She had better check with her officials.
Some Hon. Members:: Hear, hear!


Flora Isabel MacDonald: Mr. Speaker, indeed, I have checked with my officials. I have said to the Hon. Member that some $10 million has been approved for projects under Job Development in the Province of Quebec alone. We are managing our money carefully. By the end of June we expect that something in the order of 22,000 people will be involved in Job Development projects across the country. We feel that we are doing something right because the Canadian Jobs Strategy has helped contribute to the 630,000 new jobs in Canada since we came into office.


Some Hon. Members:: Hear, hear!


LUMBER EXPORTS TO UNITED STATES-REPORTED APPOINTMENT OF ENVOYS
James Ross Fulton: Mr. Speaker, my question is for the Minister for international Trade. In the run-up to free trade negotiations the Prime Minister promised two things: full involvement of the provinces, and opposition to a separate process to deal with the softwood lumber trade. Will the Minister confirm that the Government's proposal to appoint envoys was made without discussions with British Columbia? In fact, he only sent telegrams there last night.


James Francis Kelleher: Mr. Speaker, I would like to advise the Hon. Member that, indeed, the Government is on record for fully involving the provinces in everything we do, not just Canada-U.S. and not just lumber, but every initiative the Government takes. Envoys have not been appointed. That is in the discussion stage. The provinces have been alerted to this. We will be discussing this matter in Washington tomorrow. No decision will be made until we have in fact consulted with the provinces and have obtained their approval.


IMPORTANCE OF LUMBER INDUSTRY TO BRITISH COLUMBIA
James Ross Fulton: Mr. Speaker, my supplementary question is directed to the same Minister. I am sure he is aware that lumber is the largest industry in British Columbia, but he sent a telegram to the Province of British Columbia just last night. Will he confirm to the House whether or not there

May 13, 1986
Oral Questions
will be any options or concessions on volume or price for Canadian softwood to be put to those envoys should that process proceed?


James Francis Kelleher: Mr. Speaker, I can advise the hon. gentleman, as I did earlier in this morning's debate, that it is not the practice or habit of the Government to make any decisions affecting the provinces without fully involving them. That is our practice and we will continue it.


CANADA-UNITED STATES NEGOTIATIONS-IN VOLVEMENT OF ATLANTIC PROVINCES
Mr. Bob Corbett (Fundy-Royal):: Mr. Speaker, my question is for the Minister for International Trade as well. Now that it is assured that the long awaited talks on enhanced trade are going ahead, good news indeed for Canada, will the Minister assure the House, and particularly Atlantic Canadians, that no longer will the Government tolerate a second-class status for Atlantic Canada?


James Francis Kelleher: Mr. Speaker, I welcome the opportunity to answer that question. Certainly we would afford nothing but first-class status to the Atlantic provinces, as we would to all provinces in Canada. I can certainly remind all Members of the House that, indeed, a number of the chairmen of the Sectoral Advisory Committees on Trade who will assist us in these negotiations come from the Maritimes.


LUMBER EXPORTS-GOVERNMENT POSITION
Brian Vincent Tobin: Mr. Speaker, my question is directed to the Minister for International Trade. The Prime Minister, speaking in the House of Commons on April 24, 1986, in denying that there would be a separate deal made on lumber with the United States, said that the President of the United States said that negotiations would begin without conditions and that that is also the position of the Government of Canada. Why is the Government of Canada now proposing to make a separate deal, a precondition, that will limit the export of some $3 billion worth of Canadian softwood to the United States in advance of the beginning of any free trade talks? What has changed?


James Francis Kelleher: For the life of me, Mr. Speaker, I do not know where the Hon. Member is getting his information. I can tell the House, as has the Prime Minister, and as the President of the United States has said publicly, that there were in fact no preconditions to the start of these talks. None exist, and I just do not know where he is getting that information. Perhaps he could enlighten me in that area.


GOVERNMENT POSITION
Brian Vincent Tobin: Mr. Speaker, is it not true that the Government of Canada, in conjunction with the Government of the United States and
specifically President Reagan, made a commitment to the Senate Finance Committee three weeks ago, and particularly to Senator Packwood, to resolve U.S. complaints about the Canadian export of softwood lumber by limiting that export in order to acquire U.S. Senate Finance Committee support for the start of free trade talks? Is that not true?


James Francis Kelleher: Mr. Speaker, the simple answer is that it is not true. The Prime Minister has never made a commitment of any such nature to the Senate and we have never made a commitment to the President or anyone else to limit the exports of our lumber to the United States,


DRUG PATENT LAW AMENDMENTS
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, my question is directed to the same Minister. Last night CBC news reported that the drug patent law changes will be presented to Parliament this Friday. Will the Minister now admit that this is part of the price which Canada has agreed to pay to get the free trade talks going and approved by the U.S. Senate Committee?


James Francis Kelleher: Mr. Speaker, I would hope that in the future the Hon. Member would not rely upon the CBC for his information. I can only repeat what I said earlier, which is that there were and are no preconditions to the commencement of trade talks between Canada and the United States.


CANADA-UNITED STATES DISCUSSIONS
Steven W. Langdon: Mr. Speaker, in that case let me ask the Minister a direct question. At any stage in the discussions with respect to the Senate's approval process were there discussions between Canadian and American officials with respect to patent law changes? Is the Minister denying that such discussions ever took place?


James Francis Kelleher: Mr. Speaker, again I can only reply to the hon. gentleman by saying that there were no preconditions whatsoever in any area for the commencement of talks between Canada and the United States with respect to a comprehensive trade agreement.


SHIPYARDS
Jean-Claude Malépart: Mr. Speaker, my question is directed to the Minister of State for Small Businesses and concerns shipyards in Quebec. Could the Minister confirm to the House that his Government, with
May 13, 1986

the co-operation of Mr. Saunders, has decided to close down the shipyards of Canadian Vickers Limited in Montreal East? Yes or not?


André Bissonnette: Mr. Speaker, I thought I made all this clear earlier to one of those Members who, like the Hon. Member for Montreal-Sainte-Marie, Mr. Speaker, will not listen. The Minister of Regional Industrial Expansion, and I repeat, the Minister of Regional Industrial Expansion sent a letter to the people involved with the shipyards, asking them to have a discussion and to find out if industry rationalization could take place. These are people in the private sector who are supposed to meet and determine the scope of rationalization.


REQUEST FOR CLARIFICATION OF POSSIBILITY OF CLOSING
Jean-Claude Malépart: Mr. Speaker, is the Minister aware of the fact that Mr. Saunders is responsible for two shipyards in Quebec, one in Lauzon and one in Montreal, and that Quebec is responsible for the shipyard in Sorel? Does the Minister want us to believe that Mr. Saunders is capable of closing down the Sorel shipyard and leaving the other two yards open?


André Bissonnette: Mr. Speaker, see what it's like, when someone will not listen!
We are talking about someone involved in the industry, and the fact that these people have to talk to each other. If they don't, how can you expect them to come up with something positive? Mr. Saunders has two shipyards. I imagine he should be able to talk with the other yard owners about what the best policy will be.


CANADA POST CORPORATION
Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, my question is for the Minister responsible for the post office. In the Budget the Government called upon the post office to produce an operating plan. We have it from reliable sources that this plan recommends alternate third-day delivery. In light of the need for public debate on such a drastic change in public policy, will the Minister make this report public and do so before the Estimates of the post office are dealt with by the committee?


Hon. Michel Cote (Minister of Consumer and Corporate Affairs and Canada Post):: Mr. Speaker, I do not know my
Oral Questions
colleague's sources, but all I can say is that there are many alternatives being examined right now by the post office in order to comply with the request of the Minister of Finance which was to come to self-sufficiency in a short period of time. We are examining many alternatives, and one of them could be alternate-day service.


REQUEST FOR PUBLICATION OF REPORT
Cyril Keeper: Mr. Speaker, the Minister has just admitted that he is examining alternate-day service. Will he bring that report forward and make it public so that the examination of the alternatives can be made in a public environment?


Michel Côté: Mr. Speaker, this is one of the alternatives that we are examining. As soon as we will make a decision on that, we will make it public.


THE ADMINISTRATION
Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, my question is for the Deputy Prime Minister. Does the Deputy Prime Minister not agree that the former Minister of Regional Industrial Expansion created the appearance of another conflict of interest when he appointed the firm of Burns Fry to review and recommend a buyer for Canadair while the President of Burns Fry was sitting on the board of directors of Magna International, a company which at the same time was wishing to purchase Canadair?


Erik Nielsen: Mr. Speaker, that is simply one more of those statements that will be added to the reference of the impartial investigation that will be conducted.


CANADA DEVELOPMENT INVESTMENT CORPORATION-MEMBERSHIP OF DIVESTITURE COMMITTEE
Douglas Cockburn Frith: Mr. Speaker, would the Deputy Prime Minister therefore confirm that as part of the reference for the inquiry he will also look into the situation where the majority of members of the divestiture committee of the CDIC happen to belong to one firm in Canada? Does he not also agree that that creates the impression of a further conflict of interest?


Erik Nielsen: Mr. Speaker, the Hon. Member is not original in making that allegation. It has arisen before and will obviously be part of the reference which is made to the impartial investigation.

May 13, 1986
Point of Order-Mr. Lewis POINT OF ORDER


POWERS OF COMMITTEE UNDER STANDING ORDER-GOVERNMENT RESPONSE-SPEAKER'S RULING
Mr. Speaker:: Order, please. On May 1, 1986, the Hon. Parliamentary Secretary to President of the Privy Council (Mr. Lewis) sought clarification from the Chair as to the interpretation of Standing Order 99(2). The first question to be addressed is specifically whether a committee can ask for a response to only a part of a committee report.
It is clear to the Chair that such a request, while not expressed in specific terms in the relevant standing order, is a valid one since it would be a simple matter for a committee to present a separate report containing that part of a main report to which it wishes a response. Further, there are numerous supportive precedents on this very question.
The second question which has to be settled is that, when a committee has asked for a partial response, is the Government bound to comment only on that specific part of the report. In the opinion of the Chair, should a committee request a response to a particular part of a report, the whole of the report remains open to comment by the Government, if it so chooses, although the Government would have no procedural obligation to respond to more than that part of a report to which a committee requested a reply.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Riis:
That this House urges the Government not to proceed with any free trade talks with the United States Government unless that Government rescinds existing countervailing duties and guarantees that such duties will not be used in the future, given the current threat of U.S. countervailing duties in the softwood industry-an industry in which free trade now exists.
Mr. Speaker:: Is the Hon. Member for Humboldt-Lake Centre (Mr. Althouse) seeking the floor on debate?


Mr. Althouse:: Mr. Speaker, I wish the Hon. Member for Essex-Windsor (Mr. Langdon) to have the floor.


Mr. Speaker:: Order, please. I am sure the Chair misrecog-nized the Hon. Member for Humboldt-Lake Centre and is prepared to recognize the Hon. Member for Essex-Windsor (Mr. Langdon) on debate.


Steven W. Langdon: Mr. Speaker, as the Hon. Minister for International Trade (Mr. Kelleher) indicated, the motion before us today goes right to the heart of a debate which is taking place in the country. It deals with the question of countervailing duties and the role of continuing
countervailing action in respect of the negotiations as they themselves take place.
For most Canadians the concept of countervailing duties is not easy to understand. What exists in the United States-and it exists in a somewhat different way in Canada-is a system which permits companies, Senators, Congressmen, and a variety of different forces to go before a quasi-judicial body, the International Trade Commission, to raise the possibility that they are being damaged by foreign trade or that the effect of foreign imports on a domestic U.S. industry is negative. In conjunction with that quasi-judicial investigation by the ITC is an investigation by the Department of Commerce, part of the administration of the United States. It investigates whether subsidies are being provided by the country which is exporting into the United States and potentially damaging domestic producers within the U.S.
The countervail process in the United States comes out of these two streams and leaves a giant decision at the end, with input from the ITC indicating that a particular industry or set of firms is indeed being damaged. As well it has input from the Department of Commerce saying whether or not subsidies are being provided. If both these decisions come down in favour of the United States, the consequence is that the exporter to that country can have erected against his enterprise a countervailing duty. Countervailing duties can range across a vast area; we can talk about very small countervailing levels or very large ones which can be extremely damaging to exporters to the United States.
This is a crucial area for Canada. It is a case which has hit Canada repeatedly over recent years. I know the Minister and I have no disagreement that the countervail power of the United States is extremely important, has been extremely damaging to certain Canadian industries, and can be even more damaging to other Canadian industries, of which the most obvious at the moment is softwood lumber. However, softwood lumber is not by any means alone. Our salt fish and groundfish have already been hit this year by countervailing tariffs. After building an industry with the support of the province, hog producers in Essex County found themselves facing near bankruptcy because of the countervailing duties against live hog exports.
It is not only those cases which are the problem, but also those cases which represent constant threats to Canadian producers, constant threats which they have to fight often, and certainly financially, on their own in the United States. For example, I could point to mould producers in Essex County who were taken before the International Trade Commission and accused of exporting with unfair subsidies and hurting certain U.S. producers. They were told in the end that they have no choice but to fight the case themselves. Despite the fact that they were part of a small industry, they spent over $100,000. In the case of the hog producers, that industry too, despite very limited funds, has had to spend over $200,000 to fight its case before the ITC.
May 13, 1986

We have first, the serious sets of cases which have damaged Canadian exports, and second, the spread taking place in the United States of our policy areas which the U.S. now believes are part of what constitutes subsidies.
I have before me the preliminary decisions of the Department of Commerce on the groundfish case. It lists within it 54 federal and provincial programs that were considered by the International Trade Commission in the United States to constitute potential subsidies. The Department of Commerce in turn reviewed them and concluded that they did represent subsidies. Some of these are absolutely crucial to the future of Canada, not just in the Maritimes, not just in British Columbia but right across the country.
We have The Export Market Development Program which is considered to be an unfair subsidy. We have the Regional Development Incentive Program that is considered an unfair subsidy. We have the Industrial Regional Development Program, something which goes into half the constituencies of members represented in this House, and that too is considered an unfair subsidy.
It is not just the federal Government which sees its programs and policies at risk, but also the provincial Governments. In the case of groundfish we see programs from New Brunswick, Newfoundland, Nova Scotia, Prince Edward Island, Quebec, in fact from all of eastern Canada considered to be unfair subsidies. Therefore, they could provide the basis for the United States to put up new tariffs which would damage producers on this side of the border exporting into the United States.
Our argument throughout this whole free trade debate is for a direct and agressive policy on the part of the Canadian Government to persuade the United States to cease using its countervail power in this way. The best way to do that is through a double-pronged program. First, is via GATT. In the renegotiation of the next round of GATT which starts this September it will be possible for us to have very powerful allies as we attack these various attempts by the U.S. to extend countervail power beyond the boundaries of what anybody expected in the last GATT round. We could have powerful economies like Germany, France, Japan and Great Britain with us as we make the case against the United States in GATT that its countervail approach is unfair trade. It represents a predatory attempt to overextend the boundaries of GATT's previous concerns and prerogatives.
Second, we have argued that it is crucial for us to take a much more aggressive position ourselves, that we take our own countervail program, which is extremely slow and unfair to the producers, and streamline it more so it becomes possible to use that program either directly through government or indirectly via producers to take retaliatory action against the United States when our producers are hit.
It may sound like the mouse that roared when you talk about Canada taking retaliatory action against the United
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States but the trade flows that exist between the two countries are of significant importance to both countries, and for us to have built into our legislation, as we advocate, the power to take such retaliatory action, is crucial.
At the moment we have a system where even to get the chance to take a case before our special import tribunal it is necessary for our producers to go to the Minister and get his okay. I recognize that the Minister is an eminently reasonable man, but that is not the kind of fast effective hard-hitting tribunal which can take us into a position where we can fight back against the U.S. in this war of countervail activities that has begun to develop between the two countries. That is the approach we have suggested.
On the other side there is, I believe, a myth. That myth is that we can somehow escape through these free trade talks from the countervail system itself. I have here dozens of reports of speeches by key American officials that make it absolutely clear that they will not give up their right to countervail under any freer trade agreement which we might sign. We have the statements of Mr. Merken to a Wayne State university group. He said quite clearly to them that there was absolutely no chance that the countervail system in the United States would be eliminated to benefit this country. He said that if the Candian goal was to get that kind of countervail it was simply not going to be possible in the trade talks. The same skepticism was expressed by the American representative for trade, Mr. Yeutter. He has said that he would not be enthusiastic about anyone being exempted from anti-dumping or countervailing duty laws.
We can continue with all sorts of comments from, as an example, the Select Committee on Economic Affairs in Ontario which went to Washington and interviewed many groups asking if it seemed at all likely that the countervail power might be, in any sense, restricted. In each case the answer was that there is no possibility that that route will somehow win a solution for our lumber, fish, strawberry, or hog producers.
The thrust for freer trade which we have set out upon is built on a wing and a prayer which, unfortunately, is almost doomed to failure. It is almost certain to fail because that power of countervail is so crucial to U.S. producers and politicians. It is for this reason that the Government should take a different approach. It should work through GATT and develop the retaliatory powers to enable it to fight back when countervailing actions are taken. That direction provides some hope as opposed to myth.


Kenneth Albert James: Mr. Speaker, I cannot help but be amazed at the anti-Americanism which comes from the Member for Essex-Windsor (Mr. Langdon). He talks about an aggressive position on countervail. Only this morning a member of his Party spoke about the real problem of countervail by the United States on our lumber. He now wants us to develop an even more aggressive position. He talks about the mouse that

May 13, 1986
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roared. Now he wants us to develop an aggressive position while saying that we cannot negotiate or compete with the United States. He now wants us to become the aggressor, saying that that will be the solution. The arguments of the Hon. Member and other members of his Party are not coherent or organized. They are trying to create confusion to muddle the minds of Canadians. They present so many arguments which are diametrically opposed that they think the poor Canadians will not be able to figure this out. I am sure that they will be suprised.
The Member says that they want a war of trade. He wants the matter to turn into an adversarial situation of even greater proportion than it now is. This is terribly surprising and concerning. A member from his Party said this morning that we have not been talking and negotiating enough to avoid this potential countervailing situation in connection with rubber. He is also pre-empting the talks. Earlier there was rhetoric coming from this side indicating that things were being preempted and predecided. He has already made the decision that the U.S. will never give up on countervail. Yet, this morning the Member for Skeena (Mr. Fulton) said that potential countervail should not happen. We hear doom and gloom right from the start from that Party. The Member talks about a wing and a prayer. The Government knows that negotiations with the United States can fly and we intend to put the intelligent word out to the Canadian electorate in an organized and straightforward plan which they will understand, rather than relying on confusion.


Steven W. Langdon: Mr. Speaker, I would certainly hate to leave the Member for Sarnia-Lambton (Mr. James) confused. That would do no good. My speech was not meant to be antiAmerican but to recognize certain realities which exist. These realities are, in some respects, the very same realities which the Minister of International Trade noted this morning. The fact is that there is a great deal of countervailing action being undertaken by the United States. It has been extended more and more widely, and has in fact been used by the Government as a reason for trying to undertake these freer trade talks.
The point is not that that is anti-American. It is a reality to which we must react. The question is what capacity we have with which to react and what is the best way to react. At the moment our capacity to react is limited. It was the conclusion of the special committee which looked at the issue last summer that our own countervail laws were not sufficiently strong. I simply make that point here.
We must choose the route which is likely to result in success with respect to trade. We are talking about trade wars- nothing more dramatic than that. This is a serious issue in my part of the country, as I suspect it is in the Hon. Member's part of the country. We must decide what is the best way to deal with that problem. I make the case that it is much better to take a route which draws allies with us and gives us the chance to try to push back against what has become a very aggressive American approach on trade, which is recognized throughout the world.
In closing, in its trade relations with the United States the European community has been very much more aggressive. 1 think it is working out solutions for which it is much more respected than is the case with us.


James Eber Caldwell: Mr. Speaker, I would like to address a question to my colleague from my neighbouring riding of Essex-Windsor. He continues to oppose the idea of entering into a bilateral trade agreement with the United States. He has many fears of this and plants the fear in people's mind that Windsor, which is a border town, is going to suffer because of any enhanced trade. He mentioned hogs as an example. Would it not be wiser if we were able to entrench that $800 million market with an agreement similar to what we have regarding the Auto Pact which the UAW opposed when it was being negotiated? They are now, of course, opposing any enhanced agreement with the United States. Is this not a similar situation? I cannot understand the Hon. Member continuing to be fearful of an agreement such as this when, at the same time, he holds up the Auto Pact as one of the greatest agreements ever signed. That pact was negotiated by Simon Reisman, the same person now negotiating for Canada on free trade. The UAW opposed that then, and now they oppose bilateral talks. Does he not want to see our farmers in Essex County get a good agreement, one similar to the Auto Pact?


Steven W. Langdon: Mr. Speaker, that mixes together so many magnificient things that one hardly knows which string to pull to start with. Let me try.
First, each of us must attempt to assess the likelihood that we as a country are going to get from the U.S. something which will safeguard us. In the case of the Auto Pact, we got those safeguards because we were dealing with one sector and we fought very hard. Mr. Reisman himself said he opposed such safeguards, but the Government of the day, perhaps because of pressure from the UAW, who know, told him to insist on safeguards. Those safeguards, as he and I both know, have been absolutely crucial for and beneficial to Canada in that particular case. It is because of those safeguards that we hold up the Auto Pact as a sensible and desirable kind of development.
However, with respect to hogs, we have to ask the honest question: Is the U.S. likely to do away with the power to apply countervailing duties as it has done over the past year with respect to the Hon. Member's farmers and my farmers, all of whom have been hurt quite badly? As reasonable people I think we have to look at the evidence. I have tried to put a little bit of that evidence on the record today. We have the comment from Mr. Merken that they do not believe it would be possible to exempt any country from countervailing duties or anti-dumping laws. He, of course, is the U.S. deputy trade representative with special responsibilty for-


The Acting Speaker (Mr. Paproski):: I regret that the Hon. Member's time has expired. Debate.
May 13, 1986


Brian Vincent Tobin: Mr. Speaker, I am pleased to participate in this debate today. As I do so, I ask Hon. Members to reconsider the motion before the House. It says:
That this House urges the Government not to proceed with any free trade talks with the United States Government unless that Government rescinds existing countervailing duties and guarantees that such duties will not be used in the future, given the current threat of U.S. countervailing duties in the Softwood Industry-
That motion might easily have urged the Government to keep its word to the House of Commons concerning the softwood lumber industry. It might have been a motion urging the Government to keep its word to the industry itself. It might have been a motion urging the Government to keep its word to the Premier of British Columbia who has told BCTV, among others, that he has a commitment from the Prime Minister (Mr. Mulroney) that there shall be no separate deal with the U.S. on softwood lumber from B.C. or anywhere else in Canada. If such a commitment, and we only have the word of the Premier, was given to him, then indeed that commitment has been shattered. It has disappeared like the snow in spring.
We know that because we heard the Prime Minister say in this House that no separate deal, no preconditions, would be attached to free trade talks. We know that that commitment has been shattered as well. As recently as yesterday the Canadian Ambassador to the U.S., Mr. Gotlieb, was suggesting to the Americans that each country should appoint envoys to sit down and negotiate a separate deal on Canadian softwood lumber exports to the U.S.
The Prime Minister said he had a commitment from the President of the United States that there would be no preconditions. If the President gave the Prime Minister that commitment, then the President's word has been shattered as well. On May 8, just five scant days ago, he wrote a letter to Senator Packwood, Chairman of the Senate Finance Committee, saying that there must be-not "may be", or "should be" or "would be nice if there was"-but there must be separate negotiations on the export of Canadian softwood lumber to the U.S. He went on to say that if this cannot be achieved through bilateral negotiations, then he will take such action as may be necessary to resolve this problem consistent with U.S. law. This letter from the President follows by three weeks a tie vote in the U.S. Senate Finance Committee to initiate free trade talks. That followed by three weeks some kind of backroom manoeuvring in the U.S., arm twisting to get Senators on side to allow the free trade initiative to begin. It was a tie vote, and at that time it was reported that the President had made a private and confidential commitment to Senator Packwood to write him a letter indicating that the U.S. Government was committed to resolving this issue, to limit the import of Canadian softwood lumber, and that he would put it in writing.
Canadian officials in Washington and Ottawa scoffed. They said no such letter exists. Why? Is it because they were really interested in the letters the President was writing to U.S. Senators? No, they scoffed because the existence of this letter
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from the President of the U.S., following discussions between the President and the Prime Minister, following negotiations between the Minister of International Trade (Mr. Kelleher) and his U.S. opposite, indicates clearly there was a deal made between the Government of Canada and the U.S. administration that the price of getting the free trade talks started was the beginning of a separate deal to limit the export of Canadian softwood lumber from this country to the U.S. That is why they scoffed at the existence of a letter.
I do not believe, as the Minister of International Trade would have us believe, that he does not know where this letter came from. I do not believe, as he would have us believe, that he is not sure what the President of the U.S. is trying to say. I do not believe, as the Government would like us to believe, that this commitment by the U.S. President to the Senate Finance Committee, a very powerful committee, was written holus-bolus, out of the blue, without some pre-discussion and negotiation with the Canadian Government.
The reality is this. The Government of Canada has invested so much of its political capital, tied so much of its future to free trade negotiations, invested so much of its reputation in the successful outcome of those negotiations, that it has now politically put itself in the position where it can no longer say no.
The perception of beginning free trade talks and the completion of those talks is now more important than their substance. The Government of Canada had its back to the wall. A number of U.S. Senators told the President that he would not get a start to free trade talks without the votes in the Senate committee to initiate those talks. They said he will not get those votes unless the Canadians give in on softwood lumber and there is a commitment to limit the export of Canadian softwood lumber. The Government of Canada had no choice but to tell President Reagan to go ahead and make that commitment and it will make a separate deal on softwood lumber. That commitment was made either directly in a phone call between the Prime Minister and the President or through Mr. Deaver who informed the President in a visit to the White House. There is no way that such a commitment could have been given without the consent and advance knowledge of the Canadian Government.
The Government has given in on the question of generic drugs in advance of the negotiations. It has given in on the Foreign Investment Review Agency and on some aspects of the NEP in which it has placed the decision affecting Canada's oil industry back in the boardrooms of corporations south of the border. The Government is learning that by giving in on these matters in advance of negotiations it does not get any favours.
The Government has been giving away the shop, and every time it gives an inch, the U.S. administration or U.S. interests come back and look for another foot. That is what is happening to us in this softwood lumber industry dispute. This morning, the Minister for International Trade spoke in an

May 13, 1986
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attempt to reassure Canadians that everything would be all right.
The Minister said that if the Government's about-face, 360 degree flip-flop, from no preconditions and no negotiations to the appointment of an envoy on each side to resolve the dispute, fails, he reminded the House that a similar action to seek countervail that was launched in 1983 by the U.S. administration did not work then and it will not work now.
I hope the Minister was only making that statement for public consumption, as part of the rhetoric that flowed from his speech. I hope he does not take the simplistic view that if all else fails we are in good shape. The world has changed dramatically since 1983. Mr. Yeutter, the U.S. special trade representative, stated in mid-April that the Canadian means of pricing standing timber is an unfair trading practice. That was not the case in 1983.
Recent Commerce Department decisions have taken a much more expansive view than in the past regarding the labelling of foreign government aid of natural resources industries as an unfair subsidy. That is a new interpretation by the Commerce Department that did not exist in 1983.
An omnibus trade Bill was passed by the House Ways and Means Committee in Washington several weeks ago. It contains language that would specifically find the pricing of natural resources as it is done by Canada to be an unfair subsidy. Finally, the President of the United States stated in a letter to Senator Packwood that the matter must be resolved in bilateral negotiations, and if it is not resolved he will take whatever action is open to him under U.S. law. That has changed as well. The naive view that we won in 1983 and will win again is not only foolhardy, it is dangerous. The Government must decide soon that the substance of its agreements between Canada and the United States is far more important than the perception that the Government is committing itself to its major initiative of free trade negotiations. It must decide that it will draw a line around a number of areas and that it has been pushed too far by the U.S. administration in clearing the decks for free trade negotiations.
The Minister of Consumer and Corporate Affairs (Mr. Cote) will add several hundred million dollars to the cost of generic drugs for Canadian citizens and untold millions of dollars to the cost of medicare in order to satisfy U.S. interests. That commitment has been given away. It cannot be negotiated in talks across the negotiating table. It is gone.
The Foreign Investment Review Agency has been rewritten to suit the interests of the corporate boardrooms in New York, Boston, Texas and elsewhere. It cannot be negotiated because it has been given away.
Canada's energy patch is in deep trouble. It is bleeding and weakened and is now wide open for U.S. corporate interest takeover. The protection of that sector was given away when the NEP was scrapped. It can no longer be negotiated because it is gone.
The U.S., seeing how desperate the Canadian Government is to begin these talks, with its political credibility and reputation on the line, decided that no talks will start until its demands are satisfied on the question of softwood lumber. The Government of Canada is amazed that the United States would do this, having won all these concessions even before the first day of negotiations. The United States is demanding that Canada voluntarily sit down and negotiate a reduction in our $3 billion worth of exports of softwood lumber to the United States.
That is what the Government of Canada has done. It has broken faith with the House of Commons. It has broken faith with the industry. According to the Premier of British Columbia who spoke on BCTV this morning, the Prime Minister has broken his commitment to the Premier that there shall be no separate talks.
If the Government cannot find the backbone to stand up to say that enough is enough, I suggest that it find a bit of steel for its backbone so it can state, in the words of this resolution, that the Government of Canada will not proceed with any free trade talks with the United States Government unless that Government rescinds existing countervailing duties and guarantees that such duties will not be used. Failure to do so will mean that the Government is putting its political objective and its perception of reality ahead of the interests of the people of Canada, particularly those tens of thousands of Canadians who make their living from our renewable resource-our forests.


Robert Hylton Brisco: Mr. Speaker, this morning and on previous occasions the Minister for International Trade (Mr. Kelleher) has been asked the question which was raised by the Hon. Member for Humber-Port au Port-St. Barbe (Mr. Tobin). That question related to the issue of preconditions, and the Minister has, on at least two occasions and probably more, given the House his straightforward assurance that there are no preconditions. The Hon. Member opposite alleges that there are preconditions. Does the Hon. Member not believe the Minister?


Brian Vincent Tobin: Mr. Speaker, I hate to answer a question with a question, but how does the Hon. Member interpret the fact that the President of the United States has committed himself, despite his negotiations with the Prime Minister to a prenegotiation, which is a precondition and a "pre-settlement" in his own words, of the Canadian softwood lumber controversy? He said: "I intend to press for an expedited resolution to this problem independent of the comprehensive negotiations". He states that it "... must be resolved before", not after, not during, not sometime. The President's words were: " .. . must be resolved before we submit to the Senate the results of the comprehensive negotiation". If that is not a precondition by the President of the United States, I do not know what else it could be called.

May 13, 1986
What conclusion does the Hon. Member come to on behalf of his constituents when he hears that the Canadian Ambassador in Washington, Mr. Gotlieb, on the instructions of the Minister for International Trade, presumably with the knowledge of the Prime Minister-although he claims to have knowledge of precious little these days-made a proposal to the U.S. administration that Canada and the United States should both appoint joint envoys to sit down and resolve our dispute about lumber? In the words of representatives of the U.S. industry and in the words of the President: "It must not only be resolved but be resolved before we submit to the Senate the results of the comprehensive negotiations". So it is not a question of believing or disbelieving the Minister for International Trade. It is a question of educating him, of making him aware, because he is obviously an innocent abroad, of the hard-nosed nature of these negotiations. The Minister could do with some direction. It is the same Minister who lost Prince Edward Island and Newfoundland in merely presenting a map of Canada. So it should not surprise anyone that he fails to understand the implications of the letter written by the President of the United States which states: "Before this Government shall ratify the agreement we must resolve in the interests of the United States, Canada's export of softwood lumber into our nation". If that is not a precondition, could the Hon. Member give me another word which Webster's might offer up in its place?


Robert Hylton Brisco: What the Hon. Member for Humber-Port-au-Port-St. Barbe seems to ignore selectively is the fact that the issue of countervail, whether it is with forest products, steel, potatoes or berry crops, is frequently before us. It is an ongoing process. It has been there before, it is there now and, who knows, it may be there again down the road. Independent of any discussions, the Hon. Member should know that already a negative decision is on the horizon, in fact, even closer than that, with regard to the shake and shingle industry. However, the Hon. Member would not really be concerned about that because he has none of that cedar in his riding. He does not know what a cedar tree looks like. We in British Columbia do have some semblance of that industry and we know the impact of a negative decision.
Taken in the context of the Hon. Member's previous remarks with regard to the energy policy, to generic drugs and to the trade deficit, which he is obviously unaware we have in high tech, when one takes all of that into context, one must seriously question the allegations. Obviously, the Hon. Member was not in Alberta watching the deterioration of that whole province because of the National Energy Program. I was there. I saw it happen. I saw it go down the tube.


Mr. McKenzie:: Sixty thousand jobs were lost.


Robert Hylton Brisco: That does not make any difference at all to the Hon. Member for Humber-Porte au Port-St. Barbe. But I saw that happen and I saw the reversal. That reversal happened as soon as this Government was elected. It happened
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even before we cancelled the National Energy Program in anticipation of its cancellation.


Brian Vincent Tobin: Can I respond to that, Mr. Speaker?


Robert Hylton Brisco: Let me now get on to the Hon. Member's-


The Acting Speaker (Mr. Paproski):: You had better get on with it very fast because he has only 30 seconds.


Robert Hylton Brisco: This is the only country in the western world which shuts out the research component of the pharmaceutical industry to our detriment and adds to that a $ 12 billion deficit in research and technology, which is growing at 15 per cent every year.


Brian Vincent Tobin: I will be very brief, Mr. Speaker, but I want you to note that the Hon. Member spoke for some 4 or 5 minutes in asking his question.
Let me say that it is a sad day indeed when a Member of Parliament from Newfoundland who has in his riding pulp mills, not the cedar shakes which are in the Hon. Member's riding, has to stand up and speak on behalf of the Hon. Member's constituents because that Hon. Member insists on putting his loyalty to his Party and to its political agenda ahead of his loyalty and commitment to his constituents and the industry which sustains them. It is a sad day indeed when Members of Parliament from Newfoundland must stand up to ensure that the interests of the Province of British Columbia are heard echoing off the walls of this House because nothing but a whimper of support for the Government's failed position is being heard from Hon. Members from British Columbia.
The Hon. Member knows that the only way the U.S. administration could get the U.S. Senate Finance Committee to go ahead with free trade talks-and we barely made it with a vote of 10-10-was when the President told Senator Packwood: "I will fix up that problem you and some others have with the import of Canadian softwood lumber into the United States, and I will put it in writing". Some three weeks later, just a scant five days ago, the letter came. In the letter the President of the United States states that that matter must be resolved by bilateral negotiations, and if it is not resolved by bilateral negotiations, then he will take whatever actions are necessary that are consistent with U.S. law. That is the reality. The Hon. Member may not call that a sell-out, he may not say that his constituents' interests have been sold to get free trade talks going, but I say that.
I am sure British Columbians thank God sometimes that there are Members of Parliament who are prepared to stand and be counted for every part of Canada, not just for their own home province when other Hon. Members see it as their duty to stand behind their Party and not behind their own constituents.
The Hon. Member was sent here to be the voice of British Columbia in the House of Commons. The people of British Columbia do not want an apologist to speak for them. Do not ever forget that.

May 13, 1986
Adjournment Debate


The Acting Speaker (Mr. Paproski):: The time for questions and comments has now terminated.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
[ Translation]

Mr. Speaker:: It is my duty, pursuant to Standing Order 66, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: The Hon. Member for Ottawa Centre (Mr. Cassidy)-The Cabinet-Code of ethics (a) Activities of Minister's wife, (b) Prime Minister's letter to Ministers; the Hon. Member for Spadina (Mr. Heap)- Housing (a) Funding of programs, (b) Extension of 1985 programs-Interim funding; the Hon. Member for Scarborough Centre (Mrs. Browes)-Canada Post Corporation- Private enterprise door-to-door delivery.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Riis:
That this House urges the Government not to proceed with any free trade talks with the United States Government unless that Government rescinds existing countervailing duties and guarantees that such duties will not be used in the future, given the current threat of U.S. countervailing duties in the softwood industry-an industry in which free trade now exists.
Hon. Gerald S. Merrithew (Minister of State (Forestry)):: Mr. Speaker, I am delighted to take part in the debate which centres around such an important aspect of trade, particularly trade in a commodity which is so very important, a fact which has been pointed out today by several previous speakers.
I want to tell you, Mr. Speaker, that the motion before us clearly demonstrates, in my view, that the New Democratic Party does not understand what is the essential need to move forward with bilateral trade talks with our partners to the south. The very real threat, even in the last few days of countervailing action by the U.S. against Canadian softwood lumber, points to the very reason why it is absolutely essential to continue trade talks with the United States. What we are talking about here is gaining access and maintaining access to a market which takes 76 per cent of all lumber produced in this country. That is why we are going ahead with such vigour. It is to try to make sure, if we can, to preclude the kinds of actions and protectionist sentiments which are so prevalent in the United States.
I wish to point out that it was mentioned previously by my colleague, the Minister for International Trade (Mr. Kelleher), that to date there has not been a countervailing duty petition launched with regard to U.S. lumber interests. I have heard such terms as count-downs and figures such as $53.65 and 29 per cent mentioned. At this point in time it is important to recognize, in order to keep the record intact, that there has been no countervail launched.
I have been involved with the lumber issue for as long as anyone here in the House. Not only have I been dealing for the last 18 months with my own colleagues in Cabinet on this particular issue of trying to protect our lumber producers' access to that big market, but I have done so as provincial Minister as well. I fought very hard at that time in working with others in the country to try to do the same thing when the first countervail issue came forward in 1982. To those who think it is not going as well as it should be going, I suggest that they might want to ask the Ministers and industry representatives who were present then which particularly defensive issue has been handled in the best way. I can tell Hon. Members that the type of conferences that we had, the communications and the interchange of facts with industry and with the provinces are significantly better now than when I was a provincial Minister faced with the same type of issue.
I now wish to point out a couple of facts important to the debate before us. The first is that, despite the fact that there is a great deal of trade between the two countries and, in fact, that the U.S. depends on our country for a good deal of its commodities, the United States is still a sovereign nation. We are not yet in a position to dictate to it how its administration should administer trade remedy legislation. It is there and it can use it in the way it wishes. It is a sovereign state. We cannot impress on Congress how it should develop its own legislation. Congress will act in the way it wishes to act. It will bring forward such legislation as it deems fit and sees necessary.
The second fact is that the Government of the United States is organized differently from ours. On the one hand there is the administration, and on the other there is Congress, which acts independently of the administration. That fact is important because it leads to the third fact, that is to say that, generally speaking, the administration is known for its opposition to protectionism everywhere, including the U.S. Congress, but that protectionism still exists and still threatens Canadian softwood lumber. We do not deny that. It is something about which we have been aware for a long time.
With respect to lumber, Members of the House are all too aware of the intensity of the protectionist measures in the U.S. aimed at restricting our access to a market which is valued at well over $3 billion. The threats are not new at all. In recent years our lumber exports have been subjected to two investigations by the U.S. International Trade Commission and by yet another one, of extraordinary complexity, namely, the Department of Commerce. Neither of these investigations by
May 13, 1986

U.S. agencies under U.S. laws provided any substantiation for the persistent myth that Canadian lumber exports are subsidized. They both found that there was no subsidization and that Canada was trading fairly. Our softwood lumber exports are threatened by initiatives in the Congress and by potential trade remedy action triggered by the U.S. industry. 1 think it is important to note that it is not necessary to have many participants of the industry file a countervail action. It only takes one or two.
I would now like to deal briefly with the initiatives in the Congress which could adversely affect our lumber exports. We understand the pressures in the U.S. Congress. After all, we are all politicians here. The American lumber industry has experienced a protracted period of unprofitable operations and has suffered closures and lay-offs. I wish to tell the American people and the Canadian people that we, too, have shared in some hard times in this industry. We, too, have had shutdowns and lay-offs in this country. It is not unique to the U.S. We have not run to the bank all the time that the Americans have gone to the poor-house. It seems to me that only a market turn-around-and thank goodness there appears to be some indication of one-will provide a solution to the problem.
In this environment it is easy to understand the concern of the U.S. Congress for the American lumber industry. What I cannot accept is that Canadian lumber should be made the scapegoat for it. I remind Hon. Members that Canadian access to the U.S. market has been bought and paid for in previous rounds of multilateral trade negotiations. It has taken time for Canadian producers to establish their positions in the United States. They have done it by being competitive and by providing a product their customers want.
There are now about a dozen Bills before the Congress designed to restrict the entry of Canadian softwood lumber. Of most concern is the Bill introduced by Representative Gibbons of Florida, who happens to be Chairman of the House Subcommittee on Trade. The provisions of his Bill covering resource pricing policy, including removal rights, have been rolled into an omnibus trade Bill which has been reported out of the House Ways and Means Committee and is now being debated in the full House.
The resource pricing provisions of the new Bill would modify U.S. countervail law to deem that a subsidy existed where Canadian stumpage prices-that is, the price a lumber company must pay the Government for cutting down a tree on Crown land-fell short of an arbitrary figure based on American stumpage prices.
I wish to reiterate that the Government is taking the threat posed by this Bill seriously. On April 29, Ambassador Gotlieb wrote to 30 key members of the Democratic and Republican House leadership registering the Canadian Government's strong concerns over provisions of the omnibus trade Bill which could adversely affect Canadian trade interests. They are protectionist and inconsistent with the U.S. Government's international obligations. The letter referred pointedly to the resource pricing provision arguing that this provision would
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present a unilateral departure from the internationally-accepted definition of a countervail subsidy in violation of the GATT.
We will continue to bring our concerns on this trade Bill vigorously before the Congress. We will be making detailed representations to the administration shortly, urging it to continue its opposition to the protectionist provisions of that new Bill. In addition, as the House knows, a comprehensive and well co-ordinated Canadian campaign of private and public diplomacy opposing any restrictive action against softwood lumber has been mapped out and has been under way for some time.
This strategy runs along the following lines. We are trying to neutralize the U.S. campaign of misinformation by actively disseminating in the United States the Canadian perspective of this issue, by ensuring that the administration understands our opposition, and by conducting a co-ordinated campaign in the Congress. We are also bringing onside allies, and we have some in the U.S., alerting American constituencies which would suffer from restrictions on lumber imports, including, of course, the housing industry.
The campaign involves the co-ordination of a large number of players, including the embassy, all 13 Canadian consulates, and the Washington representatives of Canadian industries and federal and provincial Departments. We have argued that we are fair traders, that we are not benefiting at U.S. expense, that our success in the U.S. is based on competitive marketing factors, including a favourable exchange rate, consumer preference for our spruce, pine and fir and Canadian wood products, and superior productivity in our mills, which has been pointed out by several Hon. Members today.
I was gratified to note that these arguments were essentially supported by the U.S. International Trade Commission's recent Section 332 report. Our message continues to be communicated via congressional staffers, press briefings, speeches, testimony to congressional committees, information kits, and briefing sessions with Congressmen and administration officials.
The strategy we have been employing has enjoyed a number of successes. For example, we have received strong editorial support from major newspapers across the U.S. We have an excellent organization in place which links the federal Government, industry and the provinces. We have mobilized U.S. interest groups, such as transport interests, lumber dealers, home-builders and the like. They have coalesced in clear and vocal opposition to restrictive action against Canadian softwood lumber. In other words, we have succeeded in resisting the momentum for congressional legislation which would affect Canadian lumber exports.
The Canadian Government continues to work with the administration to help manage this lumber issue. To that end, Canadian and U.S. officials have recently resumed a new

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round of talks at the request of the U.S. trade representative, Ambassador Clayton Yeutter, to review the factors affecting competition in the North American lumber industry and to clarify government policies and practices in Canada and the United States affecting the lumber trade. This morning, my colleague mentioned that another very important meeting will take place tomorrow.
The first meeting was held in San Diego in January. A technical session took place in Prince George from February 12 to 14, and of course discussions took place in Washington on March 12. A further meeting was held in Ottawa on April 11.
The Government of Canada and the lumber industry are now faced with a very real threat if trade remedy action is taken against our softwood lumber exports to the U.S. markets. While it is possible to fold certain aspects of the lumber issue into the trade negotiations, let me make it clear that efforts to erect barriers to Canadian softwood lumber exports to the U.S. will not be put on hold pending conclusion of the negotiations.
The U.S. lumber coalition still has available to it U.S. countervailing duty legislation which affords protection against alleged subsidized imports which are causing injury to the U.S. industry. The U.S. industry is now on the brink of filing a new countervailing duty petition against our softwood lumber exports. Through the strongest of efforts, we have managed to win a delay in this action and will continue to work with the administration to hold this action off.
If, in the end, the U.S. industry files a new petition, we will argue strongly that the Commerce Department should not accept the petition because its own guidelines on this matter note; first that the Commerce Department does not investigate programs that are clearly not countervailable. Second, it does not investigate programs determined to be not countervailable in prior determinations unless the petition shows new data. As I have mentioned before, several of those investigations have already occurred, including one complete countervailing duty action. Third, it does not re-examine a program found to be generally available in the prior investigation without new evidence of changed circumstances.
In view of the above, the Canadian Government finds a reprofiled petition difficult to understand in light of the clean bill of health we were given following an identical countervailing duty action against lumber which occurred in 1982-83. In that investigation, the Commerce Department totally and unambiguously rejected a U.S. industry allegation that provincial stumpage programs conferred a domestic or export subsidy on the Canadian softwood lumber industry. Incidentally, that decision was never appealed by the U.S. petitioner.
I have already made it abundantly clear to the administration at the cabinet level that we are strongly opposed to the initiation of another investigation. In short, if a petition is filed, we will take every opportunity to register with the administration our strong views that there are no grounds for
the U.S. Commerce Department to accept a new petition and to institute a countervailing duty investigation against imports of softwood lumber from Canada.
There have been no significant changes in government policy and practice in Canada affecting the lumber producers since the 1983 countervailing duty determination. There have been no changes in U.S. countervail law which would justify a new investigation involving programs which the Commerce Department has already determined to be countervailable. In the Government's view, to proceed with such a case would be inconsistent with the Department's own guidelines with respect to acceptance of a countervailing duty petition as well as being inconsistent with the U.S. obligation under the GATT. Hon. Members should be assured that the Canadian Government will continue to commit the resources, the effort and the vigorous leadership required until this, our number one trade problem with the U.S., is resolved.
I would like to comment on a few of the remarks made by the Hon. Member for Skeena (Mr. Fulton) this morning. I think the record should be correct, and I am sure the Hon. Member would want it corrected. He referred to the efforts we are making to deal with this particular issue. First, he knows full well that the trade issue is the responsibility of the Secretary of State for External Affairs (Mr. Clark) and, more appropriately, perhaps, the Minister for International Trade. The important thing is to realize that we are working together with the provinces and industries to assist in any way we can the sectors for which we and other Ministers are responsible. Obviously, the sector in which I am most interested is one at which we have been working very hard.
The Hon. Member mentioned some figures that I should correct. As soon as I became Minister, I set up an industry and trade branch in the Department, something which never existed under the previous Government. The branch will have an establishment of 14 person-years when complete. We also have an economics branch consisting of 16 people which supplies the Government with data and analyses on trade and industry issues.
It might be important to note at this time that both of the Directors General of those two branches are active on the government-to-government negotiating committee. The heads of both these branches are playing a daily role with the staff of the Minister for International Trade on this particular issue. Naturally, we will always play a support role in trade because it is not primarily my responsibility, but peripherally and indirectly it certainly is. I intend to continue that kind of activity.
Adding all of that to everything else that has been done by the complete staff available to the Secretary of State for External Affairs and the Minister for International Trade, as well as my own personal staff, not large but active, I think we have made a major change in the thrust of the Canadian Forestry Service which in the past was essentially a research service. We have moved from a spectator's role to the role of a
May 13, 1986

key player in the discussions and negotiations that are now taking place.


James Ross Fulton: Mr. Speaker, I am sure the Hon. Minister would not want to leave the record with any bruises on it, so I will take this opportunity to seek some clarification from him.
I think he would agree that in the Estimates of his Department under agriculture for 1986-87, some $500,000 is to be used to deal with the issue of softwood trade and difficulties related to the issue we are discussing today. An additional half a person-year or so has been added on.


Gerald Stairs Merrithew: Fourteen person-years.


James Ross Fulton: Fourteen new person-years have been added? We will deal with that next time the Minister is before the committee.
I would like to hear from the Minister his understanding of the issue of the countervail suit. It is my understanding that if there is not satisfaction with the envoy proposal on the U.S. side between now and next Monday, the countervail will be technically filed on Monday but the Secretary of Commerce will not take the full 20 days required to make a ruling. In fact, he will accelerate that by one week, meaning that the ruling on whether or not to proceed with the countervail would come only 13 days after next Monday. In terms of timing, the actual free trade negotiations are scheduled to begin in the middle of next week. Because of that timing, it would be very much in the interests of certain U.S. lumber interests that the countervailing petition be filed next Monday rather than this Monday so that it would roll over into the free trade negotiations which are supposed to begin in the middle of next week. I would like the Hon. Minister to clarify that for me.
My second point deals with the Gibbons Bill, the resourcepricing provisions on which the Minister touched, and the new removal rights clause. As the Minister knows, that was voted through last October by the subcommittee so it can, in fact, on very short notice, go to the floor of the Congress.
Does the Minister think it is more likely that the very powerful U.S. forestry industry lobbyists who are loose on Capitol Hill are likely to accept the envoy proposal if there are no volume pricing provisions provided as a possible concession from Canada? Second, does he not agree that it is likely that those hardliners in the U.S. Senate and House, both Republicans and Democrats, who have been pushing this issue will want to go the Gibbons Bill route? That route would guarantee them the new arbitrary evaluation procedure between U.S. standing wood and stumpage and Canadian Crown or private standing wood and stumpage, as opposed to going through the new countervail, even though recent rulings by the International Trade Commission and the Department of Commerce indicate that it is somewhat more likely that they would be able to find a countervail against Canada under a 1986 application rather than under the 1982-83 process which Canada won at only 1 per cent.
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Gerald Stairs Merrithew: Mr. Speaker, I want to address three or four of the comments of the Hon. Member for Skeena. First, I made the point on the countervail because the dollar figure and a percentage were actually mentioned this morning. We would not want to leave a perception in the minds of Canadians that that petition has already been filed. It has not been filed at this point in time. However, the figures were mentioned both in dollar terms and in percentage terms. The Hon. Member himself used the phrase "the clock is running", which I understand may very well be the case. I wanted to ensure that there was no misconception on the part of the Canadian public.
In the meantime, negotiations and discussions will take place tomorrow. As the Hon. Member well knows, undoubtedly they will be important. He is absolutely correct that the concept of removal rights in trade legislation did get by a subcommittee and awaits discussion of the full House. He is absolutely correct as well that those kinds of phrases in that legislation pose a threat to us. However, the legislation has not passed.
The Hon. Member knows as well that many of the Senators will be going to the polls later this fall and that there may be trade-offs, as there have always been in their democratic system, in which they may volunteer support for one aspect of trade legislation in exchange for something else. However, we are not privy to that information, and the only thing we can do is to make the strongest possible representation to all Congressmen and Senators that we do not think it will serve free trade, freer trade, or enhanced trade very well.


James Ross Fulton: Mr. Speaker, I have a very short supplementary question. As the Minister knows, British Columbia was informed late last night directly by telegram about the latest proposal of Canadian and U.S. envoys to look at concessions. Does the Minister think that that is enough time for provinces such as British Columbia, which ships about 60 per cent of Canada's over-all softwood lumber into the U.S. market, to take a close look at this approach, or is it in fact true that there is not much co-operation coming from Premier Bennett on this issue?


Gerald Stairs Merrithew: There is no question that we are down to the eleventh hour on the issue. No one is taking it lightly. After discussions it was felt that the concept of an envoy or envoys might very well resolve issues which we have been unable to resolve as of this time in government discussions, in discussions between politicians at every level, or in discussions between the United States administration and the Canadian Government. It was just an idea that was floated. The provinces were informed of it. Hopefully, later this week, depending upon certain things happening, Trade Ministers will meet with Forestry Ministers to discuss that concept fully.


Nelson Andrew Riis: Mr. Speaker, I have a question for the Minister of State for Forestry (Mr. Merrithew). It does not concern

May 13, 1986
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softwood but concerns the red cedar and shake problem. It has nothing to do with subsidies, by the Americans' own admission, but from what I can gather they are concerned about competition and the problems caused by that competition in the United States.
The International Trade Commission recommended that the President step in-and I ask the Minister to confirm this-and impose a duty of about 35 per cent on our red cedar shingles and shakes. Could the Minister confirm that that is a proposal or initiative of the ITC? If so, why is that proposal being made in light of there being no subsidies?


Gerald Stairs Merrithew: Mr. Speaker, the Hon. Member knows that the shakes and shingle industry in the United States has filed an action against Canada. Again we are perceived to have some sort of subsidy or benefit for our producers, much to the chagrin and loss of American producers. Also it is interesting to note that the vote on the preliminary ruling was very close. I think it was three to three or four to three, or perhaps the reverse of those numbers. However, it is important that they recommended to the administration that there be a 35 per cent countervail duty not on all shakes and shingles but on red cedar shakes and shingles only. We have protested that in no uncertain terms. We have some doubt as to whether the U.S. industry can supply all the demand. We have fought that all along the route and will continue to do so.


Kenneth Albert James: Mr. Speaker, the Government has embarked upon a number of steps aimed at securing and improving Canada's access to world markets generally and to the U.S. market particularly. I want to take this opportunity today to outline the many important considerations which have led us to conclude that these initiatives were essential to promote the well-being of the Canadian economy and future prospects for a continued healthy growth of output, employment, and incomes of Canadians.
In my judgment, the very substantial consensus across the length and breadth of the country in support of seeking a comprehensive trade agreement with the United States reflects a growing concern that the Canadian economy is becoming increasingly vulnerable as a result of a number of adverse developments which have been building up for a period of several years.
Taken together, these developments present a serious threat to a continued healthy growth of Canadian output, employment, and real incomes. As the C. D. Howe Institute put it in a recent statement, "The status quo cannot be the goal of economic policy if Canadian living standards are to continue to rise in the future".
Canada has long been in the forefront of the countries which have supported the progressive liberalization of world trade under the GATT, and indeed continues to be in that position. However, there has been a growing appreciation that further progress on the international front is likely to be very slow and to address only a limited number of pressing concerns which Canada has with the United States. It is this market which
currently absorbs more than 75 per cent of all our merchandise exports and is critical to the well-being of the Canadian economy.
It has become glaringly evident that the policies and practices, which may have served Canada well in the past, have become increasingly untenable. The necessity of adjusting to rapid change is now one of the inescapable facts of Canadian economic life. The C. D. Howe Institute declared recently in its Policy Review and Outlook, 1986 the following:
Governments can try to delay the inevitable by preserving the status quo. But delay simply increases the magnitude of the adjustments when they come, as come they must.
One of the major forces for change which has developed over the past several years is the massive increases in trade protection pressures that have taken place around the world, particularly in the United States, the major buyer of our exports.
South of the border these protectionist measures have taken two forms. One is increasingly intense resort by U.S. firms and the U.S. administration to existing trade protection measures such as countervailing and anti-dumping duties and so-called safeguards, in an effort to cut back the flow of exports from Canada as well as from other countries. Of equal or greater concern are the more than 300 Bills currently before Congress to establish new protectionist measures, many of which could have a seriously adverse impact on Canadian imports and Canadian jobs. Existing and proposed protectionist measures pose a threat to more than just current exports and current jobs. They also serve to compel some Canadian companies to invest south of the border in order to avoid such measures, as Bombardier felt required to do to help secure a $1 billion order for subway cars in the United States. The result of such developments is a loss of investment that otherwise would take place in Canada and the loss of new jobs that otherwise would be created in our country.
Even more important, Mr. Speaker, than the present and prospective protectionist threat to our trade with the United States is the increasingly adverse impact of a number of other developments that have combined to compound severely the problems we face as the only industrial nation in the world, other than Australia, that does not have free access to a market of 100 million people or more.
Included among those developments is the continued decline in relative importance of Canadian resource exports both because of changing technology that has led to the replacement of some of these products by other materials, copper wire by fibre optics, for example, and because of the increasingly intense competition from a number of less developed countries.
In addition, we have faced increasingly significant competition in the field of manufacturing from the newly industrialized countries, such as, South Korea and Hong Kong. Canada has also faced increasingly intense pressures in the marketplace at home and abroad from other more advanced industrial
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nations. The problem is not one that has suddenly developed overnight. Instead, it is one that has been developing for some years. In a document published in 1983 entitled Canadian Trade Policy for the 1980s, the former Liberal Government warned:
Our competitiveness is slipping compared to our major trading partners and we are not as well positioned as our competitors to export manufactured goods- the area of greatest anticipated growth in the 1980s.
A similar warning was sounded more recently by the Canadian Manufacturers' Association. Given the right policies, the Association said:
Canada's employment of two million people in manufacturing could be increased by 25 per cent by the year 2000. That prospect would grow more and more elusive if we just kept on our present course ... Our major competitors are already ahead of us in the productivity race.
The fundamental problems created by Canada's small domestic market and lack of secure and more open access to a larger market has been accentuated by what the CMA have characterized as a "world scale explosion of new technologies" that has by now set in motion a "fourth industrial revolution".
Most critical of all, however, is the increasingly severe problem faced by a number of Canadian manufacturing industries that are falling progressively further and further behind in the international competitive race because their lack of assured access to a major market results in declining efficiency and heavy costs. The result is that the productivity of our manufacturing sector is in the order, on average, of 25 per cent or more below that of the United States which, in turn, results in substantially lower real incomes in Canada.
In the early 1960s, the process of rapid technological change was threatening to drive the Canadian auto industry to the wall because the relatively small domestic auto market failed to provide the volume of sales required to achieve maximum efficiency and the lowest possible costs. The Macdonald Royal Commission underlined the fact that it was only because of the opening up of the U.S. market under the Auto Pact that the Canadian automotive industry was able to achieve the strong and healthy growth it has experienced over the past two decades.
The problems facing the auto industry in the early 1960s are very similar to those that now face a number of other manufacturing sectors, stated the Commission. It said:
Our industry urgently needs to increase economies of scale in order to realize greater productivity.
To achieve that important objective, it requires assured and open access to a large market such as that offered by the United States.
The economic benefits that would flow to Canada from the implementation of a comprehensive trade agreement with the United States would depend on a number of factors, particularly the extent of the reduction or elimination of the existing barriers and the provisions made by phasing in the reduction of those barriers over time.
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Assuming that the agreement is broad in scope and phased in gradually, a number of calculations have been made by several of Canada's outstanding economists. On balance, they have concluded that the benefits for Canada would be very significant in terms of increased output, of employment, and the real incomes of Canadians.
It has been estimated, for example, that Canada's annual national output would increase by some 3 per cent to 8 per cent as a result of a trade agreement with the United States, which is on top of normal growth that might be expected.
Similarly, it has been calculated that the number of new jobs created might increase by as much as 5 per cent within two years of the start of the implementation of an agreement.
By one estimate, real incomes in the manufacturing sector could be expected to increase by some 28 per cent as the productivity of that area of the economy moved into line with that in the United States. In addition, one well known firm engaged in economic analysis, namely, Informetrica Ltd., recently concluded on the basis of its projections that a comprehensive trade agreement with the United States "would provide positive results from the beginning, and across almost all sectors and provinces".
Not the least of the benefits that would flow from a comprehensive trade agreement with the United States would be a significant reduction in the relative costs of a great many of the things that Canadian consumers buy directly and indirectly, together with a substantial increase in the range of consumer choice.
The initiative undertaken by this Government in proposing the launching of the negotiations aimed at reaching agreement of a broad nature with the United States has commanded strong support of several major business organizations and national economic institutions in Canada. This approach was also strongly recommended by the Macdonald Royal Commission on the Economic Union. The Commission declared:
We are convinced-that the potential economic benefits to Canada of freer trade with the United States far outweigh the costs, and that the principal hazards can be met by instituting appropriate policies of adjustment. Given Canada's increasingly isolated position in the international economy at large, it is difficult, in any case, to conceive of a genuinely effective policy alternative.
Among the many advantages that the Commission considered would be yielded by a trade agreement was that it would enable Canada so to strengthen the competitive capacity of its economy over time that it would be able to reverse and reduce its growing dependence on the United States economy through increased exports to other markets around the world. Paradoxically, we believe that improved and secure access to that market will, in the long run, be the best means of achieving greater diversity of our economic and trade relations.
One of the most immediate and important gains that we would expect to obtain from a comprehensive trade agreement is a substantial measure of protection for Canadian exports from both present and prospective U.S. protective trade

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barriers. While Canada urgently requires more open access to U.S. markets, it also has a desperate need for security of that very important access.
In addition to providing more secure access, it is to be expected that a new agreement will result in the elimination of some other substantial barriers to trade other than tariffs. That would be things such as "buy America" provisions which severely restrict the market for Government procurement. A trade agreement could open up that very substantial market which amounts, at present, to something in the order of $500 billion per year.
In summary, we in Canada find ourselves at a critical crossroads in our history. The choice we face is threefold. We can hold to our present course, which threatens to lead to a continuation of the erosion of our international competitive position which has been under way for some years, and a continuing decline in the comparative well-being of the Canadian economy in terms of growth, production, jobs, and wealth. One alternative to this is to do nothing. That course is to retreat behind the protective walls of "fortress Canada", which I am sure most Canadians will recognize as a sure-fire recipe for disaster on the part of a nation which has lived by trade with the rest of the world for so many years.
Finally, we can choose to follow the course of substantially reducing the barriers between Canada and the United States which is the only road that offers the promise of substantially strengthening our economy and bolstering its ability to grow and prosper in a fiercely competitive world. Is it any wonder that most Canadians have concluded that there is no real alternative to the approach to trade that the federal Government has elected to follow with the firm support of a broad segment of our nation? Surely this is an idea whose time has really come.


William Lesick: Mr. Speaker, I hope the television cameras have allowed Canadians throughout the nation to hear my colleague, the Member for Sarnia-Lambton (Mr. James), speak this afternoon. He told us the facts. He spoke the truth. He has been in the House all day listening to Opposition Members and Members of the Government speak. His speech was positive. It told us that we do require a comprehensive trade agreement. We heard all of his good reasons for this and all of Canada should know about them. A 28 per cent increase in manufacturing will mean lower prices and more jobs. What we need more than anything is assured access to American markets. That is what the comprehensive trade agreement will achieve for us.
I know that my colleague, the Member for Sarnia

Lambton, listened carefully to the remarks of Members of the Opposition. Why are Opposition Members afraid of trying something new, different, and positive such as the Member spoke about? The Opposition has been swinging at puffs of smoke. Why do Members of the Opposition have these fears?


Kenneth Albert James: Mr. Speaker, I do not understand where members of the Opposition are coming from. They seem to be
contradicting themselves so many times. This afternoon I heard an Hon. Member speaking about the 10-10 vote of the Senators. Could you imagine the hue and cry there would have been if the Senators had voted "no"? When the Senators on the Finance Committee were deliberating, we heard that a number of them were concerned about whether to vote positively. Members on the NDP benches wondered why the Government had not sent representatives down there to communicate. The next minute they do not want to communicate. I am not sure where this comes from. I am sure that if the Senate Finance Committee had voted "no" they would have said that that was a terrible thing.
The other thing that concerns me is the lack of objectivity in the rhetoric. The Member for Essex-Windsor (Mr. Langdon) was speaking this morning with doom and gloom and telling us the reasons why we should not enter these negotiations. He did not seem to have any objectivity. It seems that one can say anything in this House without any facts to back it up. He said that they never agreed to countervail.
Another thing that really gets me excited is that the President said he would like to clean up the countervail situation on softwood lumber. This morning the Member for Skeena (Mr. Fulton) said that that is what he wanted to have done. This afternoon someone said that it is bad that the President wants to have that cleaned up. They seem to have a problem making up their own minds. The Government has made up its mind that negotiating a trade agreement with the U.S. will give us jobs, which is what the country needs.


Nelson Andrew Riis: Mr. Speaker, perhaps I can shed some light for the last two Members who asked what the Opposition is concerned about with regard to dealing with something new. We have had free trade in softwood lumber for half a century. This is nothing new. We have had, by and large, a very good trading relationship with the United States in softwood lumber. However, because of the difference in currency, and because our mills now rank among the most efficient in productivity anywhere in the world, and because our labour force also ranks among the most productive anywhere in the world in the woods industry, we are able to out-compete the Americans on their own turf. We have had free trade in lumber for 50 years. They now want to stop free trade.
We have done so well in that area that the Americans are afraid of the Canadian competition. We are concerned that that same mentality will be extended to a whole variety of commodity and product areas. Is this what free trade is all about? That is the reason we have indicated concern about the open-ended support for the free trade concept.


Kenneth Albert James: Mr. Speaker, that is why I am concerned that the Opposition is negative about entering into a trade agreement with the U.S. The Minister of International Trade (Mr. Kelleher) said from the outset that one of the main reasons for negotiating an agreement with the U.S. would be to negotiate away the countervail situation which exists. That is always a possibility under GATT. We hope to be able to negotiate on
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that countervail situation. In addition, we would have a tribunal to handle any irritants which still develop.
It seems to me that this is the very thing that the NDP would like to have. I know that the softwood lumber industry is very important. 1 agree with the information given to us today by a member of the NDP concerning the number of jobs in the U.S. which are contingent upon that industry. This Government has tried to have that story told. When I was at our Washington Embassy, they explained to us the whole story. It was very important and they were getting the story out.


The Acting Speaker (Mr. Paproski):: I will entertain a short comment and question from the Hon. Member for Winnipeg North (Mr. Orlikow).


Mr. Orlikow:: Mr. Speaker, I want to congratulate the Hon. Member. This is the first time 1 heard a Government Member make mention of information available from the Department of External Affairs which analyses the "buy American" policy. If the Hon. Member would look at that information he would understand our concerns. I am reading from a document prepared by our Department of External Affairs. It is headed "Buy American". It shows that U.S. preferential public purchasing policies date from 1933. Those policies generally provide that federal Government procurement for use within the U.S. must be restricted to domestic products unless the purchase of such supplies is inconsistent with the public interest. It then goes on to list a whole series of subsidy programs for the American fishing and agricultural industries. It then lists alphabetically every state in the U.S. and the restrictions they put on purchases in their states against every other state in the Union, let alone purchases from Canada.
We are being urged to give up the things we do to protect our industry and jobs. When is the Prime Minister (Mr. Mulroney) or Mr. Reisman going to ask the U.S., if we have to give up our protection, when are they going to give up their protection? When are we going to stop negotiating with both hands tied behind our backs?


The Acting Speaker (Mr. Paproski):: I will give the Hon. Member 30 seconds in which to reply.


Kenneth Albert James: I would just like to say again that that is one of the reasons we would want to negotiate an agreement with the U.S. Certainly "buy American" is a concern, an irritant. I believe I said that in my dissertation this afternoon. It is a tremendous market and we would like to have access to it.


The Acting Speaker (Mr. Paproski):: I regret but questions and comments are now terminated. The Hon. Member for Kootenay West (Mr. Brisco).


Robert Hylton Brisco: Mr. Speaker, the story of this Government is a story of success. It is an indication that our Government has been working. In spite of the laughter in the NDP ranks, we will be able to demonstrate in a few words
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the kind of economic progress which Canada has made in the last two years.
Already our successes are starting to show. Momentum is building. We have not allowed inflation to devour the earnings of Canadians. That is a success. With inflation under control, we have started to nudge the economy into first gear. We were able to drop the unemployment rate from 11.6 per cent to under 10 per cent. That is a real figure. There are over
600,000	people across the nation who know the meaning and feel the worth of that number. They can give at least partial thanks to their federal Government for the employment we helped to create. We are now creating new jobs at the rate of over 1,000 per day. That is the act of a responsible Government, a Government that works. Canada is stronger now as a result of the policies of this Government.
Employment is not the only indicator of our successful policies. For the first time in a number of years productivity is increasing at the same time as employment is growing. That is a significant trend. In the last five or six years productivity gains were made at the expense of employment. Now more and more Canadians are joining a workforce which is becoming stronger and more competitive. Canada is becoming a stronger nation. We are no longer hewers of wood and drawers of water. Canadians can be proud of this nation's growing sophistication and diversified industrial base which makes us a major trading nation, the seventh largest in the world. While some 60 per cent of Canada's exports remain resource based, a growing proportion are being processed in Canada. Less than one-third of Canada's exports are now raw materials. We are a nation relying more and more on the ingenuity and skill of our highly-trained workforce for today's production and tomorrow's national wealth.
We have a strong and growing economy. Exports have jolted the sometimes sluggish economy. Compared to the U.S., our economic recovery has been stronger. In 15 months the Canadian economy zoomed ahead at an annual rate of growth of 6.1 per cent, compared to 2.6 per cent for the U.S. Our growth in employment has outpaced the U.S. More important, Canada's increase in productivity in the last year and three months has been five times as great as the U.S.
Canada has not been so strong for years. Never before have so many Canadians been ready to take on the world, to recapture our share of foreign trade. Since the recovery began, Canada has increased the value of its exports by 40 per cent. That is double the increase following any other recession since the Korean War. Trade is important. Exports continue to contribute to Canada's standing as one of the world's strongest and largest trading nations. We are second only to Germany in the amount of economic activity which depends on trade. One of the things that sets Canada apart is the degree to which this nation depends upon trade. Some 30 per cent of our economy depends upon international trade. That is almost twice the average for the western industrialized countries.
That dependence, of course, is a double-edged sword. As long as Canadian workers can remain competitive, we will

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continue to create jobs through export markets. It goes without saying that if Canada's workers are to remain competitive, then industry itself must remain competitive, and that responsibility falls upon industry. Currently, more than three million workers owe their jobs to international trade. A strong trade performance means undeniably more jobs. For every $ 1 billion in merchandise exports, 16,000 jobs will be created in Canada.
The other side of that sword is that if Canada does not maintain its competitive edge, jobs will be lost. In the 1970s the Government allowed Canadian productivity to drift. The result of looking inward was that Canada's share of world merchandise exports dropped .5 per cent to 4 per cent in 1983. What is .5 per cent? The Economic Council of Canada noted that it was worth employment for 160,000 Canadians. Through the gradual reduction of international trade barriers, Canadian producers have become more competitive, the Canadian economy has become more productive and efficient, and this encourages the nation to concentrate on what we do best.
Increased trade has benefited Canadian consumers and producers alike. Yet we must not lose sight of the bad news. In the last 10 years, Canada has lost ground to other traders. This country must run to keep up with the pack. We have to apply even more energy if we are to make the best of available economic opportunities.
Since the First Ministers met in Regina, this Government has been pursuing a three-point strategy to improve Canada's economic performance. Those three points are: Improved trade competitiveness; secured and enhanced access to foreign markets; and more effective international marketing.
GATT and U.S. trade are two important opportunities. The goal of secured and enhanced access to foreign markets will be sought on two fronts, through the bilateral negotiations with the United States and through the continued and active role that Canada will play in the upcoming round of talks on GATT. Together, this two-point strategy will lead to a growing world of economy and to particular benefits at home where new employment will be generated.
The Government has had an equal emphasis on bilateral and multilateral negotiations, not on the joys of continentalism, nor on the merits of putting all our eggs in one basket. Neither are subscribed to by the Government. We must seize the opportunity and secure a greater share of world trade for the benefit of Canada. That can only be achieved by permitting trade patterns that benefit both sides and having a trade policy which recognizes the need of both importers and exporters.
Since 1968, Canada's share of world trade has been declining and, in parallel with that trend, so have Canada's employment opportunities diminished. In the past decade Canada looked inward and concentrated on domestic problems.
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There is a new confidence in Canada. Our economy is improving and expanding. More people are working. Canadians are up to the challenge to reach out and trade with the world.
Canada's national Government knows that we can compete and Canadians know that we can compete. We want to harness their confidence. The Government's obligation is to regain the advantage we once had in order to put more people back to work. We must do this through enhanced trade, and that is the mission that drives this Government.
Our objectives are to explore a trade agreement with the United States which is mutually advantageous. The Government has established four basic means for securing and enhancing access to that market. One is fair trade by reducing the scope for harrassing competitive Canadian exports. There are over 300 Bills in Congress which seek to limit Canadian exports. We would like to see this kind of retaliation against fair trade curtailed.
The second is fair protection by codifying rules on subsidies to industry, agriculture and fisheries. Both countries use domestic subsidies, yet there is no agreement on what constitutes a fair subsidy. We would like to see clearer rules which would stop Canadian policies from being attacked by U.S. protectionism.
The third is fair access by reducing the impact of "buy-American" laws and eliminating U.S. tariffs in order to give Canadian companies access to U.S. federal and state government markets that are worth as much as $500 million annually. We want to see the pressure on Canadians to transfer products to the United States removed.
The fourth is fair settlement by agreeing on effective mechanisms to settle disputes about trade. Canada and the United States have many disagreements, but no means of arbitration. We would like to see more predictable rules to allow problems to be quickly and fairly addressed and resolved.
What are the benefits to Canadians? There are a number of studies which point to the benefits of enhanced trade. The Macdonald Commission generated over 40 studies which dealt directly with Canada-U.S. trade. An extensive range of studies have been undertaken within the Government. These reports prove the merits of the trade initiative.
The studies agree that the reduction of trade barriers would stengthen Canada. The economy would grow by 8 per cent. Productivity would rise without a trade-off in total employment. Jobs would be created in both the manufacturing and service sectors. Average incomes would increase, and some studies show that wages would increase by as much as 13 per cent to 15 per cent. Exports would rise and consumers would benefit from lower prices.
With transition periods and phased elimination of trade barriers over eight to ten years, we will experience managed and orderly adjustment. That kind of change is preferable to that which comes from a factory door bolted shut because of
May 13, 1986

lost export sales. It is that kind of planned and phased in change that will make Canada stronger.
Many factory workers already experienced this kind of change when the Auto Pact was signed in 1965. In the words of Bob White, President of the United Auto Workers, the Auto Pact: "Led to a major expansion of trade." He said: "We have modern plants in Canada with state of the art technology. We have a skilled workforce and our labour costs are very much in line".
There will be adjustment, just as there is now. However, with improved trade rules, this adjustment will lead to a better tomorrow. It is based on job creation, not job loss. The Government would like to see those working in other sectors have the same benefits that auto workers now enjoy. Why should Bob White want the benefits restricted to his workers? Let us have trade rules that cover as much of our cross-border trade in goods and services as we possibly can and build upon the excellent start that was made with the Auto Pact.
Some studies have assumed that any Canadian based company exposed to new competition would just wither and die. That is scarcely the Canadian way. That is not the Canada that I know. Canadian managers would stay and fight, as they did after the Auto Pact was signed.
Enhanced or no enhanced trade, Canadian subsidiaries are in Canada for good. Many Canadian subsidiaries are no longer branch plants but independent companies with their own world wide mandate.
It is not Canada's high tariffs that keep subsidiaries in Canada. Many studies have shown that companies are interested in the nearness to the market and the quality of the Canadian labour force. These will not change after any possible agreement with the United States. Canada will still be a good place in which to invest and a good place to be employed. It will be a good deal, or there will be no deal.
The Cabinet and the Prime Minister (Mr. Mulroney) will only consider an agreement if it is in Canada's best interest. It will be a good deal, or it will be no deal.


James Ross Fulton: Mr. Speaker, I rise on a point of order. Are we allowed to read speeches under the new rules or are we supposed to give speeches?


The Acting Speaker (Mr. Paproski):: Experienced Members should not be reading, but there are opportunities for the Hon. Member to look at notes. I am sure the Hon. Member is well aware of what the Hon. Member for Skeena (Mr. Fulton) has just said. I know that these are just notes. He is entitled to refer to them.


Robert Hylton Brisco: As the Prime Minister stated:
International negotiations are complex and extremely challenging. Success is not a sure thing but the results of success are well worth the enormous effort and good faith required for the negotiations.
This is a winning proposition. Negotiations for both multilateral and bilateral trade agreements will lead to
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investment, expansion, modernization and specialization. Canadian businesses will become better competitors. We are pursuing agreements with the United States and the world which will prepare Canada for the 21st century.
Earlier today, the Hon. Member for Kamloops-Shuswap (Mr. Riis) addressed the House on the subject of free trade, particularly with regard to the forest sector. I am grateful that my prompting provided him with an opportunity to explain to the House why the United States is so concerned about the forest sector and why that country's productivity is simply not on the same competitive basis as Canada's. When I asked why, he responded correctly. I asked him to give us the corollary by telling us what is happening in the United States, which he did. He did it very well and very forthrightly. I would suggest to the Hon. Member that the one element he left out of his speech, and I am sure he is aware of it, is that the recession in the United States was not as deep as ours at the outset and was slower in coming. Our forest industry in British Columbia was actually in that serious downturn before the United States. So we have gone through the recovery stage and it has been a remarkable recovery. We have seen improvements in our sawmills and pulp mills. We have seen increased productivity as a result of modern equipment. I am grateful to the Hon. Member for having put that on the record.
I would also like to say to that Hon. Member and to all Hon. Members of the House, particularly those who come from our forest regions, that the matter with which we are faced is one which is not only of concern to us. It is of concern to 140,000 businesses, members of the United States national building organization. That vocal group supports the position Canada has taken. It is incumbent upon us as Members of Parliament, regardless of Party, to work collectively for the betterment of Canadians and of forestry workers to whom we are dedicated.
In conclusion, I think it is important to indicate that it is going to take a collective will in British Columbia to resolve its economic problems. It is going to take a collective will in Kootenay West. Earlier today the Hon. Member for Humber-Port au Port-St. Barbe (Mr. Tobin), indicated he, an Hon. Member from Newfoundland, was the only one who was speaking for Kootenay West and British Columbia. Of course, I reject that statement categorically, particularly when I look at the Hon. Member's record of speaking on behalf of the forest sector as spokesman for the Liberal Party. One only needs to examine the Hansard Index to see how little he has said about trees.
Kootenay West is a riding which has suffered seriously in this economic downturn but it is slowly recovering. I would like to give that community the reassurance that we will see a new lead smelter at Cominco, that we will see a rejuvenation of industry in that community that by working together with community action groups and employing the ideas which develop within those groups along with the ideas and experience from the outside.
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I would like to make reference to Sudbury and its particular approach to its problems which provides an excellent format for any economically depressed area. I would like to give my constituency the assurance we are doing everything we can to join them in getting the economic condition of that one area back in tune with the rest of Canada so it can enjoy the successes which are presently before us, particularly in the industrial corridor.


Howard Douglas McCurdy: Mr. Speaker, the previous speaker, once again, cited the Auto Pact as an example of free trade. He suggested that Bob White would deny Canadians the same gains resulting from free trade that the auto workers received as a result of the Auto Pact. The Auto Pact is an arrangement of free trade in a commodity in which there is a proportionate Canadian value-added and a proportionate number of jobs guaranteed to be produced in Canada in proportion to the exchange of that commodity between the two countries. Perhaps the Hon. Member thinks he can change Bob White's mind and our minds by telling us that this is what we are looking for, that kind of arrangement in all sectors of trade between Canada and the United States which is precisely like the Auto Pact. Or are we going to stop this nonsense of describing the Auto Pact as a model for something of which it is not a model? If the Auto Pact is such an excellent arrangement, why is it that the Government persists in undermining it, as attested to by all the major domestic manufacturers, the unions-that is the assembly corporations such as Ford, GM and Chrysler-the UAW, the parts manufacturers and the tool makers? They are all complaining that if the Government continues in its present path of undermining the Auto Pact by encouraging the construction in Canada of assembly-only South Korean and Japanese plants, then all of 15,000 to
20,000	jobs, or perhaps as many as 200,000 jobs, may be lost because the Auto Pact has been undermined. Will you answer that question?


The Acting Speaker (Mr. Paproski):: Order, please. I will ask the Hon. Member for Kootenay West (Mr. Brisco) to answer the question. However, I am sure we are talking about countervailing duties in the softwood industry. I do not think auto parts belong to the softwood industry.


Howard Douglas McCurdy: On a point of order. The issue of the Auto Pact was raised in debate.


The Acting Speaker (Mr. Paproski):: Order, please. Easy. Would the Hon. Member for Kootenay West answer the question, please?


Robert Hylton Brisco: Mr. Speaker, I can understand and appreciate the nature of the question. I am sure the Hon. Member also understands that the nirvana he seeks is beyond us. It is beyond any two trading nations which have free trade agreements. It is beyond more than two trading nations which have free trade arrangements in terms of guaranteeing the employment component or the degree to which productivity would be there.
In response to his alarm, I am reminded very much of the attitude we saw springing from some elements in the United States. The elephant was afraid of the mouse on enhanced trade. What I say to the Hon. Member is, for heaven's sake, where is it evident that in competing with overseas markets we have no courage? Do we have no courage at all?


Howard Douglas McCurdy: That is not the question. Why are you misleading the people?


Robert Hylton Brisco: Mr. Speaker, I really do not know what the value of the interjection is.


The Acting Speaker (Mr. Paproski):: Order, please. I will allow the Hon. Member a supplementary question if we could just get this over with. There are still a couple of Hon. Members, both from the Hon. Member's Party and the other Party, who would like to speak. I would like to get all these Hon. Members in, if possible.


Howard Douglas McCurdy: The Hon. Member knows very well that the Auto Pact does not constitute an example of the kind of free trade arrangement which the Government is trying to achieve. I do not mind there being a difference. However, I would like Government Members to cease communicating a message which belies the facts. The Auto Pact is not an example of free trade. It is an arrangement which guarantees a certain proportion of jobs and a certain proportion of production.


The Acting Speaker (Mr. Paproski):: The Hon. Member for Kootenay West has 30 seconds.


Robert Hylton Brisco: It would take more than 30 seconds to try to drive the differences through the head of the Hon. Member, and I will leave that until later.


The Acting Speaker (Mr. Paproski):: The time for questions and comments is now terminated.


Mr. David Berger (Laurier):: 1 am worried as well because the Government has not clearly stated the objective it seeks to achieve from a free trade arrangement. It has not clearly stated the details of such an agreement, or the sectors which it would favour or disfavour. I heard the Minister for International Trade (Mr. Kelleher) speak on Cross Country Check-up on Sunday last. He referred to Auto Pact as free trade. It is not free trade. I agree with the Hon. Member for Windsor-Walkerville (Mr. McCurdy) that the Minister, his Party and his colleagues are misleading the public about what this crucial question is all about.
I am concerned as well because-

-in Quebec we have a saying that one should not be more Catholic than the Pope. And in this debate on free trade, I often get the impression we are doing just that.
I wish the Secretary of State (Mr. Bouchard) would stay for a few minutes, because I have a few comments I would like him to hear, especially on the need for a good post-secondary education system in this country so that we can compete with the United States and other countries on world markets. I will get to that in a few seconds, if he could wait. As I was saying, Mr. Speaker-

I think there is a tendency in this country for us to be holier than the Pope, as we say, in our approach to trade issues. We continually focus on what we might have to give up in a trade arrangement with the Americans, on what constitutes a subsidy or on what is unfair competition in our practices in Canada. Every single item is mentioned in the media. We refer to the Unemployment Insurance Program as possibly being a subsidy in certain regions of the country. We refer to our regional development policies. These questions are on the front pages of our newspapers on a daily basis. We have a masochistic attitude about it.
I remember about two years ago when Bombardier was trying to negotiate a sale of subway cars to New York City, which it ultimately successfully negotiated. A question arose as to whether or not financing furnished by the Export Development Corporation might constitute an unfair subsidy. Canadian reporters went down to the United States. They talked to local Congressmen and said to them: "Here is the Export Development Corporation in Canada giving Bombardier a subsidy. Do you think it is fair?" What answer do you think the Congressmen in the United States gave, Mr. Speaker? Contrast that situation with what happens in the United States. Do we see articles in U.S. papers stating that this or that measure is protectionist, or that the U.S. defence industry favours American companies? Not at all. The approval of the U.S, Senate Finance Committee, which made headlines and which was the first item on the news here in Canada, attracted little attention in the United States. For the Americans we are but small potatoes. It is this imbalance between our two countries which gives me great cause for concern. I feel that
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the deck is stacked against us at the very outset because of the different sides of our two countries.
As I said earlier, the Government has failed to state its objectives in any more than a general way. I ask myself why. Is this part of its negotiating strategy? Or is it because the Government does not have any objectives? Personally, I think it is the latter. There is an absence of objectives. I listened to the last two speakers, members of the Conservative Party, who spoke in the House. In listening to them one would understand that free trade is seen by the Conservative Government as a substitute for a broad range of policies which are required to make Canada prosper. To them it is seen as the answer to all our problems, a panacea. Free trade is used by the Government as a mask to hide a series of incoherent policy decisions.
Several minutes ago my colleague from Windsor mentioned Hyundai, a Korean manufacturer setting up business in Canada. The Government gave Hyundai millions of dollars. Yet the representatives of that company said that they did not even want it. They did not even ask for a subsidy, but we were falling over ourselves trying to show that we created jobs in this particular industry. We did so regardless of the problems of over-capacity already in the industry and regardless of the fact that they were not asked to comply with the provisions of the Auto Pact. Millions of dollars were poured into an industry without any thought or concern for an over-all policy or for the over-all benefit which would accrue to Canadians.
The capital gains exemption of $500,000 in a taxpayer's lifetime is a boon for the rich. Every stockbroker, investment dealer and financial adviser in the country tells us that this measure will not achieve any substantial investment in the risky areas of our economy. The Government is willing to put money into the area but, as I said earlier, we are neglecting our human resources.
A Bill which is before Parliament today, Bill C-96, deals with post-secondary education and health, the established programs financing. In this Bill the Government is washing its hands of post-secondary education. We are cutting some $8 billion out of transfer payments which would otherwise have gone to the provinces for health and post-secondary education.

I would have liked to put the question directly to the Secretary of State. How are we going to compete with the United States if we do not have a good post-secondary education system in this country? Can we compete with the United States without world-class universities? Can we compete with the United Stated and the Japanese and the Europeans without centres of excellence in this country? What is the federal Government's role, Mr. Speaker? Why has the federal Government completely abdicated its responsibilities in this area?

Several months ago I read about three super computers which were being furnished to three different universities in the United States. I believe one was in New York State,

May 13, 1986
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another in Illinois and the third in California. The computers were being completely paid for by companies such as IBM, Kodak and Sperry. Why? The head offices of these companies are located in that country. They benefit from the research which is conducted at those universities. Their offices are located close to these universities. When do members of the Conservative Party think that companies such as IBM, Sperry and Kodak will finance research in Canadian industry or in Canadian universities in the same magnitude as they do in the United States? We have a tradition of Government involvement in building this country which is being totally ignored by the Conservative Party.
In the face of this absence of clarity, this absence of policy from Government, it was refreshing to see a statement last week put out by the Science Council of Canada in which it pointed out some of the things that Canadians should watch for as we undertake these bilateral trade negotiations. Earlier, I mentioned the absence of information regarding policies which the United States has which benefit and give an unfair advantage to its industries. The Science Council of Canada pointed out that, among other things, in the United States defence contracts make up a substantial component of regional development support, and much of the support for industry does not appear as direct budget outlay. Second, when dealing with non-tariff barriers, the U.S. market is far more protected than Canada. In 1982, the United States sectors protected overtly by non-tariff barriers covered 34 per cent of the market for American manufacturers. This shold be compared to the figure in Canada of just 10 per cent, the figure of 7 per cent in Japan and the figure of 20 per cent in West Germany. Canada is a most open economy when it comes to non-tariff barriers.
In a section of the study entitled "The U.S. Challenge", the Science Council pointed out that 55 per cent of all research and development in the United States is funded by the Government compared to 50 per cent in Canada. This is contrary to what we hear every day of the week. The bulk of this research and development is limited to defence, which of course will not be discussed during these negotiations. Defence was specifically excluded from the General Agreement on Tariffs and Trade. Defence spending had grown to 65 per cent of federally funded research and development in the United States in 1984. In 1984, some $32 billion of federal research expenditures were employed for defence-related activities.
There are more interesting facts. Within the U.S. Department of Defense budget, less than 10 per cent of contracts are publicly advertised and 40 per cent are signed with companies that have a complete monopoly on the equipment. How does one expect Canadian companies to compete in that kind of a market? Foreign companies are not even allowed to bid on some of these prime contracts. Canadian advanced technology companies are denied access to SDI briefings. The Science Council study also points out that at the state level, there are so many initiatives to promote technological innovation that in
1984, the Office of Technology Assessment was unable to provide a comprehensive inventory of these programs.
In the military sector of the aerospace industry, American companies have a number of advantages. First, they have open access to bidding on defence contracts. Second, they have greater R and D support than Canadian companies. About 70 per cent of R and D costs are paid for by defence contracts in the United States versus only 30 per cent in Canada. Third, the cost of machinery is covered by Department of Defense contracts in the United States. Fourth, in terms of information access, several U.S. government-sponsored computer information systems are accessible only to U.S. users.
How are Canadian companies to get access to this information and these contracts? There is only one real way to get access, and that is, to join the United States, to become American. I am telling you today, Mr. Speaker, that under a free trade arrangement with the United States, we will not be given access to the bulk of U.S. defence contracts. We could have the best negotiators in the world on our side, and I give all due credit to the man heading the Canadian negotiating team, Mr. Reisman, but when it comes down to the crunch, Canadians will not be given total access.
The Science Council of Canada sets out four policy principles which it believes should guide bilateral negotiations, and I would just like to summarize them briefly in conclusion. First, the Science Council believes that a free trade agreement should permit measures which would protect and favour infant industries on a carefully defined, temporary basis. Second, and this is the point to which I referred just a moment ago, all United States and Canadian Governments should allow what is referred to as national treatment to both U.S. and Canadian firms when bidding on all Government contracts, research awards and development assistance. This will not happen. Third, both parties must develop a clear understanding of the range of science, technology and industrial policy measures that each Government may take without the risk of countervailing action.
Again, referring to the comments I made earlier, we have even taken up the American jargon during the course of this debate. We refer to a level or a fair playing field, but I think that Canadians must understand that each sovereign country develops its own way of dealing with problems and concerns. Canadians must demonstrate to Americans that just because an approach is a Canadian approach does not mean that it constitutes an unfair advantage, and that any deviation from American methods and approaches is not unfair just because it is not American. They have their particular distinctive ways of arriving at solutions as do we. We should be able to continue such an independent approach.
Fourth, and again I do not see this happening, both countries should provide equal access to briefings and Government-sponsored scientific and technical information systems to enable firms in both countries to respond promptly to government procurement opportunities. Again, I find it very difficult
May 13, 1986

to see this being totally opened up in the context of such negotiations.
1 understand that most of today's debate has dealt with the softwood lumber issue. I would hope that on another day in the near future, we would deal specifically with high technology and the future of high technology and its application to our traditional industries.


James Ross Fulton: Mr. Speaker, I am sure that the Hon. Member who just spoke is aware of what precipitated today's debate. I would like to ask him a question regarding that. On May 8, the President of the United States sent a letter to Senator Pack-wood, the Chairman of the Senate Finance Committee, a committee which tied in a 10-10 vote as to fast tracking free-trade negotiations with Canada which are to begin the middle of next week. In that letter, the President said that he will press for an expedited resolution to this problem independent of the comprehensive trade negotiations and moreover that the President promised to take unilateral trade action if the bilateral lumber talks fail. We have that ongoing process involving the President, the United States administration, and its Senate Finance Committee, and Canada's largest single industry, largest single source of balance of trade, and second or third largest industry in the Province of Quebec.
I should like to ask the Hon. Member what he thinks about what is happening now. Representatives of the industry lobby in the United States have suspended temporarily their filing of a petition for a countervailing duty against Canadian softwoods until next Monday, although they were told by the Secretary of Commerce, Mr. Baldridge, that the clock is already running, to which I made reference earlier today. Rather than having to wait the full 20 days for a ruling on whether or not a countervail process will go ahead, they will only have to wait 13 calendar days from next Monday.
My question concerns the point of today's debate-whether or not Canada is steaming in the right direction. I think some enormous errors have been made by the Conservative administration on this issue, but I should like to know from the Hon. Member what he and his Party think about the proposal which will be carried forward by the Minister for International Trade (Mr. Kelleher) to Washington tomorrow. I am referring to the appointment of a Canadian envoy with very specific terms of reference on which to negotiate at very high speed on behalf of a $26 billion Canadian industry. Does the Hon. Member and his Party think that that process is likely to succeed?
Do they think it appropriate that the volume and price of Canadian softwood products going to the United States should be negotiated by the Canadian and U.S. envoys?


David Berger: Mr. Speaker, I thank the Hon. Member for his questions. With regard to the specifics, I defer to members of my Party who have a more intimate knowledge of the questions than I do. However, in general terms it is difficult for me to say whether this approach will succeed.
Supply
In the letter to Mr. Packwood from the President, the President said that he planned to take action independent of the trade negotiations. That indicated to me that we do not have a clean launch and that the President is saying that they will look after American interests immediately and quickly. It is not the only area on which Americans want quick settlement. In fact there are a number of other areas.
I see our being in a position where the big guy is getting nasty and is shoving us around and we are giving in. There is a possibility that we will give in on a number of essential points even before the negotiations have begun.
I found it rather remarkable-and I did not see anything in the press today-that the news last night included an item indicating that the Minister of Consumer and Corporate Affairs (Mr. Cote) would be tabling Canada's new policy in respect of generic drugs, whereas just two weeks ago he said that the legislation would not be introduced until the fall and that further negotiations were required with the provinces. How come the process has been speeded up all of a sudden? It seems to me that we are not seeing comprehensive negotiations. We are seeing a series of attempts to satisfy the Americans. They are pushing their weight and trying to settle items immediately in their favour. This prejudices the entire ensuing negotiations.


Kenneth Albert James: Mr. Speaker, the Hon. Member is speaking more anti-American rhetoric than I have heard for a long time. It really concerns me.
The Hon. Member said that we as a Government were putting forward all the things we were giving up. I have never heard the Government talk about giving up anything. It is the Opposition which raises all the so-called things we will be giving up in the negotiations. The Opposition's reaction has been nothing but a negative one to the whole issue. I think the Hon. Member was a little confused when he talked about what was being given up.
Also he said that we were small potatoes, yet the dissertations of Hon. Members opposite all day have indicated that the United States would countervail us to death because we were so important. As has been the case all day, we just keep hearing counter-arguments.
Also he talked about objectives. I have not heard any mention of objectives or policy from his Party. There certainly appears to be a great division in his Party on what should happen in the negotiations with the United States.
As well he talked about the absence of clarity in policy. Honest to Pete, he should look inward to the policies of his cohorts; it seems that they have policies on both sides of the line.
Also he referred to non-tariff barriers in the United States and 34 per cent of the market. However, he seemed to indicate that we should not be negotiating with the U.S. to remove those non-tariff barriers.

May 13, 1986
Supply


The Acting Speaker (Mr. Paproski):: Order, please. I do not like advising Hon. Members that if there are any meetings to be taken care of, they should be done behind the curtains, please. I am finding it very difficult to listen to the Hon. Member for Sarnia-Lambton (Mr. James) who, I believe, has finished his question. The Hon. Member for Laurier (Mr. Berger) has only 30 seconds in which to reply.


David Berger: Thank you, Mr. Speaker. I respectfully say to the Hon. Member that I do not think there is anything antiAmerican in my comments. I believe in taking a strong Canadian position. I believe in putting forward Canada's interest. I do not believe that our interests are always and inevitably totally associated with American interests, which Hon. Members of the Conservative Party seem to indicate.
Perhaps the Hon. Member should read what I said when I talked about what we have to give up. I was not saying that the Government was putting that forward. I was saying that there was an inevitable focus on that in our country and in our media because we are a much smaller country than the United States. The natural focus is on problems in Canada as opposed to those in the United States where Canadian trade with the U.S. is much less important than is our trade in our country, all proportions being respected.


David Orlikow: Mr. Speaker, there is not a Canadian who does not realize that if Canada is to prosper, if people are to find work, and if our companies are to operate and make a profit, we require increasing trade between Canada and all other countries.
If we are to improve trade between Canada and other countries, we have to understand what are our needs, what are their needs, and particularly what are their policies to protect their people, just as we want to protect and improve the lot of Canadians.
We all know that grain farmers in western Canada are in a terrible situation. Many of them will be wiped out in the next few years, not because they cannot produce grain efficiently, but because of the actions of our traditional customers in western Europe who are members of the European Economic Community. They are subsidizing the production of grain in their countries so much that not only do they not purchase grain from us, but they compete in other markets with our farmers. Also we know that the new American policy of subsidizing export sales of grain for American farmers will destroy further markets for us.
The Government is urging us to sign quickly some kind of free trade deal with the United States. Just at the very time we are talking about that and we are lecturing Canadians that we should get on with the job and make concessions so that the Americans will agree to free trade between Canada and the U.S., the Americans are imposing countervailing duties on Canadians. They are proposing a 30 per cent countervail duty on softwood. That would affect British Columbia very quickly, but it is not just British Columbia that would be affected, the Atlantic provinces would also be affected. They have a forest
industry, as does my Province of Manitoba and the Province of Saskatchewan. We do not hear about the things that the Americans do to protect their forest industry.
A few weeks ago the Americans imposed a countervail duty of 5.8 per cent on East Coast fish. The U.S. Commerce Department supported that position. It listed 55 federal and provincial programs ranging from fisheries research grants to grants for shipbuilding as constituting countervail subsidies.
I have before me a document prepared by our External Affairs Department which lists a large number of programs which the U.S. Government has established to assist its fishing industry. Let me read from this document. It says under the heading Direct Subsidies, loan guarantees for construction, reconstruction or reconditioning of fishing vessels. Then we see under Federal Tax Deferrals the fishing vessel capital construction fund for vessel acquisition. This program effectively provides an interest-free loan from the U.S. Government equal to the federal income taxes which otherwise would have to be paid. Next is Operating Cost Assistance. The Fishermen's Protective Act provides funds for fishing vessel and gear damage. Then we find Additional Measures. The Nicholson Act forbids foreign vessels from landing directly in U.S. ports, thus forcing Canadian boats to land in Canada and ship overland by truck, thereby increasing Canadian costs and making the Canadian fish less "fresh" than the U.S. product.
That is what the Americans do, Mr. Speaker, but when the Americans put a countervailing duty on Canadian fish, I did not hear the Minister for International Trade (Mr. Kelleher) saying to the Americans: "Hey, guys, you are doing the same thing as you are accusing us of doing." Not only did he not say it to the Americans, but he did not get up and tell Canadians how one-sided, how tunnel visioned, how unfair the Americans were during this so-called period of negotiations. He was silent. There was not a peep out of him. Why, Mr. Speaker? I believe he takes that attitude because he wants to sell this concept to the Canadian people and he knows that if they know the facts, they will not buy it.
The other day when my Leader, the Hon. Member for Oshawa (Mr. Broadbent), put some questions to the Government, the Secretary of State for External Affairs (Mr. Clark) answered by suggesting that my Leader and our Party were taking orders from the President of the Canadian Labour Congress, as if only labour is opposed to the free trade negotiations, as if only labour is worried that somehow in these negotiations Canadians would be hurt. Let me quote from a recent issue of the Winnipeg Free Press. I hope the Minister for International Trade will listen.
I want to put on the record the views, not of labour leaders in Manitoba, but of three farm leaders in Manitoba. These are not my concerns but their concerns. On April 24, 1986, in part the article quotes John Kuhl, Chairman of the Manitoba Vegetable Producers Marketing Board, as follows:
May 13, 1986

Manitoba vegetable growers cannot compete on equal terms with their American counterparts because of higher taxes, higher fuel prices and shorter growing seasons-
Next is Waldie Klassen, Chairman of the Manitoba Chicken Broiler Producers Marketing Board, who said:
As far as our industry is concerned it would have some far-reaching and devastating effects.
Most of our industry could disappear.
He was talking about free trade in agriculture. Then we have Jack Penner, President of the Keystone Agricultural Producers, an organization which represents all the producing groups of agriculture in Manitoba, who said he is worried:
-that agriculture has been combined with the food and beverage sector for negotiating purposes, which will make it harder to protect agricultural interests.
Our concern is that agriculture not be used to gain other advantages.
Who is he complaining about, Mr. Speaker? Who ignored agriculture? Who put somebody from the food industry as chairman of the advisory committee? It was the Minister for International Trade. Then the Government has the gall, the colossal nerve, when we are asking very legitimate questions about what is going to happen if we go ahead with free trade negotiations without protecting Canadians and asking who will be hurt, to answer with scare tactics and give us a smear campaign that we are speaking only for labour. Nothing could be further from the truth, Mr. Speaker, and the Minister for International Trade and the Secretary of State for External Affairs know that this is a fact. They know that more and more people and more and more groups are expressing opposition or asking some very important questions which need to be answered.
We are for enhanced trade. That is why we support it and have always supported the Auto Pact. If we are going to look at each sector of our economy to try to work arrangements with the USA, or Japan, the EEC or anybody else that will bring advantages to us and them, we are all for it. What we are opposed to is this blind rush to do things without looking at the real situation.
The Government knows because the departmental officials in External Affairs have done their job. They have given reports to the Government, about which the Government does not talk, which the Government would prefer to hide, which tell in detail the things the Americans do to protect their people, their jobs and their industries. It is this whole "buy American" policy. Why doesn't the Minister for Internationa! Trade and that great negotiator, Mr. Simon Reisman, come clean with Canadians? Why don't they tell Canadians: "Look, we are going to try to negotiate better trading arrangements with the U.S., but you have to know not only that there are 600 Bills before Congress calling for more protection, but the U.S. has since 1933 had policies to protect the United States market for Americans"? Even if we get a free trade agreement, Mr. Speaker, the ability of American states to hinder trade not only between Canada and the USA but between American states to protect their markets will still be there.
Adjournment Debate
If we are going to have a serious, honest discussion on free trade, let the Government be honest. Let the Government tell Canadians what is involved. Let the Government tell Canadians about the benefits they will get but also about the harm that will be done to individuals and to many groups unless the Government of Canada is vigilant, tough and negotiates as an equal, not as a supplicant to the Americans. We cannot be telling the Americans that we will do anything as long as they give us a few bones to chew on.


The Acting Speaker (Mr. Paproski):: It being six o'clock, it is my duty to advise the House that, pursuant to Standing Order 82(12), the proceedings on the motion have expired.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the House under Standing Order 66 deemed to have been moved.

Mr. Dan Heap (Spadina):: Mr. Speaker, in December, 1985, the Minister of Labour (Mr. McKnight), who is responsible for CMHC, announced in the House of Commons a new housing program. A National Direction for Housing Solutions outlined five major program areas, but provided no details. It is now May 13 and not one of these programs is in place. Not one bit of federal money has gone toward the building of one housing unit so desperately needed in Canada.
On May 5 I asked the Minister in this House where the new housing programs are which he promised. Five months into 1986 he answered:
Mr. Speaker, the answer is apparent. Due to the change in delivery and cost sharing, effective in 1986, operating agreements with the provincial housing corporations have to be negotiated.
With all due respect, that answer is not apparent. What kind of Minister plans a year's housing programs which, almost half way through the year, are not in place because he still has to get agreement on the very housing programs that he wants to use?
On May 5 I also asked in this House whether, acting on precedent, the Minister could have either extended 1985 programs or provided interim funding for projects which are ready to go. When it became apparent that these agreements were not going to be negotiated until early in 1986, why the Minister did not bring forward a contingency plan for this year's housing. Why did he not extend the Section 56.1 program or the RRAP program until the negotiations were finalized?

May 13, 1986
Adjournment Debate
The consequences of this delay are almost criminal. In Toronto, city delivery agents have been anxiously awaiting the announcements and the budgets for the RRAP programs since December. On the homeowner and disabled program, they were told funding would come through early in April. It did not. There are real emergencies which are not being dealt with. In Toronto the municipal delivery agents, such as the Nonprofit Housing Corporation, are on the verge of sending applicants to apply under the provincial renovations programs in Ontario, which are not nearly as good as the federal program for homeowners, because they have no idea when the federal RRAP budget is coming through. Month after month it was promised that the money is coming, the application forms are coming, and the criteria are coming, but only rumours come.
An example of the tragic consequences of the delay is a disabled man in Toronto who has requested RRAP assistance in order to get his motorized wheelchair out of his home. Recently he has had to go to the hospital three days a week and, because he has not had the RRAP assistance to make his home accessible, he must pay out of his meagre pension to take a taxi each time.
The consequences do not stop there. The entire building season in northern Manitoba may well have been lost because building materials would have had to be transported in on the winter roads. They will now have to wait until next year. Those co-ops and non-profit groups which may be so lucky as to one day get start-up funds will, in all likelihood, be building next fall and winter and paying premium rates for heated concrete and any number of expensive alterations to building procedures to cope with the cold weather. The money spent on this will obviously be taken out of the other aspects of the design which might have added to the comfort and quality of the housing. It may even reduce the number of units built. This money is to pay for the Minister's delay.
I suggest that the Minister has been almost criminally negligent. Homeless people died in Toronto. An evicted tenant committed suicide in Vancouver. The answer to the pleas for someone to pay attention to the needs of Canadians desperate for housing was met time and time again in the House of Commons with the answer that the negotiations were ongoing with the provinces and a bigger and better housing program for needy Canadians was at hand, if they live that long.
I also suggest that the Minister and CMHC officials continue to mislead Members of Parliament and the public about these programs, however unintentionally. Last week my office received a notice from the Minister announcing that he had authorized the release of the 1986 RRAP budget. That is false. As of today no delivery agents have been told this. Even in his announcement he states that "CMHC will be in touch with local municipalities and delivery agents shortly to inform them of their homeowner RRAP allocations". "Shortly" is not "now". That program has not started. He states further that "the rental RRAP and the RRAP for the disabled will be delivered once the appropriate regulatory changes are
obtained. I expect these will be finalized shortly". "Shortly", again, is not "now". Since this is the same thing as he has been saying since December, can we expect to wait for another five months?


Mr. Bill Domm (Parliamentary Secretary to Minister of Consumer and Corporate Affairs and Canada Post):: Mr. Speaker, the Minister and his officials are now completing what has been a most extensive and productive consultation and negotiation process on new housing directions which will focus on assisting those Canadians most in need. This lengthy process has meant meetings with the provinces and many representatives of housing interest groups, non-profit associations, native organizations and the real estate and building industry. As well, over 300 written briefs have been reviewed.
Over the past few months, planning and negotiations with the provinces have resulted in the implementation of social housing programs that both maintain federal objectives and meet the identified needs of the various provinces and territories. Most important, the provincial cost-sharing arrangements, along with targeting to households in core need, will more than double the number of housing units produced this year for those who must pay more than 30 per cent of their income for suitable, adequate accommodation.
At times, the negotiations have been complex, but the Minister is pleased to advise that eight global agreements have already been signed outlining the partnership arrangements between the federal and provincial Governments. In addition, detailed operating agreements have been signed with two of the provinces, and the final agreements should all be completed in the next few weeks. The Minister has authorized the release of the budgets of the Residential Rehabilitation Assistance Program for home owners and native people on-reserve to repair their houses. The remaining RRAP budgets will be allocated very shortly. The Minister would like this House to know as well that the Co-operative Housing Program is well under way. Sponsoring groups are submitting projects, and Canada Mortgage and Housing Corporation officials are in the process of selecting those that will proceed in 1986. Proposal development funding has been made available to groups to assist them.
All in all, implementation of the programs is progressing well and we expect to complete all the arrangements within the next few weeks.


CANADA POST CORPORATION-PRIVATE ENTERPRISE DOOR-TO-DOOR DELIVERY
Mrs. Pauline Browes (Scarborough Centre):: Mr. Speaker, I rise this evening to pursue a question I put to the Parliamentary Secretary to the Minister responsible for Canada Post (Mr. Domm) on February 25 concerning the delivery of mail. I asked whether or not Canada Post would be encouraged to contract out more of its services in order to reduce the Corporation's costs and increase its efficiency. I also pointed
May 13, 1986

out that many Canadians who do not receive door-to-door delivery are hiring enterprising young people to pick up their mail from community boxes and deliver it to their homes on a daily basis.
Just last weekend I noticed an article in the Ottawa Citizen which profiled a local entrepreneur who has begun this kind of service for a monthly fee of less than $12. I believe this is an excellent initiative, and I certainly hope Canada Post officials will encourage more enthusiastic business people to undertake the same service in other communities. Had the Speaker afforded me the opportunity on February 25 to put a supplementary question, it would have concerned whether the extra amount paid by Canadians to obtain adequate door-to-door mail delivery service could be tax deductible. I look forward to speaking about that at another time.
Canadians are well aware of the serious problems facing Canada Post. Despite a five-year deficit reduction program which was to have eliminated Government subsidies by this year, Canada Post continues to mount severe losses. In 1985 this loss amounted to well over $300 million. Projections indicate that further deficits will continue. The Marchment report highlighted a number of other problems such as service, delivery, labour relations, financing and management.
In the recent federal Budget, the Minister of Finance (Mr. Wilson) stated that the Government is determined to come to grips with the financial and operating problems of Canada Post. The Government has also indicated that the corporation will be required to develop a new operating plan to improve productivity in order to reduce its operating deficit to zero by the end of fiscal year 1987-88.
I would like to ask the Parliamentary Secretary if that plan is now in place and if it includes greater contracting out of services. In addition, I trust that entrepreneurs will be allowed and encouraged to provide delivery service door-to-door from community boxes. I understand that this kind of service may involve a violation of the "exclusive right" privilege Canada Post enjoys to collect and deliver mail. If so, I would suggest that it is time to redefine that "exclusive right" privilege in order to increase the competition of mail delivery.
If this country is to enjoy effective and efficient mail delivery, we must meet the challenge of improving Canada Post. It is time to take immediate action to reduce costs by
Adjournment Debate
contracting out services and introducing greater private sector opportunities in mail delivery.


William Henry (Bill) Domm: Mr. Speaker, Canada Post has the mandate to provide Canadians with convenient and efficient service at a reasonable cost. Over the last three years, the corporation has extended door-to-door mail delivery to over 340,000 addresses in Canada.
Last June, the corporation announced plans to upgrade delivery service to more than 200,000 additional addresses during the current fiscal year by readjusting letter carrier routes or by providing mail delivery through group mailboxes or community mailboxes.
These initiatives clearly demonstrate the corporation's concern in providing convenient service to all its customers and achieving financial self-sufficiency as requested by its shareholder, the Government of Canada.
These alternate means of mail delivery-group mailboxes and community mailboxes-are not exclusive to Canada. While these alternate modes of delivery offer convenience to customers and contribute substantially to reduce the deficit of Canada Post, it is understandable that some private citizens might want to contract the delivery of their mail from the postal station or group mailbox directly to their home.
Although Canada Post does not support such a service, principally on the grounds of security of the mail, it cannot refuse to hand over the mail to a third party when authorization that can be verified has been given by the customer.
It should, however, be clear that these particular arrangements are made solely between these individual contractors and their clients, and that Canada Post is not part of the contract. The corporation's responsibility for ensuring the security of the mail extends only to the point of delivery, should it be a local postal station, a lock box, a group mailbox or a community mailbox.


The Acting Speaker (Mr. Paproski):: The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 6:14 p.m.
[Stage Direction]

Wednesday, May 14, 1986