1987-01-21

[Stage Direction]
These ladies urge the media to denounce all unwarranted acts of brutality in sports, and to promote clean play, pride and team spirit. I share their concern and I am sure the Minister of State for Fitness and Amateur Sport (Mr. Jelinek) is earnestly trying to come to grips with this problem in his national campaign. The program stresses education and seeks to promote non-violence in sports.
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, the Minister of Employment and Immigration has released the guidelines he issued to public servants to reimburse the 35,000 Canadian early retirees whose benefits were unfairly cut off as a result of unannounced changes made by Cabinet with respect to these people.
Unfortunately, Mr. Speaker, close scrutiny of the guidelines issued by the Minister of Employment and Immigration and his officials reveals that most people will not be eligible for reimbursement on the basis of information provided by Hon. Members because the Minister does not consider that the information given by Hon. Members, employers and labour unions is acceptable for reimbursement purposes.
Mr. Speaker, according to the Minister's guidelines, which are based on the legislation as it was drafted at the time, a person who lost his job as a result of plant closure is not eligible for reimbursement.
Mr. Speaker, I urge all Conservative Members of the House to bring pressure to bear on the Minister so that he will issue less stringent guidelines and enable the 35,000 early retirees to seek justice and apply for the unemployment insurance benefits to which they are entitled.


VIOLENCE IN HOCKEY
Hon. Bob Layton (Lachine):: Mr. Speaker, the recent bagarre-which is the French word for "brawl"-at the International Junior Hockey Championships in Czechoslovakia has focused attention on violence as an element of our national sport.

Recently the Pointe-Claire Cercle des fermieres in my riding of Lachine sent me a petition against violence in hockey.

As a Canadian, I am proud of my Government's commitment to fairness, sportsmanship, and team spirit. I know that all Canadians can look at our country's international reputation in sports, as in other areas, with their heads held high.
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HOUSING
Mr. Neil Young (Beaches):: Mr. Speaker, it is estimated that in Canada there are up to 40,000 people who have no place to live. In Metro Toronto alone there are between 5,000 and
10,000	people who depend on a growing number of hostels and emergency shelters for housing. Others, if they are lucky, may find a church basement, an abandoned building, or an underground garage to sleep in. Others not so fortunate do without and sleep in the open.
The United Nations has proclaimed 1987 to be the International Year of Shelter for the Homeless. The Canadian Council on Social Development has declared January 22, which is tomorrow, as World Shelter Day in Canada.
Canada's housing shortage is of crisis proportions and demands that the Government bring forward programs to alleviate it immediately. This is not because the United Nations or other bodies have called for it to do so, but because the need is obviously there and because it is the right thing to do.
The construction of housing would be one of the major employment-creation programs that the Government could undertake if it seriously believed in its election slogan of "jobs, jobs, jobs". It would not only provide employment programs, it

January 21, 1987
would provide affordable and decent housing for thousands of people who need it.


THE CONSTITUTION
Mrs. Suzanne Duplessis (Louis-Hebert):: Mr. Speaker, the federal Minister responsible for constitutional matters and his Quebec counterpart met last week in Ottawa.
On that occasion it was decided that officials assigned to the dossier would meet in February. As a Member from Quebec, I am delighted with a decision that proves once again that this Government is prepared to conduct serious negotiations with the various parties concerned so that Quebec will become one of the signatories of the constitutional agreement. The House will recall that Quebec, both under the Parti quebecois and the Liberals, has refused to sign the 1982 constitutional agreement because it fails to allow for the specific aspirations of Quebecers.
I earnestly hope that the Ministers in question will be meeting very shortly to further expedite the favourable settlement of a matter that is extremely important to all Quebecers and all Canadians.


NATIONAL DEFENCE
Ms. Sheila Copps (Hamilton East):: Mr. Speaker, the Prime Minister (Mr. Mulroney) says that the Opposition in the Parliament of Canada has no right to obtain details regarding the Bissonnette-Bazin affair. If he will not listen to the Opposition, perhaps he will listen to Calgary Mayor Ralph Klein and a Calgary city MP who said yesterday, as reported in the Calgary Herald, that they believe political strings may have been pulled in a defence contractor's decision to locate in Quebec.
Klein and Calgary East MP (Mr. Kindy) suspect government intervention may have been involved in the decision to locate a new plant on 100 acres of vacant land near Saint-Jean.
On Monday Kindy said he was aware that the deal was almost struck for Oerlikon to locate in Calgary "but there was some kind of intervention".
Art Smith, past co-chairman of the Calgary Economic Development Authority, said Oerlikon officials told him they got a "better deal on land costs and servicing" from Saint-Jean. "The one thing that Calgary could not offer was a
guarantee that it would get the $600 million defence contract if it located here", said the Mayor of Calgary.
The people of Canada want explanations, not only on the alleged criminal aspects of this particular affair but on what role the Government of Canada played in the allegations that have now been suggested by the Conservative Member of Parliament for Calgary East.


SCIENCE AND TECHNOLOGY
Mr. Bill Tupper (Nepean-Carleton):: Mr. Speaker, the Minister of State for Science and Technology (Mr. Oberle) and the Minister of State for Forestry and Mines (Mr. Merrithew) together with NSERC have announced a five-year $25 million research project to investigate, using the latest in high technology equipment, the earth's upper crust. This project, known as Lithoprobe, was five years in the planning and will require extensive field experiments in four regions of the country. Some of Canada's best young scientists in our universities, government, and industry will be involved in one of the largest such projects ever undertaken in Canada. The four regions of experiment are the southern Cordillera in B.C., the Abitibi-Grenville greenstone belt in Quebec and Ontario, the Kapuskasing region in Ontario, and Newfoundland.
The project will concentrate on structural and earth forming processes, but the findings will be of long-term value in leading the way to hidden mineral and oil deposits in Canada, thus ensuring our economic future.


INCOME TAX
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, every day hundreds of thousands of Canadians buy lottery tickets with the hope of hitting a tax-free jackpot.
Yesterday Revenue Canada released a report which shows that you do not have to win a lottery to beat the tax man, all you have to do is be rich enough to afford a good tax lawyer or tax accountant. The recent report cites figures that show that in the latest taxation year for which figures are available there were 1,830 Canadians who earned over $100,000 per year and who paid not one cent in income tax. In other words, they hit the jackpot. This Government allowed them to make the windfall because it is not interested in closing loopholes like
January 21, 1987

the $500,000 capital gains allowance which allows such tax boondoggles to occur.
While the average Canadian in the next few weeks will be preparing to go through the annual chore of filling out income tax forms, he or she will know that there are people who have sold their condominium in Florida, or their interest in Texas oil wells, who will not be paying any income tax this year, courtesy of the Minister of Finance (Mr. Wilson). The message is clear. If you have the money, forget about the 6-49 lottery because you have a sure thing in the Income Tax Act.


ABORTION
Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, I am concerned about a recent news item which distorted the facts concerning Canada's abortion law. In reporting the case of an Alberta teenager seeking an abortion over her parents' objections, the national media stated erroneously or otherwise that Canadian law allows abortion only up to 20 weeks of gestation. This was reported on CBC radio, and in local and national publications.
As all Members of the House know, Section 251 of the Criminal Code, our unfortunate abortion law, makes no reference to any legal time limit on so-called therapeutic abortions. What individual hospitals may choose to prohibit is separate from what the law allows. If a doctor can be found who is willing to perform the procedure, an abortion could be performed at nine months.
I call upon the national media to correct this appalling fact, and to stop spreading misinformation aimed at making the killing of unborn children more socially acceptable.


MUNICIPALITIES
Mr. George Henderson (Egmont):: Mr. Speaker, the Government's plunge in public opinion is not an accident. Its record is littered with broken promises and contradictions. A recent example speaks volumes. The Canadian Federation of Municipalities has proposed a five-year plan to create 60,000 jobs a year by rebuilding infrastructure, including sewers. The Prince Edward Island Federation of Municipalities supports this. However, the Minister of Finance (Mr. Wilson) rejected the request for a one-third federal participation, because it is not a federal responsibility.
On December 4, 1986, the Minister of the Environment (Mr. McMillan) called St. John's and Halifax harbours open
sewers, and declared that the lack of treatment of municipal waste in eastern Canada's urban centres was nothing less than a scandal. Is job creation a federal Government concern? Yes? No? Maybe? We have had enough rhetoric; let's have some action.


WOODWORKERS' SUPPORT FOR CANADA-UNITED STATES SOFTWOOD LUMBER SETTLEMENT
Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, it is because Canadians put economics above politics that they support the negotiated lumber agreement with the United States. Nine provincial Premiers support this agreement. Even the NDP of British Columbia support the settlement. The International Woodworkers of America, the union representing the workers, who are the people most affected, also supports the settlement. It is high time the opposition Parties put their rhetoric aside and supported the woodworkers in our country.
Last night I met with the representatives of the Atlantic Canadian lumber producers. They stated: "The negotiated settlement was the best possible solution under difficult circumstances". That is exactly what the Government has been saying. The Prime Minister (Mr. Mulroney), and the Minister responsible, must be congratulated for their leadership. I suggest the Liberal and NDP Parties reassess the support for their clearly partisan positions, and focus on people not politics.


NATIONAL DEFENCE
Mr. Rod Murphy (Churchill):: Mr. Speaker, today the federal Conservative Government has attempted to correct the damage which was done by the awarding of the CF-18 contract in November of last year. The people of Manitoba cannot be so easily fooled.
The awarding, without tenders being called, of the CF-5 repair contract will keep some jobs in Manitoba, but it will not help the continued growth and good health of an aeronautical industry in western Canada. Manitoba and the West continue to be treated in a second rate manner by the federal Government.
As the CF-18 fiasco and the Oerlikon affair have pointed out, the federal Government is not taking the best interests of

January 21, 1987
Oral Questions
Canadians into account in the awarding of major government contracts.
Some Manitobans, like other Canadians, are pleased with announcements affecting their province, but the federal Government is not acting in the interests of all Canadians who want to see an open, upfront system of awarding government contracts through tendering.



Mr. Lee Clark (Brandon-Souris):: Mr. Speaker, although the Hon. Member for Churchill (Mr. Murphy) is disappointed with today's decision, I think the awarding of the CF-5 maintenance contract to Bristol is certainly good news.
In fact it turns out that there will be more jobs in Winnipeg because of the awarding of the contract than there would have been if Bristol Aerospace had received the CF-18 contract.
The CF-5 contract may be worth less money than the CF-18 contract, but the Winnipeg company will benefit from nearly all the contract, whereas the previous CF-18 contract was to be split among five companies located in five different cities.
In addition, as a result of today's announcement Bristol of Winnipeg will be able to bid for contracts from our NATO allies and perhaps have the opportunity to service some 2,600 F-5s, which it would not have been able to do under the other contract.
As a result, today's announcement is good news for Bristol, for Winnipeg, and for all Canadians.


WAR CRIMINALS
Hon. Bob Kaplan (York Centre):: Mr. Speaker, I rise to express my uneasiness about the Government's silence on the report of the Deschenes Commission dealing with war criminals present in Canada.
When that Commission was launched, the then Minister of Justice said that the Government was concerned about harbouring individuals guilty of committing the horrible Nazi war crimes of World War II, and he added: "These individuals must be brought to justice".
No doubt the report is complicated and government consultations have to go on. However, the Government has had the report for over a month now. I think a clear statement is in order that the Government's intention, expressed in that statement by the present Minister of Transport (Mr. Crosbie),
should be reiterated by the Government, and that its conclusions on the Deschenes Commission Report should be made public soon.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, in the absence of the Prime Minister my question is directed to the Deputy Prime Minister. On Monday here in the House, when I put my first question to the Prime Minister, I asked him when he was informed of the irregularities that apparently were involved in the unusual land transaction at Saint-Jean. He said before the House that the answer to the question was contained in his press release and the statement he made before reporters. In other words, he was informed of the situation for the first time only on January 13.
Could the Deputy Prime Minister ask the Prime Minister whether he still maintains this as his answer?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, the Right Hon. Prime Minister indicated in his press release that he was informed of the facts, as related to him by his principal secretary, on Wednesday, January 14, 1987.


OERLIKON LETTER TO LAW COMPANY-POSSIBLE KNOWLEDGE POSSESSED BY JEAN BAZIN
John Napier Turner: Mr. Speaker, the lawyers for Oerlikon, the firm of Byers Casgrain in Montreal, in which Jean Bazin is a senior partner, were advised on August 12, 1986, about irregularities affecting the purchase of land. We now know from the Canada Corporations Act files that Maitre Jean Bazin became a director of the Oerlikon firm as long ago as April 29, 1986. We also know that he is a close personal and political friend of the Prime Minister. Would the Deputy Prime Minister confirm with the Prime Minister whether the Prime Minister maintains his position that Jean Bazin did not learn of the transaction until just recently or, if he knew of the transaction, he only informed the Prime Minister on January 13 or January 14?


Donald Frank Mazankowski: Mr. Speaker, as the Prime Minister has stated before both outside the House and inside the House, his principal secretary was informed of certain facts relating to property transactions in the Saint-Jean-Sur-Richelieu area which were linked to the Oerlikon plant and on

Wednesday, January 14, those facts were made known to the Right Hon. Prime Minister. It was on that basis that the actions taken on the weekend were, in fact, taken.


John Napier Turner: Mr. Speaker, those answers do not directly respond to the question. Indeed, we are left with a situation which, I believe, is severely testing the faith of this House.


An Hon. Member:: Speak for yourself.


REQUEST FOR JUDICIAL INQUIRY
John Napier Turner: Mr. Speaker, the Deputy Prime Minister knows that the Prime Minister is leaving the country on official business in a few days. He also knows that he, as Deputy Prime Minister, will find himself in what I am afraid will be the embarrassing position of defending the Government's case along the lines that proved very difficult for his immediate predecessor in the role of Deputy Prime Minister.
Would the Deputy Prime Minister prevail upon the Prime Minister before he leaves the country to order an immediate, full, open, public, and even a judicial inquiry, so that the faith of the Canadian people can be restored in the political process and in the political operations of the Government?


Donald Frank Mazankowski: Mr. Speaker, the Prime Minister has ordered a complete RCMP investigation into this affair.


Mr. Broadbent:: It is not the same thing.


Donald Frank Mazankowski: I am surprised the hon. gentleman across would want to undo, interfere, impair or, in fact, prejudice the work of the RCMP-


Mr. Johnston:: How would that happen?


Donald Frank Mazankowski: -in getting to the bottom of this issue. I think the Prime Minister said, as he indicated in his answer-


An Hon. Member:: Velcro II.


Donald Frank Mazankowski: -to the right hon. gentleman yesterday, it may very well be in the future, depending upon evidence and information that may come to pass, that further action may be necessary. I think the Prime Minister clearly left that door open.


FORMER MINISTER OF STATE'S (TRANSPORT) BLIND TRUST-CONFLICT OF INTEREST GUIDELINES
Mr. Jacques Guilbault (Saint-Jacques):: My question is for the Deputy Prime Minister, Mr. Speaker. The Canadian Press has alleged that Mr. Normand Ouellette, President of the Conservative Party Riding Association in Saint-Jean, the business associate and election campaign manager of the former Minister of State for Transport, is the manager of the latter's blind trust. Can the Deputy Prime Minister confirm
Oral Questions
these facts and tell us whether this kind of situation is a breach of conflict of interest guidelines?


Donald Frank Mazankowski: Mr. Speaker, I am not quite sure I followed the Hon. Member's question. He referred Mr. Ouellette as the election campaign manager and being the administrator of this matter. Could he elaborate on that?


Mr. Axworthy:: The blind trust.


ROLE OF NORMAND OUELLETTE-MANAGEMENT OF EXMINISTER'S BLIND TRUST
Jacques Guilbault: I will repeat my first question, Mr. Speaker. I will say it in English. Canadian Press reported that Normand Ouellette, President of the P.C. Riding Association in Saint-Jean, also a close business associate of the ex-Minister of State for Transport, his campaign manager, would be the manager of the ex-Minister's blind trust. I would like the Deputy Prime Minister to confirm this and to tell us if, in his opinion, this will break the conflict of interest guidelines?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member refers to Mr. Ouellette as being the manager of the former Minister of State for Transport's blind trust. I cannot confirm that. There have been suggestions that he may have been, or is, a member of the trust, but those are facts that have to be ascertained.


Mr. Speaker:: Hon. Members are aware of the interpretation problem. Therefore the Hon. Member for Saint-Jacques (Mr. Guilbault) may repeat his question.


OPPORTUNITY FOR PRIME MINISTER TO DEFER VISIT TO AFRICA
Jacques Guilbault: Another question for the Deputy Prime Minister, Mr. Speaker. Prime Minister Jacques Chirac of France has cancelled his trip to Canada because of internal problems in his country.


Mr. Nystrom:: Quite so!


Jacques Guilbault: Would the Deputy Prime Minister not agree that, given the crisis faced by the Government, the Prime Minister might give serious consideration to postponing his trip to Africa, if only to restore the confidence of Canadians in his Government?


Donald Frank Mazankowski: Mr. Speaker, if there is any crisis in this country, it is in the mind of the Hon. Member.
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January 21, 1987
Oral Questions
The fact of the matter is that the Prime Minister acted with dispatch, in a decisive manner and in the public interest.


APPLICATION OF CONFLICT OF INTEREST GUIDELINES
John Edward Broadbent: Mr. Speaker, my question is for the Deputy Prime Minister who has responsibility for administration of the conflict of interest guidelines as they pertain to Ministers. I learned this morning that, before he met with the former junior Minister of Transport, the Prime Minister's Office was in touch with the Registrar General's office and obtained information about the former Minister's blind trust. Will the Deputy Prime Minister now confirm that as a result of what he learned, not about a law being broken but about a violation of a conflict of interest guideline, the Prime Minister requested Mr. Ouellette's resignation?


Some Hon. Members:: Ouellette?


John Edward Broadbent: Bissonnette.


Donald Frank Mazankowski: Mr. Speaker, that is true. The principal secretary did contact the ADRG and there was, in the examination, a view that there could have been a potential conflict of interest. That is clearly one of the conditions that were taken into account.


REQUEST FOR PUBLIC INQUIRY
John Edward Broadbent: Mr. Speaker, for the first time the Government has finally acknowledged that there is something other than the framework of the law that is involved regarding Ministers' responsibilities. Considering that the Deputy Prime Minister has made this acknowledgement for the first time, will he now do the proper thing before the Prime Minister leaves the country by having a full public inquiry into this business?


Donald Frank Mazankowski: Mr. Speaker, the Hon. Leader of the NDP seems to get rather excited and impatient. The fact of the matter is that there has been a full and complete RCMP investigation into this matter and in no way would it be desirable or, in my opinion, appropriate to engage at this particular time in any other kind of a parallel inquiry that may prejudice, interfere with or impede the process that is going on right now.


CONFLICTS OF INTEREST-GOVERNMENT POSITION
John Edward Broadbent: Mr. Speaker, 1 might point out to the Minister that it is up to the Government, not the RCMP, to look into questions of conflict of interest. Such is the case. Since the Prime Minister's Office has examined Mr. Bissonnette's blind trust, I should like to ask the Deputy Prime Minister whether he can confirm that, in the Prime
Minister's view, the ex-Minister is involved in a conflict of interest.


Donald Frank Mazankowski: Mr. Speaker, I will repeat the answer because it was essentially the same question. While I appreciate the suggestions from the Hon. Leader of the New Democratic Party and while I am sure he is presenting those suggestions in good faith, I would have to wonder why he would want to engage in any kind of a side study, or parallel study, or inquiry that could impair the work of the RCMP which must go on and which is of urgent necessity right now.


PRESENCE IN GALLERY OF MINISTER OF ENVIRONMENT OF NOVA SCOTIA
Mr. Speaker:: Order, please. I want to draw the attention of the House of Commons to the presence in our gallery of the Hon. Guy Leblanc, the Minister of Environment of Nova Scotia.


PRESENCE IN GALLERY OF NEWFOUNDLAND MINISTER OF THE ENVIRONMENT
Mr. Speaker:: May I also draw to the attention of Members the presence in our gallery of the Hon. John Butts, Minister of the Environment for Newfoundland.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF MAYOR OF VANCOUVER
Mr. Speaker:: Hon. Members will excuse the Speaker for taking special pleasure in bringing to their attention the presence in our gallery of Gordon Campbell, Mayor of the City of Vancouver.


Some Hon. Members:: Hear, hear!


THE ADMINISTRATION
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is directed to the Deputy Prime Minister concerning the conduct of the Minister without Portfolio, the Hon. Member for Joliette. We have now learned that security clearance procedures were ignored for at least three members
January 21, 1987

of the Minister's staff, two of whom have been fired. In view of the fact that the Minister has shown reckless disregard for security in his Ministry, for which he must assume full responsibility, will the Government order an independent inquiry to investigate all the facts surrounding this fundamental breach of security, and pending its conclusion will the Minister be suspended?


Donald Frank Mazankowski: Mr. Speaker, the other day I responded to a similar question which contained a series of allegations directed against the present Solicitor General and which were corrected yesterday. Let me simply repeat the answer I gave the Hon. Member on January 19. At that time I indicated there was indeed some breakdown in following strict security procedures. That has been investigated. 1 took the opportunity to assure the House that Ministers' staffs who have not been security cleared and who are handling sensitive information will certainly be subject to that procedure, and for those who have not been able to clear security appropriate action will be taken.


John V. Nunziata: Mr. Speaker, there was no breakdown. There was a gross dereliction of duty for which the Minister must be held fully accountable. This is another example of how rotten and corrupt the Government is.


Some Hon. Members:: Oh, oh!


DISMISSAL OF MR. MAJEAU
John V. Nunziata: Mr. Speaker, my supplementary is directed to the Solicitor General. Yesterday in the House he indicated that Mr. Majeau was fired as a result of a two-month RCMP investigation. Will he not admit today that Mr. Majeau was fired because Maclean's magazine had called the Minister's office to make inquiries?


Hon. James Kelleher (Solicitor General of Canada):: Mr. Speaker, as I advised the House yesterday, I asked the RCMP to investigate a letter I had received with respect to an unnamed individual in an unnamed Minister's office. I turned that letter over to the RCMP on November 7, within 48 hours of its receipt by me. On January 8 the RCMP advised me of the results of their investigation. I immediately advised the proper officials of that investigation and all I can say is that within hours a firing resulted.


THE ADMINISTRATION
Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, the Deputy Prime Minister has confirmed that the allegations surrounding the former Minister of State for Transport went far beyond merely possible criminal wrongdoing.
Oral Questions


Some Hon. Members:: Oh, oh!


Svend Johannes Robinson: My question is directed to the Solicitor General who is responsible for the RCMP. Will he confirm that the RCMP inquiry cannot touch upon questions of conflict of interest and therefore explain exactly what the scope of that inquiry is, to whom the RCMP will report, and confirm that in the absence of any charges flowing from the report it will never see the light of day?


James Francis Kelleher: Mr. Speaker, as the Prime Minister has already advised the House, the RCMP were asked to make a complete investigation. That is what they are doing and I am awaiting the results of that investigation.


QUERY CONCERNING POSSIBLE CONFLICT OF INTEREST
Svend Johannes Robinson: Mr. Speaker, the Minister is responsible for the RCMP and he does not seem to understand their role. Will he not agree that the RCMP have no jurisdiction whatsoever to investigate alleged conflict of interest on the part of federal cabinet Ministers? How on earth can the Minister stand in his place and say there is going to be a full inquiry when one of the central issues, conflict of interest, cannot even be investigated by the RCMP?


James Francis Kelleher: Mr. Speaker, I can only repeat that the RCMP have been asked to do a complete investigation. That is being done. As the facts are made known to me by them, any and all appropriate action will be taken.


NATIONAL DEFENCE
Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, my question is directed to the Deputy Prime Minister. Does he believe that the public's faith in the integrity of the bidding process was maintained when three high-level officials of the evaluation team which recommended that Oerlikon receive the defence contract are now working for Oerlikon or its consulting firm? If the Government has nothing to fear, why does it not launch a full-scale judicial inquiry into this whole matter?


Hon. Paul Dick (Associate Minister of National Defence):: Mr. Speaker, it should be pointed out in dealing with this matter that there are two separate and distinct contracts. One is between the Government of Canada and Oerlikon and one is between Oerlikon and some commercial interests whereby it bought some land in Quebec. There is no doubt that the one between the Government of Canada and Oerlikon is clean and above-board and was let according to normal tendering procedures. The other problem is being investigated by the RCMP.

January 21, 1987
Oral Questions


EVALUATION TEAM MEMBERS-EMPLOYMENT WITH OERLIKON
Douglas Cockburn Frith: Mr. Speaker, will the Minister confirm that three former officials of the Department of National Defence who were on the evaluation team which recommended Oerlikon receive the contract are now presently working for Oerlikon or its consulting firm?


Paul Wyatt Dick: Mr. Speaker, none of the people who were with the Department of National Defence and are now working with Oerlikon were in a sole decision-making position when they were with the Department.


Some Hon. Members:: Oh, oh!


Paul Wyatt Dick: I am not sure if the Opposition is really interested or whether they just want to laugh. Every one of these people went through the conflict of interest guideline rules to seek their release in accordance with the laws and regulations.


THE ADMINISTRATION
Nelson Andrew Riis: Mr. Speaker, my question is directed to the Deputy Prime Minister. He will be aware that part of his responsibility is to ensure that conflict of interest guidelines for Ministers are lived up to. Since he has been aware of this matter for a week why has he not looked into this situation of abuse of conflict of interest and-


Mr. Clark (Yellowhead):: Abuse of conflict of interest?


Nelson Andrew Riis: -when will he do so and report on his findings?


Donald Frank Mazankowski: Mr. Speaker, I am not sure what abuse of conflict of interest he is referring to. If he is suggesting that he wants another inquiry alongside the RCMP investigation, perhaps he might want to explain what he has against the RCMP and why-


Some Hon. Members:: Oh, oh!


Donald Frank Mazankowski: -he would want to put in place another inquiry which might limit or prejudice or impair the work of the RCMP in getting to the bottom of this issue with due dispatch.


REQUEST FOR APPOINTMENT OF INQUIRY
Nelson Andrew Riis: Mr. Speaker, I am simply suggesting that the Deputy Prime Minister do his job and fulfil his responsiblities. There appears to be a cover-up. The people of Canada believe the Government is trying to cover up something-


Some Hon. Members:: Oh, oh!


Nelson Andrew Riis: -and that the Prime Minister is trying to-


Mr. Speaker:: Order. If the Hon. Member has a question, he should put it.


Nelson Andrew Riis: Mr. Speaker, the people of Canada are now of the opinion that the Prime Minister is trying to cover up valuable information. Therefore, will the Deputy Prime Minister explain why the Prime Minister of Canada will not announce, before he leaves the country, an inquiry into this very critical matter in an effort to hold the reputation of the Government together?


Donald Frank Mazankowski: Mr. Speaker, there is no cover-up. The fact of the matter is that the RCMP have been asked to conduct a full and complete investigation with no limitations whatsoever.


John Edward Broadbent: They don't deal with conflict of interest.


Donald Frank Mazankowski: I really do not know how in the name of God that could be referred to as a cover-up.
I have answered the question before. The reason that an inquiry such as the Hon. Member is suggesting has not been called for is that it may very well prejudice, impair, or unduly limit the work of the RCMP in the conduct of its investigation.


Rodney Edward Murphy: You're refusing to look.


Nelson Andrew Riis: Have confidence in the RCMP.


Mr. Fulton:: You're trying to sell a car with flat tires.


Nelson Andrew Riis: The RCMP will do their job.


Mr. Speaker:: Order. The Chair cannot help but notice that, as was commented upon yesterday, questions which are, if not exactly the same, certainly similar, are being asked.


Mr. Benjamin:: You have to if you don't get an answer.


Mr. Speaker:: When that happens, it is understandable that responses may become overly long in the opinion of some Members. I hope the Chair does not have to comment on this again today. I ask the Hon. Deputy Prime Minister to complete his answer.


Donald Frank Mazankowski: Thank you very much, Mr. Speaker. I simply want to reiterate the words which the Prime Minister used yesterday in response to the Right Hon. Leader of the Opposition. He stated as reported at page 2448 of Hansard:
It may very well be that in the future, as the police inquiry goes on, other action will be required by this House, the Government, or the police. It may very well be that the action undertaken now will result in criminal prosecutions launched at some time in the future against some individual, in which case it is clear that nothing ought to be done that would compromise the ability of the RCMP to prosecute fully the initiatives they will have undertaken.
January 21, 1987


Leslie Gordon Benjamin: What does that have to do with conflict of interest?


REQUEST THAT SWEARING-IN OF JEAN BAZIN AS SENATOR BE POSTPONED
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the Deputy Prime Minister. It has nothing to do with the RCMP, so maybe he can answer it. Yesterday in the House of Commons I asked the Prime Minister if Jean Bazin had made representations to the Government of Canada on behalf of Oerlikon in the past. The Prime Minister said that he knew nothing of it. There have been reports today that Mr. Bazin was making representations on behalf of Oerlikon and also that he was a director on the board of Oerlikon since April 29. Therefore, is it not obvious that the Prime Minister should telephone his friend, Mr. Bazin, and ask him to postpone his swearing-in to the Senate of Canada?


Donald Frank Mazankowski: Mr. Speaker, my answer to the first part of the question is the same answer as the Prime Minister gave yesterday. The repetition of the second part of the question does not impress me, and I am sure it does not impress other Members in the House.


Don Boudria: Mr. Speaker, answers such as that will earn the Deputy Prime Minister the nickname "Velcro Lips II".


REQUEST FOR WITHDRAWAL OF MR. BAZIN'S NOMINATION TO SENATE
Don Boudria: Mr. Speaker, in light of the fact that Mr. Bazin, according to a spokesman for Byers, Casgrain, a Mr. Vigneault, had been involved with Oerlikon since February 1986 and had been working as an administrator, as I said earlier, since April, I want to repeat my question to the Deputy Prime Minister: Will he or will the Prime Minister call Mr. Bazin today and ask him to resign his appointment to the Senate?


Donald Frank Mazankowski: Mr. Speaker, same question, same answer.


INCOME TAX
Mr. Don Ravis (Saskatoon East):: Mr. Speaker, my question is for the Minister of State for Finance. Revenue Canada released information yesterday indicating that 287 people who earn more than $250,000 per year paid no tax in 1984. Would
Oral Questions
the Minister explain to the House how it happened that they paid no tax? What is the Government doing to avoid the recurrence of this situation?


Hon. Tom Hockin (Minister of State (Finance)):: Mr. Speaker, I join the Hon. Member in his concern about the number of people who paid no tax. Over one-third of those taxpayers can be traced directly to the Scientific Research Tax Credit brought in by Finance Minister Lalonde.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: What about the other two-thirds?


Thomas Hockin: We have stopped that program. Second, tax reform with the alternative minimum tax is a comprehensive approach. In addition to that, which will account for a large number of the others, we have halted the tax sheltered financing of yachts, hotels, and recreational vehicles. We have prevented the use of carve-outs. We are introducing at-risk rules for limited partnerships. We are introducing rules to deny the intercorporate dividend deductions with respect to investments.


Some Hon. Members:: More, more!


THE ADMINISTRATION
Lorne Edmund Nystrom: Mr. Speaker, my question is for the Deputy Prime Minister. It is a different and specific question. Can the Deputy Prime Minister tell the House when the Prime Minister or his office first heard about the possibility that Mr. Normand Ouellette, the President of the PC riding association, had received $970,000 in the Oerlikon land deal? If he can tell us when that happened, can he also tell us whether the Prime Minister's Office received this information from Mr. Jean Bazin?


Donald Frank Mazankowski: Mr. Speaker, the facts surrounding this issue were conveyed to the Prime Minister on Wednesday, January 14, by his principal secretary who had collected this information earlier that week.


Lorne Edmund Nystrom: I wish we could have an answer. He really is the son of Velcro Lips.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: Broadbent is contagious.


Mr. Shields:: Anything to assassinate a character. You're an idiot, that's what you are. You are a fool.


Mr. Gauthier:: They are getting testy over there.

January 21, 1987
Oral Questions


Mr. Speaker:: Perhaps the Hon. Member could put his question.


FORMER MINISTER OF STATE (TRANSPORT) BLIND TRUST-PRIME MINISTER'S POSITION
Lorne Edmund Nystrom: Mr. Speaker, I have a supplementary for the Deputy Prime Minister.
Here is my supplementary. What was the information the Prime Minister or his office received from Mr. Jean Bazin, which led the Prime Minister last week, between Wednesday and Friday, to ask for information on the blind trust of the former Minister of State for Transport? Could he answer that question?


Donald Frank Mazankowski: Mr. Speaker, that is the same question and the same answer applies.


NATIONAL DEFENCE
Robert Phillip Kaplan: Mr. Speaker, my question is directed to the Deputy Prime Minister. It is not about the land deal, but about the underlying contract with DND which the Minister has characterized as being so clean and aboveboard, even though the bidder is loaded with friends of the Government.
How can the Canadian people maintain their confidence in the way the Government manages contracts when so many cronies of the Government are heavily involved with government contractors? This LLAD contract, for which Oerlikon was not the lowest bidder in the first round, was increased from $600 million to $1.15 billion within two months.


Mr. Speaker:: Order, order.


Some Hon. Members:: Sit down.


Mr. Speaker:: Order, please. The Hon. Member for York Centre will put his question. I hope that his supplementary question will be appropriately brief.


Robert Phillip Kaplan: How can Canadians believe that tough bargaining resulted in that increase of over $500 million when cronies were involved?


Paul Wyatt Dick: Mr. Speaker, I would like to assure the Hon. Member of the independence of this contract. An independent American company was brought in to audit and to evaluate the process-


Sheila Maureen Copps: Who wrote that for you?


Paul Wyatt Dick: -which set the bidding in motion. This occurred in July of 1984. The contract was within budget. The bid of Oerlikon was first in price, first in technical evaluation, first in industrial benefits, and first in operational and maintenance costs. Not one person who had been with the Department of National Defence or otherwise with the Government joined Oerlikon until after the contract was signed.


Some Hon. Members:: Oh, oh!


Mr. Speaker:: The Hon. Member for York Centre with a short supplementary.


Robert Phillip Kaplan: That is all very nice.


Some Hon. Members:: Oh, oh!	i


Mr. Speaker:: Order, please.


Charles Joseph Clark: You struck out, Bob.


Mr. Speaker:: Order. That was a very short preamble. Perhaps the Hon. Member could get to the question. Also perhaps some Hon. Members who are his closest colleagues could let the Hon. Member ask the question.


BIDDING PROCESS
Robert Phillip Kaplan: Is it not a fact that all of those "firsts" the Minister described were not firsts achieved by Oerlikon in the first round of bidding, but in the second round of bidding?


Paul Wyatt Dick: Mr. Speaker, the process which was set up and approved by the previous Government in July of 1984 was carried through to the end.


Some Hon. Members:: Oh, oh!


ENVIRONMENTAL AFFAIRS
Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, my question is directed to the Right Hon. Secretary of State for External Affairs. It concerns the visit of Vice-President Bush to Canada today. I wonder if the Secretary of State for External Affairs could tell us whether or not Vice-President Bush is now persuaded that President Reagan's budget is inadequate with respect to acid rain? And was the Prime Minister able to get a commitment from the Vice-President that the recommendations of the Davis-Lewis report would be lived up to in full, and swiftly?
January 21, 1987


Charles Joseph Clark: Mr. Speaker, the Prime Minister, the Minister of the Environment and I certainly made that case to Vice-President Bush. We believe he understands the case of Canada.


Mr. Blackburn (Brant):: You don't sound very sure.


Charles Joseph Clark: We will be watching to see if in fact there is action taken by the United States-


John Edward Broadbent: Was there a commitment?


William Alexander (Bill) Blaikie: I am listening.


Charles Joseph Clark: -to honour the commitment which was given by the President of the United States with regard to acid rain. We expect that commitment to be honoured.


William Alexander (Bill) Blaikie: In other words, Mr. Speaker, it appears that a commitment was not received from the Vice-President.


REQUEST FOR MINISTERIAL STATEMENT
William Alexander (Bill) Blaikie: I want to ask the
Secretary of State for External Affairs, without writing off the hope that some day it might be lived up to by the current administration, what alternate plans does the Government have for working with people in the United States Congress who want to reduce acid rain? What alternate plans does the Government have for seeking a remedy to Canada's transboundary environmental problems through that vehicle? Will either the Minister of State for External Affairs or the Minister of the Environment be soon making a statement in the House to say what the response of the Canadian Government will be to continuing American inaction, particularly on the part of the administration?


Charles Joseph Clark: Mr. Speaker, one response of the Government of Canada was to call President Bush here to inform him directly of our concerns. If the Hon. Member is asking if we will be working closely with members of the House of Representatives and the Senate of the United States who are interested in action on acid rain, the answer is yes, we will continue to work with them. However, we will also continue to keep up pressure on the administration to honour the President's commitment with respect to acid rain.


ENVOYS' REPORT-UNITED STATES POSITION
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, my question is directed to the Minister of the Environment who knows today the Prime Minister has been saying that the U.S. Government has not done nearly enough about acid rain. In
Oral Questions
saying so, the Prime Minister is trying to build a facade to make Canadians believe-


Charles Joseph Clark: Order.


Mr. Caccia:: -that the acid rain agreement is about emission cuts, and the Minister knows very well that it is not. Will the Minister admit that, even if President Reagan lives up to the Envoys' report, the U.S. would not be committed to acid rain controls protecting Canada? Would the Minister come clean with the House and the public and admit that?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the premise of the Hon. Member's question is dead wrong. I quote from page 30 of the Envoys' report which the Hon. Member says has not addressed itself to acid rain emission and reductions. It says:
-although the primary purpose of this research program-
The clean coal technology program.
-is to demonstrate the kinds of technologies that would be needed for any future acid rain control program, it should also result in some near-term reductions in U.S. air emissions that affect Canadian ecosystems.
Go back to the report and read it. It is in black and white. CANADIAN POSITION


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, in the very same quotation the Minister has just read, the emphasis is on research:
-the primary purpose of this research program is to demonstrate the kinds of technologies that would be needed-
Therefore, the emphasis is on research.


Mr. Speaker:: Order, please. Hon. Members, I am sure, would want the Chair to point out that an exchange which gets into a lot of detail and goes into extensive quotations is really for debate. I would ask the Hon. Member, who has an important matter to raise, to put the question.


Charles L. Caccia: I abide by your ruling, Mr. Speaker. Will the Government commit itself at the April Summit to accept nothing less than an acid rain control program of significance to Canada?


Thomas Michael McMillan: Mr. Speaker, the objective of the Canadian Government in April, or whenever the Summit is held-as it has been all along-is the achievement of a bilateral accord between Canada and the United States to bring about substantial reductions in acid rain-causing emissions on both sides of the border. Translated into plain English, that for us means a reduction from about four million metric tonnes of U.S. emissions a year to about half, two million metric tonnes, which cross the border from the United States into Canada, doing irreparable harm to our environment.

January 21, 1987
Oral Questions TRADE


CHARGE PAID ON DRESSED AMERICAN LUMBER SHIPPED BACK TO UNITED STATES
Derek Nigel Ernest Blackburn: Mr. Speaker, my question is directed to the Minister for International Trade. Why is the Government charging Canadian remanufacturers 15 per cent on American lumber imported to Canada which is dressed here and shipped back to contruction companies in the United States?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, I am glad the Hon. Member brought that particular anomaly to my attention and I will check into it and get back to him.


CHARGE PLACED ON EXEMPT NEW BRUNSWICK LUMBER EXPORTED THROUGH ONTARIO
Derek Nigel Ernest Blackburn: Mr. Speaker, while the Minister is checking into that one, I hope she will look at this one. Why is a lumber supplier in Ontario forced to pay 15 per cent on lumber from a mill exempt from the tax, like an Irving Mill in the Province of New Brunswick, simply because that lumber stops over on its way to the United States in Ontario?


Rodney Edward Murphy: And how many more?


John Edward Broadbent: Will you look into that, Pat?


Pat Carney: Mr. Speaker, as I said, these anomalies brought to my attention by the Hon. Member-


Some Hon. Members:: Oh, oh!


Pat Carney: -I am unaware of. I will check into them and report to the Hon. Member.


Mr. Orlikow:: How many more are there?


Derek Nigel Ernest Blackburn: There are a lot more.


CANADA-UNITED STATES AUTO PACT
Lloyd Axworthy: Mr. Speaker, my question is also directed to the Minister for International Trade. At the conclusion of the meetings this morning, Vice-Pesident Bush is reported to have said that the Canada-U.S. Auto Pact was not even discussed at the meetings with Canadian Ministers. Knowing the extreme importance of the Auto Pact to the economy of this country, and the statements made by high U.S. officials that they want to have it negotiated as part of the free trade talks, why did we not raise the Auto Pact? And why did we not gain from VicePresident Bush a clear, clear repudiation of any attempts by the United States to negotiate the Auto Pact during these discussions?


Pat Carney: Mr. Speaker, the Hon. Member might also ask why we don't stop beating our wives.


Some Hon. Members:: Oh, oh!


Pat Carney: In this case we have said that we have not put the Auto Pact on the table. The Americans have not put the Auto Pact on the table. Why would we discuss something which is not on the table that we have indicated we are not willing to put on the table?


Lloyd Axworthy: I can tell the Minister that I do not beat my wife but I cannot comment on the Tory Caucus. You will have to answer for your own actions.


Some Hon. Members:: Oh, oh!


STATEMENT MADE BY UNITED STATES NEGOTIATOR
Lloyd Axworthy: Mr. Speaker, in a speech in Washington last week Peter Murphy, the chief negotiator for the U.S., said that the Auto Pact should be considered as part of the negotiations. That was confirmed by the Under Secretary of Commerce, Bruce Howard. It is clearly a major area of priority to the United States Government. Will the Minister tell us why the Government refuses to discuss something so vital to our interests? Why did we not make a clear statement to Vice-President Bush when we had him here that they should not touch the Auto Pact?


Pat Carney: Mr. Speaker, I think I have answered that question. I have pointed out that we are not proposing that the Auto Pact be put on the table, therefore we would not raise it with the Vice-President. The Americans have not brought it forward. We are discussing-


Lloyd Axworthy: And this is our negotiator!


Pat Carney: Mr. Speaker, the only people who keep trying to force and drag the putting of the Auto Pact onto the table are members of the Opposition.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!
 * *


BANKS AND BANKING
Mr. Bill Attewell (Don Valley East):: Mr. Speaker, my question is directed to the Minister of State for Finance. I realize that we are moving toward a re-regulated financial
January 21, 1987

services market-place, and I support that initiative. However, I have received a number of complaints about the excessive increases in bank service charges and the lack of adequate notice. Will the Minister look into this particular problem? Can he assure us that through this re-regulation we will see more competition in the market-place to help combat these apparent excessive increases in service charges?


Thomas Hockin: Mr. Speaker, I would be very happy to look into this matter. I remind the Hon. Member that, with respect to the level of service charges, the financial institutions' policy framework which was brought in on December 18 will greatly increase competition which, hopefully, will affect the levels.
With respect to the terms and the posting of notices of terms which used to be posted on the inside of banks, people are now using cash machines and not going into the banks. This is a real problem. I have asked the OIGB to examine this matter to see if consumers' needs are being met. If they are not, changes must be made.


VACANCY
Mr. Speaker:: I have the honour to inform the House that I have received a communication notifying me that a vacancy has occurred in the representation:

-Eric Nielsen, Esquire, Member of Parliament for the electoral district of Yukon, by resignation.
Accordingly, 1 have addressed my warrant to the Chief Electoral Officer for the issue of a new writ of election for the said electoral district.


APPOINTMENT OF INTERNAL ECONOMY COMMISSIONER
Mr. Speaker:: I have the honour to inform the House that Bill Kempling, Esquire, Member for the electoral district of Burlington, has been appointed as a member of the Board of Internal Economy in place of J. Robert Howie, Esquire, Member for the electoral district of York-Sunbury, for the purposes and under the provisions of Chapter 39 of the Statutes of Canada, 1985, entitled an Act to amend the House of Commons Act.
Tabling of Documents


Some Hon. Members:: Hear, hear!



ROUTINE PROCEEDINGS


Mr. Speaker:: It is my duty pursuant to Section 9 of the Representation Act, 1985, Chapter 8, Statutes of Canada, 1986, to lay upon the Table a certified copy of the 1986 Report of the Electoral Boundaries Commission for the Province of New Brunswick.

In accordance with the Act, this report is deemed permanently referred to the Standing Committee on Elections, Privileges and Procedure.


OFFICIAL LANGUAGES
Mr. Speaker:: I have the honour to lay upon the Table three reports of the Commissioner of Official Languages for the Governor in Council pursuant to Section 33(1) of the Official Languages Act.

Pursuant to Standing Orders, these reports are referred to the Standing Joint Committee on Official Languages.


PETITIONS
Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to petitions, Nos. 332-294 to 332-308 inclusive, 332-320 to 332329 inclusive, 332-334 to 332-338 inclusive, 332-349, 332-353 to 332-358 inclusive, 332-370 to 332-373 inclusive, 332-385 to 332-395 inclusive, 332-399 to 332-402 inclusive and 332-440.

January 21, 1987
Committee Reports



COMMUNICATIONS AND CULTURE


Mr. Jim Edwards (Edmonton South):: Mr. Speaker, I have the honour of tabling, in both official languages, the Second Report of the Standing Committee on Communications and Culture. The report is entitled: Taxation of artists and the arts. The Committee asks the Government to table a response to its report, pursuant to Standing Order 99(2). The Committee has started to examine a number of important issues relating to Canada's cultural policy, and one of its priorities is to make the position of artists and the arts a more equitable one.

The key recommendation of the report is to incorporate a definition of professional artist and artistic activity in the Income Tax Act, a measure which would give juridical status to artists and their work. This measure would give the current administrative practice followed by Revenue Canada the force of law.
Other recommendations deal with the highly distinctive economic circumstances of artists. One of these, if adopted, would extend to professional artists the right to use block averaging and the modified accruals basis of accounting in the same way as do farmers and fishermen.
The needs of organizations established to promote the arts and the welfare of artists are also the subject of our recommendations, as is the larger issue of deductibility of charitable donations.
[ Translation]
The changes the committee is recommending have been considered at length and have received the unanimous approval of members of the arts world and of committee members representing the three federal political parties. Artists are hoping that changes in the legislation will be announced shortly. I would like to take this opportunity to thank Members from all three parties for their sustained effort in preparing this unanimous report for submission to the House.
[Editor's Note: For above report, see today's Votes and Proceedings.]


PETITIONS
Rodney Edward Murphy: Mr. Speaker, 1 have the honour under Standing Order 106 to present a petition signed by residents of northern Ontario and by other Canadians in which they express their concern that the Government's
intention to change the Patent Act relating to prescription drugs will increase drug prices for Canadian consumers and severely restrict the ability of average Canadians to buy necessary prescription drugs. In their petition the petitioners explain that they believe this is yet another example of the Canadian Government making concessions to the United States in the free trade negotiations at the expense of average Canadians.


Mr. Andrew Witer (Parkdale-High Park):: Mr. Speaker, it is my privilege today to present to the House a petition on behalf of the residents of Parkdale-High Park in which they express their opposition to the Exodus Link parole privatization contract which would locate up to 80 ex-convicts in their neighbourhood. I would like to add my strong support to their call for the Solicitor General (Mr. Kelleher) to immediately terminate funding to Exodus Link until a location outside the boundaries of Parkdale-High Park has been found.


Andrew Witer: Mr. Speaker, residents of Parkdale-High Park have requested that 1 present a petition to the House of Commons on their behalf calling for the return of the mail post boxes which were arbitrarily removed from the streets of Toronto without consultation. The petitioners are residents of Springhurst, Tyndall, Cowan and Close Avenues who have been greatly inconvenienced by the decision. I am pleased to add my strong support to their demand that Canada Post restore the mailboxes and ensure the level of efficient and convenient postal service that Canadians have every right to expect.


Leslie Gordon Benjamin: Mr. Speaker, I have the honour and duty to present two petitions. The first is from Senior Power of the City of Regina. They ask the House of Commons not to pass the legislation regarding amendments to the Patent Act because the proposals of federal Government drug plans will result in higher priced drugs for the provincial Government and senior citizens.


Leslie Gordon Benjamin: 1 have a further petition from residents of Richmond, Coquitlam, Vancouver, Delta, West Vancouver, and North Vancouver in British Columbia, as well as Regina, in which they say that in the opinion of your petitioners transportation is a monopoly without economic regulation, and that Bill C-18 will create unnecessary chaos in the transportation industry. It will lead to unacceptable reductions in safety standards, as well as deterioration in service, quality, type, and frequency.
January 21, 1987

Therefore, your petitioners humbly pray and call upon the House of Commons to withdraw Bill C-18 and retain public convenience and necessity as a fundamental factor in the development of public transportation policy.


Nelson Andrew Riis: Mr. Speaker, it is my duty to present under Standing Order 106 a petition on behalf of a number of residents of Canada who are asking the Government to reconsider the plans to change the Patent Act. They feel it will result in significant increases in prescription drug costs. They believe that this will occur at the expense of average Canadians. They ask the Government to consider this, particularly in light of the free trade negotiations.


Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, pursuant to Standing Order 106, I have the privilege and honour to present a petition to the House. The petition opposes Bill C-22 and calls upon the Government to abandon it. The petitioners from the communities of Sudbury, Val-Caron, Chelmsford, Lively, Naughton, and Blezard Valley feel that changes to the Patent Act will unfairly hurt them and their health needs which require the purchase of prescription drugs on an ongoing basis. Furthermore, they believe that the proposals of the federal Government in Bill C-22 will result in higher costs to the provincial government drug plans.
Furthermore, they believe that this is just another example of the Canadian Government giving concessions to the United States in the free trade negotiations at the expense of ordinary Canadians. They thereby call upon this Government to withdraw this iniquitous Bill C-22.


David Orlikow: Mr. Speaker, I have the honour to present a petition under the provisions of Standing Order 106 signed by residents of Regina, Fort Qu'Appelle, and other towns and cities in Saskatchewan. They say that the federal Government's proposal to change the Patent Act relating to prescription drugs will increase drug prices for Canadian consumers, and it will result in higher costs to the provincial govenment drug plans.
Therefore, they call upon Parliament to reject those proposals which will increase prescription drug prices for Canadians.


Mr. Thomas Suluk (Nunatsiaq):: Mr. Speaker, I have the honour to present a petition under Standing Order 106. The petition is signed by 45 residents of Eskimo Point, Northwest Territories, who are unhappy with the discontinuation of postal money orders and C.O.D.s which have been unavailable since October, 1986. The community is only accessible by air and it is very time consuming to get them from other communities which are hundreds of miles away. The petitioners respectfully request the reinstatement of those services.
Petitions


Thomas Suluk: I have another petition from 47 residents of the same community who are petitioning the House for the parole on humanitarian grounds of Mr. Jimmy Ishalook, who is an inmate of the Yellowknife Correctional Centre. Mr. Ishalook is suffering from an advanced state of cancer. He is presently being treated at the Cross Cancer Institute in Edmonton. Mr. Ishalook is now eligible for parole, but due to language difficulties, he has not yet filed an application.


Mr. Simon de Jong (Regina East):: Mr. Speaker, I wish to introduce a petition under Standing Order 106. The petitioners ask Parliament, and particularly the Government, to withdraw Bill C-22, the legislation which would extend patent rights and allow the multinational corporations to increase their profits at the expense of the elderly and the sick.


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, I have the honour to present two petitions today. The first one is from my constituents in the downtown area of Vancouver East, which includes Chinatown. It is from many citizens who are very concerned that the Canadian Transport Commission relocated the transfer point for dangerous goods to an area within the densely populated downtown part of Vancouver East. This is a hazard that is unacceptable in any inner city area, and particularly on the harbour side of Vancouver East.
Therefore, the petitioners are asking that the Canadian Transport Commission be required to relocate the transfer of hazardous commodities to outside the inner harbour of Vancouver, and finalize a permanent solution to the movement of hazardous commodities, which will be acceptable to the citizens of greater Vancouver.


Margaret Anne Mitchell: The second petition is from citizens in Cumberland, B.C. It is a petition concerning the changes to the Patent Act in Bill C-22 which will severely restrict the ability of average Canadians to buy prescription drugs, and will result in higher costs to provincial government plans and concessions to the United States. The petitioners strongly ask that the House of Commons reject the proposals in Bill C-22.


Mr. Dan Heap (Spadina):: Mr. Speaker, I have the honour and duty to present a petition from a number of residents of Manitoba in Stonewall, Selkirk, Pembina Highway, and Winnipeg who are concerned about the Government's determination to change the Patent Act relating to prescription drugs in a way that the petitioners believe will severely restrict the ability of average Canadians to buy the prescription drugs that they need. The petitioners are afraid it will particularly

January 21, 1987
Introduction of Bills
hurt Canadians whose health needs require regular prescription drugs. They feel that these changes are another example of Canadian Government concessions to the United States for free trade.
Therefore, they humbly pray and call upon Parliament to reject these proposals on the ground that they will increase prescription drug prices for most Canadians.


Daniel James Macdonnell Heap: I also have the honour to present another petition. This one is from a number of residents of Alberta in places such as Calgary, Edmonton, Wetaskiwin, Athabasca, Blackfield, Red Deer, and also from Toronto, Ontario. These people are concerned about the low level flight training at Goose Bay in Labrador and they feel that it should be discontinued. They believe that the present training disrupts the environment and the life of the native people there, and also it is not in the best interests of the security of Canada on the ground that it is a provocative and aggressive preparation for a first strike, and it tends to endanger world peace.
Therefore, they ask Parliament to ensure that the Prime Minister (Mr. Mulroney) will end all the low level flight training in the Goose Bay Canadian Forces Base, and cease negotiations with NATO for the establishment of a larger base there.


Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, under the requirements of Standing Order 106, I have a petition submitted by residents of the Wynyard area in my riding who are availing themselves of their ancient and undoubted right to present a grievance common to the petitioners with certain assurance that the House will provide a remedy. They point out that changes to the Patent Act relating to prescription drugs will increase drug prices, will unfairly hurt those Canadians whose health needs require the purchase of prescription drugs on an ongoing basis, and will result in higher cost to the provincial government drug plans.
Therefore, they call upon Parliament to reject these proposals which will increase prescription drug prices to all Canadians.


Mr. Bob Brisco (Kootenay West):: Mr. Speaker, pursuant to the provisions of Standing Order 106, I have the honour to present a petition asking that the present service provided to the Canadian public by Teleglobe Canada while providing telecommunications to all corners of the world, whether profitable or not, be protected; that job security of Teleglobe employees be protected; that protection of acquired and contractual rights of Teleglobe Canada employees be respected by the Government; and that the Government take immediate action to halt the process of Teleglobe's privatization.


Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, it is my privilege today to present a petition on behalf of a large number of residents of the City of Toronto who are concerned about the plans of the federal Government to licence prescription drugs differently and to allow the profits from those drugs to flow to multinational drug companies.
They therefore call upon Parliament to reject those proposals.


John Edmund Parry: Mr. Speaker, 1 have a second petition to present today. It concerns the Goose Bay war fighting and training base in Labrador. These petitioners are opposed to the continuation of that base and any extension of its use for practising for war.


John Edmund Parry: Mr. Speaker, my third petition is signed by a number of residents of the City of Winnipeg and by one from La Salle, Quebec. It also calls upon the Government to turn away from its plans to change the Patent Act and inflict higher drug prices on Canadians.



CANADIAN HUMAN RIGHTS ACT


Mr. Albert Cooper (Peace River) moved: for leave to introduce Bill C-239, an Act to amend the Canadian Human Rights Act (non-discriminatory practices).


Mr. Deputy Speaker:: Shall the Hon. Member have leave to introduce the Bill?


Some Hon. Members:: Agreed.


Albert Glen Cooper: Mr. Speaker, the purpose of the Bill is to allow an employer for whom the promotion of a religion is a main objective to require the observance of that religion by his employees.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Philip Derek Lewis: Mr. Speaker,
January 21, 1987

the following questions will be answered today: Nos. 36, 43 and 55.


Mr. McKinnon: 1.	Does the government expect the C-7 rifle, on which it started to take delivery in the spring of 1986, to be in ordinary use for drill and practice firing throughout the Armed Forces and, if so, on what date?
2.	Has there been any unexpected delay in the introduction of the rifle and, if so, for what reason?


Mr. Bud Bradley (Parliamentary Secretary to Minister of National Defence):: 1. Yes, in 1987.
2. Yes, a problem with the Canadian produced ammunition delayed the introduction of the new rifle to 1 Canadian Brigade Group and to 4th Canadian Mechanized Brigade Group. Occasionally during firing some bullets fragmented, either in the weapon barrel or shortly after exit. The manufacturer has advised that the problem is resolved.


Mr. Parry: Did the Minister of Transport receive correspondence from the Ontario Minister of Transportation and Communications requesting the expansion of the Loran-C radio navigational system in Ontario and, if so, what action is the Minister planning to take concerning this request?


Mr. David Kilgour (Parliamentary Secretary to Minister of Transport):: Yes.
Air navigation.
Transport Canada has been working closely with the United States Federal Aviation Administration to confirm existing areas of Loran-C signal coverage and to determine whether expansion of the signal coverage in Canada could be justified.
Transport Canada's position is to facilitate the use of existing Loran-C signal coverage. Any expansion of Loran-C coverage in Canada would involve consultations with the industry and would only be pursued if sufficient benefits for instrument flight navigation could be confirmed in order to offset the capital and operating costs involved.
Vehicle monitoring.
There appear to be a number of potential benefits associated with surface vehicle monitoring and these should be more clearly defined following a demonstration project being established by the Government of Ontario. However, it is not clear, at this time, if Loran-C is the most suitable system for determining the location of a vehicle. Other systems are being investigated and it is unlikely that an expansion of the Loran-C system can be justified, at this time, on the basis of surface vehicle monitoring alone.


Mr. Cooper: 1. For the fiscal years ended (a) 1983 (6) 1984 (c) 1985 and (d) 1986, were wreaths provided to RCMP detachments for presentation during Remembrance Day ceremonies and, if so, at what cost?
Softwood Lumber Products Export Charge Act
2. Was the practice eliminated for the Fiscal year ending 1987 and, if so, for
what reason?


James Francis Kelleher: 1.
RCMP policy provides for the purchase of wreaths for presentation on Remembrance Day by Division and SubDivision Headquarters only. There is no provision for purchases for detachment use. Therefore, no such purchases from public funds have occurred during the years 1983 to 1986 inclusive.
2. The above noted policy is still in effect and consideration is not being given to changing same.


Philip Derek Lewis: Mr. Speaker, I ask that the remaining questions be allowed to stand.


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


Some Hon. Members:: Agreed.


Philip Derek Lewis: Mr. Speaker, I ask that all notices of motions for the production of papers be allowed to stand.


Mr. Deputy Speaker:: Shall all notices of motions stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Tuesday, January 20, consideration of the motion of Miss Carney that Bill C-37, an Act respecting the imposition of a charge on the export of certain softwood lumber products, be read the second time and referred to a legislative committee, and the amendment of Mr. Turner (Vancouver Quadra), (p. 2382).
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, I want to avail myself of this opportunity to speak for a few minutes on the export tax which is being imposed upon softwood lumber.
During an intervention yesterday by the Hon. Member for The Battlefords-Meadow Lake (Mr. Gormley), he suggested

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that the woods industry in northern Saskatchewan was supportive of and happy with the imposition of the tax. The Hon. Member said that he had been in that area during the last few weeks. I suggest that he should return to northern Saskatchewan and ask mill operators and workers about the tax now that they have had a chance to look at it and its effects. In fact, the entire woods industry in northern Saskatchewan now recognizes the negative effect of the tax.
Of course the market has not settled down because of the change in tax. However, there is no doubt that the industry is already adjusting to its inability to fit into the market which will be developed by the imposition of the tax. Even now in places like Hudson Bay, Big River, and Meadow Lake-and two of these areas are in the Hon. Member's constituency- people recognize that they are unable to compete with the B.C. market for the areas that have traditionally been the direction in which their lumber has gone. In fact, a Hudson Bay plant which produces studs almost entirely and exports them to a great extent to the United States, particularly the Chicago market, is indicating that it laid off 30 employees because of the tax.
A study which was conducted in British Columbia suggested that the price of studs would be $120 per thousand, which is down about 25 per cent to 30 per cent from what it was before the tax was imposed. Also, the mill rate, or what the mill will get, is down from $153 per thousand to about $120 per thousand. Even with the transportation advantage in Saskatchewan of moving to the Prairies and possibly even to the Chicago market, no plant in Saskatchewan can match that rate. The lowest possible rate which can be matched in that province-and it would be very difficult to confirm it-is probably well above the $140 per thousand which B.C. companies suggest they can match anywhere in Saskatchewan.
Plants in Saskatchewan cannot possibly produce studs or lumber at that particular rate. Even the Hon. Member for The Battlefords-Meadow Lake should know that no plant in Saskatchewan has the ability to compete with the B.C. industry if it tries to sell into the Canadian market. A good portion of Saskatchewan production is sold domestically within Saskatchewan and within the Prairies. The rest of it is exported to the Chicago market or that particular part of the United States. Some of it is domestic production and goes to Ontario. However, no plant in Saskatchewan has the ability to compete with the B.C. industry. Therefore, the taxation imposed upon softwood lumber will directly and negatively affect the production of the mills in Saskatchewan. No doubt some of them will be able to adjust, but they will all feel the effects.
The reason Saskatchewan mills are unable to compete with the British Columbia industry has nothing to do with quality or even efficiency. We just do not have the scale of operations in Saskatchewan that there are in British Columbia. For instance, there is not one optimizer in any of the mills in Saskatchewan. The capital investment which would be necessary to put that kind of technology in place is so great
that no mill could afford it and stay operational. We do not have the world-class mills in Saskatchewan that are necessary to compete with British Columbia. We also have to take into consideration distance, the cost of wood and the transportation of wood to the mill. The cost of wood is so high to start with, having brought it out of the bush and to the mills, that the Saskatchewan mills already start with a disadvantage.
British Columbia mills have suggested that when they start selling into the new markets on the Prairies, in Ontario and in the United States, they will probably be forced to use the U.S. transportation system. If the Transportation Act, which is presently before this House, were to pass very suddenly- which we hope will not happen-it would allow Canadian companies to ship on U.S. transportation lines to U.S. markets. At present there is a requirement to cross the Canadian Prairies to reach the Ontario and U.S. markets.
In Saskatchewan, where we have a fairly large number of operations in places like Hudson's Bay, Big River, Meadow Lake and Prince Albert, this tax will affect us. Even where the market is domestic it will affect us. Other areas of Canada will be able to take over our market without too much difficulty. We will not be able to sell at the price which larger and more technically capable mills can from other provinces.
Management consultants studying the effect of this tax suggest that a large number of mills under the $153 a thousand or a little higher survived, but now they will be forced out of business. Jobs will be lost. We also know that with the little higher prices in the States, many mills will not be able to operate. With the added burden of the 15 per cent tax, many of those marginal mills in the U.S. will take over part of their own market. The total amount of lumber shipped to the United States will be considerably less than we expect it to be. Because lumber will be more expensive in the States this will translate into fewer U.S. housing starts. Not only will we have to pay 15 per cent more or take a 15 per cent drop in the price of lumber, because of the increased price in the United States we will not be selling the same amount of lumber as we have in the past.


Robert Hylton Brisco: Who told you that?


Stanley J. Hovdebo: We will be looking for that lumber market in Canada.
I just wanted to point out that even in a place like Saskatchewan where a large portion of our market is domestic, we know the effect of this tax will be to reduce the markets we have available to us and will also reduce the amount of return and possibly force the closing of several mills.


Robert Hylton Brisco: Mr. Speaker, I appreciate the comments of the Hon. Member for Prince Albert (Mr. Hovdebo), particularly in the context of the concern he has over the price escalation for housing in the United States. But whose fault is that? That is something the Americans brought
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upon themselves. That is something the U.S. Congress inflicted on the consumer and something for which the democratic congressmen in the United States will have to answer.
In respect of the countervail action of 1982-83 the comparison has been drawn that we have not followed the same route followed then. At that time the Liberals were in power. We have heard that the matter was a piece of cake and we have complicated the process. What people have failed to acknowledge is that there was no preliminary determination in 198283. What people also failed to acknowledge is that in 1982-83 the Opposition remained silent in order to support a united position of the Government of Canada in battling the lumber industry of the United States. The Conservatives and the New Democratic Party restrained themselves and said that Canada must go into this united and together: Government, industry and labour. Granted the circumstances were not quite the same. Granted the stress on the U.S. trade imbalance was not quite as severe. But we did adhere to a position of solidarity and unity on the issue. How unfortunate that that circumstance did not prevail in this particular action we have just sweated through.
The remarks in and outside the House by the Leader of the Opposition (Mr. Turner), by the Leader of the New Democratic Party (Mr. Broadbent) and by other members of those two caucuses have been far from helpful. They have contributed to the problem. If they are so obtuse as to believe that the United States and the lumber coalition of the United States is not listening, then clearly I feel sorry for them. I have to consider, in the light of any other evidence, that it was irresponsible conduct. I do not think there is any other explanation for it. They have to live and be accountable for that kind of action.
Adam Zimmerman says the industry would have done a better job. What were the options, Mr. Speaker? He said the industry would have done a better job and they would have made a better deal. But can you not see the scenario, Sir? After the industry got whipsawed in Washington, people would have been back here in Canada dumping on the Government saying, "Where were you when we needed you?" It would have been a field day for the Opposition, which would have replied: "Where was the Government? Why didn't it get involved?" One cannot have it both ways. If we are to take the sage words of Mr. Zimmerman, we have to consider his track record, particularly as it applies to Noranda, and that, of course, creates a bit of a credibility problem.
If we had exercised the options left to us by the industry or the options the Opposition would have us pursue, what would we really have been left with? We would have had a countervail action, and if that was not fair we could have taken the Americans to court. Can you imagine, Mr. Speaker, two or three years of that process in court and the possibilities of winning? I cannot. However, if we did win, what would the
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next step be? It would be a Congressional Bill and there is not one member of the Opposition who does not realize that. They know of the protectionist mood in the United States just as government Members do. They know Congress would act separately and very strongly. The only other opportunity left would be the GATT. The whole country might just as well go to sleep while waiting for that decision.
Mill owners and operators in my riding have spoken out on this issue. Mr. Zammit of Westar Timber in Castlegar says that the export tax is the lesser of two evils and that he is willing to live with it as such. He did not tell me how much his mill exports to the United States but I do know that the volume is substantial.
There is a naysayer in my riding. Mr. Nelson of ATCO Lumber has said that he is totally dissatisfied with the export tax and would have preferred to see the issue run its course and be settled in court. Mr. Nelson is entitled to his day in court or out, and I had the opportunity to speak to him about this. However, he did not want to talk about it so I have not had the opportunity to fully examine his opinions. By the way, most exports from his mill go to the United States.
Kalesnikoff Lumber sends 35 per cent of its products to the United States. Ymir Forest Products exports 95 per cent of its products to overseas markets.
Ike Barber of Slocan Forest Products says, among other things, that the talk of new market development is not realistic, and I will turn to that later. He also says that much is already being done in that area. Slocan Forest Products employs 300 and exports 70 to 75 per cent of its products to the United States. It will not be shutting down.
For-Wood Manufacturing has not exported to the U.S. since May 1986. Mr. Mackie of that company believes that the stumpage rates should be higher. Mr. Aldinger of Meadow Creek Cedar believes that the settlement was the best possible under the circumstances. He believes that the tax revenue should be placed in a trust fund until a trade agreement with the United States is in place and then decide on the best use for the money. The tax does not affect him, however, because he exports most of his products to Japan.
Mr. Remple of Cooper Creek Cedar is not terribly disappointed with the negotiated settlement and says that under the circumstances, the Government did as well as it could. The tax will affect his operation but not to a substantial degree because there is a high demand for cedar in the United States. He exports about 50 per cent of his products to the United States.
Of all the mills in Kootenay West, I was unable to contact four, most of which are small mills. I look forward to having an opportunity to speak to those mill operators within the next few days.
In the press, in the industry, in this House and on the street, it is evident that the weight of argument in favour of the position taken by the Government, when put on the scales of justice, tips very heavily in our favour.

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What is the response of the industry? The Hon. Member for Essex-Windsor (Mr. Langdon) has said that the softwood industry across the country is reeling, uncertain and confused. I really thought that he was talking about his Party. I have had the opportunity to outline that confusion of which he speaks in Kootenay West. That confusion simply does not exist.
The Hon. Member spoke of initiating major moves in the industry and its unions to find new markets. The industry in Kootenay West has already found new markets. It takes a great deal of time to change and develop those new markets.
I only wish that I had a great deal more time to develop my arguments, justifying and demontrating that there is a very real problem in bringing about an effective change in housing habits in China, Japan and Pacific Rim countries. Perhaps the House wishes to reflect on this. I would end by asking Hon. Members to compare housing in Canada from British Columbia to Ontario, brick to wood, with Japanese and Chinese housing and accommodations.


Derek Nigel Ernest Blackburn: Mr. Speaker, I rise to enter this debate today to point out some obvious problems with the export tax. The most crucial point of all is the very idea that the Parliament of Canada should be considering such action at all. We are not responding to any Canadian concern, we are merely responding to American pressure. We are considering a tax on the export of softwood lumber because the United States says we should. That more than anything else is clearly unacceptable to me, to my Party and, in a general sense, to the people of Canada.
This tax comes before us as a desperate, last-minute arrangement made by the Conservative Government. It shows. There are obvious inequities and oversights in this proposal, showing that it was rushed through without sufficient thought or planning.
For example, the original complaint from the American lumber industry was about low stumpage fees. This tax has nothing whatsoever to do with stumpage fees. Instead, this debate is about a tax on the export of softwood lumber products. It is not the right measure to address the American complaint. It takes a broad-brush approach and victimizes many innocent people.
The American countervailing duty was assessed on the first mill price. Although we argue that this countervailing action was unjust, at least it was aimed at what the Americans saw as being the problem. However, the Canadian export tax is not levied at the first mill. Fifteen per cent on the export price is charged as the softwood crosses the border. The proposal indicates that the free-on-board mill price paid or payable for the products includes all costs incurred to produce the products. That involves a lot more than just stumpage fees.
The Government's export tax assumes two things: that all softwood leaving the country is taxable and that it comes from the first mill. That may not be the case. Let me explain.
There is a lumber supplier in my constituency of Brant who imports American lumber, cuts and dresses it and sells it to construction companies in the northern United States. However, the regional director of tax interpretation in London, Ontario, has ruled that this supplier must pay 15 per cent of such a sale and he is right. I have searched in vain for some provision in this Bill that would exempt such a transaction. There is no such provision. This proposal simply indicates that softwood exported to the United States is taxable.
We are protecting Americans in respect to their own lumber. The measure does not address a complaint about Canadian stumpage fees. It just assures that re-manufacturing takes place on the American side of the border. Canadian suppliers to American markets will be forced to close or move their operations South. Canada will stop exporting softwood and start exporting jobs.
There are other inequities in this proposal as well. Some mills are exempt from the tax. This will force some mills out of business and give others a decided competitive advantage. This tax may not only lose Canadian jobs but may contribute to increased corporate concentration. In addition, Canadian suppliers buy from these exempt mills but if they turn around and sell the same lumber to the U.S. they have to pay the tax.
A supplier in my riding buys stock from Irving Lumber in New Brunswick. Irving Lumber is exempt from the tax. However, the Ontario supplier will be forced to pay the tax when he tries to move the lumber to market in the U.S. I understand some 120 companies in Canada have drawn these anomalies to the attention of the authorities.
I use the word "anomalies" because that is the word the Minister for International Trade (Miss Carney) used in response to my two questions in Question Period today on this very subject. She did not say I was wrong. She said these were anomalies which had crept in. That is another way of saying we goofed. We did not take the time to plan. We did not take the necessary degree of exactness in our negotiations to make certain these anomalies did not creep in.
There may be ways of addressing such inequities but the agreement prevents the Government from assisting the lumber industry. The Americans assert that the tax revenue cannot be used to benefit the lumber industry. They assert that stumpage fees were an unfair subsidy and were able to get the Canadian Government to accept that fact by bringing in this tax. How will Americans look on modernization grants or low-interest loans which Canada might offer its lumber industry? The Government has allowed the U.S. to stick its nose into our stumpage fees. Will regional development assistance be next?
There may be even wider consequences to this Government's caving in. This tax applies only to exports to the U.S. That is dangerous for two reasons. It is inconsistent with the General Agreement on Tariffs and Trade because it applies only to the U.S. That opens the door for other countries to pursue the
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same course of action. What is to prevent other producer countries from insisting that the tax apply to exports to their markets? After all, the Government has admitted our exports deserve to be taxed.
This tax invites more trouble and it will not come just from outside Canada. This tax is a recipe for federal, provincial and regional disputes. The export tax could be altered by a change in stumpage fees but stumpage fees are a provincial matter and the provinces have different levels of stumpage. Will all the provinces agree to raise their stumpage fees? Should stumpage fees be made uniform across the country? If only some provinces raise their stumpage fees will they not balk at paying the bill for lifting a federal tax? I do not envy the Prime Minister who has to negotiate such an agreement, whoever that person may be in a couple of years' time.
Finally, we should not kid ourselves that this tax is the end of the problem. I submit it is just the beginning. The Government has recognized that might makes right. The Americans have enormous economic power, therefore Canada has to jump when the Americans demand change, even if it infringes on our sovereignty and puts Canadians out of work. This is a very bad and dangerous precedent. There is no one in this House who can go home and face his or her constituents and tell them their jobs are safe. The Americans could suggest that any product exported from Canada will be next on the list. Canadians now know that the Government will not protect them from such an attack.
While this is an unfortunate cave-in, it may not be irreparable. If in a few years' time the next Government develops a degree of courage in facing up to the U.S., or any other country, it is possible that we may be able to bring in remedial legislation after the end of this Parliament. However, it is abundently clear to me that the present Government, in cosying up to the U.S. on a whole host of issues and disputes and problems, has weakened, not strengthened, our national identity, our Canadianess and our ability to cope with our problems. Witness the softwood lumber issue and our negotiations with a major power. No one ever said it was easy negotiating with the U.S. It never will be. However, if you negotiate from a position of weakness and on the premise that you have to give in at the outset of any negotiations, then God help us when it comes to other important issues in the future.
[ Translation]


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, thank you for giving me the opportunity to speak to this Bill which concerns an agreement on softwood lumber exports to the United States.
Mr. Speaker, this could be called a panic agreement, since the Minister simply decided to sign an agreement to do the Americans a favour. As a result, a 15 per cent tax will be levied on all our softwood lumber exports to the United States. The tax will cause tremendous harm to our forestry industry, especially in the Maritime provinces, and will probably mean increased prices for the consumer.
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Mr. Speaker, several experts have said there are a number of disadvantages for Canada in this agreement with the United States.
Mr. Speaker, first of all, it is an assault on our Canadian sovereignty. It is an assault on our Constitution, which guarantees the provinces control over their natural ressources, and it also deals a severe blow to relations between the Government and the softwood lumber industry.
Under the agreement, the Americans may accept or reject any replacement measures for the tax, on the basis of the income generated. Such income must be equivalent to the income generated by the export tax. This means that the Americans have the last word. And I could go on. It is clear that the disadvantages are many, and the way the Government has approached this situation from the outset is an outrage.
As we recall, on several occasions the Minister for International Trade (Miss Carney) changed her mind. One day it was a 7 per cent tax, the next day 15 per cent, and yet another day we were going to support the representations of the industry, only to end up with a second final offer.
It turned out to be a comedy of errors, Mr. Speaker, but I can assure you that the people in the industry did not think it was funny at all. We must keep in mind that the industry had already spent several million dollars in an attempt to defeat the American drive to impose countervailing duties. Canadian companies were convinced that we would have come out winners. In fact we had already won our case in a similar dispute a few years earlier and our stumpage fees had remained unchanged. Only the Government and the Cabinet have changed since then and unfortunately, Mr. Speaker, we can see now that the situation has worsened.
The industry blames the Government for fumbling the ball. I should like to read the comments of Mr. Knut Grotterod of the Fraser Company in New Brunswick, and I quote:

We had a strong case to make and we believe we could have won it before the Government interfered without consulting the industry.

Yet we can still remember this Government promising a new era of consultation and good will.
Mr. Speaker, more about the question of Canadian sovereignty. My leader has already mentioned the various ways in which this agreement threatens our sovereignty, so I will not repeat them here. However the Liberal Party is not the only one to say this, and you might be interested in this remark made by Mr. Max Cohen, an acknowleged Canadian international law expert:
The agreement on softwood lumber creates a dangerous precedent which threatens Canadian sovereignty.
Because of this agreement, the forest industry will have to face another threat. The fact is that the European Economic Community views this agreement unfavourably and has

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already indicated that it is considering obtaining a similar Canadian tax on Canadian lumber imports. All this is certainly a bad omen for our other forest products, as well as for all Canadian products exported to the United States or elsewhere. This agreement sets a dangerous precedent. The Americans could ask for a similar charge at any time on our pulp and paper exports or on our mining products, such as potash, zinc, lead, and many others. This would have a devastating effect on New Brunswick.
Let us look at the potential impact of this agreement on the Maritime provinces, Mr. Speaker. The Maritimes should undoubtedly have been exempt from this tax. The fact is that stumpage fees in the Maritimes are much higher than in other provinces. Our producers already have to pay their fair share in stumpage fees.
In New Brunswick, stumpage fees amount to $57 per 1,000 feet, compared with $8 in British Columbia. It should be added that five New Brunswick companies have been exempt, but only five. Over 100 do not benefit from this exclusion.
The Maritime Lumber Bureau, which represents 125 sawmills in the region, is organizing a committee to be called the Atlantic Coalition Against the Unfair Lumber Tax. The purpose of this Committee will be to do everything in its power to convince Ottawa to exclude the Atlantic region from the charge.
For the moment, about 130 producers and exporters from the Maritime provinces, in addition to paying the highest stumpage fees in Canada, will have to pay a 15 per cent charge on their exports to the United States, which is very unfair to this New Brunswick industry.
These small companies will certainly not be able to continue to export their products if they have to pay these two charges. According to Mr. Rumbold, Director of the Maritime Lumber Bureau:
Several firms are seriously considering the future of their sawmills because of the tax.

And according to Mr. Percy Wilkins, of Wilkins Sawmill in Fredericton:

I see quite a few sawmills in the province being wiped out. I just can't see them surviving. It's that bad.

Mr. Speaker, I would like to take this opportunity to put on record two messages I received from people in New Brunswick, people in the industry. First, the New Brunswick Federation of Woodlot Owners, which state:

-that they:
-support the effort of the Atlantic Coalition Against Unfair Lumber Taxes to have the region excluded from the lumber export tax. The closure of any of New
Brunswick's sawmills will have a serious detrimental effect on private woodlot owners.

I have here another message from Southampton:

Southampton Sawmills Ltd. of Nackwic, New Brunswick-wishes to express in the strongest possible terms its dissatisfaction with the Government of Canada's decision to implement a 15 per cent export duty on softwood lumber to the United States.
Southampton Sawmills cannot survive such unfair competition where we are taxed and our competitors are not. Southampton Sawmills cannot compete with low-priced lumber flooding our market.

Well, Mr. Speaker, I could go on and on. You know the industry in the Maritimes is threatened and, in conclusion, I urge the authorities, the Government, to do all they can to exempt the Maritime lumber industry from that unfair tax on lumber exports.


Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, I am happy to take part in this debate about the softwood lumber deal between Canadian producers and the United States. I had a little trouble following the logic of the previous speaker. It ought to be noted for the record that the producers in New Brunswick probably have the best insurance package of any producers in Canada. It is strange that when 92 per cent of their producers have exemptions they are still crying foul on the deal. I am sure the producers in the rest of Canada think that New Brunswick is in pretty good shape.
We must go back to the beginning. Probably everyone would wish that we did not have to debate this issue. We would all wish that there had been be no penalties, taxes or countervails, and that we had a free and open access across the border. After all, that is what the free trade talks are about. They are to open up the business relationship between Canada and the United States to give Canadian businesses wider access to the American markets.
We must keep in mind, however, that the reason we were in a countervail situation and had to negotiate the softwood lumber deal was because of the strong American dollar and the weaker Canadian dollar. The Canadian lumber producer did have a 38-cent advantage. In fact, because of the difference in the dollar, Canadian producers could charge the same price on the American market as it charged on the Canadian market and have a 35 per cent or 38 per cent advantage. That is what brought on the tension between the producers in the United States and those in Canada.
Due to this, there has been increased trade across the border, not only in lumber, but in all other industries which have been taking advantage of the market in the United States. Canadian industries have been able to strengthen their market positions in the United States because of the lower Canadian dollar. One plant in my constituency put on an extra
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shift six or seven years ago when the dollar had dropped to about 80 cents. They believed that if the dollar stayed at that level or dropped further it would be profitable for them to run another shift and ship into the United States. They gambled that the Canadian dollar would remain weaker than its U.S. counterpart. They expanded their operation by employing another shift and have been doing very well. We are all happy for them.
1 believe that even Opposition Members would agree that, although there are a lot of down sides to having a weaker Canadian dollar, it is because of that lower dollar that our manufacturers have been able to compete better in the United States. The fact is that this profitability has allowed our plants to improve and modernize and, consequently, in many cases, to be able to compete more effectively in the U.S. market. That is the good side of it.
In addition, this deal allows producers to plan. It is a fact that there has been insecurity in the forest industry in Canada for the past three years because it did not know how the American industry would respond to Canadian success. What we needed was a firm deal with the United States. It may be that we all wish that would not have been necessary, but the fact is that it was necessary. The Canadian industry now has a package which provides it with a framework which it knows will be in place and which allows it to plan its business in such a way that it can predict and anticipate the future. The clearest example of that was given by the Minister for International Trade (Miss Carney) the other day.
In the last days of December the stock market showed stock prices of some of the manufacturers as being 28 per cent below what it was after the deal. That is, after the deal the stocks of the leading manufacturers and lumber in Canada rose dramatically because the investors knew exactly where they were at and they could plan. They moved from a period of insecurity to a period of security. The deal allows investors to respond in a systematic way to U.S. competition.
Third, it is a good deal because it allows for adjustments to correct anomalies. The Hon. Member for Brant (Mr. Blackburn) pointed out that there are anomalies. All of us recognize that. There are members of the industry, particularly in the remanufacturing sector, who face anomalies and who will face a 15 per cent disadvantage in some of the product lines they manufacture. There is no doubt about that.
There is also no doubt that Appendix B is a very incomplete list. What Hon. Members of the Opposition have failed to point out, however, is that that list was compiled in the last days of the negotiation by the legal council of the remanufacturers from a list supplied to them by the remanufacturers. That is not to criticize those people. It is simply to say that it is an incomplete list and the deal in Clause 4(b) of the Memorandum of Understanding allows for those corrections by stating that there will be an opportunity to adjust the list. It states:
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The Government of Canada will collect an export charge on those products listed in Appendix B and such other further manufactured products as may subsequently be agreed to by the two Governments.
It allows for adjustment. While there may be some product lines not on the list, they will be there in the future. It allows for a change in trading volumes if the market turns in such a way that it puts the Canadian producer at a disadvantage. If Hon. Members will turn to Clause 8(d), they will see that the Canadian negotiators allowed for that kind of variable. Clause 8 (d) reads:
If exports from Canada to the United States of any of the products listed in Appendix A show a rapid and substantial decrease, the two governments will consult to determine whether any remedial action is required.
So what we have is an agreement which provides the framework for stability and adjustment.
Fourth, the deal allows for the kind of revenues to stay in Canada which allow us to upgrade our forest industry. Particularly those Hon. Members from British Columbia know that there is a lot to be done in British Columbia to bring the forest industry up to par so that we can continue to harvest that resource in the years ahead. We have fallen far behind. We will now have the resources to provide the kind of silviculture which will ensure that that industry is there in the future.
I would certainly urge the Province of British Columbia to make sure those dollars which flow into B.C. as a result of these taxes will be earmarked for the rejuvenation of the forest industry in British Columbia.
Let me say in closing that many comments of the Opposition have centered on the fact that the U.S. gave us a rough time and a raw deal. That is the way it is in these dealings. The Americans are hard bargainers. However, what the Opposition is forgetting is that the United States does not have to buy. In a free market system it is not obligated to buy. We want to sell. We think the United States ought to buy, but it does not have to. The very fact there is protectionism in the United States indicates that it does not have to if it does not want to. Therefore, we have to bring about the kind of market conditions and negotiatons which will make the Americans want to buy our products. That is why we have negotiated this deal.
I appreciate the opportunity to speak in this debate. I am particularly appreciative of the negotiators who worked hard into the last hours of 1986 to ensure that our industry in British Columbia and across Canada will remain secure in the future.


Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, let me say at the outset that this is a very sad day. I am very displeased I have to be here to deal with this legislation and listen to the kind of self-serving comments we have been hearing from the Government over the last few days. During the whole process of the American countervail action, the negotiations between the Government of Canada and the Government of the United States, myself, my colleagues, the Hon. Member for Thunder Bay-Nipigon (Mr. Epp) and the Hon. Member for Kenora-Rainy River (Mr. Parry), the three New Democrat representatives of northern Ontario, kept

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in touch with our industry and with the two major unions involved, the Canadian Paper Workers Union and the lumber and sawmills union. At each step of the process we found out from them what the impact was, what the communciation links had been and what their feelings were in terms of the decisions.
I can sum it very briefly by saying that those unions, the individual workers, the owners and manufacturers in the sawmill industry in northwestern Ontario, feel betrayed. They feel sold out by the Government. It was pointed out to us by the industry that for a while there was some consultation. During that consultation there was the 10 per cent final offer and the 15 per cent final, final offer. They were told we were going to fight this offer, and then all of a sudden there was no more consultation, no more communication, no more questioning of the industry. They were not asked: "What would the impact be if we tried X or Y or Z?" Therefore, they feel betrayed and rightly so.
Let us examine the specifics of the impact. I listened with interest to the Minister's introductory comments Monday afternoon at the commencement of the second reading debate. One of the things referred to by the Minister was that even the New Democratic Party could not find any evidence of any job loss as a result of this decision. That is not what we said, Mr. Speaker. I was here at the press conference. I took part in the national survey of the industry. What we found out was that there was great uncertainty, that there had been mills closed as a direct result of the initial decision by the United States and those mills were still closed and their future was even more uncertain as a result of the decision of the Government to make this deal with the United States.
As a direct result, back in the fall in Thunder Bay, according to company officials, the Great Lakes Paper Company stud mill was closed, throwing 80 people out of work. At that time the company said: "We will have to wait and see what the Government comes up with to determine whether or not we can reopen the mill". That is what the company said within a day of the word getting out about the agreement which was signed on December 30. Great Lakes Lorest Products was saying: "It really looks more uncertain now. In fact, we will have to take a look at our other stud mill operation in Dryden, Ontario," which mill had remained fully operational. Other mills elsewhere in the country have been closed, particularly mills in northern Ontario.
At the very least this agreement has dashed the hopes of those workers, at least in the short term, of getting their jobs back. It has thrown a spanner into other negotiations, since this same mill was forced to close a waferboard plant last May because of totally unrelated circumstances. I say that because I do not want to mislead Hon. Members. However, that has added to the confusion in that operation, which confusion has spread through the ranks.
I had a call from one of the workers who, on his own, spoke to some 100 workers who were doing some maintenance as a result of a temporary shut-down. He spoke to both mill workers and private contractors. They were angry about the decision and fearful for their futures. There is confusion out there, and there is fear about what has happened.
Something which has become clear to me through this process is that the Government of Canada and the officials directly involved in the negotiations really do not understand the forest industry in Canada. If they understood it they would not have done what they did. An American countervail duty, the Canadian export tax or an increase in stumpage fees do not in any way, shape or form affect the selling price of a product. The selling price is set by the market based on a variety of factors, most particularly demand. When people are building homes they are buying two-by-fours. When more people are buying homes more two-by-fours are bought and the price goes up because there is greater demand. However, when no homes are being built no one is selling two-by-fours. All the Government of Canada has done, in co-operation with the Government of the United States, is increase the input costs of softwood lumber, whether it be two-by-fours, treated lumber or the items spoken about by my colleague who referred to manufactured products. It has increased the cost of producing that product.
To use a word which has been bounced around frequently, the situation is an anomaly. At a time when there is great concern about the industry we are seeing share prices going up. The Chicago market has been going up. Because of the unusually mild winter, construction has continued on through what is normally a slump. That may last for a while longer. However, we do not know what will happen in the spring. Those mills which have stayed open in northern Ontario have been stockpiling. They have been keeping their workers employed as a result of stockpiling for the spring when construction will resume, at which time there will be a heavy demand. They do not know how long they will be able to do that. In fact, it can only be done up to the point when it will become cheaper to shut down than it is to continue to take a loss.
Ten minutes is a very short period of time in which to deal with a problem that is now affecting hundreds of people in northern Ontario, and which has the potential to affect thousands. I will be proud to stand in my place on behalf of my constituents to vote against this Bill when we have the opportunity to do so.


Sheila Maureen Copps: Mr. Speaker, we have heard a number of Members, both today and in the last two days, outline some of the specific technical problems which we will face as a result of the Government's unprecedented move of kneeling down before the demands of the United States on the lumber issue. Today, I ask Hon. Members to look ahead with respect to the results of this agreement. Lor example, let us consider a constituent in the riding of Hamilton East who is looking at this agreement wondering what effect it will have on
January 21, 1987

his or her livelihood in the future. We must recognize the general concern that is being felt across the country as a result of the signing of this agreement.
The Conservative Government has embarked on an unprecedented move. It has bowed down to the United States on trade issues to the point where, in this particular agreement, the Canadian Government has agreed to open its books on softwood lumber to perusal, to investigation, by the United States. I would like to quote from the Memorandum of Understanding which states:
The Government of Canada will provide the Government of the United States of America with data concerning the level of Provincial and Federal softwood and total stumpage harvest, the total revenue collected from the sale of Provincial and Federal softwood and total timber, total export charge collected, total shipments of certain softwood lumber products to the United States of America, total lumber production by province and total softwood lumber production by province, for each fiscal year-


Mr. McDcrmid:: From what are you quoting?


Sheila Maureen Copps: A direct quote from the Memorandum of Understanding which was signed as part of the infamous agreement which sets out the ground rules whereby the Government of Canada is saying to the United States: "Not only are we guilty but we will pay 15 per cent. On top of that we will open up our books to you so that you can come in and have access to them".
Not only will there be access, the agreement permits the U.S. Government to dictate domestic policy in Canada. We know quite clearly as a result of the tenor of the agreement that at the moment a 15 per cent export tax is being imposed by Canada. At the same time, to ensure that no other Canadian Government is involved in any way in assisting some of our failing industries, the Americans have made it quite clear that no provincial Government will have the authority to set domestic policy for timber agreements within the context of our provinces and our country. If I were a steelworker sitting in my easy chair in the riding of Hamilton East I would be feeling very uneasy at this moment. Today, the issue is softwood lumber. Who knows what it will be tomorrow.
Canada has been a fair trading partner in the steel industry, as we have been in the softwood lumber industry. This was borne out by the judgment rendered in 1983, at which time it was determined that, yes, Canada was a fair trading partner. We are a fair trading partner in steel. But now that the Americans have seen how quickly the Minister for International Trade (Miss Carney) dropped the ball, how quickly she bowed down to the Americans, why should they stop at softwood lumber? Why not deal with pulp and paper next? Or why not deal with the steel industry next? Why not the Auto Pact?
We all witnessed the pitiable situation in the House today when the same Minister, who was touting this agreement as being a safeguard to Canada's sovereignty, told the House that when George Bush came to Canada the Canadian Government did not have the guts to tell him in black and white that the Auto Pact is not to be a subject of discussion. That was not even talked about. The Canadians did not even bother, even
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though we have all heard the chief negotiator, both in the United States and in Canada, reiterating on more than one occasion that the Americans have not ruled out the Auto Pact.
On the one hand, we have before us a single agreement. However, what it represents is a sell-out by the Conservative Government. It is a sell-out which will not only cost us jobs in the softwood lumber industry in the short-term, and which will not only affect consumer prices in Canada with respect to softwood lumber and construction of homes, it will also foretell and portend future concerns in other industries in which we have already been deemed to be fair trading partners.
My colleague, the Hon. Member for Westmorland-Kent (Mr. Robichaud) stated earlier today that the European Community is looking greedily at this same agreement. If the Americans were so easily able to get the Canadian Government to bow down on softwood lumber, why should we not impose the same type of pressure?
By signing this agreement, Canada has effectively bargained away our position in the GATT because we are developing a bilateral agreement which excludes the same competitive aspects that may be available to other countries. What is Canada getting in return? We heard our colleague on the Conservative side say that the Americans are hard bargainers. We, in the House of Commons, through the Conservative Party, have made this so-called free trade agreement the corner-stone of policy.
Imagine my surprise when over the holidays I heard the Prime Minister (Mr. Mulroney) state that he would stake his political career on the free trade agreement. If the softwood lumber deal is any indication of so-called leadership, translate capitulation, that we can see by this Government, then I can tell you that Canadians from coast to coast in the lumber industry, the steel industry, and the auto industry would rather trust our sovereignty to another Government, to another political Party.
Four years ago when the same type of protectionist noises were coming from the United States, a Canadian Liberal Government held firm. It said that we have fair trading practices, and we are prepared to test those in the international courts. We tested those practices and we won because we essentially believed that the softwood lumber industry in Canada was a fair, competitive industry which could compete with the best of any nation without government assistance.
Yet, on this side of the House, as soon as we heard noises from Washington, the Minister for International Trade and her colleagues bowed down. The first statement was that we will give you 10 per cent, that is our final offer. Then it was 15 per cent. Then over the Christmas break we saw the hastily constructed agreement which not only saw our Government agreeing to charge our producers 15 per cent to sell our softwood lumber to the United States, but at the same time we

January 21, 1987
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told the Americans to come and examine our books. The Minister for International Trade is empowered by this legislation to allow anybody that she wants to examine our books with respect to our export taxes.
In Clause 19(3) it states:
Every person required by subsection (1) to keep records-shall-make the records and books of account and every account and voucher necessary to verify the information therein available to officers and other persons thereunto authorized by the Minister and give them every facility necessary to inspect the records, books, accounts and vouchers.
That means that Canadian industries could be required by the Minister to allow any American to examine the books of our companies.


John Horton McDermid: It is a standard clause in all tax Bills.


Sheila Maureen Copps: The Member says it is standard tax policy. Is it standard tax policy that we allow Americans to come in and examine the books of Canadian companies? That is exactly what this particular section is recommending.


John Horton McDermid: That is wrong.


Sheila Maureen Copps: If the Member took the time to read the Memorandum of Understanding, he would know that the Americans make it quite clear that they wish to have the chance to come in and go over every nook, cranny, ledger, and every one of our books to determine whether, in their reckoning, we are paying the fair tax.


John Horton McDermid: What clause is that?


Sheila Maureen Copps: It is Clause 7, paragraph d.:
If the Government of the United States of America presents the Government of Canada with information showing its concern with an identified problem of evasion or underpayment of the export charge or replacement measures, the Government of Canada will provide to the Government of the United States of America information relevant to such concerns. The Government of the United States of America will hold such information in the strictest confidence-
We are opening our books, our country, and we are selling out to the Americans. It is being aided and abetted by a Conservative Party that does not understand the meaning of the word sovereignty. We should be fighting this Bill. It is the first step in a longstanding possibility of losing the type of sovereignty that we have known in Canada.


Mr. Aurele Gervais (Timmins-Chapleau):: Mr. Speaker, I want to thank you for giving me the opportunity to take part in this most important debate on Bill C-37.

I feel compelled to express my views today on the current Bill relating to the 15 per cent export tax on softwood lumber exports to the United States.
As the Member for Timmins-Chapleau, representing a constituency of northern Ontario, I have a vested interest in ensuring the federal Government's endeavours in the softwood lumber issue are in the best interests of all Canadians, particularly those in northern Ontario.
At issue is a 15 per cent federal export tax imposed by the federal Government on all softwood lumber exported to the United States. Considering the following facts, the potential ramifications of the tax on northern Ontario are serious indeed.
Let us consider a brief profile of northern Ontario as it relates to the sawmill industry, 90 per cent of all wood cut in northern Ontario is softwood; 80 per cent of total softwood cut in Ontario is from the northern region of the province; 28 mills account for 85 per cent of the softwood lumber cut in Ontario;
6,000	people are directly employed in the sawmill industry with an annual payroll of $117 million.
In northern Ontario, we are painfully aware that northern Ontario's economy is largely resource based. There are communities that are totally reliant on softwood lumber. Therefore, as a Member of Parliament representing a constituency in northern Ontario, I am sensitive to the special needs and concerns of the residents of the region. The reality of the situation is that, if Canada had not pushed the U.S. into an agreement on softwood lumber, the Americans would have imposed their own countervailing duty. In fact, they had imposed a 15 per cent countervailing duty on Canadian softwood going into that country since October, 1986. The American countervailing duty, if implemented, would have been disastrous for Canada and northern Ontario.
If we had not pushed for an agreement, the United States could have imposed a higher countervailing duty, resulting in a loss of some $600 million. An American countervailing duty would deny all company exclusions. Under the countervailing duty process, the U.S. Commerce Department conducts annual reviews and can unilaterally determine the value of changes in provincial stumpage practices. The countervailing duty rate is established in these annual reviews and can be revised retroactively.
The actual level of the countervailing duty will vary with changes in the perceived subsidy level and would increase in a down market.
Under the negotiated agreement, the federal Government will return revenues to the provinces predicated on export performance. Under this plan, Ontario could conceivably earn from $35 million to $45 million based on export performance of the softwood producers. Eventually, replacement measures will be instituted by the provinces so that they can be responsible to collect the fees themselves.
From a northerner's perspective, I am pleased to hear that the Ontario Government plans to return its share of these funds collected by the federal Government to the northern region.
The Premier of Ontario has already announced his Government's intention to use the recouped moneys earned by the 15
January 21, 1987

per cent export tax to retrain affected lumber workers. It may even set up a heritage fund for northern Ontario. I support these initiatives since the provincial Government appears to be in agreement with the federal Government's commitments to assisting northern Ontario.
I have many personal views of where these funds might be expended for the forestry sector in northern Ontario-first, on greater control of the spruce and jack pine budworms which have been devastating our forests for years; second, on a better and higher rate of reforestation; and, third, on the search for expanded international markets in Europe and the Pacific Rim in order that we are not totally reliant upon the United States markets.
I do not deny that a 15 per cent export tax on Canadian softwood will hurt softwood lumber producers in northern Ontario. The federal Government is concerned about potential ramifications to the industry. To this end, we have been in contact with the Canadian Forestry Service which is monitoring the activities of 28 sawmills across Ontario that account for 75 per cent of the softwood cut in Ontario. The survey will assist the federal Government in determining the impact of the 15 per cent export tax on the industry. We will be pleased to share the results of the survey and other information pertinent to the industry with the provincial Government of Ontario and with the industry.
In my riding of Timmins-Chapleau, I have communicated with all major softwood lumber producers in the region to discuss the 15 per cent export tax. The individuals involved in the industry are fiercely independent, hardworking people. They are sincerely devoted to free enterprise and are mature enough to understand the issue and draw their own reasonable conclusions. They are not ready to close down or lay off.
Some of them expressed concerns or reservations about the impact of the duty on the industry. However, all of them agree that it is better having the money remain in Canada as opposed to paying a duty to the United States. That is precisely what would have transpired if this particular deal had not been achieved. Allowing the Americans to impose and retain a 15 per cent countervail duty would result in the loss of at least $600 million. Now that the money will remain in Canada, it will be reinvested in our own country instead of providing the Americans with a financial windfall.
It is important to consider the nature of the softwood industry. It is a cyclical business, affected by many extenuating influences such as building starts and weather conditions. As a cyclical business it is prone to regular slow-downs and even shut-downs. During this period sawmill owners take advantage of the time to do other important related activities such as machinery maintenance, building maintenance, et cetera.
While I do not deny a tax increase is not altogether healthy for the softwood industry, or for any other industry for that matter, it is crucial to consider that the industry has periods when its productivity is reduced. This is a natural occurrence
Softwood Lumber Products Export Charge Act
in the business. One must not confuse regular lay-offs or shutdowns with any potential effects of the duty on the industry.
I am disappointed the Opposition has chosen to confuse its political ambitions at the risk of ignoring the real issue. By citing statistics on what it perceives as direct lay-offs in the industry as a result of the duty, they are inciting panic.
As I stated, I am prepared to support the provincial Government in its endeavours to assist affected lumber workers. I stress at the same time the importance not to panic or over-react to instances where lay-offs might indeed be veritable regular causes and effects of the industry.

Mr. Speaker, the federal Government is deeply convinced that the deal reached on December 30, 1986 with the United States is the better of two difficult alternatives for Canadians and the Canadian forest industry. It protects Canadian sovereignty because it preserves the integrity of the Canadian stumpage system. Had the Americans refused to respect our control over Canadian resource policies, we would have had no hesitation in rejecting the deal.

I should like to refer for a minute to the comments which the Hon. Member for Hamilton East (Ms. Copps) made just a few minutes ago. I am surprised that since the beginning of the debate the only solution proposed by the Liberal Party was one which would propel us into an outright trade war with Americans. This is what we want to avoid at all costs.
I can assure the House that the sovereignty of the softwood lumber industry has been maintained. I support the Bill of the Hon. Minister for International Trade (Miss Carney). I will not relinquish my efforts to fight for the lumber industry in northern Ontario specifically and for the lumber industry in all of Canada.


David Orlikow: Mr. Speaker, it is obvious to anyone who has read United States newspapers and magazines for at least two years or three years, except of course the Prime Minister (Mr. Mulroney), that the protectionist sentiment in the United States has been accelerating at a rapid rate as the American economy slowed down and as traditional industries, such as the steel industry, the auto industry, and the micro-electronic industry which employ hundreds of thousands of people, came under attack and succumbed to competition from Japan, West Germany, France, and Italy, just to mention a few countries.
Of course we must deal with the Americans. They are our neighbours and our biggest customer. We cannot live without them. Any arrangements we make or any agreements we conclude with them must bring benefits to both Canada and the United States.
When the Prime Minister met with President Reagan, they both approved of the concept of free trade between the United States and Canada. However, the Prime Minister ignored the

January 21, 1987
Softwood Lumber Products Export Charge Act
fact that in the American political system, unlike our parliamentary system, the President may have or say he has a policy, but the House of Representatives and the Senate, as well as members of his own Party, do not have to support him. That is precisely what happened.
When the Prime Minister of Canada and the President of the United States agreed to explore the possibility of free trade between our two countries, one would have thought that there would have been no harmful acts on the part of either country at least during the period when discussions were ongoing.
However, what have we seen since the meeting between the Prime Minister and the President in Quebec City? The Americans have taken action. They have slapped duties on shakes and shingles, steel pipe, fish from the East Coast, hogs from Manitoba and Saskatchewan, and now on softwood lumber which brings billions of dollars into the Canadian economy.
The Americans announced that they were considering a tax on the Canadian softwood lumber industry on June 26, 1986. The then Minister for International Trade vowed that Canada would fight the case to the end in the ways permitted under American law and in the ways which stopped a similar proposal a few years ago.
When the Prime Minister appointed the new Minister for International Trade (Miss Carney), he said: "Just watch her go". We have been watching her. On September 30, the present Minister made the first-and these are her words- "final offer to the United States to settle the dispute by raising stumpage fees on an average of 10 per cent". That was rejected by the American lumber industry.
Then what happened? On December 30, the Minister agreed to another final offer, a 15 per cent tax on Canadian softwood exports. Why did she agree to that? She indicated in the House that the agreement would avoid dangerous development in U.S. countervail policy by having the petition withdrawn. Also she indicated that it was central to the negotiations that in return for a negotiated settlement the actual petition brought by U.S. interest groups, the U.S. Coalition for Fair Lumber Prices, would be withdrawn.
The Minister implied that the agreement meant that the softwood lumber issue was set aside and there would not be a ruling by the International Trade Commission of the United States which would set a precedent for other areas and for other industries. In other words, we would not have to worry about this situation affecting other areas. But that is not what is happening. The Financial Post, one of the two major newspapers servicing the interests and the needs of the business community, on January 5, 1987 in an article entitled "Playing by America's rules" had this to say:
Just last month Washington's Federal Energy Regulatory Commission ruled Canada's longstanding method of charging U.S. pipeline customers for natural gas must be changed to conform to internal U.S. practices. The requirement- now being appealed by Ottawa-could force Canadian gas exporters to absorb
much of the cost of shipping to the border, instead of passing them on to U.S. customers.
The Financial Post for January 12 estimates that this could cost the Canadian gas companies $450 million. That indicates quite clearly that the settlement agreed to by the Government has not ended the tax on our resource industries and probably not on our manufacturing industries which United States' interests will take to try to protect their own markets.
In the same article entitled "Playing by America's Rules" in The Financial Post for January 5, 1987 we read:
A recently formed coalition of U.S. coal companies and electricity producers, for example, is charging that provincial ownership of power companies in Canada-such as Manitoba Hydro, B.C. Hydro, Hydro Quebec and Ontario Hydro-means lower borrowing costs and no taxes, providing a major subsidy to Canadian power exports. A trade case may soon be launched.
The Province of Manitoba, from which I come, has invested billions of dollars in building a new power plant because it was able to make agreements with customers, large utilities, in the United States to sell power to states for distribution to customers at a cheaper rate than they could get it from alternate sources. Premier Bourassa of the Province of Quebec is proposing major expansions of the James Bay hydro project because he wants to sell the power to the northeastern United States.
The kind of opposition which the utilities and the coal producers in the United States will likely launch against the sale of power, using the same arguments that they used in the softwood lumber dispute, could have tremendously severe adverse effects on Canada. The Minister, who as the Prime Minister said "Just watch her go", has gone in a way which has proved a major defeat for the Canadian lumber industry. She has opened the door in the electrical power industry, in the natural gas industry, probably the steel industry and the auto industry, just to mention a few, to take the same action, using the precedent which the Americans were able to establish in this case to put the blocks to Canadians.
This decision by the Government not to fight the case as it could have in the proper way, in the way permitted by U.S. law, was a major mistake. It will have the most serious effects on hundreds of thousands of Canadians. It is one which this Party to which I belong cannot accept and one which we will oppose here and in every other way in this House and outside if we can.


Mr. Alain Tardif (Richmond-Wolfe):: Mr. Speaker, I welcome this opportunity to speak to this very controversial legislation, Bill C-37. When we talk about this question we are talking about an industry where tens of thousands of Quebecers are earning a very decent living. When we see how the situation has evolved in the course of negotiations, Mr. Speaker, I think we should take every opportunity to vigorously oppose this kind of agreement and do so for a number of reasons.
I listened with great interest to what was said by a number of Government Members, which was, substantially: We have
January 21, 1987

just signed an excellent agreement with the United States. It is excellent for the simple reason that the 15 per cent tax which in fact represents about $600 million will not be paid to the Americans. This money will stay in Canada. That seems to be their motivation and reasoning for endorsing and supporting this Bill. Mr. Speaker, I submit, with respect, that this reasoning and this logic would only make sense if we assumed that the United States would otherwise have won their case for imposing a tax. Actually, there is a precedent, because this is not the first time the matter has come up. There was a precedent where the Canadian position won out, and the United States had to drop their plan to impose a tax. I repeat, this agreement is entirely unacceptable, for a host of reasons.
First of all, and my colleagues on this side of the House have said this repeatedly, it is a direct attack on our sovereignty. To those who are inclined to believe this is not so, I say that at least part of the agreement would seem to be very significant in this respect. I shall read it, if I may:
"The Government of Canada will provide the Government of the United States of America with data concerning the level of Provincial and Federal softwood and total stumpage harvest, the total revenue collected from the sale of Provincial and Federal softwood and total timber, total export charge collected, total shipments of certain softwood lumber products to the United States of America, total lumber production by province and total softwood lumber production by province, for each fiscal year within three months of the close of the fiscal year."
Mr. Speaker, what I have just read is an integral part of the memorandum of agreement, and 1 think the conclusion is obvious. What we have here is blatant proof that the United States will now be entitled to interfere directly in a sector that in my view is a strategic and vital one and one of the most important industries in our economy. That in itself is sufficient indication that what we have here is interference and a serious attack on Canadian sovereignty.
Mr. Speaker, there are also the consequences of the agreement. The federal Government is the official party to this agreement. However, it so happens that the forestry sector and the lumber industry fall within the exclusive purview of the provinces. Now, at first glance, that 15 per cent levy might be expected to total some $600 million, but it could also come up to much more. What about those $600 million? People have said, and I hope they are right, that the $600 million will be redistributed to the provinces on the basis of their lumber exports to the United States. This of course would mean additional revenues for the producing provinces.
But the question is this: What will the provinces be doing with that tax money? Clearly, in my own Province of Quebec, we have a specific forestry problem, a reforestation problem. We have a problem in the sense that we must make huge investments in that strategic sector. Those who are concerned about that important question of course would be tempted to
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see in those future revenues the possibility to use them to meet expenditures that are absolutely vital for Quebec's future.
But no, that will not be, Mr. Speaker. The province of Quebec will not be allowed to use those monies the way it would like, because the Americans are telling us those funds cannot be used to support the lumber producing sector.
At that point, Mr. Speaker, we in Quebec will be faced with a still more dramatic problem-producers will have to, first, pay the 15 per cent tax, and, second, dig into their pockets for the investments needed for reforestation. This means that many producers will be so hard pressed that unfortunately it is to be expected that in a near future we will be faced with a whole series of sawmill shut-downs.
Mr. Speaker, I was rather surprised as well when I heard my colleagues opposite, particularly those who come from Abitibi, say that they had consulted practically every single producer and that nearly all of them endorsed the agreement.
Mr. Speaker, allow me to say that I too had discussions with a number of producers, including some of the most important, and that I found the picture to be quite different. Right now they are very concerned-shocked might be more accurate- about the dire consequences which the agreement mentioned in this Bill will have on the industry.
As I see it, Mr. Speaker, another aspect which must be pointed out is the principle underlying the whole negotiation process.
Last Monday I listened to the Hon. Member for Charlevoix (Mr. Hamelin) when he gave us his own version of a progress report on the negotiations. Here is how I would sum up his remarks: Gentlemen, let us be realistic. Canada is a country which borders on the United States, a country which happens to be much bigger, much more powerful, and much more important than Canada. The Hon. Member for Charlevoix even referred to David and Goliath as an example, Canada being David, of course. He told us: In the normal course of events it is practically impossible that a power the size of Canada, confronted by a superpower like the United States, would be in a position to negotiate on equal terms and hope to reach an agreement that would not compromise its sovereignty-
Mr. Speaker, if we suffer from such an inferiority complex, if we feel so powerless, and if we think that a superpower such as the United States can do pretty well as it pleases, I suggest we should be very concerned about the future and especially about the free trade issue that is currently making headlines.
Mr. Speaker, if we start on the premise that Canada is a very small country compared with a superpower such as the United States, it is like admitting publicly that we must surrender and give up on almost all areas.


Charles L. Caccia: David won.


Alain Tardif: My honourable colleague reminds me that, in the Bible, David really did win. Based on my honourable friend's logic, Mr. Speaker, I suggest that in this case Canada

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should have negotiated as an equal and signed a deal which could protect the interests of Canadians in this major industry.
To conclude, Mr. Speaker, may I say that I represent a riding which is clearly a major pulp and paper producer which uses a large amount of wood. What guarantee do we have that, in the near future, the American Government will not act as it did in other circumstances and impose its own tax on our lumber?
In my opinion, Mr. Speaker, this is a major surrender by Canada vis-a-vis the United States and it is a source of major concern for the future.


Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, this afternoon I rise to speak on Bill C-37 and more precisely on the amendment of the Leader of the Opposition (Mr. Turner) providing that an Act respecting the imposition of a charge on the export of certain softwood lumber products be not now read a second time but that it be read a second time this day six months hence. I am left wondering what would happen if we were to accept this amendment since we as a nation have already signed a memorandum of understanding and we have commenced doing what we said we would do.
The opposition Parties are fostering doom and gloom and are claiming that the sky is falling in. Last summer when a tax on cedar shakes and shingles was levied, they felt that it was the end of the world. As a Member from British Columbia, I feel that that tax on cedar shakes and shingles did have some effect on us but nevertheless, that industry has got back up to at least 80 per cent of its capacity and is doing quite well.
I am not here to suggest that this is the finest agreement that has ever been entered into, but I must say that under the circumstances in which we had to negotiate, it is the best of a bad deal. It is a bad deal when another country threatens to take severe action against products crossing its borders. Nonetheless, it has a right to do so.
So it was that nine provincial premiers came to the federal Government and asked if we would help fight against this action. It was the federal Government's role to take this matter up on behalf of the producers and the provinces. After the preliminary determination came down which found that a 15 per cent duty would be levied or at least that bonds would have to be posted, the provinces asked us to try to negotiate a stop to this. We acted in concert with nine out of 10 provincial premiers who asked us to take part in it.
British Columbia has been seriously affected by the impact of the actions that have been taken. The Province of British Columbia accounts for some 60 per cent of the Canadian production of lumber and some 58 per cent of the value of lumber shipped out of Canada. Needless to say, about 80 per cent of Canadian softwood lumber is exported to the United States, and this seriously affects British Columbia.
There are some anomalies in the agreement that has been signed and these have been identified by various producers in the re-manufacturing sector, the people who add value to the product itself before it is shipped. Some of the anomalies that have crept into the agreement have serious consequences on many of the companies located in Fraser Valley East. Nonetheless, the majority of those companies will, I am sure, be able to work around the agreement the way it now stands. As they get on with it, I am sure they will still be in business a year from now.
Some of the products were not put on the Appendix B list, however. That covers those products which are not taxed on the value added to them in the manufacturing process. That list is not broad enough so we will have to negotiate in order to expand it. Allowance has been made for that in the agreement. I might add that if I had my druthers between doing that or taking the originating mill as the f.o.b. point, I would rather take the originating mill as the f.o.b. point. Be that as it may, we are not renegotiating that agreement today.
We have been hearing a lot of doom and gloom from the opposition Parties about this agreement. I would like to read from an article in The Windsor Star. The article is headed "Area lumber yards refilled with softwood, employees." I will just highlight some of the points made in the article. It says:
All 20 workers laid off shortly after the imposition of the U.S. tariff have been recalled by Van De Hogen Material Handling Inc., one of Windsor's largest reloaders.
The lumber pact restored "much needed'' stability to Canada's woodexporting system, said John Van De Hogen, president of Van De Hogen.
U.S. lumber users shied away from importing Canadian wood because they were uncertain about the outcome of tariff negotiations. But with the uncertainty gone, "things are beginning to get back to normal," Van De Hogen said.
Van De Hogen said the tariff dispute has little to do with low stumpage fees. "It has everything to do with our low dollar. It's cheaper for the U.S. to buy our lumber with their dollar."
As long as a significant gap remains between the two dollars, Americans will continue buying Canadian lumber. On top of this, he said, the quality of most Canadian lumber is vastly superior to the quality of the U.S. product. "The simple fact is, they need our lumber."
"After mid-February we expect our volumes to be slightly lower than is normal for this time of year," McKeown said.
What we have before us is the legislation needed to ensure that our Customs and Excise officials can get on with the job of collecting this tax. I for one support the Bill even with its imperfections because there is a job to be done and we cannot hide from that fact.
It is interesting to note that the unions concerned in British Columbia are supportive and complimentary of the Government over the action which has been taken. Both sides of the British Columbia legislature agree that this is the best that could have been done under the circumstances. It seems strange that both opposition Parties in this House are condemning the agreement, yet the people most affected are telling the Government that we have stuck up for them, gone out on a limb and obtained a partial victory for them.
January 21, 1987

In closing, I just want to say that I am pleased our trade negotiators were able to get this agreement and I will continue to work with them and pass on information from the various companies concerned in Fraser Valley East to make sure that the imperfections contained in the Bill are corrected. This situation posed a serious threat to those companies and caused them great concern. Nevertheless, the agreement we now have in place was necessary and this legislation should be passed immediately.


William Alexander (Bill) Blaikie: Mr. Speaker, I am glad to have the opportunity to say a few words about this Bill and respond to the remarks of the Hon. Member for Fraser Valley East (Mr. Belsher) and several other speakers on the government side who have made much of the fact that members of the trade union movement, presumably in British Columbia and perhaps elsewhere, have supported what the Government has done. Whether that is the case or not, it is not what I intend to comment on. I want to comment on the irony in the fact that Progressive Conservatives, particularly the leadership, are in the habit of getting up and accusing the NDP of simply being the voice of the CLC, as if there were something wrong with that. We have been accused of taking our orders from the labour movement and so on. Those Members are now criticizing us because in their judgment we have taken a view different from that of certain trade unions on this matter. That simply goes to show that we do not take orders from the CLC or any other trade union movement-


John Horton McDermid: The only thing you take from them is money.


William Alexander (Bill) Blaikie: I have certainly struck a nerve. There is an old saying that when you throw a stone into a pack of dogs and you hear them yelping, you must have hit something. That certainly seems to be the case today. What is clear from our position is that we do not take orders from anyone on this. We have made an independent judgment with respect to which the Government may disagree. Fair enough. Obviously it does because it has come to an arrangement with the United States that we fundamentally disagree with. I simply wanted to point out the irony, if not the hypocrisy-and I of course would not accuse the Hon. Member of hypocrisy-in getting up and trying to use the unions against the NDP when the leadership of his own Party, on the floor of the House of Commons, is in the habit of making snide remarks about the relationship between the NDP and the trade union movement. Let us put that to rest and recognize that political parties have to make independent judgments about what they think is in the best interests of the country at large.
The Progressive Conservative Government of Canada was faced with a very difficult situation, I admit that. It made a certain judgment as to what would be the best course of action to take. We in our view are critical of that judgment.


Ross Belsher: What about your provincial counterparts in British Columbia?
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William Alexander (Bill) Blaikie: Our provincial counterparts in B.C. disagree with our decision? Big deal. 1 do not take my orders from the provincial NDP in British Columbia either. We make judgments as a federal caucus as to what we think is in the best interests of the country. We think, faced with this difficult situation which no one has denied, that the Progressive Conservative Government opted for short-term gain and the consequences will be long-term pain. That is the exact opposite of the philosophy of the Member for St. John's West (Mr. Crosbie) who, as Minister of Finance, on December 13, 1979, exhorted us to accept short-term pain for long-term gain. We see the wisdom of the Minister's philosophy now, if not of the measures he wanted to introduce at that time.
The fact remains that the Government was faced with a difficult situation with regard to the $600 million. However, there was only a chance that we would lose the money. We maintain that we could have won the case. However, let us imagine that we lost it. The arrangement which the Government has made has set a precedent to allow the United States of America to poke its nose into any industry in which it feels it can be successful in bullying the Canadian Government into thinking that it cannot win, as it did in the softwood lumber industry.
The real issue in this debate is the nature of Canada's relationship with the United States. Much of what we are is defined by our relationship with the United States. I contend that one of the reasons the Government is so low in the public opinion polls is that Canadians in general do not like the approach the Government took with respect to Canada-U.S. relations. Although Canadians are concerned about corruption, conflict of interest, and all the other things, the thing which bothers them most about the Government is the fact that since September, 1984, there has been a systematic restructuring and selling out of our traditional relationship with the United States. It began with the dismantling of the Foreign Investment Review Agency and the National Energy Program. It has continued with the Government's attitude toward the United States in regard to transboundary environmental problems, an area in which I have taken a special interest.
Even after today's visit by Vice-President George Bush, the Government is still not being honest with Canadians about what we can legitimately expect from the United States on the acid rain issue while Mr. Reagan is the President. The Government should be honest with Canadians and say that we cannot expect anything from that bunch of yahoos in the White House. The Prime Minister (Mr. Mulroney) does not have to use the word "yahoos", but they should be honest about what we can legitimately expect on transboundary issues.
Canadians would appreciate an honest declaration of failure because it would at least be failure with integrity. It would be failure as a result of having our say, asking for justice, and

January 21, 1987
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being denied it. If acid rain continues to fall on us, at least we would have some self-respect. We presently have neither a reduction in acid rain nor self-respect. I commend a more self-respecting approach to the Prime Minister in these issues. More than failure in our relationship with the United States, Canadian people deplore the context of that failure. Canadians want to see a self-respecting country asking for justice rather than the supine, sanguine acquiescence which has been characteristic of the Government.
I am sorry that I have only 10 minutes to speak because I have a lot more to say about this and other issues which fall within the framework of Canada-U.S. relations which I believe is the Achilles heel of the Government.


George Roland Henderson: Mr. Speaker, 1 am pleased to take part in this debate. One may wonder why a Member of Parliament from Prince Edward Island would get excited about this agreement since we are not known as a major exporter of softwood lumber products. We are known, first, as an agricultural province and, second, as a province with a great stake in the fisheries, that being our second most important industry. We are known as well for tourism.
However, forestry is also a very important sector on Prince Edward Island. Over the years we have negotiated forestry agreements with federal Governments which have done much for Prince Edward Island with regard to reforestation. I am sure that if this agreement does not affect the ability of the federal Government to deal with the provinces, Prince Edward Island will continue to ask for support in an effort to regain some of the forests which have been lost.
In the 1800s one of the main industries in my province was shipbuilding. I represent an area of the province which was most prominent in that industry. In the Port Hill area we now have a museum of the shipbuilding industry. We used to have tremendous stands of softwood and hardwood lumber, especially hemlock. Therefore, Prince Edward Island had a major stake in the forestry industry at one time. However, since the land was very fertile, many of the forests were cut down to make room for the agricultural sector. We still have a lot of Class 3 land which can produce a lot of good quality lumber. That is why we are in the reforestation business at this time.
I would like to discuss this Bill in terms of what it does to our relationship with the United States and to the sovereignty of Canada. Bill C-37 is entitled "an Act respecting the imposition of a charge on the export of certain softwood lumber products". My colleague, the Member for Humber- Port au Port-St. Barbe (Mr. Tobin), said that the Bill should be entitled "an Act respecting the imposition of the American administration's will on the weak and vacillating Tory administration in Canada".
Members on the Government side have said that Members of the Opposition do not like the Americans. That is not true at all. My father came to Canada at the age of nine years. He and my grandfather selected Canada as their home at that
time. My Dad passed away one year ago at the age of 94. He was a great Canadian.
I must say that most of my relatives are Americans. Actually about 75 per cent of my cousins live in the Massachusetts area. Therefore, I do not feel that I, or most members of the Opposition, have anything detrimental to say about the Americans. They have been good neighbours and good allies. Certainly Canada has done an awful lot during its history in conjunction with the United States. However, we all have good neighbours in our various localities. That does not mean we have to crawl into bed with them. We want our country to remain an independent sovereign nation.
1 look at this tax as an erosion of our sovereignty. There have been many indications of this erosion since this Government took power. There was the ice-breaker which moved through our northern waters without asking permission, not recognizing our sovereignty in the North. That was a very contentious issue. I know the Government did a lot of howling about it and I am sure the Canadian people in the last year or so, and as long as this Government is in power, will certainly take a tough stand when it comes to our sovereignty as it relates to the North and, certainly, as it relates to our country.
The softwood lumber export tax is a vitally important matter for many reasons. Of course, my colleagues have expounded upon those reasons at some length. We have heard about the negative economic impacts. However, in the short time I have to speak, I would like to comment a little more about the loss of sovereignty. I would like to expand on the subject with regard to the limits this sort of action puts upon Canada's ability to manage its own natural resources. I might add that this episode is only the latest in a number of U.S. tariff measures taken against Canadian exports since this Government took office.
In June of 1985, the International Trade Commission imposed a penalty duty of 20.75 per cent on imports of dried salt codfish from Canada. The affected companies included the Canadian Saltfish Corporation and the United Maritime Fishermen. There were other companies in Labrador and down through Quebec, some of them in the Prime Minister's own riding. These companies were all affected by the imposition of that duty. Last March, 1986, we had a 5.82 per cent duty imposed on fresh Canadian groundfish exports destined for the United States markets. Originally, there was a preliminary study which suggested it should be 6.85 per cent. However, after going through the proper channels it was found it should be only 5.82 per cent, and that was the duty which was imposed.
We did not see any great change in the fish market with the United States over that duty, but there was a good reason why that did not happen. That was because of the value of the Canadian dollar in relation to the American dollar and also because the markets were extremely strong in the United States. Therefore, it did not affect the Canadian fishing
January 21, 1987

industry to any great extent. However, given the fact that those conditions can change and change quickly-and we are seeing right now the dollar strengthening against the U.S. currency-I am very concerned. Ten minutes is not long enough to go into it thoroughly, but I will be speaking again on this Bill. Hopefully, I can speak for 20 minutes then.
1 am very concerned, as are other members of my caucus, about the signals this kind of deal is giving to Canadians and what it is going to do to our natural resources. We have had a number of programs which were cut back. The fishing vessel subsidy program was cut back along with other programs under the Department of Fisheries. How did the Minister explain that? It was because of the countervail duties. 1 do not believe it is going to stop there. As a Prince Edward Islander, I am concerned about the fisheries and about our potato industry because the mood of the United States is not very conducive to a happy relationship such as the great relationship we saw at Quebec between the Prime Minister and the President of the United States when Irish eyes were smiling. Before this is all over, I am afraid there will be a lot of tears shed in Prince Edward Island by our farmers, our fishermen and all the people who use our natural resources, certainly by those working in the softwood lumber industry.
We in Atlantic Canada pay the highest stumpage fees in Canada. There are only five companies which are exempt from the 15 per cent tariff in Atlantic Canada. Put that 15 per cent on top of our higher stumpage fees and take into account our high unemployment rate, and you will see, Mr. Speaker, that we cannot afford to lose jobs. I want to thank you, Mr. Speaker, for giving me those few extra seconds. You are a gentleman and 1 am sure that you will be one of the guys who survive after the next election.


Mr. Robert Wenman (Fraser Valley West):: Mr. Speaker, we find ourselves in debate today because the Canadian forest industry has been too successful in penetrating the United States market. The large disparity between the Canadian and the U.S. dollar, the efficiency of product and its quantity and quality, make the protectionist sentiment and action of the United States forest industry all but inevitable. Canadian forest companies have moved from 17 per cent to 33 per cent of the market.
The provinces should have adjusted their forest policies several years ago. They should have made adjustments regarding stumpage, annual allowable cut and intensive silviculture, recognizing the full implications of unneccessarily depleting a precious forest resource. They should have moved toward diversification, secondary manufacturing in the prime resource field. They should have had a stronger emphasis from industry and from provincial management many years ago. But again it is difficult to move from a status quo.
I suppose at this time it is time to compliment the unions because they in fact have seen this coming for several years and were among the first to call for changes in this direction. It seems to me that as a nation we always move in after a crisis rather than recognizing the signs and the necessity for times to
Softwood Lumber Products Export Charge Act
change. The winning of the earlier countervail duty was in fact a signal, not to shout hurrah and continue on as we were but rather to see it as a danger signal calling for a re-examination and change in our policies and our ways of thinking.
Back in 1983 the Minister of Transport was early to recognize protectionist forces in the United States and called for a comprehensive trade agreement. The Prime Minister (Mr. Mulroney), as soon as he took office, moved toward a comprehensive free trade with the United States because he recognized the tide of protectionism and immediately countered with his own free trade initiative. The provinces started talking but it was too little, too late. The first thing we knew another very serious, even deadly, countervailing duty was upon us. Through the mechanism of enhanced federal-provincial relationships, the provinces called upon the federal Government to help, and the Minister for International Trade (Miss Carney) came in and negotiated a better deal than even the money markets' managers could ever have contemplated. We are now implementing an interim measure export tax until our provinces can modernize and redesign their own forest policies. Until then, the federal Government will collect a tax for intensive silviculture and job retraining in the provinces.
Our Minister and her negotiators should be complimented and appreciated for their efforts with respect to the complicated agreement and negotiations which had to be completed on Canada's behalf. She has done a fine job for Canada, and Canadians are beginning to recognize this more and more each day.
There is a growing consensus among members of the industry, the unions, the financial community and British Columbians that the Government, facing a difficult situation to negotiate, has in fact done a good job in reaching a negotiated settlement. I get the feeling that the industry senses it can now live with the agreement. It now feels we should get on with settling the anomalies of the agreement as quickly as possible. That is really what this debate should be focused on and what subsequent committee meetings should be looking at in terms of giving priority to it.
During the parliamentary recess I was pleased to meet with many groups and representatives of the forest industry in British Columbia. Of particular importance were the meetings I held with the Independent Lumber Remanufacturers Association of British Columbia. The B.C. secondary softwood lumber industry is a sector of the forest industry which has grown in importance to the province in recent years. The industry has over 60 firms and employs close to 3,000 workers. In 1986, its sales volume was estimated to be in the range of $500 million Canadian.
The industry produces a wide range of value-added products from raw material purchased from primary lumber producers, both in British Columbia and the United States. The industry sells its products to both domestic and foreign markets. By far,

January 21, 1987
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it is the most important market for many firms is the United States. This small but growing sector of the British Columbia lumber industry is of utmost importance to British Columbia and Canada because the remanufacture, secondary manufacture or value-added components of the forest industry are critical to the full use and management of Canadian forest resources.
The British Columbia economy is hurt by the buffeting of primary resource boom and bust cycles. It must be levelled out through a diversified secondary industry base, the most logical and natural part of which is the secondary manufacture of local primary resources.
Because of the importance of the remanufacturing sector, and because this sector finds anomalies in the agreement as it relates to them, I was pleased to welcome Mr. Shawn Sullivan of the Independent Lumber Remanufacturers Association and Mr. Charles Widman of the Coalition of British Columbia Secondary Softwood Lumber Manufacturers to meet with Ministers and members of the British Columbia caucus to discuss the anomalies of the agreement as it relates to their sectors. I am pleased to report that the delegations felt that they received a very good hearing from both the British Columbia caucus, the Minister of State for Forestry and Mines (Mr. Merrithew) and the officials in the Departments involved. Members of the delegations left with a slight glimmer of hope that, with minor adjustments, a resolution of their problems might be found in the interpretation and implementation of the agreement.
The application of the U.S. Coalition for Fair Lumber Imports was focused on a perceived competitive inequity caused by what it viewed as unfairly low stumpage rates paid by Canadian producers. Its complaints were not directed toward value-added activities through remanufacture. This position was clearly stated in its application and followed up in the agreement. Negotiators for the agreement wisely recognized that under the pressure of a tough deadline certain anomalies might arise in areas of the agreement. As a result Clause 4 b. was put into the agreement. It states in part:
The export charge however will not be imposed on the value added in manufacturing some softwood lumber products.
That is, of course, the key by which we will have to try to see if we can find space for some of the other products which were perhaps missed in the first place. The Independent Lumber Remanufacturers Association was pleased that the list of products it submitted appeared in the agreement, giving them protective exclusions. However, upon closer examination by all parties involved, it was recognized that a number of other products such as pallet cut stocks, bed frame components, firring strips, roof decking cedar boards and industrial clears and shop products of remanufactured, box shook, edge-glued panels, select fascia and other patterns, such as 134, 130, 116, 118, 137, 204 A&B, 206 and 141, under NLGA standard grading rules may have been inadvertently left off the list of exclusions.
Similarly, some companies which would have qualified under the corporate exclusion list had they applied were left off that particular list. Whether they did not know that they could apply, whether they knew and did not want to apply because of the risk involved or because of the paperwork effort, cost and exposure of their books, or whether they simply assumed that the matter would be settled before it affected them directly, there still exists an anomaly in the agreement. In the outcome some companies of equal standing have exclusions while others do not.
Undoubtedly, the negotiators of the United States are strong and competent. However, we must also assume that they are fair and want to correct any such anomalies that may have occurred under the pressure of time and a tight deadline. Certainly, when rough lumber that comes from the United States is sold to Canada and we treat it with wood preservatives and then send it back to the United States the Americans do not want to see us charging a duty on that since they surely must want us to continue to buy that raw lumber. Thus it will be in their best interests, as well as in ours, to have a look at some of these anomalies to see if we cannot find a satisfactory solution to them. I hope the Government will appeal to the sense of fair play well known to the United States ethic and in the interpretation and implementation of the agreement make adjustments to these anomalies in the positive spirit and intention of the agreement itself.
We must resolve this issue and move on quickly to a comprehensive free trade agreement with the United States.


John R. Rodriguez: Mr. Speaker, I understand that the Vice-President of the United States, George Bush, was visiting Ottawa today. Where was he when the Government could have used him three months ago? I understand that the Government tentatively booked the National Arts Centre theatre where the Prime Minister (Mr. Mulroney) and the Vice-President will have a sing-song. They will sing Help Me Make It Through the Night. It seems to me they will need a lot of help through the next year and a half before the next general election.
I knew we were in for some trouble when the present Minister for International Trade (Miss Carney) was appointed to her post. Previously, she had been the Minister of Energy, Mines and Resources. She has a well-known record for her negotiations. After all, she negotiated the Western Accord, which was the result of her first negotiation process. It was easy to come out successfully in that negotiation because she gave everything away. She did the same thing with respect to the offshore rights in Newfoundland. She is a great negotiator-she gives everything away.
As a matter of fact, after she had successfully negotiated the Western Accord and the deal with respect to offshore resources on the East Coast the Prime Minister sent his Minister a note in which he stated: "Pat, bingo!". The note was signed: "Brian". Then when the Prime Minister made her the Minister for International Trade he said: "We've given the ball
January 21, 1987

to the Minister with respect to free trade. Watch her go. Go, Bingo, go! Go get 'em, Bingo!" She is a tough negotiator, a real tough negotiator.
When the preliminary determination was made by the U.S. Commerce Department she had this to say: "We believe that the U.S. position is fundamentally wrong". I can just imagine her saying it since I see her in the House every day pounding her desk when she speaks. The Minister said that Governments have a sovereign right to establish conditions for the management and utilization of their natural resources. She further said that stumpage clearly does not constitute a subsidy and the imposition of countervailing duties is therefore inappropriate.
The Minister said that it was a question of sovereignty. The Minister was stating her position very clearly and very firmly. If it were to be even more clear, and we can see this picture of a determined Minister with both feet firmly planted, banging away, saying "You can't do this. We have a right.", at a press conference on October 22, this determined Minister, to drive home this determination, stated:
This decision strikes at the sovereign right of governments to manage their own natural resources for the benefit of our own people.
She told this to a news conference after a three-hour meeting at the Metro Toronto Convention Centre. She further stated:
We are determined to fight this decision.
Well, Mr. Speaker, she fought. When the fight was on, there was the Minister from the beaches of Waikiki, and we can imagine her saying this, "We shall fight them from the beaches, we shall fight them from the Aloha Lounge of the Waikiki Hilton, we shall fight them on the telephones; we shall never surrender".
The Minister accused the Americans of blinking. How would she know, she never eyeballed them, she was never there. She was sunning herself on the beaches of Hawaii. She was fighting them from that vantage point. I get this big picture of the surf rising in crests, the Minister lying on the beach in dark shades with a bank of telephones shouting instructions over the telephones: "Don't blink, eyeball them. I am right behind you." When the dust settled, what did bingo have to say? What was going to be the big battle over the fact that the Americans did not have a right to tell Canadians how to develop their forests, and what stumpage to charge? Now, instead of being pushed off the ledge of the Hilton in Waikiki, we jumped. We jumped without a safety net beneath us. In the Minister's own words, what is indeed a defeat for us, because it is the Americans who will tell us what stumpage to charge, and in fact the Minister's words on January 6, 1987-


Nelson Andrew Riis: What were they?


John R. Rodriguez: There are the words. She first said that the Americans would have got a hell of a lot more out of a
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countervailing duty than out of this negotiated agreement. She reinforced it by saying, "By limiting the Americans only to the arithmetic we kept them out of our forests, out of our books, and out of our hair". Can you just see it, Mr. Speaker. Then she went on to say, "They blinked. We didn't,". She said the most important victories are fighting off U.S. attempts to force changes to our stumpage system. What a crock of bingle. Fought them off? When she went in to negotiate there was an exemption for the softwood forestry industry in the Atlantic region. After the dust settled and she had fought this great fight in the trenches, lo and behold, they got the 15 per cent being applied to the softwood industry in Atlantic Canada. Is that not marvellous? What great negotiations.
She snatched defeat from the jaws of victory, and then turned around and talked about how she made the Americans blink. Some blink. Some eye. The sad part about this is that the Americans now recognize that we have a patsy negotiating for us, a real patsy. It is not only the Americans who recognize that we have a patsy, but all the industrialized nations of the world. The Japanese are now talking a 15 per cent duty, because they think that we are going to be dumping our softwood lumber into the Japanese market.


Robert Hylton Brisco: I rise on a point of order. In a fit of compassion, I thought it might be instructive for the Member to know that the camera is having a great deal of difficulty following him. It is a great speech, but if he would try to remain in place long enough for the camera to see him, then all of Canada could watch.


John Horton McDermid: The Hon. Member should not use the name of the Minister.


John R. Rodriguez: The Parliamentary Secretary has said that I am using the Minister's first name. When I use "patsy" I use it in a generic sense, meaning a push-over.


Nelson Andrew Riis: Carney queen.


John R. Rodriguez: The Carney queen. A push-over, Mr. Speaker, that is what we all understand that term to mean.
The Japanese are now talking about challenging this patsy. The Europeans are talking about a 15 per cent duty.
It is a sad day, and the late Sir John A. Macdonald must be turning over in his grave at the display of this spineless reaction by this Government. If it was wrong for the Americans to try and tell us that our stumpage was too low, and that we had that sovereign right to determine the stumpage fee and any other matter regarding our resources, then we see them in court. That is what we do, we see them in court. We do not do what they want us to do for them.


John Horton McDermid: That's good, and lose all the money to the Americans.


Iain Francis Angus: I rise on a point of order. Looking at the clock, I see that we only have two minutes left. I wonder if the House

January 21, 1987
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would give permission for the Hon. Member for Nickel Belt (Mr. Rodriguez) to continue his very enjoyable speech.


Mr. Deputy Speaker:: Shall I call it six o'clock?


Some Hon. Members:: No.


Mr. Deputy Speaker:: On debate, the Member for Eglin-ton-Lawrence (Mr. de Corneille).


Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, I would like to speak to this Bill C-37. There is very little time left for me. In fact, there is only two minutes before the clock runs out. I am sorry that this is being put on the edge, but the Speaker will not call it six o'clock. May I call it six o'clock now, and I can begin next week or tomorrow?


Some Hon. Members:: No.


Roland de Corneille: I thank Government members very much for their co-operation. It is obvious that they are willing to cooperate in the new spirit of conviviality, cordiality, and cooperation. We have seen a lot of that. The Canadian people have noticed a great deal about the way in which this Government conducts its business, and they are becoming tired of it.
I wish to begin by saying that this Bill should be trashed, as should the Memorandum of Agreement which this Bill aims to implement.
The way in which we have dealt with the United States in the past has brought a relationship of a good neighbour policy where we have been able to respect one another; where the governments in the United States respected Canada and treated Canada in a way that showed that we were able to manage our affairs and live as good neighbours, because good fences make good neighbours.
The moment that this Government began to undertake its policy of trying to get in good with the Americans, trying to sell ourselves to them as special neighbours, we found that we were being repudiated and taken advantage of. Canadians believe that this Government is selling out this country. That is why at this time I rise to speak to this Bill.


Mr. Deputy Speaker:: It being 6 o'clock, the House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 3(1).
At 6 p.m., the House adjourned.

Thursday, January 22, 1987