1987-01-20

ROUTINE PROCEEDINGS


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 of tabling, in both official languages, the Government's response to Petitions Nos. 332-265 to 332-276 inclusive, 332-285 to 332-287 inclusive, 332-291, 332-293, 332-310 to 332-315 inclusive, 332-317, 332-332, 332-333, 332-341, 332-343, 332344, 332-348, 332-350 to 332-352 inclusive, 332-359 to 332369 inclusive, 332-374 to 332-384 inclusive, 332-396, 332-397, 332-403 to 332-406 inclusive, 332-408 to 332-418 inclusive, 332-431 and 332-448.



POINT OF ORDER


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, I was reviewing the Farm Debt Review Bill that was passed last year. The legislation indicates that at the end of the calendar year in which this Act comes into force, which of course was 1986, the Government would undertake a review of the overall effectiveness of this Act and shall, within such time as the House may authorize, submit a report to Parliament, including a statement on any changes the committee would recommend.
In a sense, the Government indicated through the Bill its intention to set up a committee, whether through the Standing Committee on Agriculture or another committee. Would the Government House Leader indicate if, in fact, a committee is in place of which I am unaware and, if not, what intention the Government might have in this matter?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, as I am sure the Hon. Member knows, this has only been operational for a short period. I am not sure whether there has been sufficient experience garnered from its operations. If such a provision is called for within the legislation, as the Hon. Member points
out, presumably that would have to be considered. I will certainly undertake to consult with the Hon. Minister of Agriculture (Mr. Wise) and get back to the Hon. House Leader of the New Democratic Party as soon as I can.



ENERGY, MINES AND RESOURCES PRESENTATION OF THIRD REPORT OF STANDING COMMITTEE

['Agreed.']
Mrs. Barbara Sparrow (Calgary South):: Mr. Speaker, I have the honour to present the third report of the Standing Committee on Energy, Mines and Resources in both official languages.
[Editor's Note: See Today's Votes and Proceedings.]



Nelson Andrew Riis: Mr. Speaker, I have the pleasure and honour to present a petition, pursuant to Standing Order 106, regarding the changes the Government is planning to the Patent Act. The petitioners feel this will increase drug prices for Canadian consumers and will severely restrict the ability of average Canadians to buy the necessary prescription drugs. They are calling upon the Government to reject these new proposals which they believe will increase prescription drug prices.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, I have the honour to present a petition from a number of residents in my riding who note that the federal Government's proposal to change the Patent Act relating to prescription drugs will increase drug prices for Canadian consumers and will severely restrict the ability of average Canadians to buy necessary prescription drugs. They also note that these proposals will result in higher costs for provincial drug plans and they call upon the House to reject these proposals which will increase prescription drug prices for Canadians.


Mr. Benno Friesen (Surrey-White Rock-North Delta):: Mr. Speaker, I have the honour to present a petition on behalf of my constituents. The operative part of the petition says that
Starred Questions
all human beings are deserving of legal protection from unjust attacks upon their lives and that the present law regarding abortion does not provide such protection. Wherefore, the undersigned, your petitioners, humbly pray and call upon Parliament to amend the Criminal Code so that unborn human beings are protected by law from abortion. I want to add that I totally endorse that. The petition meets the requirements of the House.


Philip Derek Lewis: Mr. Speaker, would you be so kind as to call Starred Questions Nos. 37, 40 and 41?


Mr. Kindy: 1.	Did the Solicitor General acquire information that showed Ambassador Egerton Herbert Norman, had been identified and discussed by Anthony Blunt as someone who, like himself, was associated with the Russian intelligence service?
2.	Did the Solicitor General, following Mr. Norman's suicide, acquire information that showed that he (a) had connections with (b) had contributed funds to the Canadian Communist Party before or during his employment by the Department of External Affairs?


Mr. Kindy: Is the Solicitor General aware of the identity of the employee of the National Council for Canadian-Soviet Friendship described by the RCMP as a rabid and dangerous Communist, as cited in Professor James Barros' book "No Sense of Evil", on pages 51, 65, 67, 84, 88 and 130 and, if so, what is the name of that employee?


Mr. Kindy: Is the Solicitor General aware that Mr. Herbert Norman had attempted to recruit Mr. Robert Bryce, former Secretary of the Cabinet, into the Communist Party when they were students at Cambridge University and that Mr. Bryce knew in the autumn of 1950 that Mr. Norman was being interviewed at External Affairs as a possible Russian penetration agent and that Mr. Bryce has never divulged this information to the RCMP and, if so, does the Minister intend to inquire into the reasons that such information was not divulged to the RCMP?


Philip Derek Lewis: Mr. Speaker, I wish to advise the House that the Government's response to all three questions is the same, and it is as follows: The Government wishes neither to confirm nor deny the facts or allegations mentioned in these questions based on the established tradition adhered to by all Governments, not to comment publicly on the details of specific security matters and consistent with the provisions of Sections 13, 15.1, 16.1(b), 16.1(c) and 19 of the Access to Information Act.
January 20, 1987
I ask that the remaining questions be allowed to stand.


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Monday, January 19, 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. 2393).
Hon. Gerald S. Merrithew (Minister of State (Forestry and
Mines)): Mr. Speaker, I am delighted today to be able to put some facts on the record in this particular debate which has been sometimes clouded by some misperceptions and halftruths. It is an important debate for Canada, I agree. We have been working at it for a long time. Of course, the whole issue of our softwood trade has been one which has been most prolonged. It is not new at all. It has gone on for decades and decades. I have been part of it for four or five years. It is perhaps one of the most bitter disputes in the history of Canada-U.S. trade relations.
Since the Memorandum of Understanding reached with the United States on December 30, we have put behind us a lot of difficult negotiations with the U.S. It seems to me we are now in a position to strengthen our industry without the constant threat of other trade irritants. We can now try to be competitive in a a very competitive market. I do not have to emphasize how divisive this issue has been to our national fabric. It would be extremely unfortunate if the degree of rancour and mistrust which so characterized our negotiations with the United States carried forward within Canada as we proceed to implement the agreement and to examine alternative provincial measures in the export charge.
It is necessary for Canada to unite and find a realistic and effective solution to the challenges with which we are faced. Indeed, the federal Government has been very conscious of the need to remain united in dealing with this very bitter dispute with the United States. A high level of goodwill and a spirit of co-operation characterized our discussion with the provinces last week in Vancouver and some of the comments I have heard recently from the industry have been more positive and helpful than the initial reaction to the agreement by some industry spokesmen.
The workers in British Columbia and elsewhere in Canada who have such an important stake in the outcome of this dispute have been very supportive of our efforts to secure an understanding with the United States. Sadly, I have also heard
[Stage Direction]
January 20, 1987
[Stage Direction]
comments from the Opposition who, in many instances, have taken this opportunity as a means to achieve their own personal political objectives. It is unfortunate to see the great divergence of opinion between certain members of the Opposition and those to whom they perceive to be their own constituency. It must be extremely frustrating for the New Democratic Party to find so few people in the labour movement who oppose the initiative of the Government to secure an understanding with the United States. Many of the provincial wings of that same Party have come out in support of a negotiated settlement. For example, the British Columbia forestry critic has called the softwood lumber deal agreement a pretty good deal.
As for the Official Opposition, I find it ironic to hear those Hon. Members even talking about forestry. For almost two decades that Party presided over the dissemination of the federal Government's forestry service and the downgrading of the leadership role of the federal Government in this key sector of our economy. Its lack of commitment to forestry is a matter of public record. The forest community already knows and recognizes this. It is regrettable it has taken this situation to raise the interest of that Party. However, I laud Members of the Liberal Party for now taking a keener interest in forestry and call upon them and other members of the Opposition to put their rancour aside in order to make this agreement work on behalf of all Canadians. The development of the forest industry is too important to the economy of this country to be subject to shabby theatrics and partisan politics.
I would like now to turn my attention to some of the specifics of the understanding with the United States. The critics have been less than objective in their statements in the softwood lumber dispute. They have consistently ignored the realities of that dispute and the real options which were available to the Government, in fact, all Governments of Canada. The critics imply that the choice was between an agreement with the United States or continuing free trade in lumber. The real choice was not that. It was between a countervailing duty or other restrictive measures imposed unilaterally by the United States against Canadian softwood lumber exports or a negotiated settlement. In other words, a punitive countervail or an agreement by choice. The Government could have chosen to fight to the bitter end. This would not have served Canadian interests. To ignore the political realities of the issue would have deprived us of any control over the situation. The choice was between having the Americans tax our lumber or our agreeing to tax it ourselves. This has been entirely overlooked by the critics.
For the benefit of the House, I would like to review the three objectives which were set out by the Prime Minister (Mr. Mulroney) and the nine Premiers at the First Ministers' Conference in Vancouver in November. Basically, they wanted us to protect Canadian sovereignty, second, to avoid a precedent in U.S. trade law which would be damaging to Canadian interests and, third, they wanted us to keep the money in Canada. In our negotations we stood fast. Our
Softwood Lumber Products Export Charge Act
negotiators held on to Canada's position right to the very end. We have met all three of those objectives.
Let us examine those objectives in turn. First, the softwood lumber agreement respects and maintains our sovereignty and avoids the intrusion by the United States into Canadian affairs which would have occurred with a countervailing duty action. As a former Minister responsible for forestry in New Brunswick, I understand the importance of being fully in control with respect to how we manage our forestry resource for the betterment of our citizens. Under the agreement, the export charges were set at an agreed level, 15 per cent. A countervailing duty could be unilaterally raised by the United States following an annual review. That would be unacceptable. Under the agreement, Canada administers the export charge and monitors its effect and is required only to provide the information to the United States. A countervailing duty, on the other hand, would be subject to actual policing by the United States. Under the agreement, Canada is free to replace the export charge with stumpage increases or other measures at a time and level of our own chosing. Only the value of these changes is subject to consultation and agreement with the United States. A countervailing duty, on the other hand, would have severely limited Canada's freedom of action. The timing, the nature and the value of any replacement measures would have been unilaterally determined by the Americans.
Suggestions by the Opposition that our sovereignty has been threatened by this agreement are completely without foundation. Any student of international politics knows that bilateral agreements between nations involve, in some way, an intrusion into the other's business, be it a quota, a normal commercial transaction or a verification clause. There is far less intrusion into Canada's forest management policies under this agreement than there would have been with a countervailing duty.
The second objective was to avoid a highly damaging precedent that could have affected other exports to the United States. I remind Hon. Members that the basic issue involved here is whether or not the policies of Canadian Governments, in managing and pricing their own natural resources, could be subject to the trade remedy legislation of other nations. Under this agreement which we negotiated and signed on December 30 the dangerous legal precedent set by the unfavourable preliminary determination made by the U.S. Government in the softwood lumber case last October has been nullified. A countervailing duty would have confirmed that precedent and left Canada more vulnerable to similar actions against other resource exports.
The third objective was to ensure that the money remained in Canada, for Canadians, and did not become a contribution to the United States Treasury. Under the agreement the provinces are free to use the revenues from the export charge to replenish our forests, to provide adjustment assistance for affected workers, to assist our forest industry in developing alternative markets abroad, or to advance the development of
[Stage Direction]
January 20, 1987
Softwood Lumber Products Export Charge Act
new technologies. Under a countervailing duty action these Canadian funds would have gone directly into the Treasury of the United States, and would not have been available to create jobs and to lessen the negative impact on affected workers and communities.
While it is still much too early to predict the full impact of the export charge on the Canadian lumber industry, it is clear that some export sales to the U.S., and jobs, will be lost. The degree to which these adverse effects occur across the country largely depends on how much of the duty can be passed on to the U.S. consumer-and it appears a good deal of it has been to date-and the supply response of the American producers. Early indications show that a substantial portion of the export charge is now being borne by the U.S. consumer. We will continue to monitor this situation.
Nevertheless, the point I am making is that as a result of our negotiations the provinces have the financial resources to respond to this situation. In the area of forest management it is our estimation that over 100,000 jobs, both direct and indirect, will be created during the life of the forestry development agreements negotiated with the provinces. At the same time this ensures a long term timber supply. These forest development agreements have a price-tag of $1.1 billion of federal and provincial contributions. I wish to mention that is a 400 per cent increase since the time the Liberals governed our country.
I again want to reiterate my call for pulling together on this issue. This will be extremely important as we examine possible replacement measures in whole or in part, such as stumpage increases, to the export charge. As a result of our meeting in Vancouver last week, Canada's provincial and federal Ministers responsible for forestry have agreed to address this issue in more detail. I can assure the House that both myself and my provincial counter-parts place considerable importance on involving businessmen and labour in this process. The issues involved are very complex. We will not be stampeded into any quick-fix solutions that are not in the over-all interests of Canada.
My colleagues and I will be having our initial meeting on the issue of replacement measures during the next Canadian Council of Forest Ministers meeting to take place in Montreal on January 26. I have been encouraged by the collective and the unanimous desire of the provincial Forestry Ministers to work co-operatively since the Council was established in 1985. We have co-operated on a great many issues, and I am sure we can co-operate on this very difficult issue which we have now undertaken. Each and every provincial Minister is committed, as am I, to co-operating with all parties in the forest sector to move ahead to meet the challenges which still lie before us.
The Acting Speaker (Mr. Paproski):: Are there questions or comments? The Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: Mr. Speaker, the Minister of State for Forestry and Mines (Mr. Merrithew) indicated that from the very beginning the process included the co-operation of all the
players involved. I remember, as I am sure he will, time and time again when Members raised questions in the House with respect to how things were progressing in the United States in terms of the countervail case before the Department of Commerce and the ITC, the Secretary of State for External Affairs (Mr. Clark) asking members of the Opposition not to raise the issue in the House of Commons. We were told that everything was progressing well, that in co-operation with all of the players the Canadian Government was absolutely certain that the case Canada had put forward was iron-clad and that we had nothing to fear. Then October 21, after the Commerce Department brought in its preliminary ruling which found Canadian exports to be subsidized by 15 per cent, the Minister for International Trade, the Hon. Member for Vancouver Centre (Miss Carney), said that we would fight it all the way. She said: "Today it's lumber. Tomorrow it could be any number of issues. We all agree that this ruling is deplorable, artificial and contrived and does not stand up to extensive analysis". She then went on to say that the United States' action "strikes directly at the sovereign right of a government to manage its own resources" and that negotiations would only condone the precedent. She said: "First we must fight to reverse this verdict".
The Minister for International Trade said that this move was a direct infringement on Canadian sovereignty. The Minister of State for Forestry says that is not the case. Will the Minister explain what the Minister for International Trade was saying on October 21 ?


Mr. Merrithew:: Mr. Speaker, I was very much part of those discussions when we talked of fighting the issue. I was part of the talks which we had in 1982 and in 1983 when we fought the previous countervailing duty issue which, incidentally, did not work. There has been some indication that it was won by either industry or by the Liberal Government. Unfortunately, within just a matter of months there was another case. So there was no winner in this particular case. At one point in time there was no question but that it was profitable for us to stick together. However, the political reality of what was happening in the United States and the rampant protectionist sentiments which were being expressed in the American Congress and in the industry dictated to us that the political situation had changed. As a result of intelligence we obtained from lawyers in the American industry, our government lawyers, our embassy staff and our friends in industry and government in the United States we were told that the handwriting was on the wall, that we could not win. The preliminary decision was already down against us and on October 16 it was negative to Canada.
What other choice did we have? There were but two. First, we could either continue to fight the issue through the courts and pay the money to the United States over the intervening period of time, or fight it in GATT. Or, second, we could try to negotiate a settlement. If one considers the facts of the matter, the result of negotiating a settlement Canada is by far ahead of the situation.
January 20, 1987


Mr. Caldwell:: I wish to address my question to the Minister. A few months ago when we were debating the shakes and shingles issue and replacing the 35 per cent duty, we heard calls from the opposition Parties that we would see a shut down of that industry, and hundreds of thousands of people would be laid off and would be out of work. Is it possible for the Minister to bring us up to date on whether those hundreds of thousands of people have been laid off, and has the shingle industry been shut down in British Columbia? Will the same thing happen with the 15 per cent duty on the softwood lumber?


Gerald Stairs Merrithew: We were very much part of the debate which took place following the shakes and shingles issue in the House. We heard the doom and the gloom that the whole world was going to come to an end, shakes and shingles would be destroyed forever. The Opposition House Leader said that
10,000	jobs would be lost. There are only 4,000 such jobs in all of Canada. I do not know where he got his figures. The NDP indicated that the whole world would come to an end. In fact, very little has happened. The industry is now working near to capacity. We are being competitive. We know that the supply of red cedar in the United States will run out, and then we will be even more competitive. There was absolutely no truth to the fact that the world was going to come to an end because of the countervail on shakes and shingles.
Regarding the lumber issue, nobody in the country, certainly not in the Chamber, has any magic answers as to how many jobs will be lost. A lot will depend on how many of those jobs and what per cent of the cost will be absorbed by the American consumer. Quite frankly, it is my view, and it has been our indication to date, that the American consumer is the one who will be penalized. In the future we will know what effect there will be on our marginal mills, or the impacts on our domestic interprovincial markets. At this time I will not comment on that, because we do not know. It is proof positive by the type of irresponsible statements that were made following the shakes and shingles debate that at this time it is better not to hazard a guess. We will monitor that particular situation.


Mr. Langdon:: I wish to ask the Minister of State for Forestry (Mr. Merrithew) some specific questions about New Brunswick and Nova Scotia. On a visit there last week I talked with the Maritime Lumber Bureau which has established an emergency committee to fight this tax.


An Hon. Member:: I don't believe it.


Steven W. Langdon: You do not believe it? You should ask yourself what is actually happening in New Brunswick.


The Acting Speaker (Mr. Paproski):: Order, please. I would advise Hon. Members that there are only four minutes left. I have tried to allow three or four Members to ask questions and make comments, and I would hope that Members would give these Hon. Members the opportunity to do so.
Softwood Lumber Products Export Charge Act


Steven W. Langdon: My question to the Minister is this. In the final stages of negotiation of this agreement, the New Brunswick producers involved received an indication from both the American officials and from the officials whom they had talked with in Ottawa that there was going to be some over-all exemption for Atlantic Canada, which has a very small element within this lumber industry, and which has stumpage fees that are very much higher than anywhere else in the country. Why was nothing done for the 97 companies that are not exempted from this export tax, when there are five New Brunswick companies that are exempted? Why is there this incredible sense of unfairness? Why was it not corrected in the final stages of negotiation?


Gerald Stairs Merrithew: I am delighted to have an opportunity to address this particular question. I will be meeting with the Maritime Lumber Bureau this afternoon. I have already met and talked with them on dozens of occasions. I have been in general contact with the industry in New Brunswick during the final hours of the negotiation.
Anyone who leads the Canadian people or the Maritime producers to suggest that they might somehow have received a magical exclusion for the region, I can tell you from having talked with the people who were at the table that it was simply not on. Therefore, what choices do we have? We could negotiate to maintain the exemptions, which were given in the October 16 preliminary decision. We had that choice or nothing. We opted to protect the exclusions of the 20 companies in Canada that were given exclusions, five of which are in New Brunswick. The Hon. Member has forgotten to indicate to the public and the Chamber that those five companies, and I know them personally since I have worked with them for years, make up 92 per cent of all of the exports from New Brunswick to the United States.
It seems to me that with those exclusions and exemptions New Brunswick will come out of it better than anyone could possibly have dreamed, and we negotiated that. With the final determination, if it had gone against Canada, there is no indication now that we would have been able to keep those exclusions and exemptions. If it is possible to have a winner at all, New Brunswick was clearly a winner.


Mr. Foster:: I have a short question for the Minister. A number of companies have been excluded from the agreement. Why did the Minister not negotiate an agreement for an exclusion for Indian bands? Would he be prepared to do it in the Bill that is before the House? There is an Indian band in my constituency which has a private operator, a Status Indian who produces lumber for export to the United States. He pays stumpage to the band. Status Indians normally do not pay federal tax on income earned on the reserve. Will there be a special provision for the Indian bands and band members who produce softwood lumber and sell it to the U.S.?


Gerald Stairs Merrithew: The Hon. Member has made an interesting observation. However, it is important to realize what the Americans wanted from this. Number one, they wanted us to

January 20, 1987
Softwood Lumber Products Export Charge Act
take a smaller portion of their market. That would include any lumber shipped from our native lands. Second, they wanted a punitive measure. It did not matter whether it was a federal tax, or increased stumpage, but they wanted something to be done because they perceived that we were conferring some benefit. That would include native bands in operation. The bottom line is that the American people were not having any part of expanding the number of exemptions at that time. That does not mean that we will not continue in the ensuing months to discuss with them those types of exemptions. There is provision in the agreement for us to reopen it. I will take it under consideration.


Mr. Manly:: Will the Minister tell the House whether any special studies were done as to the impact that this export tax will have upon different regions of the country? If so, could the Minister tell the House which regions will be most adversely impacted?


Gerald Stairs Merrithew: Naturally, governments and private consulting economists made estimates of what the effect of the tax may be, if it were based at 10 per cent, 5 per cent, 15 per cent, or the requested 36 per cent. Obviously, we have had some estimates done, and we will monitor that situation. The trouble is that these estimates are always based on certain assumptions, for example, new housing starts in the United States, the United States' economy, what will happen here in Canada, what the distribution east and west will be, and what the domestic market fluctuations will be. No one can easily determine what the effect will be. However, we will be monitoring that. In every province we have in place a system so we can watch what the trends are. To date, they have not been terribly negative. In fact, they have been surprising.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated.


Nelson Andrew Riis: Mr. Speaker, I am pleased to have an opportunity to put on record some comments regarding Bill C-37, an Act respecting the imposition of a charge on the export of certain softwood lumber products to the United States, or we assume to the United States. We are still questioning whether under GATT we have the right to levy a special tax on one country and how other trading partners in the softwood industry will feel about it, whether or not they will take it to GATT and ask it to be applied to all countries which receive softwood exports from Canada.
However, it is appropriate to spend a moment or two to put the whole matter into some context today. We recognize that there is a $4 billion lumber export to the United States from Canada, representing nearly 15 billion board feet and 88 per cent of our total lumber exports. Obviously we are talking about the Canadian softwood export industry virtually in total.
It is useful for us as parliamentarians to recall that we are discussing the woods industry of Canada which employs,
directly and indirectly, 780,000 Canadians. It is a major aspect of the Canadian economy and of course the overwhelming leader in our trade.
Over the last number of years the Canadian lumber sector modernized and retooled its sawmills. It spent a great deal of money modernizing its operations. Of course, the high quality of SPF-spruce, pine, and fir-from Canada are recognized the world over to be extremely high quality lumber and sell in world markets at premium prices; people are prepared to pay more than the going rate to obtain first rate Canadian lumber. Our workers in the woods are extremely productive. They are among the most productive in the world. Consequently, it enabled the Canadian industry was able to expand significantly its exports to the United States over the last number of years. By and large the quality of wood there is significantly less. The mills are antiquated and outdated. They are still using big rip-saws which end up with excessive amounts of sawdust from sawn logs.
Quite frankly, we did such an excellent job in terms of our high productivity levels and our ability to compete internationally that we were able to send lumber from the northern parts of Canada down to the United States, to sell it in Tennessee, to take the Americans head on in the market-place, and to be successful.
When we add on transportation costs to our wood product delivery, it gives an idea of just how competitive and productive is the Canadian operation. It is first class, and we can be very proud of the sector.
The Americans recognized that they had to do something about their old-fashioned, antiquated operations, low productivity sector and poor quality lumber. A few years ago they set out to attempt to keep the Canadians out of their market and to increase their prices by keeping out Canadian competition. They lobbied their Congressmen and key Senators, such as Senator Baucus, Senator Gibbons, Senator Packwood, and others, and they did it successfully. They got Congress to take a number of initiatives which would in fact work against the Canadian interest in the United States.
Why they feel that Canadians having 35 per cent of their softwood market is inappropriate is beyond me, considering the percentages of various markets which they have in Canada-40 per cent, 50 per cent, 80 per cent and even 95 per cent in some sectors. However, they felt it was inappropriate for Canada to have 35 per cent of their softwood market and took the retaliatory actions of which we know so well over the last number of months.
Also Canadians must be reminded of the very famous "Dear Bob" letter which the President of the United States sent to Senator Packwood who at that time was Chairman of the Finance Committee. In that letter the President pointed out very clearly that they had to deal with the Canadian softwood issue and, if necessary, he would go to whatever length to ensure that the American softwood industry would become
January 20, 1987

more competitive in the United States, and if that meant keeping Canadians out of their market, so be it.
That was the involvement of the President of the United States alongside some of these critical Senators who sort of ganged up on the Canadian industry. I think they recognized that it would be an easy task. After all, they considered the Government of Canada to be a push-over. When I look at how they have treated us over the last few months, I think they see the creation of a new branch plant in Canada called the Conservative Government of Canada, which is here to take directions from the United States Congress. One would find it easy to find all sorts of evidence to substantiate this new United States branch plant in Canada.
In 1983 when the Americans decided to move against Canada, we were successful before the International Trade Commission. We made a good and strong case. I should say that by and large the Government of Canada and provincial Governments, particularly the Government of British Columbia, kept out of it. The industry and the unions involved worked co-operatively and did an excellent job. They presented a good case and won. However, in the last little while that certainly has not been the case.
We have seen clear evidence that once the Canadian Government became involved, particularly with the Premier of British Columbia, the whole process began to unravel significantly. I should like to remind the House of a quotation of the Minister for International Trade (Miss Carney) when she spoke a few months ago after the Commerce Department of the United States made its preliminary ruling which found that indeed Canadians subsidized their industry. They wanted to impose an export charge of 15 per cent, and the Minister for International Trade said that we must fight this all the way. She said:
Today it's lumber. Tomorrow it could be any number of issues.
She went on to say:
We all agree that this ruling is deplorable, artificial and contrived, and does not stand up to extensive analysis.
Also she said:
The U.S. action strikes directly at the sovereign right of a Government to manage its own natural resources, and negotiations would only condone the precedent. First, we will fight to reverse this verdict.
A few days later in the House of Commons, she said:
This decision has concerned us and should concern all of the United States trading partners, because we view it as an unacceptable attempt to impose U.S. views on how other Governments should manage their natural resources. Furthermore, we feel that this preliminary ruling by the U.S. Commerce Department has no basis in U.S. law, is badly flawed, and is inconsistent with the U.S. obligations under the GATT.
What we have is the unravelling of our strong case. I remember the Secretary of State for External Affairs (Mr. Clark) rising in the House on many occasions and saying that the Canadian case was strong, ironclad, thoughtful, and well developed. He said that it could withstand pressures from the United States and that, therefore, it should go through the
Softwood Lumber Products Export Charge Act
quasi-judicial process in the U.S. and, if necessary, on to GATT for a final ruling.
The whole process then fell apart. It is very clear that it began to fall apart just after Labour Day last year when the British Columbia Minister of Forestry, Mr. Jack Kempf, stated publicly that he felt the Government of British Columbia was not charging enough for its trees and that the stumpage rates were too low.
Then Premier Vander Zalm started to shoot from his mouth that indeed the whole matter should be reviewed, that there seemed to be a possible subsidy in the forest industry, that stumpage rates were too low, and so on.
At that time the Minister for International Trade was put into a situation where she had to admit that Canada had virtually lost the case, that in a sense the Premier of British Columbia and the B.C. Minister of Forestry said to the United States: "You are right. We subsidize our industry. We undercharge for our trees which we sell our forest companies", exactly what the American forest coalition was accusing us of doing. With the Premier of British Columbia one of the political leaders of Canada representing the province with the most trade in softwood with the United States having said that, the federal Government then caved in as well. The Minister for International Trade (Miss Carney) said: "Yes, now we are going to change our minds. We do not have confidence in our case. We are going to negotiate." Industry considered this unbelievable. It was not aware of the change of heart. In my discussions with many industry leaders they told me they were absolutely shocked that the Minister had changed her mind without any consultation or discussions with them. They just read about it in the newspapers the following day.
A very serious situation then began to unfold, as we know only too well. An agreement was eventually signed and the Government of Canada in a sense caved in, telling the United States that it would negotiate. The Canadian Government agreed that what the U.S. accused us of doing was accurate and agreed to a 15 per cent tax on exports to the U.S. Some people have had some very strong words about this. For example, historians, economists and legal scholars have given the Mulroney Government a failing grade in the handling of the softwood lumber talks with the United States. As reported by Canadian Press on January 3, 1987:
-the Government has jeopardized Canada's sovereignty by caving in to American demands to impose a 15 per cent tax on lumber exports south of the border.
And they say there is no precedent in Canadian history for a deal that gives Washington a voice in how Canada manages its lumber industry.


Mr. Gormley:: Who said that?


Nelson Andrew Riis: Maxwell Cohen, one of Canada's foremost experts on international law, said that the lumber deal is a dangerous

January 20, 1987
Softwood Lumber Products Export Charge Act
precedent that threatens Canadian sovereignty. He went on to
say:
It is a strange procedure to allow someone to monitor our own stuff.
Cohen was a judge on the International Court of Justice in the Gulf of Maine dispute with the United States. He was a former Canadian chairman of the International Joint Commission. Here was an expert saying that in a sense the Canadian Government had sold out its sovereignty in this issue.
Let us look at some letters. I want to refer to one written by Malcolm Baldrige, Secretary of Commerce in the United States Department of Commerce-


Mr. McDermid:: Why don't you read the IWA letter?


Nelson Andrew Riis: -and Mr. Clayton Yeutter, the United States trade representative. In their letter to the U.S. coalition, which initiated this process, we find:
Fourth, it is the understanding of the U.S. Government that the U.S. Government would have to approve any changes in the export charge or calculation of the value of any replacement measures. Any changes made without U.S. Government approval would be a violation of the Understanding.
Just as clear as day it says here that the United States Government must approve any changes to our stumpage programs in Canada and other substitutions for the export tax that the Canadian Government or the provincial Governments decide to make. If the United States Government feels it can intervene and play a role in our forest policy, why should it not feel the same way about our fisheries policy, our tourism policy, our agricultural policy and our resource policies?


John Kenneth Gormley: That is nonsense.


Nelson Andrew Riis: It is not nonsense, Mr. Speaker. It is not nonsense when international experts in trade indicate-


John Horton McDermid: What an alarmist.


Nelson Andrew Riis: -that Canadian sovereignty has been sold out. I suspect that these international experts know about what they are speaking. I put a great deal more faith in them than I do the Minister of International Trade who, by the way, was so concerned about the signing of this arrangement with the United States, that will, put by a variety of estimates, somewhere between 5,000 and 25,000 jobs at risk, and there is a great variance in what this is actually going to do, that she was sitting on a beach in Maui. She was holidaying in Hawaii.


John Kenneth Gormley: And where was Jim Fulton?


Nelson Andrew Riis: The Minister responsible for this deal who in a sense has put thousands of Canadian jobs at risk was so concerned that she was sunbathing in Hawaii. That betrays very clearly by her actions how concerned she and the Government obviously were.


Maurice Brydon Foster: She will fight them on the beaches.


Nelson Andrew Riis: She adds new meaning to that old saying, she will fight them on the beaches, obviously.
I want to outline some of the concerns that have been brought to my attention by a variety of forest experts, people in the industry for whom I have a great deal of respect, people who are respected in their communities for their knowledge and understanding of the softwood industry. I refer to people like Mr. Joe Martignago of Balco Industries Ltd. in the community of Heffley Creek, British Columbia. Mr. Martignago said:
The 15 per cent export tax is devastating. It could cost Balco approximately $8 million per annum. We will go down sooner and for longer. The Forest Industry Council estimates the additional cost to the Canadian industry will be $600 million per year. That is well in excess of the total profit of all lumber companies in Canada.
Mr. Peter Berry, President of Evans Products Co. Ltd. in the community of Savona, British Columbia said:
The Government handling of softwood lumber export tax was a disaster. It is too early to say what specific impacts will be felt by Evans Products, however, we can expect that the 15 per cent will cost us $4 to $5 million per year. Don't expect that cost to be offset by price increases. Some companies will literally have to go to the wall.
Mr. Brian Swanson, President, Clearwater Timber Products Ltd. of Clearwater, British Columbia said:
I'm not very happy. We shouldn't have another country dictating what it would cost to sell to others, i.e. Sweden, Chile, New Zealand. I resent the fact that the industry, to the best of my knowledge, had no real input into the decision.
Let me go on to a comment made by Mr. Herb Henri of Holding Lumber Co. Ltd. in Adams Lake, British Columbia who said:
The export tax will mean a $30 to $40 charge against all American shipments. We would rather have seen an offset of a 90 day cooling off period for further discussion instead of the December 31 deadline.
He was concerned the industry had been left out of the discussions at the critical eleventh hour.
Mr. Van Scoffield, Manager, Cariboo Lumber Manufacturers Association in central British Columbia said:
The best position would have been to fight rather than negotiate.
That is what we have been saying all along. He went on:
Now that option doesn't exist, the outspokenness of some politicians during August and September of 1986 left little chance to backtrack.
Of course those politicians were Mr. Jack Kempf, Minister of Forests, British Columbia, the Premier of British Columbia and the Minister for International Trade.


Mr. McKnight:: Jack Munro.


Nelson Andrew Riis: Mr. Van Scoffield, spokesman for the central interior British Columbia lumber industry went on to say:
The long-term effect, even for survivors, will mean their profits will be drastically reduced or eliminated. There will be no money for improved equipment and technological changes necessary to stay competitive. Even the survivors will be on a downhill slide. Everyone will lose.
Mr. Barney Lukas, Director of Public Affairs for Weyerhaeuser Canada Ltd. in Kamloops, B.C. said:
Even now, when the demand for lumber and the prices are reasonable, much of the industry is at a break even point. Everyone is a potential loser. The disappointment for the forest industry is that we would have preferred the
January 20, 1987

Government had taken the judicial route rather than the negotiated route. The impact on today's prices would be $16.5 million per year for us.
I could could go on and on. There are all kinds of leading spokespersons for the forest industry who have condemned the way the Government has handled this whole matter.
In conclusion, Mr. Speaker, I might refer to your own province of Alberta. For example, Mr. Rytz with the Alberta Forest Products Association said:
Every stud mill in the province is in a loss position as of right now.


John Horton McDermid: When did he say that?


Nelson Andrew Riis: A week ago. Mr. Chris Anderson of the Canadian Forest Products of Grande Prairie said:
There are definitely going to be jobs lost and plants closed.
I think we have to recognize that the Americans have accepted negotiated settlement because they are absolutely convinced it will keep Canadians out of their market. The whole purpose was to keep Canadians out. If Canadians are kept out of the market which makes up 88 per cent of lumber exports, obviously there will be cut-backs in Canadian operations. If there are cut-backs in Canadian operations, some plants will close and there will be lay-offs. Lay-offs will occur earlier in the year than normal and recalls will occur later in the year than normal. The effect of this will be very negative.
I would ask government Members what will happen to single-industry communities that depend upon this industry when a mill will actually close and thousands and thousands of people will lose their jobs? I say that because we have heard so many reports from experts indicating that from 5,000 to
25,000	jobs may be lost. I do not want to say that 25,000 jobs will be lost but what compensation will there be for the thousands of people who will lose their jobs?


John Horton McDermid: How many?


Nelson Andrew Riis: I would like to remind Hon. Members that a 1971 employment-


The Acting Speaker (Mr. Paproski):: Order, please. I regret that the Hon. Member's time has expired. Questions or comments.


John Kenneth Gormley: Mr. Speaker, I listened with interest to the comments of the NDP House Leader and I wish to ask him a question about the impact of this issue on Saskatchewan. I spend considerably more time in my riding than I do here in Qttawa. I was fortunate enough to take a tour of my constituency in the days after the announcement of the tax. People in the forest areas consistently told me that the NDP criticism of this tax was uninformed, fear-inspiring and out of touch with people who actually live and work in logging areas.
There were four particular points made by many of these people who live in Big River, Meadow Lake and other areas.
Softwood Lumber Products Export Charge Act
First, they acknowledge the reality of growing American protectionism. Second, they accept the alternative Canada has had to take. Third, in the case of Saskatchewan, they see the money coming back into forest development, silviculture and reforestation. Fourth, and this was the interesting criticism, they found the question of sovereignty as argued by the NDP to be the lamest excuse. They saw this in particular as being nothing but fear-mongering.
I would like the question that I will put to the Hon. Member to be answered in one word, either yes or no. Anything more than a yes or no answer will indicate that the NDP is waffling on this issue. Did the NDP House Leader or members of the NDP travel to Saskatchewan's forestry areas to find out how the people there would respond to this issue, yes or no? Did they go to Meadow Lake, Big River, Hudson Bay or Prince Albert to ask these questions, yes or no?


Nelson Andrew Riis: Mr. Speaker, this is interesting.


John Kenneth Gormley: No?


Nelson Andrew Riis: For Conservative Members, the world is yes or no, black or white.


John Kenneth Gormley: Yes or no?


Nelson Andrew Riis: I would like to tell my hon. friend across the way that for many, many days, members of the New Democratic Party toured the West, the North, northern Ontario, the Province of Quebec and Atlantic Canada. We phoned mills and mill operators across Canada.


John Kenneth Gormley: You didn't go to Saskatchewan.


Nelson Andrew Riis: No matter where we went, no matter with whom we spoke, we found that the people thought that the disastrous decision of the Government would set this industry back significantly.
If perhaps as many as 27,000 jobs are lost, the highest estimate that I have read-


John Horton McDermid: I can't believe this.


John Kenneth Gormley: Are you going to put your seat on the line?


Nelson Andrew Riis: I'm not going to put my seat on the line. I just said that the highest estimate made by experts is 27,000.


Cyril Keeper: Put Tory seats on it.


The Acting Speaker (Mr. Paproski):: Order, please.


John Horton McDermid: Mr. Speaker, I have one or two comments to make. I am glad we have now heard an estimate from the member of the New Democratic Party as to how many jobs will be lost. The record shows that NDP Members say that there will be up to 27,000 jobs lost because of this. That is very interesting.


Mr. Waddell:: He said it was the highest quote. Get it right.

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Softwood Lumber Products Export Charge Act


John Horton McDermid: I want that to be understood. The Hon. Member was asked how many jobs would be lost and he did not give an answer. Then he said that up to 27,000 jobs would be lost. I would like to find out from whom he quoted, if it is a quote. I wish he had given someone credit for it, but he did not. I do not think we will find anyone who said that. It is typical of the exaggeration and fear-mongering of the New Democratic Party that brings us those kind of statistics. He has no foundation for that statement whatsoever.
Since this deal was made, lumber prices in the United States have risen by 13 per cent.


Nelson Andrew Riis: That's the point, to keep us out of their marketplace.


John Horton McDermid: This indicates that the Americans are paying the tax. Shipments have not dropped. Americans are still buying Canadian lumber and are paying 13 per cent more since the agreement was signed.


Nelson Andrew Riis: You've got to be kidding, John. If you believe that, you think there are fairies floating around in here.


John Horton McDermid: Those are the facts. Read them.


Mr. Nystrom:: No wonder you're in third place.


John Horton McDermid: I have here a letter from the International Woodworkers of America, friends of the NDP. I think the President of the Woodworkers of America will run for the leadership of the New Democratic Party. Here is what this group has to say:
During the past few days, the softwood lumber settlement has been severely criticized on both political and economic grounds. We would suggest that many negative comments have been both ill-informed and ill-founded. All seem to be based on the assumption that somehow the 15 per cent duty could have been substantially reduced if a negotiated settlement had not been entered into. That is simply untrue. The only question which remained to be answered was whether the United States or Canadian governments would be permitted to collect the revenues.
Even the friends of members of the NDP are saying that their fear-mongering is not working and is unfounded.


Nelson Andrew Riis: Mr. Speaker, it is interesting that the Parliamentary Secretary has suggested, incorrectly as usual, that I mentioned the exact number of lay-offs that will occur. He is normally an intelligent man. I simply said that one of the quotes-


John Horton McDermid: From whom?


Nelson Andrew Riis: -from one of the experts predicting the impact of this was as high as 27,000 jobs to be lost in the forest industry.


John Horton McDermid: Nobody said that.


Nelson Andrew Riis: He represents the Government that has negotiated this deal that is placing thousands of Canadian jobs at risk. Surely the Government has done some analyses. Surely the
Government has looked at the impact of this. However, I would like to ask a specific question of the Hon. Member.


John Horton McDermid: No, no, you're the guy who's supposed to be answering.


Nelson Andrew Riis: Perhaps the next government Member who speaks will answer this question. Back in 1971, the House passed the Employment Support Act which was designed to help industries harmed by retaliatory trade practices. In other words, there is legislation in place to help a single-industry town. If there are massive lay-offs in a community, there is a mechanism in place now that would allow the Government to take immediate action. I would suggest to Hon. Members opposite that as soon as we start providing a list of those mills that are closed and those single-industry towns that are placed in a position of jeopardy, the Government take immediate action to provide whatever remedy is required to help the people harmed as a result of the Government's disastrous decision on the softwood lumber issue.


John Horton McDermid: Mr. Speaker, I would point out to the Hon. Member that employment in the lumber industry has gone down by 30 per cent in the last 10 years while the industry is 30 per cent more productive. The marginal mills have been closing down or modernizing all along. They have had to. That is why our producers are far superior to the American producers. That is why we are selling lumber and still selling lumber in the States. To say that there will be thousands of jobs jeopardized, that towns will close down because of this, is absolutely and totally unfounded.
Members of the NDP are putting fear into this industry like they put fear into the shakes and shingles industry. Just because of the fear-mongering that went on, the shakes and shingles industry closed down for a couple of months. Lo and behold, people still wanted to buy shakes and shingles. The only difference was that the Americans were paying more for them. The industry is going full tilt again and the same thing will happen to this industry. The big losers are the American consumers.
We will still sell lumber to the American consumers and we will still be competitive. The Americans like our lumber because it is of a better quality than theirs. All this fear-mongering about mills and towns closing down and 27,000 people being put out of work is absolute balderdash.


Nelson Andrew Riis: Perhaps it is time for a challenge, Mr. Speaker. The Parliamentary Secretary says that there will be no mills closed and virtually no lay-offs.


Some Hon. Members:: "Baldrige-dash".


The Acting Speaker (Mr. Paproski):: Order, please. I ask the Member to give a short response. His colleague, the Member for Yorkton-Melville (Mr. Nystrom), would like to
January 20, 1987

ask a question, but I will have to cut him off. Therefore, I will allow the Hon. Member to respond.


Nelson Andrew Riis: Mr. Speaker, the Parliamentary Secretary, who obviously feels very knowledgeable on this issue, says there will be virtually no lay-offs and no plant closures as a result of the 15 per cent. Is he prepared to put up his seat, as I am, and say that if there are any lay-offs or any plant closures as a result of this he will step down from his seat? Will he accept my challenge? Does he have the courage of his convictions, or will he hide behind the veil of empty promises to the people of Canada? If he believes what he is saying, he will put his seat on the line.


The Acting Speaker (Mr. Paproski):: The period for questions and comments is now terminated. I will recognize the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) on debate.


Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, I have been struck by the comments of journalists who say that it is time for Canadians to have sympathy for the poor Tories. Brian Mulroney is now the Joe Blpftsk of Canadian politics. Everywhere he goes he carries a cloud around with him. It is now time for Canadians to go to the wailing wall and light candles for the poor, benighted leadership of Brian Mulroney who, day after day-


The Acting Speaker (Mr. Paproski):: Order.


Some Hon. Members:: Order, order. Relevance.


John Kenneth Gormley: You are totally irrelevant.


The Acting Speaker (Mr. Paproski):: Order. Question Period begins at 2 o'clock. I would hope to have a little more decorum here. I would like to hear the speech of the Member for Winnipeg-Fort Garry. However, he has been here long enough to know that the Prime Minister (Mr. Mulroney) is the right hon. gentleman and is not referred to by his name.


Lloyd Axworthy: Thank you, Mr. Speaker. I was quoting. I should have put quotation marks around the words of those who are now soliciting this wave of sympathy for the stumbling and fumbling that we have watched with interest. One would be hard pressed to be sympathetic after listening to the speech of the Minister for International Trade (Miss Carney) yesterday. While the negotiations were being conducted she was nowhere to be seen. Now, with bravado and bluster, she is attempting to defend the indefensible by going on the offensive and blaming everything on the Opposition or someone else. There is always someone else to blame.
This typifies the deep sense of panic and fear which has gripped this administration as it realizes the mistakes it has made in governing. I suppose there are those within the administration who are not smart enough to realize the trouble they are in, but the Canadian people know what trouble they are in. Any Government that was elected with a massive majority and is running third in the polls two years later has
Softwood Lumber Products Export Charge Act
some cause for worry. However, we see only increasing arrogance.
The Minister returned from Hawaii declaring a grand victory, which compares with the eloquent statements of Neville Chamberlain who upon returning from Nuremberg and Munich said he had won the peace. The fact is that ignorance is being masqueraded as bravado. Canadians must be concerned about the lack of understanding of this issue.
I will comment on statements made by the Minister and we will see how they hold up. Yesterday she tried to make the case that this agreement was somehow good for the lumber industry of Canada. It is totally absurd to assert that the results of these negotiations will have no negative impact on the lumber industry and that Canadians should be thankful for these negotiations. She was trying to say that anyone who raises the problems which will be faced by the lumber industry is misguided. The Parliamentary Secretary has said that this is a great campaign of misinformation.
The profit margin of the lumber industry was only 3 or 4 per cent last year. How is it possible to extract $500 million or $600 million from such an industry and say it is good for them? How do you bleed an industry to death and say that it will lead to vitality? It does not make sense.
This morning representatives of the secondary lumber manufacturers are on the Hill pleading with various caucuses. There are 80 mills in British Columbia, Alberta, Saskatchewan and Manitoba engaged in the secondary manufacturing of wood products that will be closed down because they are paying 200 or 300 per cent more as a result of the negotiations of the Government. They would have been happier with the countervail. Under the countervail at least they were only paying on the primary products. They are now paying on a whole range of manufactured products. We were led to believe that the Government was interested in encouraging value-added, labour intensive development. Instead, the Minister's wonderful agreement will result in major shut-downs and layoffs in the secondary lumber products industry.
The Minister went on to say that the Government has saved the industry, that it will put $600 million back into provincial coffers. The Government has not taken into account the amount of money which will be lost to the industry. The report on the economic impact on the Canada and U.S. softwood lumber industry prepared by Widman Management points out that the loss of corporate taxes will be $282 million, that the increased unemployment insurance payments will be $163 million, and that the loss of personal income tax will be $59 million. The net loss as a result of this agreement will be $500 million. What great advantage has been gained by this agreement which will result in a major withdrawal of funds from the corporate sector?
Is it not strange, Mr. Speaker, that the Conservatives, who were elected in 1984 on the platform of national reconciliation and working with private industry, have now engaged in the dirtiest, bloodiest insult match with private industry that we

January 20, 1987
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have ever seen? I am amazed by the language which the Minister for International Trade has used to describe members of the lumber industry. Only weeks ago those people were paragons of virtue. They are now being called the worst kind of traitors. The Minister said that you cannot trust them, that they do not know what they are talking about. This is the Government of free enterprise. This is the Government which was going to support the private market. It is now telling the industry that it does not know what it is doing, that the Government knows better. The Minister for International Trade, the well-known expert on lumber matters, knows much better than the industry.
There is one major difference between 1983 and 1986 with regard to the softwood lumber industry. In 1983 the lumber industry was allowed to fight its battle with the support of the Government. In 1986 the Government intervened and replaced the lumber industry. All the brave speeches about allowing the private industry to decide its own best interests ring hollow. I recall very well that the strategy in 1983 was to allow those who knew best to act. We did not have a Minister for International Trade wallowing in, with all her new-found knowledge, to displace the industry in its process. The industry negotiated for itself and won the battle. However, we now have a Minister who knows so much better, and we have lost. That says something about the hypocrisy we have heard.
The Government talks about this agreement being so good for the industry. We want to know why the industry is saying this agreement will require it to translate the export duty into stumpage fees and substantially raise the cost of the domestic product. That can translate into an extra $1,000 per house for Canadians and into substantially higher costs for exports to other countries. Not only are we in a catch-22 situation with the U.S., we are also going to penalize our own consumers and our other export markets. That is the great economic advantage that the Minister for International Trade has won for Canada. She has repudiated the industry. She has an agreement that does not work. We have a formula which will lead to higher prices in our domestic and other export markets. That is the economic advantage.
The Minister says we had no choice. That was the only thing we could do. Balderdash. What stupidity to say there was no other choice. We had another choice, that of following the trade rules which were worked out over the years with both the U.S. and the internaticnal community. If we had followed those trade rules there could easily have been no duties imposed at all. We would not be talking about 15 per cent or 10 per cent or 20 per cent. We had the option of continuing to fight on the issue and end up with no duty being imposed. That wonderful, all-knowing, omniscient Minister of International Trade ignored the report the U.S. Department of Commerce put out on December 23 which said that lumber prices were increasing. That, in the admission of the Department of Commerce, substantially weakened the lumber coalition's case. We forgot that and pushed on for negotiations, and you have
to ask why. We know why. My Leader said why yesterday. The Minister of International Trade had orders; clear off the irritants, get rid of this problem between us because we have to have a quick-fix deal within three or four months.
What was the other option? We were told directly that the international tribunal under the GATT was prepared to give its first report in February. They were prepared to give a ruling at that time which would have put the U.S. on the defensive. They fully understood what this Government does not understand, that the U.S. is attempting to tamper with our right to set natural resource prices. That is totally contrary to GATT and international trade rules. With that ruling the U.S. would have had to either roll back its decision-


John Horton McDermid: Or?


Lloyd Axworthy: Or repudiate a GATT ruling-


John Horton McDermid: Or?


Lloyd Axworthy: At a time when they are trying to negotiate a new multilateral agreement.


John Horton McDermid: Or?


Lloyd Axworthy: Then Canada could have had the right to take retaliation against U.S. products under GATT.


John Horton McDermid: That is right.


Lloyd Axworthy: That is right. What about computer products and other business equipment? What the Tories have totally forgotten is that we negotiated under the Tokyo round free access to the U.S. lumber market and gave the Americans access to the Canadian market for computers and business equipment. We already paid the price for that access. Under GATT we could have had the right to repudiate that agreement. That is what the Government does not understand.
The only way a country like Canada can properly protect itself in the world of international trade is if we play by the rules and strengthen them, not try and get around them. The Government has simply no comprehension of that fact. It may give lip service to a multilateral system, it does nothing to use it or reinforce it. The Government thinks instead that it can get by with the Dale Carnegie approach to negotiations, a song and a dance, a smile and a wink, and somehow President Reagan is going to give in to us. That seems to be the specific approach to Canada-U.S. relations.
That brings me to the other assertion made by that great and all-knowing Minister of International Trade that sovereignty is a phoney issue.


John Horton McDermid: It is.


Lloyd Axworthy: The Parliamentary Secretary agrees with her. That shows how far he has retrogressed in the past few years. The fact of the matter is that sovereignty is an issue. I do not think the Tories understand what it means. That is their
January 20, 1987

problem. They do not understand what sovereignty or independence means. They have no conception of how you go about defending sovereignty. They have no concept of what it means to this country. For their edification I will refer to some international law books. Reading from the standard text by Charles Fenwick, sovereignty means the repudiation of the right of a stronger state to intervene in the affairs of a weaker state. It has come to represent the will of smaller states to exist as separate and independent members of the international community.
That has always been Canada's assertion. We have a particular problem because we share a continent with the largest and most powerful country in the world. That is something Canadians have always been sensitive to. We recognize the need to maintain a balancing act between dealing properly with our friends and allies who share the continent and at the same time defending our independence and sovereignty. That is a balancing act and no one says it is easy. It has to be a central preoccupation of any Canadian Government and it has been over the years. We all know how important it is to make sure you do not shift the balance too far one way or the other.
We have recognized that one important way of ensuring that the balance is maintained is to establish, through the international community, rules which restrain the exercise of the power of the stronger state, whether it is on matters of the environment, defence or trade. Canadian regimes of all political stripes, Conservatives and Liberals, up until now have recognized that the best way to preserve and maintain that balancing act is to strengthen the international community, to put procedures in place where other countries of similar size and nature can help determine the rules. We recognize that that is the best way of maintaining our sovereignty and protecting ourselves.
The fact of the matter is that the Government across the way is the first Government since the end of World War II which has totally abandoned that theory. I think it is the peculiar preoccupation of the present Prime Minister (Mr. Mulroney) that he can somehow establish with the Reagan administration this palsy-walsy informal approach and somehow get around them. Yet he has been proven wrong time after time. The Americans, because they are tough and smart negotiators, when they see weakness, are going to take advantage of it. That is what they have been doing. Whether it concerns pharmaceuticals, publishing or softwood lumber, they see weakness and take advantage of it.
That is the problem with this agreement. It negotiates on the political side and does away with our right to use the rules of the game. Can you imagine signing an agreement where we totally give away our right to go to GATT? We will now rely upon the American President, who has the necessary retaliatory powers, to determine whether there is a breach or not. The people who signed this letter are senior cabinet officers of our partners in the agreement. They are not inconsequential individuals. They are saying, here is our interpretation of the
Softwood Lumber Products Export Charge Act
agreement. Are they saying that the fact that Canadians cannot reforest or even build roads in the forest areas does not mean anything? That shows how little they know about international law. The Americans are partner to the agreement and if the Parliamentary Secretary read the agreement as he should, he would see that they have a right to pull the trigger if they see a breach.


John Horton McDermid: Why do you not believe the Canadians?


Lloyd Axworthy: When you read agreements, you take both partners into account and do not just look at one side. You should understand their interpretation of the agreement.
If the Government wants to establish Canada's position, where is its letter in return that refutes that statement? Why has it not told Canadian lumber producers and the Canadian provincial Governments, in a clear written document that will have the same standing as the Yeutter-Baldrige letter, what Canadians can do and clearly put on the record that the Government is prepared to refute that statement?
Yesterday in the House I asked the Prime Minister whether he is prepared to ask Vice-President Bush tomorrow if he will repudiate the Yeutter letter and make it clear that their views are the same. He refused to do so. He has refused to put anything in writing.
The Government cannot tell me its interpretation when it does not have the guts to put it down in writing or negotiate it with the Vice-President of the United States. How does the Government expect Canadians to believe its stand when it will not say what it is prepared to do?
We know that the agreement has given the rights to the Americans to monitor our industry, become involved in evaluating the price of our industry and, furthermore, to say whether and how we can determine programs and policies to help our industries. If the Americans are not satisfied they will pull the trigger on the agreement and bring a Section 301 action. We are told this is not an imposition on our sovereignty. That is what frightens Canadians. If the Government believes this is how to sign an agreement, then God help this country.


Mr. Fontaine:: Mr. Speaker, my first remark ... I heard the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) talking about nationalism and the Constitution. After being on the team that included his colleague from Quebec-I see him and I can hear him shouting-the team that totally ignored 27 per cent of the population when the last constitutional agreements were signed, I think the Hon. Member is hardly in a position to rise in the House today and talk about nationalism and protecting the rights of Canadians.
I wish he would be more forthcoming with his facts and remember to tell Canadians-I want to ask him about this- what he would do about the 60,000 jobs affected by our

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lumber exports, including 11,000 jobs in Quebec. And perhaps he could say what should be done to maintain our $4 million worth of exports to the United States.
I also wish he would tell the people in his riding, in his province and the people of Canada that we managed to reduce the initial demand for a 36 per cent tax that would otherwise have been applied by the Americans last summer and would have cost us SI.44 billion. First we brought it down to $600 million in taxes that would have been collected by the Americans, while today, we are going to collect that tax ourselves and redistribute the money among the provinces. Perhaps he would care to comment on that and say what he would have done.
Furthermore, I wish he would comment on the position taken by the International Woodworkers of America. Thirty-one thousand people wrote to the Minister for International Trade (Miss Carney) to show their support and express the hope the our negotiations would be successful.
Finally, would he care to comment on the fact that our lumber exports rank third and that he would have those exports eliminated altogether?
Mr. Speaker, I wish the Hon. Member for Winnipeg-Fort Garry would explain his position and the position taken by his colleague, the Hon. Member for Saint-Henri-Westmount (Mr. Johnston), on the same matter, so that we can understand what is going on in the Liberal Party, and if they can agree, perhaps they could explain to their Leader, the Leader of the Opposition, what he should be saying on the same subject.
I would appreciate some clarification, Mr. Speaker.


Lloyd Axworthy: Mr. Speaker, I shall be glad to answer the questions of the Hon. Member for Levis (Mr. Fontaine). First of all, he said that 60,000 workers would be affected by this decision. Where does he get his figures? What is his source? For all we know they come out of the blue, since we do not have the source of the documents provided to Hon. Members.
Mr. Speaker, there is no way I can answer the Hon. Member's question unless I know where he gets his facts. So now for the other questions, we had a meeting with Mrs. Saucier, President of the Quebec Chamber of Commerce and spokesperson for the lumber industry in the province of Quebec. At this meeting she said that the Government's decision to levy this tax would create a very serious and very dangerous problem for the industry in Quebec. I may add that her views are highly respected in the province.
I am surprised the Hon. Member for Levis has not contacted Mrs. Saucier. She is an excellent person to consult.

At the same time he wants to know our position on this issue. It has been clear from the beginning that we felt the Americans had an unfair, unjustified initiative and that ours
was the correct position before the international and U.S. tribunals. We believed that to be the position of the Government until October 26. The Minister for International Trade declared with great eloquence in the House that we would fight to the end in those tribunals, but she shifted ground and changed her mind. She sold out, but our position has been consistent throughout this matter.
I suggest to the Hon. Member that there is bound to be major problems when this matter is negotiated. That problem now exists. We have had the same position all along and if the Hon. Member had followed the advice of the Official Opposition he would not be in the mess that his Government has created for him at the present time.


Nelson Andrew Riis: Mr. Speaker, the Hon. Member will be aware that according to the agreement only 20 companies out of hundreds involved in the Canadian softwood industry were granted exclusion from this tax. This includes seven companies in B. C. and others throughout the rest of Canada. Has the Government taken any major steps to ensure that other companies that ought to be exempt from this tax will be included in an agreement? Are renegotiations taking place and, if not, should they?


Lloyd Axworthy: Mr. Speaker, the Hon. Member quite rightly points to one of the most serious and immediate problems facing us. There are some 80 to 100 secondary manufacturers of lumber products in this country. The majority of them, some 40 to 50 enterprises, are in British Columbia, and approximately 20 more in Alberta. On Friday, I met with some eight to 12 companies who are so affected in my home province of Manitoba. They are producing secondary products that are not part of the list of those that will be excluded. There are many companies themselves that are not excluded, yet the Government has not undertaken any renegotiation. It has made no effort to reopen the agreement to provide for amendments in order to come to the rescue of those companies. This simply illustrates our point, that the Government has become blind in its fixed notion that what it is doing is right.
This is a part of the problem facing the Minister for International Trade. Perhaps as a result of embarrassment, fear, or ignorance, she has exhibited the worst examples of inflexibility. This matter has become a crusade rather than one of ministerial responsibility or intelligent and reasoned public policy when one tries to obtain the best arrangement out of a difficult situation. The issue has become a great crusade.
If there is any item that must be altered in that agreement, it is with regard to those manufacturers. They must be given some opportunity, otherwise they will continue to pay 200 per cent to 300 per cent more under the Canadian imposed export tax than under the previous countervail duty that the Americans introduced. I suppose increasing the cost by 200 per cent or 300 per cent is what the Tories call great public policy.


Ian Gardiner Waddell: Mr. Speaker, I am not an expert in this area like the Hon. Member and some of my colleagues. He might
January 20, 1987

be aware that yesterday John Ferguson stated in his column entitled "Opposition's Crying Wolf Over Lumber Deal with U.S.", that the Opposition criticized very severely the previous tariff on shakes and shingles. In fact, the impact has been minimal and the 35 per cent tariff was really passed on in higher prices to U.S. consumers and the mills are still working with the loss of few jobs. He goes on to say that the American consumers seem to be absorbing a big chunk of this tax as well.
1 wonder if the Hon. Member could answer that point? In other words, I suppose Mr. Ferguson is saying that this will be passed on to American consumers and in the end will not hurt Canadian industry. I ask the Hon. Member that because I would like to look at this more objectively myself.
I would like to put a second question with respect to that point. Is it not a fact that our industry was being subsidized? How does one lose $200 million running the forest industry in British Columbia unless proper economic rents for the resource owned by the Government is not charged? It seems to me pretty difficult to have a forest like that in British Columbia and lose $200 million.
Let me put those two tough questions to the Hon. Member and ask him, if he been Minister for International Trade, how he would have approached the issue? What would he have done differently? Would he have insisted that the Province of British Columbia, for example, charge proper economic rents and therefore perhaps stop the Americans from complaining? Or would the Hon. Member have taken any other measures differently from the Government?


Lloyd Axworthy: Mr. Speaker, first let me recount a discussion we had last week when I visited Washington and met with the coalition against unfair import taxes. It is an American coalition of lumber dealers and consumer groups who have been fighting up until October 26 on the same side as Canada. They recognize that the imposition of the countervail was a wrong move and are now desperately against the Canadian imposition of the export tax. That is certainly because they recognize that it will mean very major hardship for American consumers. There is no doubt about that. They are estimating an additional cost of $700 or $800 to $1,000 for some of the products used by Canada. At the same time they point out that the housing market in the United States, which is the major user of Canadian softwood, has been going through a boom period for three or four years. Coming out of the recession there was a major pick-up in housing demand, but that has now slackened. The projected number of units will be down
200,000	or 300,000 next year, which they obviously assume will have a deflationary impact on prices and there would be far less ability to pass those prices along through the import tax. That means that a large part of that tax will have to be swallowed by the manufacturers or they will simply go out of business. Certainly those in the marginal sawmills will be put out of business.
Softwood Lumber Products Export Charge Act
The second major question which must be asked is what is the impact upon our own consumers and our other export markets? The Government has said its intention is to move from the export tax to increased stumpage fees. The stumpage fee itself applies to trees, and to be able to carve out an end use product from one piece of cedar and say that is destined for the U.S. market is virtually impossible. Therefore, the stumpage fee increase will impact on our own domestic market as well as on our other export markets. That would make Americans even happier because they will be able to compete more equally with us in other export markets.
In answer to the final point, I simply reiterate that if we were the Government we would have done as we did in 1983, use the rules we have and, by using those rules, strengthen them. We have recourses in the international system and in the American tribunal system. The best defense of our interest is to use those rules, to fight for them, and to make our best case. Particularly, and this is the issue at stake, what precedent has been established? We have now conceded that we subsidize our industries. We had never conceded that before. That was simply a matter of public policy in Canada. We have now made a historic mistake in saying we agree that we provide subsidies on our natural resources through Government action. That will open up a whole host of reactions and we already have new coalitions in the United States emerging to fight them.


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


Mr. Jack Shields (Athabasca):: Mr. Speaker, it is indeed a pleasure to take part in this debate. However, before I get into the meat of my remarks, I would like to make a comment for the benfit of the two previous speakers, the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) of the Liberal Party and the Hon. Member for Kamloops-Shuswap (Mr. Riis) of the New Democratic Party. I believe there was a common thread running through their remarks, and that was to first attack the Prime Minister (Mr. Mulroney) and then to attack in a very vicious way the Minister for International Trade (Miss Carney). Of course, their attack on the Minister for International Trade, their biggest argument, is that she was on holidays in Hawaii while the final negotiations were taking place. Both of those Hon. Members know full well that there are telephones, telefax and telecopiers. The Minister was not involved in the negiations on a one-to-one basis. There was a negotiating team sitting in the room during the negotiations and she was in contact with them at every moment or at any time those people wanted to get in touch with her for direction, and those Hon. Members know that. The Hon. Member for Winnipeg-Fort Garry has been in that position himself when he was Minister for Manpower and Immigration. When things were happening in Ottawa and he was not here-he might have been out of the country-he was in contact with his Department and his negotiators. Let us be fair.

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Lloyd Axworthy: I never did that, Jack. I was never away when those important negotiations were going on.


Jack Wendele Shields: The Minister was carrying out her responsibility and the Hon. Member for Winnipeg-Fort Garry and the Hon. Member for Kamloops-Shuswap know that. I am surprised the Hon. Member for Winnipeg-Fort Garry would take that tact. I had associations with him when he was a minister. I worked with him on a number of pieces of legislation. I remember approaching him with a very serious problem faced by my community. The fresh-water fishermen were having problems. The Hon. Member for Winnipeg-Fort Garry, as a minister, obliged me in my representations. Therefore, I am surprised, because he knows the difficulties in carrying a ministerial load.
The Hon. Member for Winnipeg-Fort Garry also indicated that the Minister said that with the deal we worked out to solve the softwood lumber dispute with the United States there would be no impact on the industry and no injury. That is just not true. No one from this Government, the Minister, the Parliamentary Secretary or anyone else, ever indicated there would be no impact and no injury. Of course, there could be injury and there could be impact. We all know that. However, the Government and the Minister were faced with a very difficult choice in counteracting the 15 per cent countervail duty which was placed by the United States on the import of softwood lumber.
The Hon. Member for Winnipeg-Fort Garry said we could continue to fight the issue and win the removal. He said we should have fought it out. However, he failed to say that that was going to take perhaps three or four years and that all the time it was being fought through GATT and through the courts, the tribunals and so on, the import tax duty which was there would still be collected and would still be going into the coffers of the United States. He also failed to say that even if we were lucky enough to win, the mood in the United States right now in Congress and the Senate is such that action would have been taken at that level to impose the same kind of restrictions through GATT which are there now, and GATT be damned. The Hon. Member knows that the whole mood of the United States is one of protectionism and of putting up barriers to international trade. He knows that is going on. He knows of the number of individual Bills which are being sponsored through Congress right now.
Thus the Government was faced with a difficult choice. We could either pay a countervail duty to the United States Treasury to the tune of $800 million per year, or even larger, and hope that we would win the case by following the rules. Over the next four years that would bring the total sum up to approximately $2.5 billion. We could have conceded the issue and suspended any action until Canada brought about offsetting measures, such as the imposition of a countervail duty. By doing that we would have started a trade war with our biggest trading partner. That is what we are talking about.
We are not talking about a dispute with a country on which we do not depend for a great deal of our trade. We are talking about a country which accounts for 75 per cent to 80 per cent of all our foreign trade.
The third option we had was that of negotiation. We could sit down and negotiate our way out of a mess which was created by a countervail duty without affecting other negotiations which were ongoing to secure access to markets. We could get out of the mess without setting a precedent that would affect other sectors of the economy. In other words we had to sit down like reasonable people and try to negotiate a solution to a very serious problem which affects a significant Canadian industry.
I have the impression as a result of listening to the Members of the NDP and the Liberal Party that we should not negotiate with the Americans. I am left with the impression that they think if we negotiate with them we will lose. They seem to say that we should fight, put up barriers and throw hand-grenades. And then when they do come out with a policy which may affect Canada we have to run to them and say: "You have to exempt us because we are one of your best friends". We cannot do that sort of thing.
So what did the Minister do? She instructed her officials and we moved in to negotiate an agreement. The federal Government did not move in to negotiate an agreement unilaterally. It did not go in as a centralist government and say: "We will negotiate". What the Government did is it went to the provinces, sat down with them and then brought them in on the negotiations. The approach they would dictate is defined by their going to the United States and sitting down with their counterparts to negotiate this agreement. There was co-operation all the way. As a result, nine provinces out of ten agreed with the final position taken. The one province which did not agree was the Province of Ontario. However, it will come onside when the issue is finally resolved.
What the softwood lumber dispute illustrates to all of us is just some of the trade problems faced by Canada and the U.S. It also demonstrates how essential it is for our two sovereign countries to get together and hammer out new rules to settle such disagreements. We cannot allow our trade position with the United States to deteriorate to a point that we will find these types of problems popping up every week or every second week. We have to put a system in place by which disputes of this nature can be solved in a reasonable manner, as was done with the lumber dispute.
I would also like to speak for a moment about the sovereignty issue which I think is very important. I believe that sovereignty is extremely important to all Canadians, just as it is extremely important to all Americans. We have heard members of the NDP and members of the Liberal Party talk about sovereignty and how it has been eroded as a result of our entering into a bilateral agreement with another country on a trade issue. What they fail to say, and most assuredly why they failed to say it is clear, is that when this country entered into
January 20, 1987

the GATT agreements we gave up, in a sense, some sovereignty or some decision making simply because we have agreed to abide by certain conditions. If we break those conditions then certain things will happen. We will lose our sovereignty in terms of being able to change the rules as we want because we have entered into an agreement.
Each time we enter into a bilateral agreement with any country on any trade issue, whether it be in the area of fisheries, hydro projects in British Columbia or in Quebec, or others, they are monitored by both countries. What members of the Opposition fail to say is that we also monitor bilateral agreements with the United States. We monitor what is going on in the United States. So in the truest sense I suppose that the United States also gives up some of its sovereignty. Through GATT we monitor events which are taking place in the United States, and the United States gives up some of its sovereignty. But that is not the issue. It is a red herring and Members opposite know that.
Let us look at some of the results of the agreement which has been entered into. The Coalition for Fair Lumber Imports is now withdrawing its petition which led to the countervail decision. As a consequence we are introducing legislation to impose a 15 per cent export tax on softwood lumber, excluding all those small plants and companies which impose a value-added levy to the products they ship to the United States. The 15 per cent will not be imposed on those groups. The 15 per cent on the primary production of softwood lumber will be imposed as an export tax. The money from the export tax will go directly into the federal Government coffers. Rather than going into the United States coffers, it is now coming into the Canadian coffers.
The next part of the agreement with the provinces is that the money will be redirected to the provinces that are producing the softwood lumber and shipping it to the United States. They will be able to use it for reforestation, silviculture, or any displacement that may take place in the labour force. The key is that the provinces still control the resource, the federal Government does not.
The Hon. Member for Winnipeg-Fort Garry stated that we should have maintained what they did in 1982 or 1983. Yes, they acted. They were the ones who brought in the national energy policy and attacked the resources of the provinces. I suggest that if they were in Government today that they would be collecting the export duty and keeping it here in Ottawa. This Government is saying that the resources belong to the provinces and they are responsible. Therefore, the export tax that will be collected on exports to the United States will be redirected to the provinces, as it should be.
The agreement essentially maintains exemptions for exports of certain Canadian companies operating in British Columbia, Ontario, and Quebec, most of the producing provinces that do have value added to the lumber before it is shipped to the
Softwood Lumber Products Export Charge Act
United States. It will not apply to the value added in the remanufacturing process. That is a commitment that we have.
Most important is the argument we hear, "Gee, you entered into this agreement with the United States on the softwood lumber. My goodness, that will affect all other areas and every other agreement that we might want to develop or reach with the United States". The indications are very clear that this is not so. The proposal to the U.S. Government that was made between Canada and the United States on the softwood lumber was made without prejudice. Without prejudice means that this can never be used as an example of what was done before which can be used in another area. Without prejudice is a common term that lawyers use. They write a letter and put on it "without prejudice", which means that this agreement was drawn up without prejudice.
It is a good agreement. Certainly there will be cost. As the Members over there have clearly indicated, this cost will be passed on to the consumer in the United States. Indications are that the price of lumber has already gone up about 13 per cent in the United States and our sales from Canada to the United States should not be affected.
I rest my case, Mr. Speaker, and thank you for the opportunity.


Ian Gardiner Waddell: I have one comment and a question. First of all, my colleagues and I were listening to the Member's struggle with the NDP Party. We were trying to Figure out if the Hon. Member does it on purpose, or does he not understand, as is the case with many Conservative back-benchers. Maybe the Hon. Member could privately tell me. It is like saying, the New Democratic Party Party. You cannot have an NDP Party. It is the NDP. Maybe the Member could get his mind around that.
The Hon. Member in debate says that the deal is done without prejudice, therefore, we are safe. It is without prejudice to other matters. That seems to me to be an impossibly naive position to take. The Hon. Member is Parliamentary Secretary to the Minister of Energy, Mines and Resources (Mr. Masse). Did the Member notice that recently the American regulatory body for natural gas tried to intervene and hold up the Canadian practices of pricing gas? In fact, they are intervening with our own ways of dealing with the pricing of our resource. Is that not very similar to what went on in the countervail tariff on lumber? Is that not another example of the Americans intervening in Canadian sovereignty, trying to tell us how we should tax and deal with our resources? Is it not another step in the path of the eventual absorption of Canada by the United States, down which this Government is rapidly leading Canada? Does the Member not understand why Canadians and the Opposition are so upset about the loss of sovereignty in this deal? Would the Member answer that question?
The Hon. Member will recall that a few minutes ago I put a question to the Liberal critic, the Hon. Member for Winnipeg-North Garry (Mr. Axworthy), and asked him what he

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would have done had he been the Minister. He answered me that above all he was very concerned that Canada had set a precedent, had conceded that we subsidized our resources. That is what the Member said, and he was concerned with that precedent.
I wish to reiterate the question. Is the Member not being impossibly naive when he says that this is all done without prejudice? Are the Americans not starting to do the same thing with our natural gas industry?


Jack Wendele Shields: First of all, I will try to answer all the convoluted statements made by the Member for Vancouver-Kingsway (Mr. Waddell). One, the NDP Party-I know it sounds as if there is a stutter there. They always take two positions, so I feel that they cannot be referred to as the New Democratic Party, because there is the NDs in Alberta, and there is the NDP in British Columbia that take opposite positions to what that Hon. Member states. It is a repeat-NDP Party-and I will continue to use it. They dropped the "Party" in Alberta for NDs-that does not sound quite right, but it is NDs. There are some problems. We do not have them here, but they have them over there.


John Horton McDermid: It stands for "no dimension".


Jack Wendele Shields: The Hon. Member talked without prejudice.


Ian Gardiner Waddell: You did.


Jack Wendele Shields: The Hon. Member for Vancouver-Kingsway is a lawyer and knows what "without prejudice" means. This understanding is without prejudice and this is written in the understanding which I wish to read to him:
This Understanding is without prejudice to the position of either Government as to whether the stumpage programs and practices of Canadian governments constitute subsidies under United States law or any international agreement.
That is pretty plain. As the Member often does, he asked a question without going to the facts and finding out for himself. I hope that explains it. If the Hon. Member does not have that in his possession, I would be happy to let him have a copy.
The Hon. Member then tries in some convoluted way to link up natural gas. The Member says that the regulatory bodies on natural gas have made a request similar to that of the lumber people. That is not true. The Hon. Member knows full well that the regulatory body in the United States is talking about the transportation costs of natural gas. They are not talking about the pricing of natural gas. They are asking whether the cost of transportation should be included in the price. The Hon. Member knows that full well.
The Hon. Member says that I am being naive when I talk about bilateral agreements. I wish to point out to him that all the bilateral agreements are agreements. There are bilateral agreements for fishing off the West Coast, and for fishing off the East Coast. There are bilateral agreements for the production of energy, electrical power, and the shipping of power across the border. The automotive agreement is another bilateral agreement.
In all of these somehow the United States gives up something; it cannot do certain things if it signs a bilateral agreement. In Canada we give up certain things if we sign a bilateral agereement. It is not sovereignty; it is reasonable people sitting down and working out a problem facing both countries and trying to come up with the best solution. It is much better doing it that way than using the NDP way of doing it, that is, throwing hand-grenades at our largest trading partner and one of our most secure partners in the trading world.


Mr. Deputy Speaker:: I will take two more questions-one from the Hon. Member for Saskatoon East (Mr. Ravis) and one from the Hon. Member for Egmont (Mr. Henderson).


Mr. Ravis:: Mr. Speaker, I want to pick up on a point concerning the Minister's absence from the country during the Christmas vacation. I was very annoyed at that point being raised because the Minister is probably one of the hardest working Ministers in the Government. I think it is reasonable that a person can expect to spend some time with his or her family during the Christmas vacation, particularly when we realize that the Minister was prepared to spend time on the telephone every couple of hours, as I understand it, keeping in touch with the officials while the negotiations were going on. If Ministers are derelict in their duties, they deserve every bit of criticism they receive from the media or from the public. However, that is not the case in this situation. Even though the damage has been done by our friends in the media and in the Opposition, I think the point should be corrected. This Minister does not deserve that reputation.
Let me return to some of the realities facing the American Government today. They have been mentioned before in the debate, but I want to refer to an article that appeared in Business Week which goes back not only to last month but almost a year in terms of the trade deficit situation suffered by the American economy. The Americans thought they could stop their trade deficit at $125 billion, at $150 billion, and at $175 billion, but they found that they could not turn it around. If that situation faced Canada, in all probability we would want to retaliate against some of our trading partners as well.
I would like to put my question to the Hon. Member for Athabasca (Mr. Shields). It is my understanding that the United States has been dealing with some of its other major trading partners, namely, Japan and the European Common Market. Is it not true that we in fact ended up with a much better deal in our softwood lumber situation, in terms of at least keeping the money in the country, than Japan and the European Common Market where it is costing their economies literally hundreds of millions of dollars?


Jack Wendele Shields: Mr. Speaker, the Hon. Member is absolutely correct. The protectionist sentiment now rampant in the U.S. Congress and Senate has generated something like 300 independent protectionist Bills in those two Houses. This has
January 20, 1987

created a very dangerous situation from which Canada is not exempt.
If we are not able to sit down in some way and negotiate with our largest trading partner problems such as as the softwood lumber one, we will be facing real problems. We cannot allow this to happen, and that is why the total initiative is taking place.
I want to return to the comment about the Minister being in Hawaii on holidays over the Christmas period. First, Christmas is pretty sacred to most families; she is a single parent and she was with her family. Second, the Minister was constantly in touch with the negotiating team. I think it is sleazy politics when members of the Liberal Party and of the NDP, and some former cabinet Ministers, hammer away at this, knowing full well that with telephones and the telecommunications system it is not true that a Minister has to be sitting on the doorstep or in the next room. They know the Minister was in touch with the negotiating team. It is just not true and it is very sleazy. The journalism which has resulted from these accusations is sleazy journalism, and I feel that very strongly.


Mr. Henderson:: Mr. Speaker, I should like to make a brief comment. I will not become involved in the debate on whether the Minister should or should not have holidays, be they in Hawaii or wherever she was. However, some Maritimes lumber producers told me that they could not care less whether she is in Hawaii for 365 days of the year.
I think the Hon. Member for Athabaska (Mr. Shields) would agree that this agreement has some serious implications for Maritimes lumber producers. It imposes a 15 per cent tax on all but five Maritimes lumber producers.
As Hon. Members will know, stumpage fees in the Maritimes are higher than they are in any other Canadian province. Basically this deal was struck for British Columbia, Ontario, Quebec, and Alberta. However, Maritimes lumber producers are very scared about what is happening; they have told this to me and to other Hon. Members. In fact, the Hon. Member can ask some government Members from Atlantic Canada about that. It will have a severe effect upon their industry, and some of them will have to close their doors. Time will tell if that is the case or not. Their concern is not only because of their sales to the United States, but also the competitiveness of Quebec and Ontario lumber coming into Atlantic Canada if there is an impediment affecting the sales of Quebec and Ontario lumber into the United States. There is no way the martime provices can compete with that. In many cases we do not have the quantities of good quality lumber to compete in those areas.
I do not want to be always whining about Atlantic Canada, but almost every program implemented by the Government seems to be tuned to some of the larger and richer provinces and has a detrimental effect upon industry and jobs in Atlantic Canada. All we have to do is look at the unemployment rate in Atlantic Canada where there has not been a turnaround in the economy since 1983. The unemployment rate in Ontario is quite low, but it is very high in Atlantic Canada.
Softwood Lumber Products Export Charge Act
Would the Parliamentary Secretary tell us whether there is provision in the agreement to exempt the Maritimes lumber industry which will be affected more drastically than any other part of the country by the agreement?


Jack Wendele Shields: Mr. Speaker, I thank the Hon. Member for asking a very valid question and expressing a concern on behalf of the maritime provinces. Whenever any agreement is signed or worked through, it seems that one part of the country is hurt more than another part of the country because of population and a number of other factors. I agree that there are some specific problems facing the industry in the maritime provinces. However, I also know that these problems will be addressed very clearly. They have been expressed to the Government by other Members from those areas.
The basic underlying philosopy of the present Prime Minister is that all of us must become sensitive to the various regions of the country. When a policy is signed specifically for one province or one area, sometimes it has a counter-effect upon another area. We must all work toward becoming much more sensitive to this. I agree with the Hon. Member. I will certainly help him as much as I can to rectify any problems faced by the maritime provinces because of the agreement.


Steven W. Langdon: Mr. Speaker, I should like to make some brief comments on the Minister's speech yesterday. My friend in the Liberal Party, a former Minister of Transport, accused the Minister of inflexibility. I must say that of all the possible accusations that could be levelled against the Minister for International Trade (Miss Carney), inflexibility is the very least about which I would be concerned. We have seen the most flexible Minister for International Trade in the country's history. At one time she was dead set to fight this matter to the bitter end. A short month or so later she flip-flopped completely and sought to undermine our negotiations just as the preliminary decision was coming down. But, as soon as that preliminary decision came down, she immediately flip-flopped again and said: "We will fight it to the end". With complete flexibility, she flip-flopped yet once more and gave us a strong, tough argument for following a course of action exactly opposite to that which she had recommended previously. I must not, I am afraid, accuse the Minister of anything that smacks of inflexibility. I wish she had been a little bit more inflexible. I wish for the sake of the country she had stood up and stuck to her position and fought through this issue, as the lumber industry wanted to see it fought through, and as two out of the three trade unions involved in the industry wanted to see it fought through. A great many industry analysts who had looked at just how strong the U.S. case was wanted to see the issue fought through. A little less flexibility would not have been a subject of criticism from me.
I must say that the Minister in her tone in the debate yesterday presented to the House the spectacle of someone whose back is very much against the wall. She must, I have to

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say, bless the events of the past weekend. Were it not for the events this past weekend the focus would be entirely on her. The thrust would be on seeking her resignation and trying to replace this present weak ineffectual Minister with somebody who would fight for the interests of Canada.
This whole debate that has taken place over the lumber question is a debate which is, in itself, extremely interesting, a debate which is very important to the future of the country. But it is not in itself nearly as important as what this incredibly damaging set of concessions to the United States demonstrates about the wider issue of free trade with the Americans. We have been shown in this case a very clear picture of just precisely how we will be leveraged, how we will be hit and how we will be squeezed in the free trade negotiations taking place. If there is any Member of this House who does not recognize the power that the United States exerted to achieve this agreement, which achieves every single objective the Americans sought back two years ago-


Mr. Darling:: Wrong.


Steven W. Langdon: -a year and a half ago-


Some Hon. Members:: Wrong.


Steven W. Langdon: -if they do not recognize that, then I think they are the people who, to use the Minister's ridiculous phrase, are blinking, the people who are blind and the people who are not able to face reality and see it clearly.
This perspective which we present on what has happened to the lumber industry and what is likely to happen as a consequence of the agreement is not the result of sitting back in Ottawa or elsewhere in the world on vacation, or not and looking at what we hope will happen, it is the result of direct and detailed discussions with industry and trade union representatives right across this country which took place in the period after Christmas. It is the result of a survey of lumber companies; it is a result of an attempt to meet face to face with lumber people right across Canada.
I must say that the Minister has distorted, I hope without any deliberate intent, the results of that attempt to reach out and talk to lumber people. She indicated in her speech yesterday that Members of the New Democratic Party travelled across Canada with a task force and as the media reported, could not find any lay-offs directly attributable to the export tax. The letter which was written to the Minister herself as a consequence of that cross-country tour, which I have in front of me, states: "Hundreds of workers have already been laid off-


John Horton McDermid: Not because of that.


Steven W. Langdon: -and we found those specific examples, and Maritime producers alone talk of 9,000 to 11,000 jobs at risk".
I do not mind a debate with the Minister which is direct, upfront and vigorous, but I do mind a debate which attempts to
distort information which she herself has in her possession from our attempt to provide her with more information.
It has been suggested by the last Conservative speaker that the question of sovereignty, the future independence of our country-because that is what it is about-is somehow a red herring. I have here in front of me a text, not of a U.S. letter to its lumber producers, but a text of the Federal Registry of the United States of America, the register of a decision taken by the President of the United States and signed by Ronald Reagan himself. It indicates quite clearly within that text:
-I intend to take or to authorize all appropriate action in response to any future failure by the Government of Canada to meet the objectives and commitments of the Understanding.
What precisely does that mean, Mr. Speaker? It means that we have to look to what the Americans understand by that agreement. Clearly what they have taken under their federal authority is the responsibility to see to it that Canada puts it into effect.
Of course, what the Americans have indicated is quite clear. The letter written by the American trade negotiators to the lumber producers in the United States indicates that the United States will monitor what will be taking place in Canada. One expects monitoring to be part of an agreement, but they will monitor closely the operation of this agreement "to ensure the amounts collected through the export charge or replacement measures are not returned to or otherwise used to benefit producers or exporters of Canadian softwood lumber". In other words, our hands have been tied when it comes to the assistance we can give to those hard-pressed lumber producers who will be hurt by this 15 per cent export tax.
The American trade negotiators have also said that any changes whatsoever made with respect to the agreement without U.S. government approval would be considered a violation of the understanding. If the understanding is violated, the axe will be over our heads. This is something which has not been recognized by those who have been attempting to analyse this agreement.
The letter written to the U.S. lumber producers says that should the Canadian Government breach its obligations under the understanding or terminate this agreement, the U.S. Government will take all appropriate action such as acting under Section 301 of the Trade Act of 1974 to impose import duties equal to the charges which the agreement contemplated would have been collected by the Government of Canada and/or the provincial Governments. In other words, the Americans, without any recourse to yet another countervail debate, would have the right at once to impose its import taxes on our products without allowing for an appeal through U.S. courts.
Our sovereignty has been damaged in a way that should surely leave every Hon. Member of the House of Commons shamed by what is taking place. According to this agreement, we cannot even provide grants, low-cost loans or other benefits
January 20, 1987

to the lumber companies that will be hurt. We cannot even award contracts for silviculture, road building or recreation and other foresting activities on a non-competitive basis. In short, we have to follow precisely what the United States wants us to follow with respect to how we deal with reforestation, recreational activities in the forests or anything related thereto. That is shameful. I wish the Government would have the courage to say honestly that it recognizes the shameful position it has put us in.
I must speak to some degree as well of the details of the legislation and the agreement. I would like to deal particularly with Atlantic Canada. In Atlantic Canada the situation is so unfair and so grossly unjust that I cannot believe that a Canadian Government, particularly one with a forestry Minister from that part of the country, would have permitted such a thing to take place. As reported to me by the Maritimes Lumber Bureau, 97 firms in the Maritimes are not exempt from this export tax.
One might ask if these are the big firms that can afford not to be exempt, the firms that are the most powerful and influential and therefore the most able to penetrate the U.S. market. No, these 97 firms are small and 40 of them are the single source of support for employment and economic prosperity in one-industry towns. Those firms are required to pay the 15 per cent export tax despite the fact that many of them depend entirely on exports.
The Atlantic producers worked very hard to promote their position after the preliminary determination was made. On December 4 they all visited Washington to make the point that they should be exempt. On December 15 they visited Washington to stress again the need for fairness represented by an exemption for them. On December 18 they came to Ottawa to make precisely the same point. Everyone was quite clearly aware that these firms with much higher stumpage fees would be hit very, very hard. Yet nothing happened that would assist these 97 lumber producers or their thousands of workers located in one of the worst hit parts of Canada. What injustice, unfairness and unthinking uncaringness about a part of the country which is crucial to the future of Canada.
Not only was there that injustice, there was originally a list of firms and products in British Columbia which were exempt from the U.S. countervail. That list was significantly shortened by the negotiations toward the agreement. As a consequence, thousands of workers who had not felt threatened by what was taking place will be hit immediately and hard by this oversight. Was it an oversight? Was it yet one more concession? Was it one more bargaining chip that had to be given away? All one can say is that it was an incompetently organized and worked out agreement, and that had to bear some relationship to the fact that the Minister for International Trade was not trying, either in Ottawa or Washington, to be on top of the negotiations. I cannot believe that a Minister charged with that responsibility would not be right there seeing to it that these crucial points were established in the final agreement.
Softwood Lumber Products Export Charge Act
This is the start, not the finish, of serious disasters for natural resource producers throughout Canada. Already natural gas producers are experiencing what has taken place in this case. Already pulp and paper producers are feeling the same pressure. Already European and Asian producers are starting to explore similar moves against Canada because we have admitted that we subsidize our lumber industry. That is the shame of this agreement and that is why I felt a sense of great natural grievance when I heard the agreement had been signed and when I saw the details as they came out at the start of this year.


Mr. Deputy Speaker:: Questions and comments.


Mr. Orlikow:: Mr. Speaker, I would like to direct a question to my colleague. He has talked about the effect of the way in which the Conservative Government handled the lumber question. We have been told that the Government had to make the deal because if it did not it would be subject to the same kind of pressure in many other fields. I want the Hon. Member to comment on a report which appeared in the January 5, 1987 issue of The Financial Post, that great radical journal. It talks about something which the Hon. Member for Athabasca (Mr. Shields), who spoke a few moments ago, should be interested in, natural gas. It says that 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 it on to U.S. customers.
I have seen figures which indicate this could cost Canadian producers of natural gas something in the neighbourhood of $200 million. Will the Hon. Member comment on that possibility?


Steven W. Langdon: Mr. Speaker, that is one example of the kind of thing taking place as a consequence of our demonstrating that when it came to negotiations over lumber we were patsies. We proved ourselves to be the kind of people who buy the Brooklyn Bridge. I am surprised that the Minister for International Trade (Miss Carney) did not come back from her overseas travel with that in her suitcases.
There is a recognition in that article of what is taking place in many sectors of the U.S. Canada is a serious competitor in very many natural resource areas. Contrary to the past, when Canada was seen as an important source of supply and therefore a country to be encouraged to supply these kinds of natural resources, we are feeling increased pressure in area after area. In this particular case, quite complicated changes in rulings ordered by the U.S. agency involved runs absolutely and directly counter to the April 15, 1985 Shamrock Summit conclusion by President Reagan and the Prime Minister which

January 20, 1987
Softwood Lumber Products Export Charge Act
indicated that we were to move toward free market arrangements in natural gas and a whole host of other related products. What has taken place in this case is that detailed contracts have been overthrown by the agency concerned. It is just one more sign of what will hit us in the future as a consequence of the weakness we have shown in this case.


Mr. Wilson (Swift Current-Maple Creek):: Mr. Speaker, I come from an area of the southern prairies which is almost devoid of timber. In fact, we have but one tree in our riding about five miles north of Swift Current. It is actually fairly well-known. We have come to revere it and some people tie ribbons and other things to it. Notwithstanding the lack of timber, I do feel constrained to make a couple of comments and ask a question of the Hon. Member for Essex-Windsor (Mr. Langdon).
I felt reasonably good this morning upon awakening. It was a new day and the sun was shining. However, after hearing the usual gloom and doom from that harbinger of horror and purveyor of pessimism I feel obliged to suggest that there is a bit of hope out there.
In my area we are concerned about grain and beef. Our producers are very much threatened by the subsidization put in place by other Governments. We had the spectacle under the previous Government of many, many thousand of pounds of beef coming into this country from the European Common Market. Our producers were very much concerned about that. They quite properly made application to the import tribunal in this country and secured the application of a countervailing duty.


Maurice Brydon Foster: That was after the capitulation of your Government.


Geoff Wilson: The Hon. Member for Algoma (Mr. Foster), whose Government allowed that flood of beef to come into the country in the first place, thinks otherwise and leaves the Chamber.
The grain producers also have great cause for concern. The intervention by Governments everywhere in subsidizing the uneconomic production of grain has greatly distorted the market-place and caused our farm people difficulty. Those of us in the Prairies feel that the beginning of enhanced trade talks with the Americans bilaterally and all countries multilaterally through GATT is absolutely essential. We have to retain and enhance our market access if we are going to survive.
I am very confused over the lumber issue because I am hearing a number of lumber-producing provinces saying this is the best deal possible. It is in fact a good deal. I think I hear the NDP in British Columbia saying this is a good deal. I think of several situations in the past where my friend from Essex-Windsor complained bitterly about the de Havilland privatization, Boeing taking over, and the suggestion that numerous jobs would be lost. I recall the shakes and shingles controversy and the suggestion by the Hon. Member's Leader that 4,000 jobs would be lost. In fact, nothing of the sort has
happened. I believe everyone would say that the privatization of de Havilland was an excellent thing. The shakes and shingle industry has survived intact. People will note that our lumber industry is strong. Due to the quality of the product and the exchange rate, it is quite likely that we can withstand this lumber transaction, that the jobs will be preserved, and that the American consumer will be stuck with extra money which will accrue to the Canadian Treasury.
Will the Hon. Member clarify why he and the other members of his federal Party find so much wrong with the agreement while his provincial counterparts in British Columbia, the unions in British Columbia, and a number of the provinces think it is a pretty good deal?


Steven W. Langdon: Mr. Speaker, there was a great deal wrapped up in one final question. I will not deal with the points which led up to the final question but, instead, will deal briefly with the final question itself. I have talked with my provincial colleagues in British Columbia, including the leader of the New Democratic Party there. It is their view that this deal does represent, for precisely the reasons which are detailed in my speech, an extremely dangerous assault on the economic independence of this country which will affect a whole set of natural resource industries besides softwood lumber.
That is also the expressed view of trade unions such as the Canadian Paperworkers Union and the Sawmill Workers Union which represent those who, quite frankly, work in the most vulnerable of the mills, those in northern Ontario, the Maritimes, and some of those in Quebec. They, too, are very strongly opposed to this agreement because of what they expect it will do to them. First, they expect it will represent a threat to their jobs. Second, they expect that the lumber companies themselves, because of the severe cost pressures which they will feel, will attempt to reduce wages, which will affect them quite significantly as well.
The final point I would like to make is that this agreement was worked out with a tremendous amount of concessions being given by our side. I challenge any Member of the Conservative side of the House to tell me of one single solitary concession made by the United States in this lumber agreement. In reality, they made no concession. We gave up everything and they gave up nothing. That is what I fear will happen in our free trade talks as well.
[ Translation]


Mr. Deputy Speaker:: Resuming debate. The Hon. Member for Montreal-Sainte-Marie (Mr. Malepart).


Mr. Jean-CIaude Malepart (Montreal-Sainte-Marie):: Mr. Speaker, this is a sad day for Canada because the result of the debate is that, on this issue, the Canadian Parliament is acting as a branch plant of the American Government. This decision and this Bill introduced by the Government do not reflect the will of Canadian men and women, nor that of the Canadian
January 20, 1987

Government or of the Official Opposition, they quite simply are dictated by the American Government.
I am not surprised that we should have reached that point after two and a half years under the administration of the present Prime Minister. We need only remember recent events and remind ourselves that this man was appointed president of Iron Ore just so he would shut down operations without fanfare. Well, Mr. Speaker, again today we are witnessing a lack of leadership and courage in this matter. It is imperative that the people who are listening and watching should know why we are stooping so low, why the Canadian Parliament is being forced to follow the dictates of a foreign Government and impose a tax on Quebec and other Canadian companies, a tax which will be paid by Canadian workers.
Mr. Speaker, Quebec is hit as hard as the other provinces. For instance, the Saguenay-Lac-Saint-Jean region unfortunately is represented by four Conservative Members: yet not one of them has spoken against this measure. The forest industry is a major employer in that region and it will be severely affected by the decision of the Government. Abitibi is also represented by two Conservative Members, yet we have not heard a peep from them even though workers in those ridings may indeed lose their jobs. We must bear in mind that people like our grandparents fought against annexation by the United States. There are people who took up arms to keep this from happening. Even Quebecers, who sometimes like to set themselves apart from the rest of Canada, even Quebecers joined up with people from the other provinces to ensure that Canada would not become an American state. But as luck would have it, the landslide in 1984 brought us Chicken Little who was elected Prime Minister, so that today, in 1987, the debate is on legislation and decisions that are not being made by the elected representatives of the Canadian people.
Yesterday, I heard the Hon. Member for Charlevoix (Mr. Hamelin) say it was the best possible settlement. There was nothing else we could do. I say that when people get to the point where they say there is nothing else they can do, there is something they can do: they can resign and make way for others who are prepared to protect and support the interests of Canadians.
Mr. Speaker, all this bullying and today's decision to agree to impose a 15 per cent tax on the lumber industry, a decision forced on us by the United States, all this will lead to further pressure. Tomorrow, the Americans will say: We don't like your unemployment insurance system, and you are going to change this and that. Conservative Members will say, with their Leader: Yes Sir, Mr. President, anything you say. And it will be yes, Sir, again, when the Americans start criticizing something else. For instance our health insurance plan, the best in this country, which enables all Canadians to be insured, whatever their income and gives them access to the best medical care, and helps them survive. With the kind of
arrangement the Conservatives are accepting on bended knee today, tomorrow the Americans may well be telling us, since they do not have this kind of health insurance: We think you should get rid of your health insurance plan because you are competing unfairly with such and such an industry. That is what it will come to, Mr. Speaker.
When I think that the Hon. Member for Levis (Mr. Fontaine)-oh, I'm not surprised. He is never on the right track, which is why the shipyards in Lauzon are in such poor shape. And speaking of tracks, Mr. Speaker, I have the impression he thinks Lauzon makes trains instead of ships, which is probably why the Hon. Member is so confused.
Mr. Speaker, I realize I don't have much time left. I want to make it clear that I intend to support my Leader in his battle to ensure that this Bill is not passed and that Canadians will continue to hold their heads high and decide for themselves what they will do to protect our lumber industry and uphold the dignity of this country.



STATEMENTS PURSUANT TO S.O. 21


Mrs. Lucie Pepin (Outremont):: Mr. Speaker, last week the Minister of National Health and Welfare tried to minimize Canada's urgent need for a comprehensive system of quality day care services. The Minister attempted to shift this responsibility onto families by making the most of the feelings of guilt and ambivalence of working parents who must leave their children in day care nurseries. The Minister's message to those parents is clear: he is not prepared to help such families despite the fact that they now form the majority of Canadian families.
The Minister stated that, in his opinion, day care services for children are a provincial responsibility, and he thinks it is rather interesting that the provinces should expect the federal Government to show leadership in this sector. Such an attitude flies in the face of the national leadership tradition which prevails in the case of all other major social programs in Canada.
On Thursday and Friday he will be meeting with his provincial counterparts to talk about day care. Mr. Speaker, I sincerely urge the Government to give this important task to a Cabinet member who can fully appreciate our needs and provide the kind of strong national leadership required in these circumstances.

January 20, 1987
[English]	FISHERIES



MEMBERS OF PARLIAMENT


Mr. Barry Turner (Ottawa-Carleton):: Mr. Speaker, it will not take me 60 seconds to express my indignation and disgust concerning an example of a blatant abuse of public funds.
In the Member's Manual, our bible for honest and fair guidance in the exercise of some of our privileges, Members are reminded that the contents of their Householders should be non-partisan.
I have a recent Householder that is, for all intents and purposes, a political mail-out paid for by the people of Canada. At one point it refers to Conservatives as stupid and insensitive, which is blatantly untrue and unacceptable partisanship. Page after page is critical of the Government's sincere attempts to strengthen Canada's economy and our standard of living. I find this to be the most disgusting, politically partisan publication I have seen since coming to this Chamber. It cannot go unchallenged.
In case you are wondering from whence it came, call the office of the Member for Ottawa Centre (Mr. Cassidy).



SEAL POPULATION GROWTH-DAMAGE COSTS SUFFERED BY FISHERMEN

Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, one year ago I appeared before the Malouf Royal Commission on Sealing and outlined the serious costs associated with not arresting the growth of the seal population. Fishermen whom I represent are suffering because seals are damaging nets and traps, contributing to the spread of parasites, and consuming fish.
One seal consumes 3,200 pounds of fish annually. There are in excess of 100,000 grey seals consuming millions of pounds of fish each year off Atlantic Canada.
At a time of conservation of stocks and increasing emphasis on quality, millions of dollars worth of fish are being lost. The loss in terms of jobs is also substantial.
In my view the situation requires a seal cull as soon as possible. The issue is critically important to the Atlantic Canadian fishery and all of Atlantic Canada.

*
* *



HUMAN RIGHTS


Mr. Bill Blaikie (Winnipeg-Birds Hill):: Mr. Speaker, I want to bring to the attention of the House the indignation and anger felt in western Canada with respect to the fact that VIA Rail was allowed to lay off all its Red Caps in western Canada while Red caps were kept on in major centres in eastern Canada. This is another insult to western Canadians by the Progressive Conservative Government, and another attack on groups of people who least deserve to be attacked, including the disabled and pensioners, many of whom are CN and CP pass holders who make good use of Red Caps. They have been basically told no longer to use train service, particularly if they are from western Canada, because VIA has been allowed to lay off the Red Caps.
Furthermore, the new equipment for VIA Rail still has not been ordered, and I heard a rumour this morning that while VIA Rail claims not to have enough equipment it is actually contemplating leasing out some of its equipment elsewhere. I call on the Government to order the new equipment and take action on the discrimination against western Canada and the elimination of the important symbol and service provided by Red Caps.



FATE OF RAOUL WALLENBERG

Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, I want to congratulate you on permitting an exhibition of paintings by Canadian artist Armand Vallee in honour of Raoul Wallenberg, here in the House of Commons. Forty-one years ago this month, during World War II, Raoul Wallenberg of Sweden was seized by Soviet police. He was in Hungary where it was his task to direct efforts to save Hungarian Jews from deportation to Nazi death camps.
Raoul Wallenberg showed tremendous courage and total disregard for his own safety by saving an estimated 100,000 Jewish men, women, and children. He has been kept prisoner in the Soviet Union since 1945, with reports insisting he is still alive. This House of Commons in 1985 unanimously passed a Bill which made Raoul Wallenberg an honorary Canadian citizen. At that time we also encouraged the Secretary of State for External Affairs (Mr. Clark) to take all diplomatic steps necessary to secure his release.
I urge the Government to increase its efforts to save Raoul Wallenberg. This violation of human rights by the Soviet Union cannot be tolerated. We must show the Soviet Union that Canada has not and will not forget this hero to humanity.

%

January 20, 1987



POLITICAL PARTIES


Gabriel Fontaine: Last weekend, Mr. Speaker, the socialists convened their hordes of renegades, former foes and political upstarts from Manitoba and Saskatchewan in an attempt to cajole Quebecers and win votes on rather theoretical subjects. Their efforts fell somewhat short and the socialists are still divided on the language issue.
When it comes to Quebec, Mr. Speaker, the socialists might take a more practical approach and do something to create jobs. Not to offend his Manitoba colleague, the leader of the socialist party spoke against the F-18 project in Montreal, to the detriment of Quebec.
During their weekend meet the socialists also failed to mention the economic fall-outs of the NATO program in the Labrador region, or the dissident views of Newfoundland socialist party leader Peter Fenwick concerning armaments and peace.
Mr. Speaker, the socialists should show more concern for job creation than for theories and advocate the same policy throughout Canada.



INVESTMENT CANADA


Nelson Andrew Riis: Mr. Speaker, Investment Canada recently approved the sale of West Kootenay Power and Light to an American firm, UtiliCorp, of Kansas City, Missouri, U.S.A. West Kootenay Power is a crucial western Canadian utility involving both the generation of hydroelectric power and strategic water rights in the Kootenay region of British Columbia.
Investment Canada approved this sale even while the B.C. Utilities Commission hearings were taking place. At the very least the B.C. Utilities Commission should be allowed to complete its deliberations and bring down its report prior to Investment Canada approving this utility's sale to a foreign company.
I protest the undemocratic way in which the Investment Canada decision was made, essentially behind closed doors, with Parliament in recess, and beyond access by the elected representatives of the people of Canada. It should be noted that this decision by Investment Canada is in direct contravention of the commitment of the federal Government that Canadian resources should be Canadian owned.



PENITENTIARIES


Mr. W. R. Bud Jardine (Northumberland-Miramichi):: Mr. Speaker, this Friday, January 23, the Atlantic Institution will be officially opened by the Solicitor General (Mr. Kelleher). This institution is a maximum security prison located in an economically depressed area of my riding which has a chronically high rate of unemployment.
The project was initiated by the previous Government at this site to satisfy a requirement by Correctional Services Canada for additional units, and to create jobs. I thank the previous Government for that. It was completed by the present Government for the same two reasons-requirement and long-term employment. We are most grateful. Surely all Hon. Members will find no fault with that logic and I dare say will continue to lend their support to similar institutions in other areas of the country with the same requirements-need and employment.



REFUGEES


[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, on May 21, 1986, the former Minister of State for Immigration promised to table new legislation in the fall session to deal with the refugee determination process and the growing backlog of cases. This followed the report of the Plaut Commission which was completed on April 17, 1985, and the reports of the Standing Committee on Immigration tabled November 7 and December 19, 1985. Both reports recommended legislation to deal quickly and fairly with refugee applications. In this way the Government could avoid large backlogs and discourage fraudulent claims.
It is now January 20, 1987, well beyond the target for tabling this legislation, and still no Bill is available. As a result, the backlog continues and phoney claims are encouraged. When will the Government act to deal with this important matter? It is well beyond the time to do so.


Stan Darling: Mr. Speaker, many Canadians are concerned about recent commitments to acid rain abatement from south of the border. While the United States claims to have spent over $6 billion on clean coal technology in 1986, Environment Canada officials are

January 20, 1987
currently investigating whether actual acid rain abatement will occur. The Minister of the Environment (Mr. McMillan) is closely monitoring the situation and shares the concern of every Canadian on the acid rain issue.
Our Prime Minister (Mr. Mulroney) will reiterate the need for acid rain controls when he meets with the Vice-President of the United States on Wednesday, and again when the President comes to Ottawa in early April.
For our part, Canada's plan to reduce 1980 sulphur dioxide emission levels by 50 per cent by 1994 is bang on target. This is the first Government to deal with the issue effectively. We will continue to seek an agreement with the United States on transboundary pollution.



SHIPBUILDING


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, the federal Government is reportedly again on the brink of announcing the construction of a Polar 8 ice-breaker. After more than a decade of indecision, confusion, and broken promises by both Liberal and Conservative Governments, the Government is apparently still toying with various design and construction options. Most recently it appears that the design may come from a foreign-owned company at a cost of $120 million more than designs put forward by Canadian firms. Ten years and millions of dollars worth of taxpayer-paid research may be discarded.
This ongoing saga is not amusing to the shipbuilding industry, or to the skilled labourers who need work badly. I implore the Government to move quickly, award the contract, and put our skilled shipbuilders back to work. Let us get on with strategies to renew Canada's shipbuilding industry across the country.



AGRICULTURE


Mr. Lee Clark (Brandon-Souris):: Mr. Speaker, there are almost 20,000 honey producers in Canada, nearly 5,000 of whom live on the Prairies. Unfortunately, like so many agricultural producers today, they are having a difficult time getting a fair price and establishing new markets for their honey.
While there are many problems which have to be resolved in this industry I think that recreating the position of federal apiarist would be an important first step. Unfortunately, this position was cut from the Department of Agriculture in the 1960s.
Part of the federal apiarist's job would be to enhance interprovincial trade. Furthermore, this person would be of great assistance to beekeepers who are now trying to expand honey exports to other countries, particularly in Europe and the Middle East. Ensuring that Canada maintains a high quality product for export would also be part of the job description.
Finally, I think that this person could become a federal ombudsman for Canadian honey producers and as such his or her assistance would be greatly appreciated.



UNEMPLOYMENT INSURANCE


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, I wish to voice my strong disappointment in the Government for its treatment of pensioners who have had their UI benefits cut.
The December 5 statement of the Minister of Employment and Immigration (Mr. Bouchard) has only added to the confusion. Though the Minister directed his Department to reexamine cases in which people made retirement decisions on the basis of inaccurate information from federal government sources, some UI offices are telling pensioners to wait because they do not have enough information to know how to deal with their cases. It is also known that benefits will not be restored until legislation is passed in the House, something which is not expected until April.
The Government is to blame for these delays. It decided to wait until the Forget Commission reported, only to ignore its recommendations and only to allow some of the pensioners to reclaim their UI benefits.
The Minister's December 5 statement is unacceptable. The delays and hardship which our pensioners have had to endure are even more unacceptable.



PHARMACEUTICAL INDUSTRY


Donald Paul Ravis: Mr. Speaker, there is an ongoing debate in the country regarding the need for more primary research to enhance our economic recovery through exports and to reduce our brain-drain.
Last week I had the opportunity to meet with faculty and graduate students at the University of Saskatchewan College of Pharmacy. They are looking forward to conducting drug research at this university in Saskatoon, and to finding research jobs in their own country.
January 20, 1987

Thanks to the opposition Parties and the media, the drug legislation debate has only focused on increased costs, rather than on long-term medical and technological benefits. I particularly regret the frustration felt by our seniors. Doris Campbell, a quadriplegic suffering from Lou Gehrig's disease, stated in The Winnipeg Sun:
The issue is not whether a new drug will cost you a few dollars more, the issue is developing cures through research to save the lives of Canadians.
When research and new discoveries are under way at our universities and laboratories by Canadian scientists, then we can be proud for making the right decision.



RESIGNATION OF HON. MEMBER FOR YUKON

Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I am honoured today to rise along with my friends, the Leader of the Opposition (Mr. Turner), and the Leader of the NDP (Mr. Broadbent), to pay a tribute to the Hon. Member for Yukon (Mr. Nielsen).
His resignation was greeted with sadness on this side, and obvious relief on the other side. Erik Nielsen has known triumph and tragedy, attack and applause. None of these was able to distract him from his chosen course. He is one of the remaining Members of the small band who served with such distinction under the leadership of the late Right Hon. John G. Diefenbaker in government and opposition, in good times and bad.
Words are inadequate tools to express the debt owed to Erik Nielsen by Parliament, by this Party, and by this country.
Occasionally the halls of Parliament bear witness to skill and dedication far beyond the normal. I will acknowledge that from time to time Erik was partisan. I owe him a special debt because I came into the House as a brand new Member never having been here before. I sat down over there, after walking in for the first time, not even knowing the sounds, and what have you. It is an intimidating experience to be here for the first time, and also to be here as Leader of a political Party. I had a few rough days or weeks in the process-very rough, in fact. One night I called my mother to ask her how I was doing. She said, "Brian, you are doing just great. You are doing fine. But when Mr. Nielsen says sit down, sit down."


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: Erik Nielsen as a parliamentarian is worthy to stand with the giants of the past. Those of us who had the good fortune to sit with him in the House must know that this was a man of no ordinary compass.
Hon. Erik Nielsen

He was fully devoted to the service of his country. He flew with the allied forces during World War II and upon his return from Europe he studied law and opened his own law office in Whitehorse.
His first election was controversial, and perhaps this was an indication of the kind of very tumultuous political career he was going to have. Throughout his 29 years on the parliamentary scene he has always been right where the action was-or certainly never far from it.

If there is one word characterizing Erik Nielsen's approach to life-irrespective of partisan differences-that word is duty. He made no excuses for himself and accepted none from others. He has always been relentless in the demands he placed on himself, holding down at one time the posts of President of the Privy Council, Deputy Prime Minister, and Minister of National Defence.
Erik Nielsen for 29 years epitomized the best qualities of parliamentary democracy. He enjoyed friendships on all sides of the House. I appreciated, on behalf of all Members, the generous comments of the Leader of the NDP yesterday, and of the Leader of the Opposition last evening. That was in the finest traditions of Canadian parliamentary life. As I say, Erik enjoyed friendships on all sides of the House, in spite of his reputation as a rough and tumble parliamentary fighter.
Erik has not always been the tough, relentless prosecutor pictured by the media. When circumstances warranted, he has frequently been known to temper the wind to the shorn lambs on the other side. Parliament will miss him, because he is a man who understood Parliament, and who worked tirelessly to make it more effective.
May I express the hope that he can be persuaded to serve Canada in the future in other ways.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: I know I speak for all Hon. Members of the House in that regard.
May I say personally that I shall miss his loyal service and his unflinching courage. He has been a very good friend and a very valued colleague.
In peace and in war, Erik Nielsen has served Canada and all of us honourably and well.


Some Hon. Members:: Hear, hear!


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, may I respond to the words of the Prime Minister (Mr. Mulroney) in rising today to pay tribute to a man who has served the House of Commons more than half his adult life, indeed almost 30 years.
2446

January 20, 1987


Some Hon. Members:: Oh, oh!
Hon. Erik Nielsen
I have had the privilege of knowing Erik Nielsen even before that because our law firm at the time used to handle his appellate work out of the Yukon. I have a genuine respect for him, and probably know him as well as anyone on our side of the House.
He is a very private man. He is a man who has suffered deep personal tragedy in his life and has overcome it. Few have known loyalty to friends, to Party, to cause, and particularly to country as has Erik Nielsen.
Publicly, yes, indeed he was a fierce partisan. We on this side of the House, particularly when we were on that side of the House, felt the sting of his attacks on innumerable occasions.
No one knows the rules of the House better than Erik Nielsen. No one knows how to use them better, and no one can use them with more effect, precision, and from time to time even ruthlessness.

When he led the Opposition in 1983 he proved to be a fearsome opponent and displayed great skill in his attacks against the Government then in office. He had for this House an intuition which was practically unequalled during his heydays here in Parliament.

He has a reputation for being terse in his comments both to the media and indeed on the floor of the House. He has many secrets. I happen to know a few of them-


Some Hon. Members:: Oh, oh!


John Napier Turner: -and that may be my only protection, because I understand he is thinking of writing his memoirs.
I have read a lot of political books in the last year or so-


Some Hon. Members:: Oh, oh!


John Napier Turner: -but this is one I will really be looking forward to reading.
We call him "Yukon Erik". There is no more beautiful riding or territory in Canada than the Yukon. Erik Neilsen has a great love for that territory, for its rivers and lakes, for the Ogilvie Range, and indeed for the tranquility of his cottage on Quiet Lake.
When I was Parliamentary Secretary to the late Arthur Laing-he was Minister of Northern Affairs-I used to be paired on several occasions with Erik as we travelled around his constituency. What a young man of faith I was; I rode with him in his aeroplane as we travelled over his constituency. One morning we were taking off from the Stewart River and we nearly did not make it. To use Erik's air lingo, "we nearly bought it", and I have never known to this day whether we were really in trouble or whether Erik Nielsen was testing me out.


John Napier Turner: This brings us to the reminder that he was a fine pilot. He was a great bomber pilot during the war. He won the Distinguished Flying Cross.
When in May, 1985, the House was paying tribute to our Forces on the fortieth anniversary of VE-Day in Europe, Mr. Nielsen was sitting in the chair now occupied by the Minister of Justice (Mr. Hnatyshyn). I do not think any of us ever heard a more eloquent tribute to those who fought and sacrificed for Canada during both wars than what we heard from the lips of Erik Nielsen.
I think all Members will confirm that, whether we agreed with him or not, and in this corner of the House more often than not we did not agree, he commanded our respect and even, from time to time, our admiration. I admire him particularly because he has dedicated his life to public service in war and in peace without flinching, without favour, without fear, without compromise, and with an absolute and total dedication to this House and to our country.


Hon. Edward Broadbent (Oshawa):: Mr. Speaker, we have a very interesting tradition and rule in this House. It is an unstated tradition that we say absolutely nothing good about one of our political opponents while he or she is in office if we can possibly avoid doing that. And then we do just the opposite, of course, when a person leaves the House of Commons. We find ways only to say good and honest things about that individual. For some of us it is more difficult than for others, but we avoid putting emphasis at all upon those matters on which one happens to disagree.
I would like to begin by joining with the Prime Minister (Mr. Mulroney) and the Leader of the Opposition (Mr. Turner) in saying that Erik Nielsen is a man who served his country well in time of need when it was singularly necessary to have men and women come to the defence of this nation in wartime to protect the liberties and freedoms we are now exercising. Erik Nielsen was at all times there front and centre doing, in an exemplary way, what was required.
After that he became a local politician and went from there to being elected to the House of Commons. He has sat on this side of the House as a vigorous member of the Opposition. He has been a member of the Cabinet, and Deputy Prime Minister. For a few months he had an aberration of common sense and he actually became Leader of a Party. He quickly recovered, made it very clear that that was a temporary job, and he got out of it.
I do want to note at this time, however, that there are at least two other people in this House who will know that Erik Nielsen regarded the leading quality of any Member of Parliament was that of unquestioning loyalty to his Leader. I


Some Hon. Members:: Hear, hear!

January 20, 1987

think that that is one of those commendable principles which Erik Nielsen followed.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: We all have our anecdotes about Erik Nielsen. The Leader of the Opposition talked about visiting the Yukon. I remember the first time I was there. I had the pleasure of flying over Mr. Nielsen's-I do not know if it is his cottage or his permanent home-I think it is his campsite-his location of recreation, and a beautiful site it was. I came back, told him, and was told something about an attempt that was made to hit my small plane with rocks. Had it been anyone else who told me the story I would have been sure he was kidding.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: But, being the partisan Tory that Erik was, I am sure he made the effort. I want to tell my friends in the Conservative Party that even then he was a loyal and dedicated Tory.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: He was, as has been said, devoted to this House. He did everything with a great deal of enthusiasm. Although on policy matters, as I had the occasion to say yesterday, I agreed with him on perhaps only 5 per cent of matters, I respect his commitment to what he believes in, and I admire his total dedication to the supremacy in our system of parliamentary democracy itself.



ORAL QUESTION PERIOD


John Napier Turner: Mr. Speaker, my question is directed to the Prime Minister. In his statement on Sunday, the Prime Minister told reporters twice that the Minister of State for Transport had been forced to resign because of facts that had been brought to his attention. The Prime Minister did not say allegations or accusations but facts. The obvious question is: What are those facts? Is the Prime Minister going to make a full statement before the House? We are talking about the resignation of a Minister of the Crown, and Canadians have a right to know the reasons for that resignation.


Martin Brian Mulroney: Mr. Speaker, I said that certain facts were brought to my attention which I checked as soon as possible, and once I was fully informed,, I took immediate action by asking the Minister to resign and asking for a full police investigation. All the
Oral Questions
information I had was immediately made available to the police. I think I have fulfilled my obligation to Parliament-


REQUEST FOR PUBLIC INQUIRY INTO GRANTING OF OERLIKON CONTRACT
John Napier Turner: Mr. Speaker, we are having some difficulty getting at this matter. We are not talking about potential illegality nor are we talking about potential criminal events. We are talking about whether or not a Minister acted properly.
It is not illegal that one of the Prime Minister's key Tory organizers is now a director of Oerlikon's land subsidiary; it is not illegal that one of the key Tory organizers in Quebec is a paid lobbyist for Oerlikon; it is not illegal that a former member of the Prime Minister's staff is now working for Oerlikon. We are talking about other facts that have been revealed in the last 24 hours that, in our view, demand a public inquiry.


Some Hon. Members:: Hear, hear!


John Napier Turner: Once again, will the Prime Minister order this inquiry so that the facts which may have been persuasive to him can become public and Canadians may have a full, impartial view of everything that went on in Saint-Jean surrounding the granting of the Oerlikon contract?


Martin Brian Mulroney: Mr. Speaker, I think the overriding concern is the protection of the public interest. Having initiated a police inquiry of the most complete nature, I think it is important that we allow the RCMP to conduct this inquiry fully and to the very best of its abilities within the earliest time frame as it always does.
All of the information I had I conveyed to the police immediately upon requesting that they conduct a complete investigation. Of course, I do not establish the parameters of any inquiry. Because it is a complete inquiry, the police are free to go wherever the evidence leads them in the search for any wrongdoing of any kind. I do not think that anything ought to be done that would in any way inhibit that process. 1 believe the Canadian people want that kind of decisive action taken. They have received such action and can look for no better independent agency to conduct this kind of full and complete inquiry than the Royal Canadian Mounted Police.


DISCHARGE OF MINISTERIAL DUTIES
John Napier Turner: Mr. Speaker, if we were merely talking about the comportment of an individual, whether he were innocent or guilty of criminal charges, then the presumption of innocence about which the Prime Minister spoke yesterday and the RCMP inquiry might be relevant. However, this goes beyond that. We are talking about the proper conduct of a Minister in the course of fulfilling his duties. There must have been something that persuaded the Prime Minister to act the way he did.

January 20, 1987
2448___________________________________
Oral Questions
We are not talking about a private RCMP inquiry that should properly be private to preserve the presumption of innocence. We are talking about a public inquiry that can reestablish confidence in the administration of the country's business. Once again, will the Prime Minister not yield and grant the country a public inquiry so that that confidence may be restored?


Martin Brian Mulroney: Mr. Speaker, it is not a question of a reluctance to yield in any way. It is a desire to do the right thing for the country. I think the action I have taken, both in requesting the Minister's resignation immediately and in initiating a full and complete Royal Canadian Mounted Police inquiry, is exactly the way one should go.
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. It is my desire to make sure that the Canadian public interest is well protected, consistent with our obligation toward the presumption of innocence. I acted completely, fully and effectively in the action I took.


INFORMATION TRANSMITTED TO JEAN BAZIN
Hon. Douglas C. Frith (Sudbury):: Mr. Speaker, my question is also directed to the Prime Minister. On August 25 a Mr. Lassonde wrote Jean Bazin's law firm, Byers Casgrain, expressing concern about irregularities that occurred in the land transfers in Saint-Jean. Is the Prime Minister informing the House that between August, 1986, and Tuesday, January 13, 1987, his good friend Jean Bazin never once mentioned these irregularities to the Prime Minister or his office?


Martin Brian Mulroney: Mr. Speaker, I indicated my position and the information I had in the public statement I made on Sunday. Jean Bazin is a lawyer in Montreal and, I understand, is the President-elect of the Canadian Bar Association. He is a senior partner in Byers Casgrain and represents, as all lawyers have in the past, clients in a client-solicitor relationship, and was acting in good faith on behalf of his client, as have both the Leader of the Opposition and I in the past.
I made public the facts that were made available to me when they were made available. Because of Mr. Bazin's distinguished career in the law and as President-elect of the Canadian Bar Association, should anything have occurred, I presume he would have acted in the interests of his client pursuant to instructions received from his client. All I can tell the House are the facts, and those were the ones that were set out in the statement on Sunday.


MONEYS ALLEGEDLY RECEIVED BY RIDING ASSOCIATION PRESIDENT
Douglas Cockburn Frith: Mr. Speaker, yesterday in a response the Prime Minister denied the existence of a specific letter concerning the-


Some Hon. Members:: No, he did not.


Douglas Cockburn Frith: He said he did not know of the existence of a specific letter in which Oerlikon alleges that $970,000 was channelled to the president of the Saint-Jean riding association. Will the Prime Minister inform the House whether or not Mr. Bazin, when he met with the Prime Minister's principal secretary on January 13, informed the principal secretary of the allegations concerning the $970,000 being channelled to the president of the PC riding association?


Martin Brian Mulroney: Mr. Speaker, I want it to be clearly on the record that there was a substantial error in the prefatory remarks made by the Hon. Member in regard to yesterday's statement in the House of Commons. I know my hon. friend would want to withdraw that in the interests of accuracy.
The information imparted by Mr. Bazin to my principal secretary was provided to me and immediately turned over to the RCMP. That resulted in two things happening: (a), the removal of the Minister and, (b), the initiation of a full and complete police inquiry. That is exactly what came to my attention and that is exactly what I did in the public interest.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: I might say to all Hon. Members that the Chair, in hearing the Hon. Member for Sudbury, took the view that if an error was made in the beginning of the question, the Hon. Member took steps to correct it during the question. Certainly that is the way the Chair took his comment.


CONTENTS OF AUGUST, 1986, LETTER
John Edward Broadbent: Mr. Speaker, my question is directed to the Prime Minister. Given Mr. Bazin's position with the land acquisition firm related to Oerlikon, given his position of counsel for Byers Casgrain, it seems almost inconceivable that the August 12 letter just alluded to would not have been known to Mr. Bazin some months ago. 1 would like to ask the Prime Minister if, in his conversations with the Prime Minister's principal secretary last week, Mr. Bazin drew to the attention of Mr. Roy the contents of that August letter?


Martin Brian Mulroney: Mr. Speaker, I am not acquainted with the dates my hon. friend mentions except to say this. Information imparted to me and what I have seen indicated to me there were transactions that took place which appeared to be odious and completely unacceptable, and at variance with the kind of conduct
January 20, 1987

Canadians expect and are entitled to receive. It was for that reason that I initiated a full RCMP investigation and I know the police will prosecute whomever they deem to be involved in this matter, as they should.


REQUEST THAT PRIME MINISTER QUERY MR. BAZIN'S KNOWLEDGE OF LETTER
John Edward Broadbent: Mr. Speaker, I think that is about the third time the Prime Minister has not dealt with the specific question being asked. I would like to ask it in a somewhat different way. He has already indicated that Mr. Bazin should become a member of the Senate of Canada. Yesterday, in a different context, he alluded to the possibility of obstruction of justice if certain information was not brought forward at the time it ought to have been. Can he assure the House that he will find out if Mr. Bazin knew the contents of that letter written last August which called into question the land transaction, at that time or any time since then, prior to the discussions which took place with his principal secretary last week?


Martin Brian Mulroney: Mr. Speaker, no, I will not find out; the police will find out. That is exactly what this is all about. If anything was done wrong they will prosecute.


Some Hon. Members:: Hear, hear!


REQUEST THAT PRIME MINISTER MAKE INQUIRIES PRIOR TO MR. BAZIN BECOMING SENATOR
John Edward Broadbent: Mr. Speaker, it is not the RCMP who are naming someone to the Senate of Canada; it is the Prime Minister. He has the responsibility to get an answer to that.


Some Hon. Members:: Hear, hear!


John Edward Broadbent: Since there is every reason to believe that Mr. Bazin ought to have known of the contents, and I will not put it stronger than that, a long time ago, will the Prime Minister take steps to ensure that before Mr. Bazin is sworn in as a Senator the Prime Minister will find out if he knew the contents of that letter?


Martin Brian Mulroney: Mr. Speaker, the information we are considering today was brought to my attention by my principal secretary who received it from Mr. Bazin. That is clearly, in my judgment, the act of someone who wants the truth to be known and action taken. My hon. friend will not want to set aside consideration of the solicitor-client relationship which exists. The reason for my action was to make sure that the most independent police authority of which I am aware, namely, the Royal Canadian Mounted Police, be given a full mandate to begin the complete inquiry which is necessary. I am not saying this in an argumentative manner but my hon. friend appears to be in disagreement with that approach. All I can indicate to him is that I believe it is the proper way to proceed.
Oral Questions
All of the information made available to me was immediately given to the police with instructions to initiate the fullest investigation. I say to my friend, not in any argumentative way, that if he has any information, or if any member of the Opposition has any information, give it to the police so the prosecution can be ongoing, because that is the way it should be done.


John Edward Broadbent: It is a political responsibility.


DEFENCE CONTRACT TENDERING PROCESS-POSSIBLE ROLE OF MR. BAZIN
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the Prime Minister as well.
I would like to ask him if he knows personally whether at any time during the tendering process for the LLAD system Mr. Bazin acted as a lobbyist or representative for the firm of Oerlikon, making representations to any senior official of the Government to obtain the contract for Oerlikon?


Martin Brian Mulroney: Mr. Speaker, I have no knowledge of that at all except I can tell my hon. friend that Mr. Bazin, as I say, is a lawyer from Montreal who represents clients. I am not aware of that client list but I can tell him that he is not a lobbyist, he is a distinguished attorney. He may from time to time represent people here or elsewhere. However, I am not personally acquainted with any of the suggestions made by my friend.


INQUIRY WHETHER PRIME MINISTER DISPOSED TO ASK MR. BAZIN TO DELAY BEING SWORN IN AS SENATOR .
Don Boudria: Mr. Speaker, I would like to ask the same question I asked the Prime Minister yesterday.
Considering the present controversy involving Mr. Bazin, would the Prime Minister agree to call his friend Mr. Bazin and ask him to voluntarily postpone his swearing-in as a member of the Senate until this investigation has come to an end, for the same reason he decided to ask one of his colleagues to step aside temporarily, as he said, as a Member of Cabinet until the investigation is over with? Is he prepared to make that telephone call now?


Martin Brian Mulroney: Mr. Speaker, as far as I know, there is no controversy, to quote my hon. friend, involving Mr. Bazin. The facts about his professional involvement in a matter were brought to the attention of the public, the same facts were brought to my attention and I immediately asked for a police investigation. And no one will receive special treatment in this respect: neither you nor I nor Mr. Bazin. All the facts are important and must be considered by the police, as far as Mr. Bazin is concerned, and I assume the same applies to anyone who has information on this case.

January 20, 1987
Oral Questions


INQUIRY WHETHER PRIME MINISTER WILLING TO POSTPONE
Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, I wish to direct a question to the Prime Minister and it has to do with the same point, specifically.
As a lawyer and member of the Oerlikon board of directors, Mr. Bazin may have been entitled to keep to himself the information he was bound to have had concerning this land deal and the possibility of improprieties taking place in Saint-Jean during the period from August to January when the Prime Minister's Office was told about this matter.
With respect to a future senator, keeping in mind his character and involvement, we wonder whether the Government, which is led by the Prime Minister, should accept that Mr. Bazin be sworn in before the investigation has been completed. In light of this, is the Prime Minister prepared to delay Mr. Bazin's Senate swearing-in until the Royal Canadian Mounted Police have completed their investigation?


Martin Brian Mulroney: Mr. Speaker, I may be mistaken but I have always been under the impression that according to Canadian tradition a Senate appointment becomes effective the day it is announced. The equivalent of the appointment itself constitutes the swearing-in and all the necessary requirements so that the appointee may become a member of the Senate.
That being so, in referring to Mr. Bazin my friend is making certain allegations which, I would suggest, are dangerous and do not seem to be substantiated or supported by documents.
In any case, the only way to analyze and study these facts so that justice be done is to ask, not you nor me but the RCMP, Canada's police force, to make an independent investigation to do justice and shed light in this case.


REQUEST THAT ENTRY TO SENATE BE POSTPONED
Michael Morris Cassidy: Mr. Speaker, Mr. Bazin was a director of the company which was informed in August that there were apparent improprieties connected with its purchase of land in Saint-Jean. As director, he would presumably have been informed of this. In declaring the innocence of the former junior Minister of Transport, the Prime Minister nonetheless asked him to resign. Therefore, while accepting at this time the innocence of the prospective Senator, Mr. Jean Bazin, would the Prime Minister not act accordingly and defer his entry into the Senate until this matter is resolved by a parliamentary inquiry, a judicial inquiry, or the RCMP?


Martin Brian Mulroney: Mr. Speaker, the question is essentially the same in English as it was in French. The answer is essentially the same as well. My
friend mentions that there ought to be no presumption of guilt, and he is right. There is none, in any case.


Nelson Andrew Riis: How about the Minister?


Martin Brian Mulroney: Neither for the Minister. He is a Minister of the Crown.


Nelson Andrew Riis: You dumped him.


John Edward Broadbent: You fired him.


Martin Brian Mulroney: I indicated that that in no way implied a presumption of guilt.


John Edward Broadbent: Well, hold up the Senate appointment as well.


Martin Brian Mulroney: I do not think my hon. friend suggests otherwise. There is only one way that I am aware of to ensure that the facts with regard to any prosecution, any violation of any statute of any kind, be made available to the proper authorities. That is not by the Hon. Member, not by the Leader of the Opposition, or not by me, but by the RCM Police so that a full and exhaustive inquiry can be made and whatever charges are appropriate can be laid against the appropriate persons.


REQUEST FOR PUBLIC INQUIRY
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, my question is directed to the Prime Minister. In the case of the inquiry involving the former Minister of Regional Industrial Expansion, the Prime Minister initiated a public judicial inquiry, chaired by Chief Justice Parker. However, in the case of the former Minister of State for Transport, he has asked for a police investigation, which means that there will be no public disclosure. Why the double standard? Why isn't the public entitled to a public inquiry in this particular case?


Martin Brian Mulroney: Mr. Speaker, as I said before, the information brought to my attention was entirely different in each case. In this particular case, the information was immediately brought to the attention of the police. That was a value judgement which I as Prime Minister made very quickly, and I think that was the right thing to do.


INQUIRY WHY GOVERNMENT DECIDED NOT TO ESTABLISH JUDICIAL INQUIRY
Jacques Guilbault: Mr. Speaker, in justifying his decision to have a judicial inquiry, on May 16 the Prime Minister said in the House, and I quote: "I think we have acted properly. I would think that most Canadians would applaud the appointment of an impartial person." Why has the Prime Minister dropped the idea of a public judicial inquiry? Why would the public no longer be interested in finding out how the Government is running this country?
January 20, 1987


Martin Brian Mulroney: Mr. Speaker, I have dropped nothing. I opted for the instrument I considered to be effective and most appropriate in the circumstances, considering the facts that were brought to my attention, and that was an investigation by the RCMP, where the police establishes-


An Hon. Member:: Cover up.
[Translation\


Martin Brian Mulroney: A Liberal Member says this is a cover-up. He doesn't trust the RCMP-

The Liberals apparently do not believe that the RCMP are independent. We do believe that they are independent and competent.


SCOPE OF RCMP INQUIRY
Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, my question is for the Solicitor General, the Minister responsible for the RCMP. Will the Minister confirm that the scope of the RCMP inquiry in the Bissonnette affair is limited solely to potential breaches of federal law and does not include questions of morals, public ethics, or conflicts of interest? Will the Minister confirm as well that, if no charges are laid as a result of the RCMP inquiry, the public will never learn the facts underlying this whole sleazy affair? How can he justify that?


Martin Brian Mulroney: Mr. Speaker, we indicated that the inquiry conducted by the RCMP would be a complete inquiry. That is exactly the kind it will be. There have been no requests or instructions of any kind imposed upon the police. Quite appropriately, they have been given complete freedom to do exactly as they think appropriate. They will follow the facts wherever they lead.


QUERY CONCERNING WHO WILL UNDERTAKE INQUIRY
Svend Johannes Robinson: Mr. Speaker, yesterday the Prime Minister confirmed that this matter involved not only criminal law but, to quote the Prime Minister, morals and perhaps public ethics. Considering the fact that the RCMP cannot investigate matters of morals or public ethics or conflict of interest, who is going to investigate these fundamental issues? God the Father?


Martin Brian Mulroney: Mr. Speaker, I really don't see what the Hon. Member is worried about. I said in response to a question by the Hon. Member for Saint-Jacques that we were not excluding any other options but that we were faced with a certain number of facts. On the basis of these facts I decided that the most appropriate and most effective instrument would be an RCMP investigation. The RCMP will conduct a full investigation, and we shall see whether any further action would be appropriate, but for the
Oral Questions
time being, I think we should support what is being done by the RCMP.


ENVIRONMENTAL AFFAIRS
Mr. Alan Redway (York East):: Mr. Speaker, my question is directed to the Minister of the Environment. Many Canadians agree with the recent statement of an American Senator that it is time for the Canadian Government to get tough with the United States over acid rain. Will the Minister advise the House what action the Canadian Government intends to take with the United States on the issue of acid rain? Is there anything which Canada can do other than shout, scream, and write angry letters?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the approach of shouting, screaming, and writing angry letters was taken by the previous Government and it got us nowhere.


Some Hon. Members:: Oh, oh!


John Edward Broadbent: You're really making progress.


Thomas Michael McMillan: In fact, by June, 1982, the Government of the day broke off negotiations with the U.S. Government on that subject.
As I have said publicly, we are disappointed with the lack of progress in the United States, specifically with regard to the Canada-U.S. acid rain envoys' report. We are going to insist tomorrow when we meet with Vice-President Bush that that report be implemented in its entirety as the President of the United States indicated would be the case. We believe that Canada must come to the issue with our hands clean.
I have met all day with the Environment Ministers from across the country who, with the federal Government, have renewed their commitment made in February, 1985, to slash acid rain causing emissions in Canada by 50 per cent by 1994 based on 1980 figures. In that connection the federal Government hopes to sign bilateral accords with the individual provinces before the President and the Prime Minister meet later this year.


THE ADMINISTRATION
Mr. Brian Tobin (Humber-Port au Port-St. Barbe):: Mr. Speaker, my question is directed to the Prime Minister. Is he

January 20, 1987
Oral Questions
able to assure the House today that none of the nearly SI million which was paid to Normand Ouellette, the President of the P.C. riding association in Saint-Jean, Quebec, has found its way into the accounts of the P.C. Party of Canada?


Martin Brian Mulroney: Mr. Speaker, that is for the RCMP to investigate. If any of the money involved went to the NDP, the Liberals, or the Conservatives, that should be prosecuted as well.


Mr. Speaker:: I should point out to Hon. Members that the Chair very much appreciates the discipline that all Hon. Members have shown in this matter. However, questions ought to be carefully directed at the Prime Minister or a Minister on matters over which the Minister or the Prime Minister has jurisdiction, and immediate jurisdiction.


POSSIBLE ESTABLISHMENT OF COMMISSION OF INQUIRY
Brian Vincent Tobin: Mr. Speaker, in light of statements given by the Prime Minister earlier in Question Period in response to the Leader of the Opposition, that other forms of investigation or inquiry may follow an RCMP investigation, is the Prime Minister telling us that he has not closed the door on the possibility of a public commission of inquiry into this whole affair?


Martin Brian Mulroney: Mr. Speaker, I am saying that the full Royal Canadian Mounted Police inquiry was and is the most appropriate and necessary means of inquiry in this matter. Nothing should be done that would in any way inhibit the fullness of that inquiry and the celerity with which it ought to be conducted. Clearly, at any time I would be guided by their results and their advice, or new facts that might in any way be worthy of consideration in that regard.


PRIME MINISTER'S POSITION
Lorne Edmund Nystrom: Mr. Speaker, my question is directed to the Right Hon. Prime Minister. On one hand he fired the former junior Minister of Transport for involvement in this affair while, on the other hand, he will not delay the swearing in of Mr. Jean Bazin to the Senate. Will he tell the House precisely why he is treating the two of them differently? After all, he has a choice.


Some Hon. Members:: Oh, oh!


Martin Brian Mulroney: Mr. Speaker, I have answered that question.


CONTENTS OF AUGUST, 1986, LETTER-MR. BAZIN'S KNOWLEDGE
Lorne Edmund Nystrom: Mr. Speaker, in light of the fact that he has not answered the question, I want to ask the Prime Minister a very reasonable supplementary. Since Mr. Jean Bazin has not yet-


Mr. Speaker:: Hon. Members can see the difficulty when questions which are very similar if not exactly the same are asked again and again.


Lorne Edmund Nystrom: Mr. Speaker, I will put a different question. In light of the seriousness of this affair, before Mr. Bazin is sworn in as a Senator will the Prime Minister personally call Mr. Jean Bazin to find out when he became aware of the contents of the August 12 letter?


Martin Brian Mulroney: Mr. Speaker, that is exactly the same question to which I gave the same answer.


SOFTWOOD LUMBER EXPORT TAX-REQUEST THAT CANADA-UNITED STATES NEGOTIATIONS BE REOPENED
Lloyd Axworthy: Mr. Speaker, my question is directed to the Prime Minister. Yesterday in the House the Minister for International Trade said that she knew of no lay-offs directly attributable to the direct export tax that the Government has brought in. However, this morning a number of representatives from the secondary manufacturing industry in western Canada said layoffs are already taking place because of the close to 200 per cent to 300 per cent increase in costs related to the direct export tax.
During his discussions with Vice-President Bush tomorrow, will the Prime Minister seek to reopen the negotiations on the softwood lumber agreement to ensure that all manufactured lumber products are excluded from that agreement and that these lay-offs which threaten the existence of 80 to 100 plants in western Canada will not take place?


Hon. Pat Carney (Minister for International Trade):: Mr. Speaker, I want to point out that we take no lessons about job losses from the Hon. Member who served as Minister of Employment at a time when the unemployment rate in this country was the highest it ever was in the post-war period.


Lloyd Axworthy: I thank the Minister for that enlightened, expansive answer to the question.


POSITION OF UNITED STATES GOVERNMENT
Lloyd Axworthy: Mr. Speaker, the Secretary of State for External Affairs threw a hand grenade at his counterpart, Secretary of State Shultz, saying that the Government of Canada doubts the sincerity of the U.S. administration's actions and efforts on acid rain. If the Government doubts the sincerity of the U.S. Government's action on this very important issue, how can it have full trust in the sincerity of the U.S. Government that it will live up to its obligations in the softwood lumber agreement as well as the
January 20, 1987

broader issue of free trade? How can we doubt the sincerity in one and not in the other?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, I think there was a message being sent sotto voce by the failed Minister of the Environment, the Member for Davenport. If he wants to put a question to me, he can find the courage to stand in his place in the House of Commons and put it.


Ms. Copps:: A failed Prime Minister.


Mr. Crosbie:: Quiet, Copps.


Mr. Caccia:: Read the envoys' report.


Mr. Speaker:: Order. The Hon. Secretary of State for External Affairs.


Charles Joseph Clark: Mr. Speaker, we are deeply disturbed about the failure of the U.S. administration so far to act on its undertakings with regard to acid rain. It is precisely to address that concern directly that the Vice-President of the United States was invited to Ottawa by the Prime Minister. That matter will be discussed tomorrow as will other questions, naturally.
We believe that the way to deal with differences that exist between our two countries is to raise them directly and discuss them civilly, and make it very clear that Canada expects action on the acid rain commitments that have been given to us by the President of the United States.


ENVIRONMENTAL AFFAIRS
William Alexander (Bill) Blaikie: Mr. Speaker, my question is directed to the Prime Minister. It concerns the question of acid rain and tomorrow's visit by Vice-President George Bush. Does the letter by the Secretary of State indicate that the Prime Minister intends to take a tougher line with the U.S. on acid rain? Will the Prime Minister ask the administration to go beyond the Davis-Lewis report and do something that will actually reduce acid rain emissions in the United States in the foreseeable future? Will he ask for that kind of action from the American administration?


Charles Joseph Clark: Mr. Speaker, we are seeking the honouring by the U.S. administration of the commitment that was given to us by the President with regard to acid rain. We are asking for an honouring of the recommendations in the Davis-Lewis report which were approved by the President of the United States. We believe that action on those recommendations would mark a considerable step forward in the fight against acid rain. As
Oral Questions
my colleague, the Minister of the Environment, indicated earlier in the House today, it is essential for us to approach this issue with clean hands and to take as much action in Canada as we can. We have done that.


William Alexander (Bill) Blaikie: No one is quarrelling with the clean hands argument. The question is whether or not the Prime Minister, in his meeting with Vice-President Bush tomorrow, will be pushing the administration to act not only on the Drew-Lewis report but to go beyond it.


ROLE OF U.S. MEMBERS OF CONGRESS
William Alexander (Bill) Blaikie: Mr. Speaker, my supplementary question is directed to the Prime Minister. If it becomes obvious that the Reagan administration has no intention of living up to that agreement or doing something concrete about acid rain, will he be frank enough with himself and Canadians to abandon putting all his faith in his special relationship with the President and seek to co-operate with members of the United States Congress who are ready to do more than is recommended in the Drew-Lewis report when it comes to acid rain?


Charles Joseph Clark: Mr. Speaker, of course we are working with members of the U.S. Congress on the question of acid rain. However, if it is the proposal of the representative of the New Democratic Party that we should abandon our attempts to get action from the U.S. administration that would improve the acid rain situation in Canada, we will not abandon that action. The acid rain problem posed for this country is far too grave and serious for us or any Party to walk away from.


IMMIGRATION
Mr. John Oostrom (Willowdale):: Mr. Speaker, my question is directed to the Minister of Immigration. People are circumventing and abusing Canada's immigration laws by using airline stopover points as a means of entering Canada. Will the Minister consider the application of in transit visas to stop this abuse, and the burden it is imposing on Canadian taxpayers?


Hon. Benoit Bouchard (Minister of Employment and Immigration):: Mr. Speaker, the transit visas referred to by the Hon. Member are one of the measures the Government is considering in an attempt to provide an immediate remedy for problems connected with the use of certain points of entry to this country, namely Toronto, Vancouver and Montreal, as transit points to stay in this country. It is one of several measures we are considering, on which decisions will be forthcoming in a matter of weeks.

January 20, 1987
Oral Questions DAY CARE CENTRES


REQUEST FOR INCREASED FUNDING
Lucie Pépin: Mr. Speaker, my question is directed to the Minister of National Health and Welfare. Since we are on the eve of a federal-provincial conference at which day care centres will be on the agenda, could the Minister, to demonstrate to provincial governments the Conservative Government's sincerity in this matter, inform the House whether his Government is prepared to increase funding for day care centres within the framework of the Canada Assistance Plan?


Hon. Jake Epp (Minister of National Health and Welfare):: Through you, Mr. Speaker, to the Hon. Member, the Prime Minister and others in the Government, including myself, have said clearly that to advance day care further, additional commitments will have to be made. That includes financial commitments. In terms of the Canada Assistance Plan, the Government of Canada now has a financial commitment of approximately $105 million this year. There are some points being made that if the provinces triggered more access to the Canada Assistance Plan, that could even be done. Therefore, the financial exposure is quite clearly known by all of us.
That is one approach the Hon. Member puts forward. I think she would recognize that is but one of a number of approaches which should be considered.


REQUEST THAT GOVERNMENT TAKE ACTION
Lucie Pépin: Mr. Speaker, in view of the urgency of the situation with respect to day care centres and considering the fact that the parliamentary committee's report on day care will not be tabled until March 1987, why doesn't the Government implement its priorities and set aside $150 million in its next Budget for capital and operating expenditures for day care centres? If it is a priority, why not act accordingly?


Arthur Jacob (Jake) Epp: Mr. Speaker, I cannot discuss any budgetary proposals. The Hon. Member has made a representation in this House which has been heard, I imagine, by all members of Cabinet.


SOFTWOOD LUMBER TAX-REQUEST THAT CANADA-UNITED STATES NEGOTIATIONS BE REOPENED
Steven W. Langdon: Mr. Speaker, my question is directed to the Prime Minister. The Coalition of
B.C. Secondary Softwood Lumber Manufacturers has provided us with a list of 23 firms which will either wholly or partially close because of massive increases in prices because their final products have not been made exempt from the 15 per cent lumber export tax. Will the Prime Minister tell VicePresident Bush tomorrow in his discussions with the VicePresident that we must reopen this negotiation and get those jobs and firms safeguarded for the future?


Pat Carney: Mr. Speaker, I do not think the Hon. Member for Essex-Windsor is presenting the facts. I would like to remind him that one of the reasons we negotiated the settlement with the Americans was to be able to recapture funds in Canada which could be returned to the provinces for silviculture, job creation, and worker retraining.


Lloyd Axworthy: What has that got to do with it?


John Edward Broadbent: What has that got to do with the issue?


Pat Carney: Without our negotiation we would have a countervail and the provinces would have no funds. In the case of manufacturers, the NDP is consistently telling the Canadian public that the tax applies to the added value of the product.


Lloyd Axworthy: It does.


Mr. Blackburn (Brant):: It does. Check with your officials.


Pat Carney: And I continually say that in the agreement we negotiated it only applies to the lumber input, not to the added value.


Lloyd Axworthy: So why are they going broke?


Pat Carney: That was a major concession we won-


Derek Nigel Ernest Blackburn: That is not the way they are applying it, no way.


Pat Carney: -because the final determination would have done away with it. Just in closing, I want to point out-


Some Hon. Members:: Order.


Mr. Speaker:: The Hon. Member for Essex-Windsor, a short question.


TAX EXEMPT PRODUCTS
Steven W. Langdon: Mr. Speaker, I have to tell the Minister that there have been very significant changes made in the product lists included between the countervail and the agreement. I wish the Minister would understand my question, and I will direct it to the Minister responsible for forestry in hopes he may understand. Is it possible that discussions can take place with Vice-President Bush, because this is a crucial trade issue, to see to it that these products are extended so that it is possible for these
January 20, 1987

companies not to face increases of 230 per cent, 250 per cent and 260 per cent in their costs of production and have to shut down?


Pat Carney: Mr. Speaker, the Hon. Member lacks a certain credibility when it comes to his job losses-


An Hon. Member:: Look whose talking.


Pat Carney: May I point out that in May, 1986, concerning shakes and shingles, the Hon. Member told the House: "Yesterday shake and shingle producers told us almost 4,000 jobs will disappear in British Columbia".


Derek Nigel Ernest Blackburn: Stick to the question.


Nelson Andrew Riis: We will fight them on the beaches. We will fight them in the surf.


Pat Carney: They have not disappeared in British Columbia.


Nelson Andrew Riis: We will fight them in the palm trees.


Pat Carney: Only one firm has asked for funds for worker retraining. I suggest that the Hon. Member's estimate of job losses-


An Hon. Member:: Back to the beach.


Pat Carney: -is terribly exaggerated.


An Hon. Member:: You are a joke and you are incompetent.


Mr. Speaker:: Hon. Members know that the Question Period is nearly at an end. I just want to advise that about 15 minutes were spent on the first three questions and answers. I know Hon. Members will understand that while there are still Hon. Members wishing to ask questions, the Chair does have to close it off. However, I will accept one question from the Hon. Member for Nunatsiaq and that will be the last question.


FINANCE
Mr. Thomas Suluk (Nunatsiaq):: Mr. Speaker, my question is directed to the Minister of Finance. It concerns the taxation of northern benefits with regard to travel assistance. It is my understanding that travel assistance paid by employers to designated points in southern Canada will not be taxed. However, travel assistance taken in the territory will not be tax deductable. Since many northerners perceive this as an inequity, can the Minister, first, review the decision reached in December, 1986, and, second, can he provide an acceptable
Privilege-Mr. Boudria
explanation in layman's terms of how this decision was reached?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, I appreciate the interest of the Hon. Member in this particular matter. What we are trying to do is put into place a permanent regime of what has been up until now a temporary regime provided under a tax remission order. The terms of the permanent regime are no different in this particular regard, transportation, than was the case under the temporary duty remission scheme.
What it is meant to do is provide people who live in the north access on a preferred basis to vacation in the nearest designated city. I appreciate the concern expressed by the Hon. Member and I will review the Hon. Member's comments accordingly.


Mr. Speaker:: I should advise Hon. Members, including the Hon. Member for Montreal-Sainte-Marie, that there are a number of points of orders and questions of privilege. The Hon. Member for Glengarry-Prescott-Russell on a question of privilege.


PRIVILEGE
Don Boudria: Mr. Speaker, yesterday you will recall that I served notice to you of my intention to rise today on a question of privilege. I have now had a chance to review Hansard carefully and I believe my privileges have been breached and that the Standing Orders of this House have been broken. I also served notice of my intention to rise on a question of privilege with the Prime Minister (Mr. Mulroney) a few moments ago.
If you deem 1 have a prima facie point of privilege, Mr. Speaker, I am prepared to move the motion necessary to refer the matter to the Parliamentary Committee on Elections, Privileges and Procedure.
As reported at page 2362 of yesterday's Hansard the Prime Minister said: "If he has had that information for some months why did he not bring it to the attention of the RCMP-" and the next part of the sentence is the truly important part. It states: "-since his failure to do so could result in the obstruction of justice?" By inference, the Prime Minister in the House has accused me of performing a criminal act.
I draw to Your Honour's attention the fact that Section 127 of the Criminal Code very clearly states the definition of "obstructing justice". Clearly, I believe that I have not committed such a criminal act but, beyond that, the Prime Minister does not have the right to make such accusations in

January 20, 1987
Privilege-Mr. Boudria
the House of Commons. I believe, Sir, that if I or anyone else were to accuse another Hon. Member of being a thief, a murderer or any other similar thing, that it would not be permitted by the House, and rightfully so. The same applies to this particular criminal accusation as well.
Section 127 of the Criminal Code deals with judicial proceedings, formal investigations, and attempts to convince others to falsify testimony. While I am not a lawyer, I fail to understand how the Prime Minister could make such accusations since he, of course, is learned in the law.
I draw to Your Honour's attention page 11960 of Hansard of March 19, 1976, where Speaker Jerome stated that where the charge is a direct allegation it must be withdrawn.
Further, I draw to your attention, Sir, Beauchesne's Rules and Forms of the House of Commons of Canada, Fifth Edition, page 107, where it is noted that on several occasions it has been decided that to accuse anyone of an illegal act is improper.
I also draw to Your Honour's attention Bourinot's Parliamentary Procedure, Fourth Edition, in which the following is stated:
In the Canadian House, questions of privilege take a wide range, but it may be stated in general terms that they refer to all matters affecting the rights and immunities of the house collectively, or to the position and conduct of members in their representative character.
I also draw to Your Honour's attention the following from the same publication which states:
The large number of rulings on the subject of parliamentary language, as applied to a member in debate, clearly indicate that any expression derogatory to his character as an honourable gentleman in private life or to his honour and personal character as a representative of the people is out of order.
On page 362 of the same document it is also pointed out that it is improper to attribute unworthy motives.
Finally, in the same document it states that when a Member has intimated that he would move the adjournment, or that he would in any other way threaten a Member of this House, the Speaker has interposed and called him to order for using language which is menacing to the House. In this case, language which is menacing to a Member is, in my view, menacing to the House of Commons.
In conclusion, I remind you, Mr. Speaker, that Beauchesne's also speaks to this issue. Citation 316 states that to make a personal charge against a Member is against the rules of the House and is identified in certain ways which are set out. Apart from the prohibitions contained in Standing Order 35 it has been sanctioned by usage that a Member, while speaking, must not make a personal charge against a Member.
Citation 326 states that threatening language is also unparliamentary. It states that when a Member has intimated that he would move the adjournment of the House, as I said previously, according to Bourinot, that that indeed would be deemed to be threatening the House and therefore disorderly and improper. For the same reason, and for all the reasons that I have expressed to you today, Mr. Speaker, I believe that the
accusations made yesterday by the Prime Minister are improper and should be withdrawn. If they are not I intend to continue to ask that the matter be referred to the committee responsible for dealing with such matters, if Your Honour finds that I have a prima facie case of privilege.
It is my hope that that will not be necessary and that the Prime Minister will choose to withdraw the unfortunate remarks of yesterday.


Donald Frank Mazankowski: Mr. Speaker, I submit that the Hon. Member does not have a prima facie case of privilege, that an accusation was not levelled by the Prime Minister (Mr. Mulroney), and that the Prime Minister did not accuse the Hon. Member of a criminal act. To put the issue into context one has to reread the question and answer.
In the course of the Hon. Member questioning the Prime Minister, as reported at page 2362 of Hansard, he pointed out-in fact he boasted-that the media, certain Members and many Canadians had been aware of the transactions for two months already. I will deal later with the portion of the Prime Minister's reponse which the Hon. Member finds offensive.
I also understand that the Hon. Member went outside the House and boasted about the fact that he knew about the allegations and had information about this incident two or three months ago. If that is so then he is duty bound and he clearly has an obligation to provide that information to the RCMP.


Mr. Gauthier:: Including Jean Bazin?


Donald Frank Mazankowski: Yes, including any Member he alleges to have information about. He has a duty to the House and his country to do just that.
The point is that the Prime Minister indicated in his response to the Hon. Member that if he has such information then he should rise in his place in the House of Commons to tell the House who has the information, what it is and, if he has had it for some months, why he did not bring it to the attention of the RCMP since his failure to do so could result in the obstruction of justice. The Prime Minister did not accuse the Hon Member but, rather, invited him to do this.
What I think the Right Hon. Prime Minister was doing was providing the Hon. Member with some good and timely advice. I think he should take it in that spirit. Quite frankly, if the Hon. Member is not prepared to substantiate what he alleges, then I think he should take that advice and consider it and perhaps reconsider his question of privilege.


Nelson Andrew Riis: Mr. Speaker, I listened closely to the case being made by my colleague. Indeed, I believe there is evidence for a prima facie case of privilege. However, I would like to argue it in a different way.
The phrase uttered by the Prime Minister (Mr. Mulroney) yesterday states: "If he has had that information for some
January 20, 1987

months why did he not bring it to the attention of the RCMP since his failure to do so could result in the obstruction of justice?" I remember clearly when the Prime Minister delivered that response to the Hon. Member that he used a very threatening pose. He raised his voice and used very strong language.


Some Hon. Members:: Order, order.


Nelson Andrew Riis: As you well know, Mr. Speaker, threatening language itself is unparliamentary. There is no question that when one suggests to an Hon. Member that his behaviour could be interpreted as an obstruction of justice that that in itself is threatening language, particularly when used by the Prime Minister. I submit to you, Mr. Speaker, that as a lawyer who understands very clearly the allegations of "obstruction of justice" that you know just how serious that particular allegation is. It is language unbecoming a Member of this House, certainly when spoken by a Member in the position of the Prime Minister.
I believe the Prime Minister would serve the House well if he would consider the case being made today, and do the honourable thing and withdraw his remarks, rather than have you, Mr. Speaker, deliberate as to whether we have a case of privilege.


Mr. John Nunziata (York South-Weston):: I rise on the same point, Mr. Speaker. I wish to take issue with the comments made by the Deputy Prime Minister (Mr. Mazan-kowski). He indicated that the Hon. Member for Glengarry- Prescott-Russell (Mr. Boudria), or indeed any Canadian who had knowledge of the facts surrounding the Oerlikon affair, was duty bound to bring the matter to the attention of the Royal Canadian Mounted Police. I wish to ask the Hon. Deputy Prime Minister to point to some jurisprudence that substantiates the position that he has taken.
As was indicated by the Hon. Member for Glengarry- Prescott-Russell, and confirmed by other individuals involved in this particular transaction, some months ago it was known that there were land flips involved in the awarding of this contract. Does the failure to report that type of information to the RCMP constitute an offence under Section 127(1) of the Criminal Code of Canada, which speaks to the offence of obstructing justice?
I wish to read from the Criminal Code which states:
127. (1) Every one who wilfully attempts in any manner to obstruct, pervert or defeat the course of justice in a judicial proceeding-is guilty of
(c)	an indictable offence and is liable to imprisonment for two years, or
(d)	an offence punishable on summary conviction.
In this particular case, I would submit that there was no judicial proceeding in effect at the time. The RCMP had not laid any criminal charges in the matter. There was no other judicial or quasi-judicial proceeding taking place. I take issue with the Deputy Prime Minister when he says that the Hon.
Privilege-Mr. Boudria
Member for Glengarry-Prescott-Russell, or anyone else who had certain information or facts, was duty bound by law to bring the matter to the attention of the Royal Canadian Mounted Police.
Another point in passing, Section 127 speaks-


Mr. Speaker:: Order, please. I may be able to assist Hon. Members, and the Hon. Member for York South-Weston (Mr. Nunziata) who is quite correctly stating what the general law is. He is addressing the Chair with a succinct and reasoned argument. The Chair understands completely the exact point that the Hon. Member for Glengarry-Prescott-Russell has made. I hope that Hon. Members will stay away from arguing another issue now arising, that is, what the Hon. Deputy Prime Minister (Mr. Mazankowski) may have said with respect to his view of the law.
The point that the Chair has to decide is whether the words used by the Right Hon. Prime Minister (Mr. Mulroney) yesterday, and in their context, amounted to an accusation which is unparliamentary and which has worked against the interests of the Hon. Member for Glengarry-Prescott- Russell to speak freely in this Chamber. As a consequence, if they do, they should be withdrawn. That is the narrow point that the Chair must look at. The Chair must also take that in the context of the question asked.
I wish to advise Hon. Members, and it may save undue debate on this point, that yesterday the Hon. Member for Glengarry-Prescott-Russell came to the Chair and he was clearly and visibly concerned. I assured the Hon. Member that this matter would be heard today. I have very carefully read the transcript. I am not quarrelling with the law as set out by Hon. Members. I am certainly not quarrelling with the law as set out by the Hon. Member for Glengarry-Prescott

Russell with respect to what is or what is not privilege. That was again a very succinct and clear argument. I wish to assure Hon. Members that I have the point, and I will look at it very carefully. I will, of course, return at an appropriate time. That may assist Hon. Members who may be impelled to feel that the Chair has not got the point from restraining in exercising their clear right to speak, and it may save some Hon. Members from needing to enter into the argument.
I return to the Hon. Member for York South-Weston, who I know will want to complete his remarks shortly.


John V. Nunziata: I appreciate your comments, Mr. Speaker, and I take your advice.
The reference that I was making to Section 127 of the Criminal Code was in reply to the statement made by the Deputy Prime Minister. You are quite correct in stating that the issue is whether it is appropriate for one Hon. Member to accuse another Hon. Member, whether directly or indirectly or by implication, of criminal activity. I would submit that the words used by the Prime Minister (Mr. Mulroney) yesterday, while he may not have directly accused the Hon. Member for Glengarry-Prescott-Russell of criminal activity, certainly

January 20, 1987
Points of Order
implied that the Hon. Member had breached the Criminal Code of Canada.
How can any Hon. Member in this House operate effectively when another Member, especially the Prime Minister, accuses a Member of criminal activity? I suggest that the privileges of the Hon. Member for Glengarry-Prescott- Russell have been affected. We all know how reckless the Prime Minister is at times with his rhetoric. In this case, the Prime Minister got carried away.


Mr. Speaker:: I know that Hon. Members when arguing procedure and the law about an event that happened in the past would not, out of enthusiasm, wish to create another incident that would have to be discussed and dealt with by the Chair tomorrow. I note with some satisfaction that there are smiles on both sides of the House.


Hon. Herb Gray (Windsor West):: Mr. Speaker, I wish to make some comments about the point of privilege. In doing so, I will bear in mind your admonition of a few moments ago.
I wish to read into the record the words complained of by the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria). The Prime Minister (Mr. Mulroney) said yesterday when speaking of the Hon. Member for Glengarry-Prescott-Russell:
If he has had that information for some months why did he not bring it to the attention of the RCMP since his failure to do so could result in the obstruction of justice?
I submit that the Prime Minister, speaking as he did about what the Hon. Member for Glengarry-Prescott-Russell may or may not have done in the past, was in effect alleging a wrongdoing of a type that was contrary to the Criminal Code.
The Government House Leader (Mr. Mazankowski) said that the Hon. Member for Glengarry-Prescott-Russell had a duty to bring the information in question to the attention of the authorities. If that is the view not only of the Government House Leader but of the Prime Minister, even though it is erroneous and incorrect on a reading of the section, and the cases of the courts interpreting it, it clearly shows, I submit with the utmost respect, what was the purpose of the Prime Minister in making the remarks yesterday.
I want to support what the Hon. Member for Glengarry- Prescott-Russell said about there being grounds for a question of privilege. If it should happen, despite the very persuasive arguments of the Hon. Member for Glengarry- Prescott-Russell in support of there being a question of privilege, that you do not happen to agree with him, then I submit it is also and still open to you, Mr. Speaker, to find that the language of the Prime Minister was unparliamentary and therefore subject to be withdrawn on your direction.
It is very clear according to Citation 319 that it is improper "to impute to any Member or Members unworthy motives for
their actions in a particular case". Furthermore, Citation 324 reads:
It is impossible to lay down any specific rules in regard to injurious reflections uttered in debate against particular Members, or to declare beforehand what expressions are or are not contrary to order; much depends upon the tone and manner, and intention, of the person speaking;-
I submit that not only are there grounds for you, Mr. Speaker, to find a prima facie breach of privilege but, in the alternative, to find that the Prime Minister's words were unparliamentary and therefore subject to being declared such by yourself and ordered to be withdrawn.
I also submit that the manner in which the Hon. Member for Glengarry-Prescott-Russell approached you yesterday with his concerns about the language used by the Prime Minister, which you were good enough to place on record a few minutes ago, would constitute the notice ordinarily required in order to raise a matter of unparliamentary language.
I submit to you, Mr. Speaker, that not only are there grounds so ably argued by the Hon. Member for Glengarry- Prescott-Russell and by the Hon. Member for York South- Weston (Mr. Nunziata) for finding a breach of parliamentary privilege; in any event there are grounds for you to find that the language used by the Prime Minister is unparliamentary and should be withdrawn.


Mr. Speaker:: I want to thank Hon. Members for the interventions which will assist me in deciding this point. I assure all Hon. Members, especially the Hon. Member for Glengarry-Prescott-Russell (Mr. Boudria), the Deputy Prime Minister (Mr. Mazankowski) and others, that I will give this matter appropriate and careful consideration.
I think the Hon. Solicitor General (Mr. Kelleher) wishes to raise another question of privilege, or it may be a point of order. It is one of the two; perhaps the Hon. Minister could clarify that, to begin with.


POINTS OF ORDER
Hon. James Kelleher (Solicitor General of Canada):: Mr. Speaker, I rise on a point of order. Yesterday during Question Period a question was put by the Hon. Member for York South-Weston (Mr. Nunziata) in which he raised the issue as to whether I as Solicitor General did not perform my responsibilities properly and did not act promptly in the matter of allegations against an exempt staff member who worked for the Minister of State. Indeed the Hon. Member's question and request for an RCMP investigation into my role in the affair implies wrongdoing on my part. The facts are as follows, and they will be very brief.
January 20, 1987

On November 5, 1986 my office received correspondence from a Montreal citizen that included allegations against unnamed individuals, including an unnamed staff member in an unnamed cabinet Minister's office.
On November 7, in keeping with standard practice in such cases, my office forwarded the correspondence to the RCMP for review, and a reply was made to the citizen's letter on December 19, 1986, indicating that those concerns were being looked into by the Royal Canadian Mounted Police.
On November 17, 1986 the Hon. Member for York Centre (Mr. Kaplan) provided me with copies of that correspondence, asking assurance that I would turn that over to the RCMP. I assured that Hon. Member by letter on November 27, 1986 that indeed I had already done so.
I was advised by the RCMP of the results of this investigation on January 8, 1987, and within hours the member of the ministerial staff was relieved of his duties.
Further, I am advised that the RCMP has no record of being informed with respect to this matter in May 1986, as the Hon. Member for York South-Weston has stated.
The Solicitor General has no responsibility for the administration of the Government's security clearance screening program. I reject categorically the suggestion that I was in any way involved in the security screening process in this case. As the chief law enforcement official for the Government of Canada and as a Member of Parliament, I cannot allow these imputations and allegations to go unchallenged.


Mr. Speaker:: I see the Hon. Member for York South- Weston (Mr. Nunziata) indicating that he wishes to rise in response to the point of order of the Hon. Solicitor General (Mr. Kelleher). Of course I will hear the Hon. Member, but I want him to know that I have looked over very carefully the comments complained of. It would seem-and this may help shorten debate-that the Hon. Member for York South- Weston asked a question in which he said that it concerned the conduct of two Ministers, one being the Solicitor General. He was asking why a routine security check could not have been done and indicating that the Solicitor General, at least on the information which apparently the Hon. Member had at that time or perhaps thought he had, was notified in October.
Then the question is: in view of this will the Prime Minister (Mr. Mulroney) initiate an RCMP investigation into the conduct of another Member, but this matter concerns the Solicitor General.
It is interesting that the Solicitor General has not risen on a question of privilege. The Solicitor General has merely come before the Chamber to say that he feels the question which was asked imputed some kind of wrongful or negligent behaviour on the part of the Solicitor General. What the Solicitor General has done today is read a statement in which he lays out very carefully certain facts. Of course when the Solicitor General, as all Hon. Members, makes statements like that, those facts are to be accepted in this Chamber, naturally.
Points of Order
It may be that the Hon. Member for York South-Weston will be satisfied with that relation of facts as they are. If by some chance the Hon. Member for York South-Weston is not satisfied with that relation of facts, then it would be appropriate, at another time, to rise in his place and put a question to the Hon. Solicitor General.
I would hope that in recognizing the Hon. Member for York South-Weston-and his comments may assist me-that we will not get into an argument over the facts, because this is not the place to do it. The Hon. Member for York South-Weston is of course the Hon. Member who asked the question, and I think it is appropriate that he rise and make an intervention. I hope it will be a short one, under all the circumstances.
I call upon the Hon. Member.


John V. Nunziata: Mr. Speaker, I can assure you that my submissions will be short. I simply wish to indicate that I have facts in my possession which appear to be at variance with the facts as indicated by the Solicitor General (Mr. Kelleher). You are quite correct in saying, Mr. Speaker, that this is not the forum in which to debate which version of the facts are accurate.
The Solicitor General has made a statement today. He is an Hon. Member, and I must accept his facts for the time being, and I will do so.


Mr. Speaker:: The comments of the Hon. Member for York South-Weston are very fitting for the adjournment of a debate on such a point.
Is the Hon. Member for Don Valley East (Mr. Attewell) seeking the floor on a question of privilege or on a point of order?


ALLEGED UNPARLIAMENTARY LANGUAGE
Mr. Bill Attewell (Don Valley East):: Mr. Speaker, I rise on a point of order concerning unparliamentary language used by the Hon. Member for Burnaby (Mr. Robinson). At the finish of a question which he directed to the Prime Minister (Mr. Mulroney) in today's Question Period, if I am correct in my memory, he used the term "sleazy affair".
I think in all honesty, Mr. Speaker, you are to be commended for the new levels of decorum and dignity you have brought to this House along with the co-operation of Members in last few months. I am compelled to say that the language I heard makes the Hon. Member simply guilty of base political exploitation. I think the language is wrong on two counts. First is the word itself. Second, a very delicate sensitive case was launched just 48 hours ago, and to start almost pre-judging the situation with the use of the language used by the Hon. Member for Burnaby is unparliamentary. I would ask for your ruling on this, Sir.

January 20, 1987
Softwood Lumber Products Export Charge Act


Mr. Speaker:: I thank the Hon. Member for raising the matter. The Chair heard very clearly this afternoon the comments of the Hon. Member for Burnaby (Mr. Robinson) who, unfortunately, is unable to be in the House at this time due to other duties that he is performing on behalf of his constituents. I will look carefully at the words.
I might say that the word sleazy is hardly comforting to those it is used against and probably does not help debate very much. There is some question, however, as to whether the Hon. Member for Burnaby was referring to the accusations that in some wrongful way, land was as they say in real estate terms, flipped and as a consequence some wrongful thing was done perhaps because of some kind of knowledge or some knowledge of some sort that ought not to have been available. If the word sleazy was referring to that particular accusation, then that is a matter of judgment for all citizens to consider. I would hope that when I look at the words of the Hon. Member for Burnaby that that is where the word sleazy is confined. If, of course, it refers or if it was meant to refer to the conduct of the Prime Minister (Mr. Mulroney) and the action which the Prime Minister took then that obviously would give me more difficulty.
I will consider the matter. I should say to the Hon. House Leader of the New Democratic Party that I will communicate with the Hon. Member for Burnaby and make the Hon. Member aware that this matter has been raised. The Hon. House Leader may wish to do the same. If the Hon. Member wishes to make an intervention, that can be arranged with the Chair at some time in the next few days.
I thank the Hon. Member for Don Valley East (Mr. Attewell) for bringing the matter to the House.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed 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. 2393).
Mr. Speaker:: Order. Could the Hon. Member for Windsor West (Mr. Gray) stay for a moment to deal with my request. The Hon. Member for Montreal-Sainte-Marie (Mr. Malepart) last had the floor and his debating had not been finished. The Chair is quite prepared to wait a minute or two if the Hon. Member is coming back. Perhaps the Hon. Member for Windsor West could advise the Chair.


Herbert Eser (Herb) Gray: Mr. Speaker, we appreciate very much your courtesy in this matter. We have been checking, but we find that the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart) is unavoidably committed elsewhere at this point. He will simply have to forego the time otherwise available for the completion of his remarks. I again thank you, Mr. Speaker, for your courtesy.


Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, it is with great interest that I take part in the debate on Bill C-37, an Act respecting the imposition of a charge on the export of certain softwood lumber products.
Mr. Speaker, I cannot remain silent after listening to the previous speaker, the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart), who in the course of his remarks made an unwarranted and shameful attack against Members from the Abitibi-Temiscamingue region. I would point out to the Hon. Member for Montreal-Sainte-Marie that Members from Abitibi-Temiscamingue do not have to listen to his lectures on behaviour or conduct. The fact that he did lecture us shows that although the Member for Montreal-Sainte-Marie may be overly anxious to champion every cause in Canada, he does have his own limits and sometimes-quite often indeed-he talks through his hat.
When I listen to him talking about softwood lumber I am not quite sure whether the Hon. Member for Montreal- Sainte-Marie knows that when we in Abitibi-Temiscamingue talk about softwood lumber we are referring to sizes such as 1 by 3, 2 by 4, 2 by 8, and beams.
Sooner or later, Mr. Speaker, a Member reaches his level of incompetence, and I think this is what has happened to the Hon. Member for Montreal-Sainte-Marie.
Mr. Speaker, I simply wanted to set the record straight because I think that Members from Abitibi-Temiscamingue are proud to protect the interests of their constituents here in the House, and they do so in a dignified and responsible manner. Indeed, Mr. Speaker, responsible parliamentarians are expected to explain to the Canadian people what is at stake when important decisions are to be made. The decision we are talking about today is extremely important and we simply must explain to Quebecers and other Canadians why we decided to come to a compromise on softwood lumber, a compromise which was deemed to be both quite acceptable and the best option available to us under present circumstances.
Mr. Speaker, when they tell us regional Members don't talk about softwood lumber ... Yesterday, the Hon. Member for Abitibi (Mr. St. Julien) spoke in the House about the wood-chip problem we have in Abitibi-Temiscamingue. Unfortunately, the Hon. Member for Montreal-Sainte-Marie was not in the House as so often happens when we have something to say. He was probably out and around, stirring up trouble across Quebec. However, people realize that while he is often
January 20, 1987

just clowning around, work is a serious matter. And there are people here in the House who realize that as well.


Mr.   Speaker-Mr. Rossi@: Mr. Speaker, on a point of order.


The Acting Speaker (Mr. Paproski):: The Hon. Member for Bourassa (Mr. Rossi), on a point of order.


Mr. Rossi:: The Hon. Member just referred to the fairly frequent absence of the Hon. Member for Montreal-Sainte-Marie from the House. With respect, I submit that the Hon. Member from Montreal-Sainte-Marie is in the House regularly and that the Hon. Member opposite was taking advantage of the fact that he is not in the House but in his office. He is not supposed to refer-


The Acting Speaker (Mr. Paproski):: I appreciate the comments from the Hon. Member for Bourassa (Mr. Rossi). I would hope that the Hon. Member for Temiscamingue (Mr. Desjardins) would not reflect on the absence or the attendance of any Member in this Chamber.


Gabriel Desjardins: Mr. Speaker, I just want to point out, since he said we did not address our regional problems in the House, that this is the third time I have risen in the House to speak to the softwood lumber issue and that my hon. friend from Abitibi has also done so. I want to set the record straight so that we are judged accordingly.
Mr. Speaker, regarding the softwood lumber debate, I want to say that the region I represent here in the House is certainly the one in Quebec most severely affected by the 15 per cent export tax on softwood lumber. In my riding of Temiscamingue, we have the biggest softwood lumber producer in Eastern Quebec, and I am referring to Normic Perron. There are other companies in the forestry sector that are also very important such as Howard Bienvenue, Tembec-a very important company that is also involved in pulp and paper- and the Taschereau sawmill. Anyone who is aware of the importance of the softwood lumber trade with the United States knows that it ranks third among our exports. After cars and pulp and paper comes softwood lumber, a $4 billion market with 60,000 jobs in Canada and 11,000 of these in Quebec. Of that 11,000, there are several thousand in my riding and in the riding of my hon. friend from Abitibi.
Mr. Speaker, I spent the holidays in my riding, in my three riding offices, from December 19 to January 15, being available to the local population and explaining what the softwood lumber issue was all about. As a parliamentarian, I felt a moral responsibility to be in my riding to listen to the people and to explain the repercussions of the 15 per cent tax to the local media. When we take the time to explain the events and the agreement to our people and our industries in Abitibi-Temiscamingue, we find that they have been through worse in the past, Mr. Speaker. For families like the Perrons
Softwood Lumber Products Export Charge Act
and the Bienvenues in Abitibi, who came to the area 50 years ago, working for the forest industry in Abitibi-Temiscamingue was not always easy. These people have been through worse. Naturally, they are not happy with the 15 per cent. They did not jump for joy and say that this was the best thing that could happen, but they understand the facts. They know that it was inevitable. There had been clear signs for a few years that such a compromise would be inevitable and that the Americans would eventually take strong action against our substantial lumber exports to the United States. This is indeed what happened. It was inevitable.
We had to act and we did so in the best interests of Canadians. People in our regions understand this. They know that the forest industry is subject to fluctuations, that it is a cyclical industry. In our region like elsewhere in Quebec and Canada, sawmills have had to close these last few years. However, others have been built and the trend will continue in coming years. The market fluctuates a lot and the 15 per cent tax will change nothing in the short-term for forest products in our region. I have some major producers in my region, but the smaller sawmills in Abitibi-Temiscamingue often sell 100 per cent of their products locally or regionally, which means that there will be no job loss.
Mr. Speaker, as I was saying, we have a responsibility as parliamentarians since we cannot really count on the Opposition to inform the population, even though we have to admit that certain Opposition Members can show good sense in such a debate. In any case, I think that it is our responsibility to inform the public and explain why the Government has to take certain action. We have to explain what we do, and the public understands.
I would like to give a chronological outline of what has been happening in the lumber industry this last year, but First, Mr. Speaker, I would like to point out that this issue is nothing new in Canada. It goes back at least 50 years to 1932 or 1933. Lumber was already a contentious issue between our two countries and there is therefore nothing new about this debate. The issue has been around for 50 years, and most recently in 1982 and 1983, when the forest industry won its case, except that-


Mr. Della Noce:: Not by much.


Gabriel Desjardins: As my colleague says, not by much. Our industry won a very close case in 1983 and it was obvious that the Americans were just biding their time.
After the 1983 victory the forest industry increased its softwood lumber exports to the United States. Our share of the American market expanded from 25 to 33 per cent, or thereabouts. Inevitably, sooner or later the Americans were bound to say enough is enough. The American industry put up an impressive and influential lobby which made strong representations to Government authorities and, in the past year, their signals and messages have been clear. Lawyers

January 20, 1987
Softwood Lumber Products Export Charge Act
representing both countries were quite sure that this time countervailing duties would be imposed. For a year our Canadian ambassador in Washington had been telling the federal Government, the provinces and the forest industry to get ready because the next time around everything would break loose and we would have to negotiate every inch of the way.
If I may, Mr. Speaker, I should like to recall briefly the chronology of events during 1986. Mr. Speaker, in late May or early June the alarm was sounded: the American Commerce Department Secretary was considering launching an investigation into the allegedly illegal Canadian softwood lumber competition in the United States and thinking in terms of imposing a 35 to 36 per cent levy on our softwood lumber exports. This was in early June, Mr. Speaker. At the time the Secretary of State for External Affairs vehemently expressed our anger with respect to the American reaction. They were talking about 36 per cent, and this was enough to prompt us to marshall the most elaborate concerted effort of all interested parties in this country, including forest industry spokesmen, federal and provincial Governments, and labour unions. We set up one of the most extensive consultation process ever seen in this country on such an important issue. Mr. Speaker, consultations were held from beginning to end in this case, and nobody will ever be able to claim that the dispute was unilaterally settled by the federal Government. What should be understood, Mr. Speaker, is that natural resources like lumber belong to the provinces. It was the provinces' responsibility to defend their interest, but it was felt the federal Government was in a better position to do so. We decided to get involved because the industry and the provinces called on us to solve the matter on their behalf. This shows we did not act unilaterally but in consultation at all times.
Back to the sequence of events, Mr. Speaker, I was referring to early June, when the U.S. announced or planned a 36 per cent tax, which was unacceptable. I personally rose on two occasions in this House on behalf of the forest industry of Quebec and of my own area, to oppose that 36 per cent tax and to support the Secretary of State for External Affairs (Mr. Clark) who had issued a call for calm and action, which we heeded.
So, on June 13, federal and provincial ministers decided to meet-that was on June 13, 1986, Mr. Speaker-to work out a strategy and fight that planned 36 per cent tax on our lumber exports. Again, during the whole summer of 1986, the various parties involved in the issue worked steadily answering a questionnaire, a sort of indictment, at the request of the U.S. Secretary of State. Because of alleged illegal competition, we had to produce a 7,000 page document in answer to the American questionnaire-7,000 pages, Mr. Speaker. We would be faced with exactly the same kind of thing if we had decided to go through the legal process-the Americans would have won the day and we would have been forced at any time-the industry, the governments, the various levels of Government-to open our books and to fill 7,000 page
questionnaires as we had to submit on August 13. There would have been several of them in the future, and the industry was not interested in getting stuck in that red tape any longer.
Mr. Speaker, on September 13, 1986, the Government reached the practical decision to work out a strategy to offer a compromise to the industry and to our American friends. We brought forth, we proposed to the Americans a 10 per cent compromise. That was no unilateral step by the Government. The forest industry and the provinces were in agreement. We felt that, faced with a 36 per cent evil, why not come up ourselves with a less stringent proposal, let us say 10 per cent. We submitted that proposal on September 30 in a diplomatic note that went to the Embassy, to the U.S. Government in Washington, and the answer was no. That proposal was turned down, and later there was a preliminary finding that was not in our favour and there also was a 15 per cent proposal submitted by the American Government. So we met at a federal-provincial conference on November 20-21, one month before the December 30 deadline that had been set for the 15 per cent proposal.
Mr. Speaker, during the two-day federal-provincial conference held on November 20 and 21, we had to act and find a solution to a problem that had to be solved. There were three alternatives: first, go through the legal process, all the way- that was the Ontario position, the one that was often advocated here by their Big Brother in this House. However, Mr. Speaker, it is clear that this legal process was prejudicial to Canada. It would probably have meant the implementation of a tax exceeding 15 per cent and such a tax might not have been collected by the federal treasury and would probably have been set at 30, 35 or 25 per cent, a level which would have been most detrimental.
The second possible alternative would have been to withdraw from the negotiations as I have heard it suggested, Mr. Speaker, but that was not a solution. The United States would have carried on and would probably have levied, as I said earlier, a 30 p. 100 tax which would have entailed a terrible loss of jobs in Canada.
The third alternative was that as reasonable people, and as responsible governments which would like to solve the problem, we would find a third solution and reach a compromise. This is why we should congratulate our Minister for International Trade (Miss Carney) and our Minister of State for Forestry and Mines (Mr. Merrithew) who sought the agreement of nine provinces. However, it should be stated, Mr. Speaker, that following extensive consultations, nine provinces out of ten approved the arrangement put forward at the federal-provincial conference. We should reconsider that arrangement which clearly stated that the 15 per cent tax appeared to us as the lesser evil, but the main thing was that the revenues were reinvested in Canada and redistributed among the provinces and it is on that issue that we won the day. This is not a major victory about which we should be mightily pleased. No, but as the elected government we had to
January 20, 1987

assume our responsabilities and take action and we did so in the national interest.
On December 30, at midnight, therefore, everybody could watch on television the signing of this agreement and I will return to this in a minute. Let me say that people are more likely to believe comments made by well-informed editorialists and economists than those made by politicians anxious to make political gains. Well, according to the former, this compromise was the best possible deal under the circumstances, and I will quote some of their comments later on. So, on December 30, the agreement between our two countries was finalized.
But how did people react to it? The important point I am trying to make is the manner in which politicians, the media and the industry itself reacted the following day. Mr. Speaker,
I am not likely to forget what happened on December 31. I was spending the holiday in my riding watching the situation as it developed. The ink on that document was not yet quite dry when the Hon. Member for Laval-des-Rapides (Mr. Garneau) and the Hon. Member for Winnipeg-Fort Garry (Mr. Axworthy) stated that the Government had sold out Canada to the United States, that it was outrageous. Mr. Speaker, there are times when a Parliamentarian feels that his colleagues should behave in a more dignified and responsible fashion. I was really shocked to see these Liberal Members of the Official Opposition behaving in such an objectionable and irresponsible way, trying to make petty political gains on such important issues.
As it was to be expected, Mr. Speaker, both opposition parties reacted as usual in a childish and ridiculous fashion. But we, on the Government side, are responsible administrators and we must make decisions. This one was clearly in the interest of Canada.
Everybody will agree, I am sure, that the provincial governments were satisfied with this compromise, especially those of Quebec and British Columbia which were delighted to recover all the money they could have lost. Therefore, nine of our ten provinces were all for it. The only province which was against it was Ontario. But what was Ontario doing debating the lumber issue, considering that it produces hardly 5 per cent of all the lumber in Canada? It was easy for the Premier of that province to make capital gains on an issue such as this. He did not hesitate to do so. But I feel that his views lacked credibility. Such was not the case of those of Quebec and British Columbia because they were the provinces most concerned and this compromise was acceptable to them. Mr. MacDonald, the Quebec Minister of Trade, said so in so many words. He said that this agreement is good, under the circumstances, because we intend to invest the money we are recovering in reforestation and retraining of the workers.
Mr. Speaker, I also wish people would mention the reactions of the media and our editorial writers. In fact, I would like to focus on the francophone media in Quebec, since a number of journalists have looked at the matter-how time flies, Mr. Speaker-and I would like to point out that people like Michel
Softwood Lumber Products Export Charge Act
Roy and Alain Dubuc of La Presse who are not known as Conservatives but whose critical insights are often very apt, have said that in the circumstances there was no reason to panic, that the negative reaction of the Opposition should be ignored and that in this case, it was the best possible compromise. And, Mr. Speaker, I think we can count on the dynamic approach of the forestry industry in Abitibi-Temiscamingue.
We have seen worse, we will survive this and we will keep on working.


Lorne Edmund Nystrom: Mr. Speaker, I have a question for the Hon. Member for Temiscamingue (Mr. Desjardins).
Mr. Speaker, he just told us that the Bill before the House represents the best possible compromise in the circumstances. I remember clearly when I was here in 1973 and 1974, when we had a similar situation and I am referring to the oil crisis in this country when the Trudeau Government levied an export tax. After that, there was a terrific crisis in Alberta, British Columbia and Saskatchewan because we in Western Canada thought that oil was something that was "within the wings of the provinces", in other words, that it was under provincial jurisdiction.
You said that there had been consultations with the provinces about the lumber issue. However, there has not been any agreement with the provinces. In my opinion, this is very important, and I believe that the Member from Quebec will recognize that it is indeed important to have the agreement of the provinces. I recall quite clearly what I said about this at the time of the oil crisis 12 years ago in Alberta and Saskatchewan.
Mr. Speaker, I would like to ask the Hon. Member whether, as a Quebecer and a Canadian, he believes that, in our federal system, it would be a good thing to go against the rights of the provinces by having consultations only without any official agreement even though the provinces have some rights in this area. Would he really agree that it would be a good thing for our country and our federal system?


Gabriel Desjardins: Mr. Speaker, I thank the Hon. Member for his question because this matter also concerns me.
He spoke about getting the agreement of the provinces on this important subject. However, I pointed out in my speech that we had the agreement of nine out of ten provinces about the compromise which we accepted.
Before taking action, must we always wait to have the agreement of all ten provinces? We have been elected to govern, to make decisions, and its seems to me that, in this case . . . The Hon. Member mentioned what happened in 1973 and 1974, but I was very young at the time, and I can only speak about what I know well, namely the present lumber situation. Nine out of ten provinces is very close to a consensus. In my opinion, we could not go any further to reach a consensus.

January 20, 1987
Softwood Lumber Products Export Charge Act
Mr. Speaker, the only province not involved in this consensus, and I think that this has to be said, is Ontario, as I have already pointed out. With 5 per cent of the national lumber production, this province does not seem to have big stakes in this economic sector.


Mr. St. Julien:: In answer to my colleague from Temis-camingue, Mr. Speaker, I might point out that on March 25, 1985 Quebec and Ottawa signed another economic agreement, this time with a third partner, the Quebec Lumber Manufacturers Association. This $3.42 million agreement is aimed at expanding our foreign markets to reduce the dependence of that industry upon the North American market.
I had three other points I wanted to mention to my colleague whose riding is next to mine. Since 1985 I have been in touch with the 27 forest companies in my riding to keep them up to date, because it is very important that our companies be aware of the latest developments with respect to coniferous trees, new agreements, and so on.
I would also point out to my friend and colleague that on August 1, 1985 I wrote a letter to the President of the United States concerning softwood lumber in my riding and in Canada. I got a reply from the President of the United States, signed by John J. St. John on behalf of the Administration, which reads as follows:
On behalf of the President, I respond to your letter dated August 1 concerning the bill which is still pending before the American House of Representatives and which is aimed at imposing specific duties on Canadian lumber imports. As you probably know, under our system Members of Congress can introduce legislative measures without the authorization of the Executive Branch. The Administration is not responsible for nor does it support legislative measures which come before Congress and which might affect Canadian lumber exports. The Administration is opposed to protectionism and remains fully committed with respect to the Quebec City declarations concerning goods and services.
In conclusion, Mr. Speaker, I would say to the Member for Temiscamingue, and especially to a certain Member from the Montreal area-his riding probably extends over ten square kilometres at the most, whereas we in Abitibi-Temiscamingue cover 50 per cent of the whole territory, roughly
800,000	square kilometres-that we have a lot of work and regularly attend House of Commons proceedings. I might add that for the first time in 100 years, in December 1986, the Minister of State for Forestry and Mines (Mr. Merrithew) was in the Abitibi-Temiscamingue region, in Val-d'Or to be specific, where he officially opened a Canadian Forestry Service office as a result of my request of May 1985. Mr. Speaker, in twenty years of Liberal rule, there was not a single Liberal MP available to help us open that office in Abitibi- Temiscamingue. But within two years we did it. I am happy for our Abitibi-Temiscamingue forest producers, for this will help them. We are going to help them day after day, week after week. I realize that sometimes there are difficult situations, but we are now going through a really fantastic period, and for that reason I support my colleague for Temiscamingue.


The Acting Speaker (Mr. Paproski):: Perhaps the Hon. Member for Kamloops-Shuswap (Mr. Riis) would like to ask a question.


Nelson Andrew Riis: Mr. Speaker, this is the period for comments and questions.


John Horton McDermid: That was a brilliant statement.


Nelson Andrew Riis: It was an interesting statement indeed. I have three short questions for the Hon. Member. First, would he explain why so many companies, perhaps as many as 120, which ought to have been exempted from the 15 per cent tax, were not exempted? Is he aware whether negotiations are planned to include these companies on the present list of 20 exempt companies?
Second, is the Member aware that the provincial governments have now guaranteed that the entire portion of the $600 million collected through the tax which will accrue to their provinces will be invested in the maintenance of the forest resource in the respective jurisdictions? Third, and perhaps most important, is the Member aware of studies which the federal Government has completed which would indicate, as closely as can be determined at this time, the potential or real damage which the new 15 per cent export tax will cause in the industry?


Gabriel Desjardins: Mr. Speaker, I would like to thank the Hon. Member for his comments and questions. As he will himself admit, the question he raises is a very involved one. The decision has been made, it has just come out. Certainly we have experts in our departments, responsible people who will look seriously at his representations and a decision will be reached in a relatively short time frame on the questions he has asked me. Although I am not an expert on trade matters, I am quite sure our department will study and analyse the matter he has raised and answers will be provided in due course.


Michael Morris Cassidy: Mr. Speaker, I appreciate your support for the Ottawa Rough Riders.
But returning to the subject at hand, I should like to direct a very specific question to the Hon. Member for Temis-caminque. Is the Hon. Member aware that the Freight on Board or FOB price at the lumber mills in his own riding is much higher than in Western Canada, in British Columbia, and that because of this, the 15 per cent tax which his Government has just imposed will represent a larger amount for the Quebec lumber than for the British Columbia lumber? In fact, there will be a difference of $10 in the PCM between Quebec and Western Canada. My question is this: Does the Hon. Member feel it is fair that because of this tax, Quebec lumber producers will be more heavily taxed than their British Columbia counterparts? How could he justify this unfair
January 20, 1987

difference between the tax treatment of these two regions of our country?


Gabriel Desjardins: Mr. Speaker, I entirely disagree with the statement made by the Member for Ottawa opposite. The same conditions used to exist and I can assure my colleague that the forest industry in my riding is quite efficient, it takes in decent profits and it has always been successful in the past. 1 met with those people. They told me they could live with this 15 per cent tax. They have modern technological equipment and such a tax should not have any negative effect. Of course, they were not very happy but they are responsible businessmen and they told me. "Of course, our profits will be lower, but this is not the be-all and end-all." The Abitibi area has gone through many other problems in the past. We can live with that kind of a tax without massive layoffs and without scaring the Canadian people. I find those men very responsible and much more dignified than the Members opposite.


The Acting Speaker (Mr. Paproski):: I regret but the period for questions and comments is now over.



PROCEEDINGS ON ADJOURNMENT MOTION


The Acting Speaker (Mr. Paproski):: It is my duty, pursuant to Standing Order 66, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Spadina (Mr. Heap)-External Affairs-Nicaragua-(a) Bombing missions launched from Honduras (b) Request that government urge Honduras to disarm Contra forces; the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen)-Immigration-Action taken by Immigration Appeal Board; the Hon. Member for Ottawa-Vanier	(Mr.	Gauthier)-National	Research
Council-(a) Algonquin radio observatory (b) Professionals' future prospects.


SOFTWOOD LUMBER PRODUCTS EXPORT CHARGE
[Stage Direction]
The House resumed 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).
Softwood Lumber Products Export Charge Act
Lorne Edmund Nystrom: Mr. Speaker, I would like to say a few words on this issue which is important to most of the provinces. Believe it or not, in Saskatchewan we also have a softwood industry. It is not as big as that of British Columbia, Quebec, Ontario or other parts of Canada, but we do have an industry and are concerned about the legislation before the House. This is an important issue just as is free trade. The issue of free trade is beginning to concern more and more Canadians. I have just spent a couple of weeks in my riding. More and more people in my constituency are concerned about whether we will sell the soul of our country in our free trade negotiations with the United States.
I remember well when our Prime Minister (Mr. Mulroney) was campaigning against his former leader, the Member for St. John's West, and other members of his Party for the leadership of his Party about three years ago. At that time he said in Thunder Bay that he was against free trade with the United States. He said that because the United States is so big and we are so small, free trade with the United States would be very similar to a mouse hopping into bed with an elephant. It may be fine for the mouse until the elephant had a nightmare and rolled over.


An Hon. Member:: It was a lion.


Lorne Edmund Nystrom: I thought he said a mouse and an elephant, but the Member says it was a mouse and a lion. An elephant is bigger than a lion so perhaps that makes a better story.

However it is exactly the same thing, because there are 25 million Canadians, while the American population is ten times larger at 250 million people. That is a large population, and it is difficult to have free trade between a small and a large country. And it is my view that many people here in Canada do not like the arrangement where by Canadian sovereignty is really after the deal that is now there, because we are all Canadians. We are proud of this country and we must have a country that is very strong and very large in the future.

The legislation before the House compromises the sovereignty of Canada as many of our constitutional experts have already said. Quite frankly, I am very surprised to see a Conservative Government bring forth legislation which would compromise the sovereignty of our country. I believe that the Conservative Party has changed greatly in the last few years. It is increasingly seeing Canada as a fifty-third state because there is more continentalism in their philosophies about this world.
The Conservative Party of Sir John A. Macdonald had a national vision. It was the nationalist party in this country and the Liberal Party was the continentalist party. Our history tells about the battles of tariffs and free trade in the days of Laurier, when the Liberal Party wanted to have a free trade

January 20, 1987
Softwood Lumber Products Export Charge Act
arrangement between Canada and the United States. It was a Conservative Party that stood up to protect this country, its people, its jobs and its future against that kind of move by the Liberal Party.
The times have changed. There has been a complete reversal of roles by the Conservative Party of Canada. Even more recently, John Diefenbaker had a national dream and stood up for this country. He was a Canadian nationalist who stood up to American presidents. Where is the Conservative Party of Macdonald and John Diefenbaker?
The Leader of the Conservative Party seems to believe he was elected in Maine rather than Manicouagan. Let us consider how the Conservative Party has sold out Canada in the last two years. First, the National Energy Program was eliminated as a result of pressure primarily from the United States and multinational corporations based in the United States.


Barbara Jane (Bobbie) Sparrow: That was not a sell-out.


Lorne Edmund Nystrom: The Conservatives responded to that pressure and changed the National Energy Program. As timid as the Foreign Investment Review Agency was, the Conservatives opposite bended to the pressure of the Reagan administration to get rid of the Foreign Investment Review Act in spite of the fact that it was basically a toothless tiger. John Diefenbaker or Sir John A. Macdonald would not have done so, nor would a good red Tory like the Member for Assiniboia (Mr. Gustafson) if he was the Prime Minister. Another example is the patent legislation that is before the House.

I remember very well that in February 1985, at a meeting in Quebec City between Mr. Reagan, the U.S. President, and our Prime Minister, the President asked our Prime Minister for an amendment to the Canadian Patent Act concerning drugs. It was my feeling, Mr. Speaker, that the U.S. President told our Prime Minister there could be no free trade agreement unless the Patent Act was amended with respect to drugs. There again the U.S. President dictated a policy to the Canadian Prime Minister. And I ask once more, Mr. Speaker, where is John Diefenbaker's party, where is Sir John A. Macdonald's party, where is the former Conservative Party that used to be a nationalistic party here in Canada. What has become of that party? That is why the Conservative Party ranked third in a recent Gallup Poll. Never in our history has a government sunk so fast in the public opinion as the Conservative Party! Where is Mr. Diefenbaker's former party, a nationalistic party, that fought for a very strong Canada, Mr. Speaker?

Perhaps it is because they have a leader who was once the head of Iron Ore Canada, a branch plant of an American corporation, and has a vision of this country as a branch plant.
This Bill can be considered in the same way as the legislation I have already mentioned. Tomorrow the Vice-President of the United States will visit the Prime Minister to talk about
free trade. I hope the Prime Minister delivers a stronger message about free trade, softwood lumber and many other issues of concern to us in the House.
This legislation will adversely affect Canada's sovereignty in the same way that the U.S. Farm Bill hurts Canada and American farmers. While the Americans preach free trade on one hand, they are subsidizing the export of American farm commodities into Canadian markets in places like Saudi Arabia and Siberia. That hurts my farmers and farmers throughout the country. The Prime Minister should stand up for Canada and tell George Bush that it is not good enough.


An Hon. Member:: Start World War III.


Lorne Edmund Nystrom: The Conservative Member says "Start World War III". He is being frivolous when making such a comment. I am saying that our Prime Minister should stand up and speak loudly and clearly for Canada on issues like this. I am speaking in the House today because this is another example of how he has not done so.
The softwood lumber issue dangerously compromises Canadian sovereignty because the agreement allows for replacement of the export charge with stumpage increases only through U.S. agreement that the value of the stumpage increase alternative is equivalent to the export charge. If the Americans agree that the stumpage increase is equivalent to the export charge, then the provinces have the right to increase their stumpage charges. I suggest that policy in this country is not made in Washington but made in Canada. Agreements such as this are not good enough because they compromise the sovereignty of Canada. John Diefenbaker would not tolerate what those Conservative Members tolerate under their new leader, the man from Manicouagan.
The U.S. interpretation of the agreement specifically prohibits the provision of grants, low interest loans and other benefits to the forest industry by the federal or provincial Governments. In other words, we have agreed not to extend subsidies to the forest industry in this country unless we have the agreement of the U.S. administration. That is another compromise of Canadian sovereignty.


Mr. Greenaway:: They should not be getting them in the first place.


Lorne Edmund Nystrom: The Member says that there should not be grants or subsidies from the federal Government to the forest industry. Old mills may have to be modernized or some sectors of the forest industry in parts of Canada may need assistance. If we are not allowed to give that assistance, I suggest that it compromises Canadian sovereignty. The United States will have the power to shape the future evolution of our forest industry and that is not good enough for Canada or for this Parliament.
Another issue which I believe should concern those free enterprise Conservatives who believe in free trade around the world is that the export tax applies only to the United States
January 20, 1987

and thus may not be legal under GATT rules. This point has been conceded by spokespersons within the Government itself, and our forest industry competitors such as Sweden may go to GATT and insist we increase our lumber and other forest product prices on goods exported to the European Common Market by a similar amount, again causing more damage. Is it legal under the General Agreement on Tariffs and Trade to employ an export tax on exports to only one country and not other countries? Is it legal to export softwood lumber to the United States at a price 15 per cent more than it is exported to countries such as France, Spain, and Portugal? The Government admits that this may be a problem and it is another argument why it should reconsider this Bill.
This agreement states that any replacement stumpage increases must yield the same price increase on lumber exports to the United States as the tax. However, it is not possible to differentiate, I am told, between stumpage paid on a tree moving to the U.S. as lumber and stumpage paid on a tree moving to a pulp mill. In other words, overhauling the stumpage system in a manner which is dictated by the U.S. could, and probably will have adverse consequences for other sectors of the forest industry such as pulp and paper, lumber producers shipping to Japan, the European Common Market, and so on. These are some of the possible implications of the Bill before the House today.
Another concern I have is that I think we moved too quickly. The process in the United States had not come to a halt or completion. The U.S. Department of Commerce has still not made a ruling and it may not have found, for example, that there was discrimination because of Canadian subsidies or Canadian stumpage fees being too low, in its opinion. It may not have found injury and if it did not find injury and damage because of supposed subsidies, it may not have imposed or could not have imposed a countervail tariff. In fact, the legal advice from American lawyers to the forest industry was that the final determination of a subsidy and the final imposition of a countervail tariff could have been followed by an expedited annual review shortly thereafter. Therefore, the whole process may have gone on a long, long time. We would have had a lot of time to try to come up with a federal-provincial agreement on what to do in order to preserve our markets in the United States and expand the markets for Canadian softwood exports.
Another point I would like to make is if we had done this, we may have had a chance of winning the legal process in the United States. We also would have kept open the future option of a special appeal to GATT in Geneva. I think there are a number of reasons why we should not support the Bill before us today. In summary, it is because the Bill is a Bill which has been basically drafted by American officials. It is a Bill which does not allow any changes in our legislation unless it is accepted by American officials. It is a Bill with which the United States administration is treating Canada as a fifty-first state. I do not think that is good enough. I think it is a sell-out of our country. It compromises our sovereignty. It is softwood
Softwood Lumber Products Export Charge Act
lumber today, what is it to be tomorrow? Will it be potash tomorrow? Will it be uranium the next day? Will it be steel products the day after that? We are not sure.
I see sitting across from me the Minister in charge of the Canadian Wheat Board. I know the frustrations he is experiencing with the U.S. Farm Bill in terms of the subsidies on exports of American grain and barley and such products.
Mir. Mayer: It is the Europeans who have the real problem.


Lorne Edmund Nystrom: It is also a problem for the Europeans. I do not deny that, of course. There is a trade war between Europe and the United States and I believe both of them are equally guilty, as the Prime Minister said in a press conference a few months ago. However, we are caught in the cross-fire as a smaller nation, as are the Australians and the Argentinians.
It is very frustrating being in that kind of a situation. There is not as much we can do in that kind of situation as we can when it comes to softwood lumber. There is something we can do about softwood lumber. That is why I am really surprised the Conservative Party, the Party which once included proud nationals like John Diefenbaker and Sir John A. Macdonald, would compromise our sovereignty and sell out our economy to the Americans on an issue like this.
[ Translation]
This is a terribly important issue. According to the Hon. Member for Kamloops-Shuswap (Mr. Riis), about 700,000 Canadian men and women are directly or indirectly employed in the forestry sector here in Canada. The forestry industry is very important for Canada's future and for the employment situation here in Canada. Most companies in the industry predict there will be lay-offs because the agreement between Canada and the United States does not augur well for the future of this industry. Mr. Speaker, Canada's sovereignty and Canada's future are at stake. It is time for Canada to act.

Let us not pass this legislation before the House today. Let us have an agreement between the provinces and the federal Government as to what we should be doing. I was a bit surprised to hear a member of the Conservative Party from Quebec saying a while ago that consultation between the provinces and the federal Government by itself was good enough without an agreement. I remember being at the federal-provincial conference in Vancouver back in November and I remember Ontario did not agree, but I knew that process was only a process of consultation and we still did not have an agreement. We do not have an agreement in an area of vital provincial concern, yet taxing resources comes under our Constitution as a provincial right, under provincial jurisdiction.
I think it is very dangerous for federalism that the federal Government would go ahead unilaterally without an agreement and impose an export tax. Again, it surprises me that this would come from the Conservative Party which criticized the former Prime Minister, Mr. Trudeau, for so long and so hard

January 20, 1987
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for acting in exactly the same way when it came to an export tax on oil in 1973 and 1974.

The Hon. Member for Joliette was here at the time, since he was elected in 1968, the same year I was. He did not agree at all with Mr. Trudeau, when the latter did the same thing to the oil industry. He agreed with me and he was against Mr. Trudeau. And he said with the Conservative Party: There will be another system that will respect the rights of the provinces and the principles of federalism here in Canada where we need the consensus of all Canadians. And the Prime Minister referred to the need for national reconciliation.
The Hon. Member says so too. Mr. Speaker, if that is true, why is the Conservative Party now third in the Gallup polls in Canada? Why? With polls like these, Mr. Speaker, I am very glad I'm not a Conservative Member.


Mr. Girard:: And so are we!


Lorne Edmund Nystrom: Thank you. Mr. Speaker, national reconciliation is not as important as provincial participation.
I remember when the Conservative Member sitting in the Chair at this moment rose in the House ten years ago to speak against the former Liberal Government and the levy of an export tax on oil exported from Canada to the United States. They often said that, with a Conservative Government, there would be a different system in Canada, a system where the provinces would deal with the Federal Government as between equals.
I would like to ask my friend, the Hon. Member for Joliette (Mr. La Salle), who was leader of the Quebec caucus and the only Quebec Member of his party at the time, what has happened since then. What has changed? Why is his party acting exactly like the party led by Mr. Trudeau as far as federal-provincial issues are concerned?


Mr.   La Salle@: Never! I would resign.


Lorne Edmund Nystrom: Mr. Speaker, we have just heard some good news. The Hon. Member for Joliette will resign because he is also disappointed by his leader's policies, which are exactly the same as those of Mr. Trudeau.


Mr.   La Salle@: That is not what I said.


Lorne Edmund Nystrom: That would be a good thing. Mr. Nielsen yesterday and Mr. La Salle today.


Gabriel Fontaine: Mr. Speaker, I am happy for the opportunity to ask a few questions to my socialist colleague for Yorkton- Melville (Mr. Nystrom).
Mr. Speaker, all Canadians know that, last summer, a ruling by an Ontario court found that it was illegal to use certain payroll deductions under the Rand formula to finance the socialist party.
I therefore wonder how the socialists can explain to the
31,000	members of the IWA why they object to our agreement with the Americans since the IWA president wrote early in January 1987 to the Minister for International Trade to express his full support for this agreement. My socialist colleagues should not forget that these people are financing them. It can hurt you a lot to attack your own sources of financing. In addition, we must not forget that this letter was signed by Mr. Munro, a former candidate to the presidency of the socialist party in British Columbia. In addition, the secretary treasurer of the association is Mr. Gerry Stoney, a former president of the socialist party in British Columbia.
I also wonder how you can agree with your colleague, the economic critic from British Columbia, who is in complete disagreement with what we you have said about our understanding with the Americans.
I conclude, Mr. Speaker. You mentioned that we may not have achieved national reconciliation, but at least we have achieved reconciliation within our own Party. The socialists from the various parts of the country do not even agree among themselves. Therefore, you would be well advised to seek ways to agree among yourselves, in order to make more informed representations to the House of Commons of Canada.
I should like you to reply to these questions. How are you going to explain that?


John Kenneth Gormley: Mr. Speaker, I have a question along a similar line. First, it is interesting to note how the Hon. Member from Saskatchewan can elicit such a reaction from Hon. Members from all across Canada so that they are equally offended by his comments and spring to their feet in indignation.
In terms of the Saskatchewan dimension, the Hon. Member has raised a point about sovereignty and the options the provinces face with respect to the collection of the tax. I met last week with Saskatchewan's Minister responsible for forestry. He told me that based on the alternatives, he welcomes the opportunity to be able to use some of this money to put into silviculture and reforestation. These are two projects which are of vital concern to native people and to those who live in northern Saskatchewan. How can this member of the New Democratic Party turn his back on an opportunity to be putting money back into forestry instead of paying a tariff as high as 35 per cent or 36 per cent?


Lorne Edmund Nystrom: Mr. Speaker, it seems to me that the Hon. Member for The Battlefords-Meadow Lake (Mr. Gormley) is under considerable anguish these days. Perhaps it is as a result of the polls. The former Member of Parliament for The Battlefords-Meadow Lake, whose name is Anguish, was here yesterday, which perhaps explains the situation.
January 20, 1987


John Kenneth Gormley: Mr. Speaker, I rise on a point of order. It is worth noting that the man to whom the Hon. Member refers is a former Member of Parliament, which is why I am here.


Lorne Edmund Nystrom: The present Member for that riding will follow in his footsteps. There has been a precedent set in the riding.


Mr. Mayer:: Anguish may in fact be the next Leader of the NDP in Saskatchewan. He may beat you out.


Lorne Edmund Nystrom: That just might happen, and it might be a good thing. I do not think there has been a Member of Parliament from The Battlefords-Meadow Lake who has survived more than one term-at least not for a long, long time. I remember the former Members Bert Cadieu and Elias Nesdoly. Nesdoly was defeated and Cadieu came back once. Then there was the terrific Member, Doug Anguish. Unfortunately, he lasted only one term, as will the present Member for The Battlefords-Meadow Lake.


Charles James Mayer: It should be noted that he is also a terrific Member of Parliament.


Lorne Edmund Nystrom: Mr. Speaker, I think he is a good Member of Parliament. I have never said anything negative about him. I am simply saying that a precedent has been set in his riding whereby Members representing the riding last for only one term. Considering the way his Party is going nationally he will be lucky to run second, let alone first.
The Hon. Member said he talked to the Minister responsible for forestry in the Province of Saskatchewan. I would be very glad to have some of the money come back to Saskatchewan. My position is that it should all come back. It is a provincial resource and it should be a provincial right to impose a tax. That is why there should have been an agreement before we went ahead with this measure in the first place. I think there was the time to do that and I believe that has been pointed out in the House before.

In reply to the Hon. Member for Levis (Mr. Fontaine), may I say that he often refers to the socialist party. Mr. Speaker, following the next federal election, Mr. Jean-Paul Harney, a socialist, will represent the Levis riding. Mr. Speaker, the Hon. Member asked about Mr. Munro and the union, as well as Mr. Gerry Stoney. On Saturday and Sunday, I talked in Ottawa to Mr. Gerry Stoney. I know Mr. Jack Munro very well, and both of them may not agree on the federal position of the NDP on this issue, but both will support the NDP and help it win the next federal election. It is perhaps exactly the same with the heads of some forest corporations which are against the Conservative proposal now before the House, but they will stubbornly vote for the Conservative Party at the next federal election.
Softwood Lumber Products Export Charge Act [English]


James Eber Caldwell: Mr. Speaker, I would like to ask a question of the Hon. Member for Yorkton-Melville (Mr. Nystrom). He mentioned the problems we are having in agriculture in Canada. The Hon. Member will recall that just over one year ago the Americans placed a countervail duty on pork products going to the U.S. That countervail in terms of dollars amounted to something in the order of $200 million, which money has come out of the pockets of Canadian pork producers. It is money which could be well spent in Canada in aid of our farmers. The Americans took the case through the proper procedures and proved that in fact we were subsidizing our pork products. It now happens that they are keeping the money. I assume from what the Hon. Member is saying that because they have kept that money, our sovereignty is still intact. However, when he gets into the issue of softwood lumber and we are keeping the money on this side of the border, he seems to say that we have lost our sovereignty. I do not quite understand that position. No one wants tariffs to be imposed.
There was a situation in which our Government placed a tariff on U.S. corn coming into Canada. That is now affecting British Columbia producers. But we have retained our sovereignty. I do not quite understand where the Hon. Member is coming from. On the one hand the Americans take money and we keep our sovereignty while on the other if we keep the money we have lost our sovereignty. Would the Hon. Member please comment on that concept?


Lorne Edmund Nystrom: Mr. Speaker, I am not saying that we can win all the cases. I know that all the cases cannot be won. I have been involved in similar issues for many years. I know that some countries win some cases and sometimes they lose.
The point I am making is that we should stand up and fight for what we think is right. A decision had not been rendered in the United States and the process had not been completed. We are not sure what the results would have been. The process would have gone on for many more months in that country. What we did was duck and run. I think that was the wrong way to go.
There is also an organization called GATT. Like other countries we could have appealed to GATT. The point is that this whole process would have taken a long time. In that time we could have come to a federal-provincial agreement. I am a Member from the small Province of Saskatchewan where there are only one million people. We do not trample on provincial rights.
I think a provincial right has been trampled on in this case. I think a federal-provincial agreement could have been arrived at. It would have caused less acrimony in Canada and would have resulted in a more harmonious solution. We did not have time to do that. In the end it may have even won the case with the United States. I do not know. The Hon. Member opposite does not think we would have. But we could have bought more time and maybe we could have come up with an agreement

January 20, 1987
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with the provinces. I think we moved too quickly. We became too afraid too quickly.


Nelson Andrew Riis: I have a very short question for the Hon. Member. Now that the provincial governments will have the opportunity to roll some of this 15 per cent export tax into increased stumpage rates, does this mean that for other forest companies other than lumber, for example pulp or pulp and paper and other forest products, that their costs will be increased with stumpage rates going up? Also, the cost to the Canadian consumer will rise because of the increased stumpage and the increased cost for lumber and other commodities sold in Canada.


Lorne Edmund Nystrom: That is absolutely true, because there is no differentiation between a stumpage fee increase for what is exported and what goes into pulp and paper. The final point on that is there will be a problem between the provinces. I see the Hon. Member for The Battlefords-Meadow Lake For example, our stumpage fees are higher than those in British Columbia. That may create more problems for Saskatchewan than for B.C. Again, it is a differentiation between Quebec, Ontario, and the West. These are all problems that are difficult to sort out. Now we have a gun to our head, and I do not think that is fair.


The Acting Speaker (Mr. Paproski):: Order, please! It being 5 o'clock, the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.


PRIVATE MEMBERS' BUSINESS-PUBLIC BILLS   CANADIAN HUMAN RIGHTS ACT, CANADA LABOUR CODE, PUBLIC SERVICE EMPLOYMENT ACT MEASURE TO AMEND
Mr. Bill Vankoughnet (Hastings-Frontenac-Lennox and Addington) moved: that Bill C-229, an Act to amend the Canadian Human Rights Act, the Canada Labour Code and the Public Service Employment Act (whistleblowing), be read the second time and referred to a legislative committee.
He said: Mr. Speaker, Bill C-229 is an Act to amend the Canadian Human Rights Act, the Canada Labour Code and the Public Service Employment Act. This could be referred to as the whistleblowing Act.
The purpose of this Bill is to provide appropriate sanctions against retaliatory discharges by public sector employers of employees who report or blow the whistle on serious misconduct of their employers.
In protecting employees acting in good faith, this Bill would recognize that there are times when it is in the public's interest to encourage employee whistleblowing, particularly when the public health and safety are at issue. The price of doing right should not be the end of a career, scorn, or years of economic hardship.
This legislation is intended to protect people who are willing to expose illegal or unethical practices of their employers. It would allow employees to file with the Canadian Human Rights Commission information concerning actions of their employers which they believe to be a threat to the health and safety of the general public.
The Canadian Human Rights Commission would then determine if the revelations of the employee were made in good faith. If the Canadian Human Rights Commission decided that there was no malicious intent on the part of the employee, that individual would have the benefit of all protective measures provided by this legislation. Specifically, protection would be provided from dismissal, suspension, or the imposition of a financial penalty by an employer in retaliation for a complaint, or for a disclosure in connection with a complaint.
If the Canadian Human Rights Commission is satisfied that there are reasonable grounds to believe that the allegations contained in a complaint are true, and that it is in the public interest to reveal the allegations, the Commission would file an appropriate report to the Speaker of the House of Commons. Every report submitted to the House of Commons would be referred to a designated committee for the purpose of reviewing the ethics of conduct of public officials.
By providing appropriate protection for employees acting in good faith, this Bill recognizes that there are instances when it is in the best interests of the public to encourage employee whistleblowing. When the health and safety of the public are in jeopardy, this Bill will provide a clear and much superior method than the usual brown envelope procedure. This topic has not received as much attention in Canada as it has in the United States. I believe it is time for this type of legislation in Canada.
Whistleblowers have been called many names such as rats, traitors, publicity seekers, alarmists, trouble-makers, malcontents, weasels, and stool pigeons, to name a few. To some they have been branded as moral heroes. Recent studies in the United States suggest that whistleblowers are ordinary employees who are so troubled by the employers' conduct that they feel compelled to do something. Frequently, employers respond to such action by terminating their employment.
I believe that individuals who blow the whistle for legitimate reasons such as gross mismanagement, waste of public funds, fraud, corruption, as well as the health and safety of the general public, should, if proof can be established, be encouraged to protect society, and in turn have protection themselves. However, this Bill deals with the health and safety aspect of whistleblowing, and I feel it would be an important step. We should protect those who show courage, ethics,
January 20, 1987

conscience, or moral concerns instead of blindly following orders from superiors, or looking the other way. The important thing to remember is not just the protection of a legitimate whistleblower, but the general public who may well be in danger.
It is time that we, as legislators, looked at what happens to whistleblowers after the events that could well change their lives. Whistleblowers almost inevitably pay a heavy price. With few exceptions, they are driven out of not just their jobs but their professions. It is long overdue that we give consideration to protecting those people who have legitimate public health and safety concerns, and have first-hand knowledge that the information is being suppressed.
Despite the need for this whistleblower's protection and the public concern for it, industry and Government remain cool to the idea. It would be a small price to pay for this legislation to protect society, and the careers and the emotional lives of conscientious whistleblowers.
For example, ethical whistleblowers exposing PCB dangers, harmful plant operations, environmental pollution, questionable food additives, violations of safety regulations, should be protected as they have a responsibility to our society. It has been established that most whistleblowers are loyal employees with many years of faithful service. They are not habitual complainers, members of the lunatic fringe, or anarchists bent on violent change. They are people who come face to face with a practice that they believe is wrong and decide to turn concern into action.
Only after first taking their concerns to the appropriate management, and then without action, would they have to use this Bill as protection. Instead of receiving thanks for bringing their legitimate concerns to light, they could presently be charged with damaging morale, hindering efficiency, or performing their duties incompetently. With this legislation, they would be protected. Even the union, if one existed, or if the employee was a member, might be reluctant to take up the issue.
The individual, or perhaps several people, would have the other options I stated earlier: the brown envelope method, the use of the media, or to seek assistance from their Member of Parliament to expose the wrongdoing. Normally, employees have a duty to respect the confidentiality of information learned through their employment which could be damaging to their employer. However, this does not apply to knowledge about actual known or planned crime. Thus the need for this legislation.
Whistleblowing is serious. This Bill intends to encourage the truth in order to protect the health and safety of Canadians through a legitimate process which would also protect the whistleblower. I ask that the House of Commons seriously consider this Bill by referring it to the appropriate committee for study.


Jean-Robert Gauthier: I wish to congratulate the Hon. Member for Hastings-Frontenac- Lennox and Addington (Mr. Vankoughnet) for introducing
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what I think is a very valuable and very needed piece of legislation. I agree with the Bill. I would support sending the Bill to a committee for further study and consideration, and possibly amendments which we are all open to. I wish to tell him in speaking to some public servants in my riding who over the years have come to me with this difficult problem of whistleblowing on their employer for reasons of health and safety that in their opinion, this is a much needed and important piece of legislation.
I repeat, I congratulate the Hon. Member on his initiative, and I hope the House sees fit to pass this legislative suggestion in due course.

Mr. Speaker, the Bill before the House today deals with a question that sometimes creates problems for Government employees. As far as I know, there is no appropriate sanction in Canada to deal with retaliatory discharges by public sector employers of employees who report or "blow the whistle" on serious misconduct of their employers, particularly, as the Bill says, with respect to health and safety. By thus protecting employees against retaliatory action on the part of an employer who is unhappy about the fact that an employee has revealed certain information, I think we are recognizing the fact that the public interest sometimes requires that employees working in the public sector and who feel obliged to take action on matters or situations they find unacceptable, have the right to see and consult with a public person or an ombudsman and to tell that person, if they so wish, that they do not agree with a given measure because it constitutes a threat to public health and safety.

This whole question came to light some time ago, but Hon. Members will recall that articles appeared in the newspapers in 1986 dealing with an employee who had been fired from the Immigration Appeal Board.
I refer to an article by Philip Jalsevac which appeared in the February 13, 1986 edition of the Kitchener-Waterloo Record and read:
The Immigration Appeal Board has followed the five-month suspension of a Toronto deputy registrar by firing him for giving internal documents to a lawyer and publicly criticizing the board.
It went on to explain what board chairman Michel Falar-deau-Ramsay told Registrar Keith Forgie, 35, in the letter of dismissal which he received the previous day.
The Canada Employment and Immigration Union, through its spokesperson, Renaud Paquet, said that it would pursue the matter. At the time I was asked to comment, and I said that I believed legislation should be forthcoming. I also said that I believed strongly that a White Paper should be brought forward by the then Minister of Justice, espousing the Government's views on the matter. We asked for a discussion paper or a draft Bill from the Government. Our only reply was from the Minister of Justice who indicated the Government's position.

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I should like to quote from another article written by Philip Jalsevac which read:
Justice Minister John Crosbie says he can't see the need for legislation to protect public servants who make public improper or illegal government practices.
The article continued:
However, he said his immediate reaction was that so-called whistleblowing laws aren't needed because public servants are protected like everybody else by the Charter of Rights and Freedoms.
I think that point is well taken. We in the House know that the Charter of Rights and Freedoms is before the courts for interpretation, but that is not the point.
There are other jurisdictions in the world, such as American jurisdictions, where certain protection is afforded people who for reasons of security, possibly safety, or health feel that a procedure or something they are being asked to do is against the national interest.

Mr. Speaker, the concept of whistleblowing or whistleblowers is to be seen as an attempt to resolve the dilemma of employee loyalty and an employer responsible for running a public agency.
As I said earlier, in this context Canada provides no general protection for whistleblowers against retaliatory measures on the part of the employer. Federal public servants in particular have no legal protection should they reveal information on hazards to public safety.
The only legal protection at the federal level concerns the application of specific legislation. For instance, the Canadian Human Rights Act and the Canada Labour Code contain provisions that protect individuals against possible retaliatory action by the employer if they file complaints, testify or in any way participate in the enforcement of that specific legislation as it applies to their employer. This legal protection does not cover whistleblowing on activities that put the community at risk.
However, although not specifically aimed at whistleblowing cases, certain statutes may be referred to in support of whistleblowers. For instance, as the Minister of Justice (Mr. Hnatyshyn) pointed out, Section 2 of the Canadian Charter of Rights provides protection for fundamental freedoms like freedom of opinion, expression and conscience. The mere reference to these freedoms does not protect whistleblowers, but since the courts are now in the process of interpreting the Charter, it might be a useful reference. As we know, everything depends on the court interpretation of the facts in the spirit of the Charter, Mr. Speaker. It is there, but it needs to be enhanced and interpreted by the courts.
On the other hand, the Access to Information Act might be useful to protect whistleblowers. As a matter of fact, if any disclosed information could have been obtained through this statute, it would mitigate the notion that a public servant must
respect confidentiality with respect to his employer. Recourse to the provisions of this act does not by itself guarantee the protection of whistleblowers, but it can change the picture to the extent that the whistleblowing incident itself would become less dramatic.
Finally, given the absence of a legislative provision, common law might be used as a guideline. There have been a few such cases in American common law, and the result was that the protection given to whisleblowers is related to the accuracy and veracity of the information disclosed, as well as to the existence of real danger for the community. The burden of proof therefore weighs very heavily on the whistleblower. However, legal precedents have failed to establish criteria to enable us to assess the extent of evidence to be submitted with respect to real danger, nor have they given us a precise definition of the notion of community.
Therefore whistleblowers in Canada do not enjoy general protection and they can resort only indirectly to their means of defence against the possibility of retaliatory measures taken by their employer. A whistleblower acts at his own risk.
As I said earlier, the situation is different in the United States because they do have specific provisions barring any retaliatory measure against an employee who has disclosed information pertaining to any kind of danger for the public.
Mr. Speaker, I know that I have only two minutes left, which is not much. I wish to recommend most seriously to the House that it refer the subject matter of this well drafted and well considered bill to a committee for study and review and that it ask the Government for its support, because it is important that civil servants moved by their concern for public health and safety be protected against retaliatory measures when they make public statements about measures they are supposed to take on behalf of their employer.
Mr. Speaker, I should like again to congratulate the Hon. Member for introducing this bill and indicate to him that we support it. I hope that this bill is read a second time today.


Michael Morris Cassidy: Mr. Speaker, I enter into this debate partly because of my concerns about the rights of federal public servants, a number of whom I have in my constituency. However, I think it is a broader issue, as the Hon. Member for	Hastings-Frontenac-Lennox and
Addington (Mr. Vankoughnet) would of course maintain.
We suffer from the constitutional dilemma that the area of federal jurisdiction in Canada over employee-employer relations is considerably more limited relative to the total number of people in the workforce than perhaps it is in the United States where whistleblowing legislation has become quite common both at the federal level and at the level of state Governments.
January 20, 1987

The fact that the jurisdiction is more limited should not, I believe, prevent this Government and this level of Government from acting on behalf of those employees that are within its jurisdiction, and 1 hope in that case setting an example which will be followed by a number of provincial Governments in short order if Ottawa were to take the lead. I agree with the Hon. Member's proposal that Bill C-229 should be sent to a legislative committee and considered very carefully. I endorse the principles of the Bill. I think the idea of whistleblower legislation would benefit particularly larger organizations under federal jurisdiction. First and foremost would be the Government of Canada as well as the large Crown corporations.
I say to my friend on the benches opposite that I fear the Bill is rather weak and needs to be reworked substantially, but it would be better to do that in committee than to deny a committee the chance because I do not think the issues are that difficult to resolve. There are ample precedents that can be followed, and it would be my hope that a committee with a month or two of work and perhaps with some submissions and interventions from people knowledgeable about these matters could come back with a Bill that would serve us well.
This is a good idea but the mechanics are somewhat questionable. Just what is it we are looking for and what can be done in order to ensure that the whistleblower is respected? We have to deal with people who say; "You are going to create anarchy in the workplace" or those who say, "you are going to create a Bill which offers too little encouragement or offers too little protection to someone who feels that they should raise problems of health and safety, violation of public property, public policy or of gross mismanagement". People feel compelled to raise the issue in some way. How do you arrive at a balance on those questions?
There are really two issues. One is to provide what I would call a conventional means by which whistleblowers can lodge their complaints. It remains open to somebody who is very concerned about a particular issue and who just wants to blow on the issue to call a press conference or bring a banner to Parliament Hill or in some other way complain. The passage of whistleblower legislation will not do away with that remedy which is available right now.
The problem, of course, is that most people who blow the whistle in that way, except in exceptional circumstances, have to realize that they are taking their own fate in hand, that they carry a grave risk that they may get dismissed for disloyalty or for behaviour which is unacceptable to the employer. As well, many employers would be prepared to fire the employee for that kind of behaviour even if it cost them some money in severance pay to do so. That is why the whistleblower legislation which has been adopted in a number of American jurisdictions has tended to provide some means by which complaints can be lodged on a basis of confidence but which can be investigated without identifying the source of the complaint, by which the complainant can find out what was
Canadian Human Rights Act
done, what was determined with respect to his complaint and what action, if any, was taken.
In certain cases there is still an ultimate step which leads to publicity of the complaint but, even in that case, it is often the agency or the investigating body which carries the complaint rather than leaving the individual employee in a situation where he or she risks an intolerable situation in the workplace by being identified as the whistleblower in public to his or her supervisors and employer.
The second part of the legislation is to protect the complainant. Confidentiality is a major means of protecting the complainant, but the American legislation also generally provides for anti-discrimination provisions which also have the effect of protecting the complainant against what the U.S. Federal Code calls personnel action, a generic term which includes not only dismissal but also being passed over on promotions, getting bad evaluations on performance reviews every six months or other types of actions that may have a direct or indirect impact on a person's employment prospects or on his or her ability to do the job effectively.
The Bill proposed by the Hon. Member for Hastings- Frontenac-Lennox and Addington does provide a mechanism through the Human Rights Commission to protect complainants against that kind of personnel action. I think my major concern is the fact that the avenue for complaints is not spelled out at all effectively, in fact I do not believe it is spelled out adequately. I think the Bill might benefit in committee. If it does not get to committee because it is talked out-I would hope that does not occur-then I hope the Hon. Member would be encouraged by the reaction in this House and perhaps go back to the drawing board and elaborate on that part of the Bill to come up with something that might be a more effective or workable model which, as I said, I can agree to and do agree to in principle.
I would cite the U.S. Federal Code, Mr. Speaker, which applies to members of the American federal Public Service and also, I presume, to a number of federal boards, agencies and commissions. The same principle about protecting the whistleblower exists. The same principle about providing protection against job action exists as has been provided for in rather briefer form in this Bill. What also occurs is that in separate legislation the Congress has adopted what it calls an inspector general system.
There are inspector general offices in all of the major American departments of Government. As Hon. Members know, the American ministries or departments are much larger than ours. They have only 10 members of Cabinet so those 10 departments make up what most of us cover off with 30 or 40 ministries in Canada. In addition, there are certain administrations such as the space agency, the veterans administration and small business administration which also have inspectors general.
Those inspectors general have a mandate to combat fraud, abuse and mismanagement. They do that not only at their own

January 20, 1987
Canadian Human Rights Act
initiative but can also receive and act on complaints. The inspector general stands in relation to the department to which he or she is appointed. I presume they have some kind of a small office of investigators in much the same way as say our Auditor General stands in relation to the Government of Canada, that is, an independent relationship. Therefore, complaints from whistleblowers, from people who wish to raise matters with the inspector general can be raised. Matters of health and safety, abuse, fraud or mismanagement can all be raised. There is a means by which the employee is entitled to find out what happened to a particular complaint.
I do not know if that legislation is perfect. A very useful paper was distributed and prepared by Mr. David Johansen of the law and government division of our own Library of Parliament. In the literature there is some question in the United States as to what extent legislation should actively encourage whistleblowers and to what extent it should simply recognize that people wish and have an urge to blow the whistle. It should at least allow that to take place without people putting their jobs in jeopardy when they lodge complaints.
Also cited in the same paper is some very useful legislation in the State of Connecticut. I might read one or two clauses into the record. In Connecticut the statutory provision states:
Any state employee-having knowledge of any matter involving corruption, unethical practices, violation of state laws or regulations, mismanagement, gross waste of funds, abuse of authority or danger to the public safety occurring in any state department or agency may transmit all facts and information in his possession concerning such matter to the attorney general-
The attorney general is the designated hitter in this case:
-who shall make such investigation as he thinks proper. The attorney general shall have power to summon witnesses, require the production of any necessary books, papers or other documents and administer oaths to witnesses, where necessary, for the purpose of investigation.
It might be useful to have that kind of process even with respect to such things as the events that are now taking place or that have taken place in St. Jean-Sur-Richelieu. The clause continues:
Upon the conclusion of his investigation, the attorney general shall (a) where necessary, report his findings to the governor, or in matters involving criminal activity, to the chief state's attorney, and (2) report to the complainant, upon his request, on such findings and any actions pursuant thereto. The attorney general shall not, after receipt of any information from a state employee under the provisions of this section-disclose the identity of such employee without his consent unless he determines that such disclosure is unavoidable during the course of his investigation.
There is a limit on personal action and as well a limitation that provides that if an employee is found to have knowingly lodged false charges, the employee puts himself or herself at some risk.
I think there are some valuable precedents in the United States. I realize my time is up but I would ask Hon. Members to look sympathetically at this proposal. While I do believe that the principle should be sustained, possibly the provision
might be worked up in more detail so that we could have more effective whistleblower legislation.


Mr. Chuck Cook (Parliamentary Secretary to President of the Treasury Board):: Mr. Speaker, I rise to address the Bill to amend the Canadian Human Rights Act to protect so-called whistleblowers, by which I understand the Hon. Member to mean public servants who speak out to the news media or to Members of this House on alleged instances of government wrongdoing or misinformation. The concept of the Bill, as I understand it, is that unless those in positions of authority are subject to possible serious sanctions and punishment, they will seek to retaliate in the form of harassment and persecution of the employee or employees concerned.
Let me first say that I find this a concept which reflects a certain lack of awareness of the fine system of Public Service employee protection measures which have been built up in Canada over the last 120 years and which already permit employees to bring their concerns to the attention of Departmental management. I feel rather strongly that in this day and age, internal systems are in place that minimize or eliminate any need for so-called whistleblowing by employees.
The overwhelming majority of employees and appointed officials in the Public Service are hard-working, trustworthy and honest people who would take appropriate action using existing channels when instances of wrongdoing are uncovered by them or are brought to their attention. I believe there are adequate systems in place to ensure that any employee has access through internal routes to appropriate authorities. However, in extreme circumstances where employees might find themselves frustrated in attempts to get their messages through to officials of sufficient seniority, a whistleblowing situation might-and, I repeat, might-be envisaged. It is to this unlikely scenario that I would now turn.
I believe that the picture painted by this Bill is one of a Public Service in which employees are devoid of rights, of protection from harassment and persecution and of all redress mechanisms to guarantee their fair treatment and are generally subject to such a regimen that only amended human rights legislation could bring their mistreatment into the open and thereby control those who mistreat them. This image of the Public Service is, in my belief, at odds with reality. I believe Hon. Members would share that belief. Any image less reflective of today's reality in the Public Service is hard to imagine.
I make no claim to be an expert on Public Service redress methods, but I have investigated some of them. All Hon. Members are surely aware of the impressive body of existing personnel legislation and the rights these laws have afforded public servants over the years. Let us take a look at these laws.
Pursuing scenarios, let us suppose that after an alleged whistleblowing incident, a manager were to decide to punish the whistleblower. Could he or she do so with impunity? The answer is clearly no. Let us suppose a boss seeks to punish an employee by means of an annual performance appraisal that

January 20, 1987

unfairly denigrates the employee's abilities. Such an action is immediately subject to the full rigours of the grievance procedures accorded to public servants by the wishes of this House under the Public Service Staff Relations Act (1967). I would remind the House of the comprehensive nature of this grievance process. Following a complaint, an aggrieved employee may have up to four further levels of hearings of his or her case before Departmental officers of increasing seniority until the case receives the personal attention of the Deputy Minister of the Department. In addition, in many cases employees would have the active support of their unions or associations in this regard.
Let us suppose again that based on some alleged whistleblowing incident, the manager attempts to build a case for the release of the employee based on grounds of incompetence or incapacity. First, such an action is always based on performance appraisal reports which are subject to the redress mechanisms I have already indicated. Second, a decision to release an employee under this provision which is contained in Section 31 of the Public Service Employment Act is appealable. The first level of appeal is to the Public Service Commission's Appeals and Investigations Branch, a quasi-judicial tribunal. Should satisfaction not be found there, the aggrieved party may have recourse to the Federal Court and may eventually appeal to the Supreme Court of Canada itself.
In this regard, Hon. Members are no doubt aware that cases involving release or discharge under the Public Service's personnel legislation have indeed found their way to the Supreme Court. These actions have served to clarify the boundaries of legitimate managerial prerogative and conduct. Several of these cases have caused the learned judges of the Supreme Court to speak eloquently of the democratic rights of public servants in Canada. The very fact that these cases reach and are heard in detail by the Supreme Court is a tribute to the breadth and equity of the redress systems already available to public servants.
Next, let us suppose that the punishment selected by this imaginary but vindictive manager is to try to damage forever the employee's prospects of career advancement. Can this actually be done? No, it cannot be done because for every job opening that comes up in those parts of the Public Service where the employee is eligible to be considered, a potential appeal action may be brought to the Public Service Commission if he or she is not considered. From the appeals directorate, it goes up through that same network of redress through the courts I have already cited.
Frustrated on these points, this manager is in a little trouble about now. Let us say that the manager now seeks to punish the employee via the disciplinary route. All disciplinary action against employees stems from the powers granted to the employer to establish and maintain standards of conduct and discipline under the Financial Administration Act while the redress for employees is contained in the Public Service Staff Relations Act. Again, detailed and exhaustive multi-level
Canadian Human Rights Act
grievance mechanisms already exist to protect employees from arbitrary and unfair action.
In addition to the internal grievance procedures I have already outlined, in these circumstances still further redress rights apply. Should satisfaction still not have been received in the view of the grievor at the final level of internal Departmental grievance review, further action is available through the Public Service Staff Relations Board which will appoint an adjudicator to investigate the matter. Even after that hearing, which may now be the fifth hearing of the case, redress lies through the courts. These are comprehensive rights indeed. Rights such as these would almost be unheard of in the private sector.
By this stage, our manager has run out of avenues to pursue in causing the employee's release by building a dossier of negative performance appraisals, by building a case for release on the grounds of incompetence or incapacity, by attempting to frustrate the employee's career path or by seeking a discharge on disciplinary grounds. All that is left is for the manager to attempt to make the employee's life miserable. However, such a campaign constitutes personal harassment and personal harassment is a most serious offence in the Public Service. If such action is wrongly taken, it constitutes a prima facie case of abuse of authority.
In addition to the normal grievance route, the employee may elect to pursue redress through the personal harassment policy. The first step is to see the Departmental personal harassment co-ordinator. This individual is responsible for the investigation of all alleged cases of personal harassment within a given Department. If the co-ordinator cannot rectify the issue, he can take the case to the investigation director and so on. In other words, this Act is really unnecessary given the splendid Public Service and various methods of redress we have.
I trust I have illustrated, at least in general terms, the breadth of rights, entitlements, recourses and redress mechanisms, both formal and informal, already enjoyed in the Public Service of Canada. I trust the House will realize this protection is strong enough to protect anyone seeking to address concerns of genuine wrongdoing and to thereby protect the public interest.


Vincent Della Noce: Mr. Speaker, I am pleased to rise to deal with Bill C-229 introduced by my hon. colleague. I do not share the views expressed by the Hon. Member for Ottawa-Centre (Mr. Cassidy) and the Hon. Member for Ottawa-Vanier (Mr. Gauthier). Indeed, I do not even agree with the principle involved.
First of all, I wish to say that private employers have always expected loyalty and productivity from their employees. In the public sector, the Government here in Ottawa must respect its

January 20, 1987
Canadian Human Rights Act
employees and cannot insist on productivity. It insists on loyalty and confidentiality. These are the only two things which I expect from my employees, because when they accepted their positions, they agreed on loyalty and confidentiality. The Canadian public already has a right to access to information. With Bill C-229, the Hon. Member would like to go even further and ask the Government to surrender confidentiality. As the Hon. Member for Ottawa-Vanier (Mr. Gauthier) said earlier, we agree with the principle, but this Bill certainly needs improvements.
Of course, people need information, but I suggest that they have been overwhelmed with confidential data over the past two and a half years. We get them in newspapers every day. Many in my riding feel that the Opposition is doing a tremendous job. It finds, sees and denounces everything. They are wrong, for it is not the Opposition which is doing a good job, but the journalists who obtain information through informers, the so-called "whistleblowers". As I said to my constituents, the Opposition makes no investigation and discovers nothing, being satisfied with buying the morning paper and reading the news. After meeting for one hour, it is ready to ask the Government embarrassing questions during the oral question period on everything that happens. If the news is somewhat positive, it will make it negative. And who are these people who inform the newspapermen? Well, they are the famous "whistleblowers". I like this phrase very much.
So to achieve this, Mr. Speaker, this Bill would have to amend the Canadian Labour Code, the Canadian Human Rights Act, and the Public Service Employment Act. The Canadian Human Rights Act would be amended so that discharging or suspending an employee, imposing a monetary sanction or putting him at a disadvantage would constitute a discriminatory act which the Canadian Human Rights Commission would be empowered to examine and correct. For instance, if an employee had good reasons to believe that his employer was acting illegally or against the public interest or was endangering public health or safety, he could lay a complaint before the Canadian Human Rights Commission, which would have the power to provide some protection in relation with disclosures made in good faith, going as far as rolling back retaliatory measures taken by the employer.
In this context, any disciplinary action by the employer against an employee could be viewed as an infraction.
If the complaint is founded, the Commission would refer any misconduct of a public sector employer to the House of Commons and its "Ethics Committee". As for the Canada Labour Code, it would be amended to specify that retaliatory discharges for bona fide whistleblowing will be considered as unwarranted or unjust.
In addition, an employee would not necessarily be guilty of disloyalty for making disclosures about his employer. Protection of denunciators is not a new idea, Mr. Speaker, and in this era of commitment to open Government, a number of countries have passed legislation for this purpose. However, attempts to legislate in this vast and important intermediary
zone where an individual is neither obligated to respect a law nor free to act as he wishes have not always had the expected results.
The 1978 American Public Service Reform Act of which the two previous speakers have spoken protects public servants who make certain revelations against retaliation. It prohibits the imposition of sanctions by the officers in charge to the employee who has disclosed certain information. However the law is formulated and whatever the protection it gives denunciators, there will always remain a difficult question. What are the motives of the denunciators? This is where it becomes interesting, Mr. Speaker. Denunciation can be a defensive mechanism on the part of an employee under threat of disciplinary or other type of action for reasons which have no relation with the apparent misconduct. In other words, a public servant about to be discharged for unsatisfactory work might want to protect himself by accusing his superiors of misconduct. This could also be a catharsis for personal and organizational conflicts unrelated with the apparent misconduct. But in other terms, Mr. Speaker, all this could become some kind of a blackmail.
Could you tell me, for instance, Mr. Speaker, what good faith means? We all think we act in good faith, and believe me since I came here in Ottawa, I have often wondered about the definition of good faith. We all believe we act in good faith, and would never admit we could act otherwise. So, how could we then define good faith or the lack of it? How does the Bill succeed in enlightening us on that matter? It does not seem easy to me to define with enough clarity the concept of good faith.
I have another comment to make about this Bill. It seeks to protect employees blowing the whistle on an employer who is planning to act contrary to public policy. What is contrary to such policy? Some will say that any major change in public policy is contrary to that public policy until the Government has decided to amend it. There can be confusion between what is perceived as contrary to public policy and what is a normal process of change in that policy.
Further, Mr. Speaker, one of the basic principles underlying the public sector is that of employee allegiance and loyalty to their superiors. How are we to reconcile that principle with a Bill that involves a third party, the Canadian Human Rights Commission, in the process, before allowing the time needed for persons who have committed an action that may seem contrary to national interests to justify such action?
Finally, to what extent is the legislation actually needed, if there is nothing to lead us to believe that public sector employers act in a way that violates health and safety?
At present, there are a number of statutes and regulations that deal with industrial relations in the public sector.
For instance, the Canadian Human Rights Act, the very open-minded Access to Information Act, the Canadian Labour Code, the Public Service Staff Relations Act, the Public Service Employment Act and the Staff Harassment Policy do

January 20, 1987

protect public service employees. Consequently, an act to protect them from sanctions by employers for whistleblowing in good faith would even be superfluous.
Let me ask you a question, Mr. Speaker, without even your having to answer. Who would hire a "whistleblower"? Who would hire someone who was not loyal or who could not keep his or her employer's confidentiality, for instance? That would be a conventional employee violation, but the employee who would do that kind of thing might have to live with those problems all his or her life, and this is where I say that at some point the grievance process could be used, but grievances only afford protection against harassment, discrimination and so on, but there is no way a grievance could protect against a lack of loyalty or confidentiality.


Mr. Stan Graham (Kootenay East-Revelstoke):: Mr. Speaker, I appreciate the motivation of the Hon. Member for Hastings-Frontenac-Lennox and Addington (Mr. Van-koughnet) for bringing this Bill forward, but I cannot help but believe that the Canadian Human Rights Act is not the appropriate place for the proposed provisions. To understand why I feel this way, it is useful to know some of the background to the development of the Canadian Human Rights Act and, indeed, other human rights legislation in the country.
Following the Second World War Canadians and members of other democratic nations became sensitive to the need to have effective mechanisms for protecting minorities against prejudice and discrimination. In 1948 the United Nations proclaimed the Universal Declaration of Human Rights which affirmed "the dignity and worth of the human person" and that "all human beings are born free and equal in dignity and rights". The Universal Declaration also asserts that: "All are entitled to equal protection against any discrimination in violation of this declaration."
It was in this spirit that our early human rights laws were developed. Initially, these laws were quasi-criminal in nature and were enforced by officials of government Departments. These laws eventually evolved into our contemporary human rights statutes which take a more remedial approach. These statutes are designed to encourage the conciliation and settlement of complaints, and are administered generally by agencies and commissions which operate independently of the Government.
The Canadian Human Rights Act is administered by the Canadian Human Rights Commission. The Commission investigates complaints of discrimination and may appoint a conciliator to attempt to settle a complaint. If the complaint is not settled and the Commission believes that the complaint should not be dismissed, the Commission may request the President of the Human Rights Tribunal panel to appoint a tribunal to hear the complaint. The tribunal, which is an independent and impartial body, adjudicates the complaint
Canadian Human Rights Act
and may order appropriate remedies if it finds that discrimination has occurred. This model of enforcement is followed by several jurisdictions in Canada.
The point of these laws has always been to combat discrimination and to ensure that all individuals have an equal opportunity to participate in Canadian society. It is worth quoting the purpose clause of the Canadian Human Rights Act which is as follows:
The purpose of this Act is to extend the present laws in Canada to give effect-to the principle that every individual should have an equal opportunity with other individuals to make for himself or herself the life that he or she is able and wishes to have, consistent with his or her duties and obligations as a member of society, without being hindered in or prevented from doing so by discriminatory practices based on race, national or ethnic origin, colour, religion, age, sex, marital status, family status, disability or conviction for an offence for which a pardon has been granted.
The principle of equal opportunity is a principle to which the Government is fully committed. The Canadian Human Rights Act is one of the vehicles through which this commitment is realized. Hon. Members will understand, then, my reluctance to support amendments to this Act which would not fit together with its essential thrust.
The Canadian Human Rights Act currently provides protection on the basis of a number of prohibited grounds of discrimination including race, sex, colour, religion, national or ethnic origin, or disability. These grounds generally relate to characteristics which are either immutable or difficult to change. The Human Rights Act is designed to assist persons who have been denied an emloyment opportunity or access to services or accommodation because of invidious discrimination. It seems to me, however, that Bill C-229 relates to different concerns outside the principles of the Canadian Human Rights Act.
Bill C-229 would amend the Human Rights Act to provide protection for employees who report the misconduct of their employers, what some people call "whistleblowing". Bill C-229 would call discrimination the discharge or discipline of a "whistleblower". With respect, this is simply not the type of conduct which we have come to describe as discrimination. As far as I know, it is not the type of conduct that is dealt with by any anti-discrimination statutes in Canada. As such, it is not clear to me that such provisions should be grafted or tacked on to the Canadian Human Rights Act. To do so might well dilute the force of the anti-discrimination provisions of the Act as well as the ability of the Canadian Human Rights Commission to deal effectively with racial and other forms of discrimination.
I should point out that while I oppose these amendments to the Canadian Human Rights Act, I welcome efforts to keep the Act up to date in order to do what it is supposed to do, which is to prevent invidious discrimination. I am, therefore, pleased that the Government has committed itself to review the Canadian Human Rights Act in Toward Equality, the Government's response to Equality for All, the report of the Parliamentary Committee on Equality Rights. In Toward Equality the Government also agreed in principle to repeal
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January 20, 1987
Softwood Lumber Products Export Charge Act
those provisions of the Human Rights Act which permit mandatory retirement on a blanket basis. Generally, this will mean that employees cannot be compulsorily retired simply because they have reached what is called "normal age of retirement".
I applaud this commitment because it says that we will no longer abide the stereotypes of our older citizens and of what they can and cannot do. It recognizes that there is a real and continuing contribution which they can make to the economic life of our country. At the same time, I am pleased that the Government is considering transitional rules to ensure the orderly abolition of mandatory retirement. This is a complex area involving many collective agreements and pension plans, and transitional rules may be necessary to prevent undue hardship.
Another amendment to the Canadian Human Rights Act which the Government announced in Toward Equality, and which I support, is to incorporate the concept of reasonable accommodation. The Parliamentary Subcommittee on Equality Rights recommended that the Canadian Human Rights Act require employers to make reasonable accommodation to the special needs of members of classes protected from discrimination, except where this would cause undue hardship to the employer.
This amendment is particularly important to disabled persons to help them overcome the arbitrary barriers to employment. This amendment will also be helpful in providing for the accommodation of the religious observances of employees. It will do so in a reasonable way that balances the needs of employees and the capacity of employers.
These are the sorts of matters with which an anti-discriminatory statute should concern itself. I realize that the title "Canadian Human Rights Act" may have broad connotations, but the Act, like similarly titled provincial legislation, is geared to dealing with discrimination. It concerns specific enforcement mechanisms for dealing with specific types of problems and does not necessarily lend itself to dealing with other sorts of problems, particularly those that are addressed by the Bill which we have before us. I appreciate the intentions of the Hon. Member for Hastings-Frontenac-Lennox and Addington and I believe that he may find a different approach more appropriate.


Mr. Deputy Speaker:: The hour provided for the consideration of Private Members' Business has now expired.

Pursuant to Standing Order 42(1), the item is dropped from the Order Paper.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed 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).
Maurice Brydon Foster: Mr. Speaker, I am pleased to have an opportunity to speak to Bill C-37, the export charge on softwood lumber. It is of immense importance not only to my constituents but to the country at large.
There is a dreadful tale behind the creation of Bill C-37. The Government has made a number of flip-flops on the whole issue. Last June, when the United States International Trade Commission accepted a petition from the United States softwood lumber producers, there was a clear indication by the Government that it would oppose a countervail duty at that time, which was proposed to be some 27 per cent or 28 per cent. Throughout the summer, all provincial Governments and Departments of Natural Resources spent hundreds of thousands of dollars preparing the necessary documentation. It is my understanding that some 7,000 items were prepared by the various provincial government Departments.
There was unanimity among the forest products industry, the Canadian Forest Industries Council, provincial Governments and the federal Government that the petition before the U.S. Department of Commerce trade administration section would be opposed. In fact, the Minister said that they would oppose it all the way.
Suddenly in late September the Government made a final offer of 10 per cent to the U.S. softwood lumber pricing coalition. We waited until mid-October when that Government came down with a preliminary determination of a countervail of 15 per cent. The Minister for International Trade (Miss Carney) indicated that she and the Government would fight this all the way. That decision was supported by the Canadian Forest Industries Council. Suddenly in December, before the First Ministers met in Vancouver, she made a dramatic conversion after a phone call to Secretary Baldrige of the Department of Commerce in the United States, and the Government caved in and decided to pursue a final 15 per cent agreement. That agreement was reached at the end of December.
It is interesting to note that the Minister for International Trade was not even in Washington negotiating but was off on a holiday, apparently in Hawaii, while the civil servants struggled to negotiate this agreement. Most of the editorial writers across the country caught the spirit of that, perhaps none as much as the Toronto Star which is a great newspaper
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in the City of Toronto. I believe that editorial of January 7 captured the feelings of many Canadians. It states:
One can only presume that, before she fled to Hawaii, International Trade Minister, Pat Carney-


John Horton McDermid: Mr. Speaker, I rise on a point of order. Mr. Speaker, we are discussing a piece of legislation which is very important to Canada, Canadians and the lumber industry of this country. I do not believe that personal attacks on an individual Member of the House is called for, especially from that Hon. Member who has been here long enough to know that it is in extremely bad taste. I suggest that he pay attention and speak on the subject matter of the Bill rather than make a personal, mean, nasty attack on a colleague in the House of Commons.


Maurice Brydon Foster: I hope that when the Parliamentary Secretary takes up my time to speak in the House that you will add that time to my speech. I do not care how many times he gets up to interrupt with irrelevancies, but clearly I do not want it taken off my time.
As I was saying, the largest newspaper in Canada, the Toronto Star, said in its editorial on January 7:
They gave the Americans the final say on our resource policies, on our tax policies and how the proceeds from this settlement can be spent. Distant and silent while our sovereignty was being bargained away, the Minister had the audacity to come home and claim that the deal "was negotiated on our terms".
It is one thing to negotiate on our terms, but the question is: Who won? There is no question about who won to anyone, certainly the Forest Product Industries Council. Clearly, it was like Neville Chamberlain coming back from Germany in 1938 or 1939 when he said: "Peace in our time, peace at any price". Canada has certainly capitulated in this agreement.
The impact of the decision by the Government to impose an export charge will be devastating. It has already had an extremely adverse effect on the lumber industry in northern Ontario. The agreement is extremely unfair to northern Ontario because the export tax which the Government is already imposing is 15 per cent across the board. Northern Ontario pays an average stumpage charge of some $17.50 a thousand on softwood lumber, whereas British Columbia pays $4.50 a thousand. Yet the tax imposed on our producers is an identical 15 per cent.
The other adverse effect of this 15 per cent export tax is that it is imposed on an ad valorem basis. That is that the transportation cost is not taken into account and the transportation cost is the big advantage we have in Ontario because we are relatively closer to the large American markets. In December and January we had a number of shifts in our mills shut down. For instance, the Eddy Forest plant at Nairn Centre, Ontario, which is the largest sawmill in eastern Canada, producing some 176 million board feet last year, was shut down for a month. The Eddy Forest Products plant at Nairn employs about 300 people. The mill at Searchmont was shut down for seven weeks. There were layoffs in various shifts at the mill at Dubreuilville, Ontario. In fact, a report in The Sault Star on
Softwood Lumber Products Export Charge Act
February 2 quotes the vice-president of the Ottawa based Eddy Forest Products which operates at the mill at Nairn, describing the agreement as a "humiliating capitulation". He said it would have a devastating impact. A minimum of 1,000 jobs will be lost in northern Ontario because of the tax. A representative of G. W. Martin Veneer Ltd., Mr. Brian Thompson, said they have sustained a 40 per cent reduction in softwood sales in the United States since the imposition of the American countervail duty on October 17.
There is no question but that this legislation will have an extremely adverse impact on northern Ontario. When those mills were shutting down in November and December, we had the advantage of an extremely strong market in the United States and the advantage in northern Ontario of 20 per cent of the industry on strike in British Columbia. Those advantages may well not be there in the new year as this tax comes into effect and begins to be felt.
Another point I want to make is that this tax is imposed without any consideration for our native people. An operator in the Garden River Indian Reserve, Albert Perrault operates a sawmill. He produces several hundred thousand board feet of lumber and employs 15 people. He has been told that the tax applies to native people even though normally the federal Government does not tax them for products or work done on Indian reserves. Clearly, when this deal was negotiated in Washington there was no consideration given to the native people. They do not pay a stumpage fee to any provincial Government. If they pay a fee, they pay it to their band council. Surely, that is within the family of the Indian band. That has not been taken into account and this export tax should be withdrawn with respect to native people. 1 certainly hope the Government will take that suggestion into account in the arrangements which are made with the United States because it clearly is a violation of the traditional arrangement that the federal Government would tax native people.


John Horton McDermid: What stumpage do they pay?


Maurice Brydon Foster: The Parliamentary Secretary is asking me what stumpage they pay. They pay the stumpage to the band council which, as I say, is within the family of the band council itself. It is not like an ordinary citizen living off the reserve paying stumpage to the provincial Government. I would hope the Government would negotiate an exemption for native people and at the same time not impose the export tax. If the Government is unable because obviously the United States has all of the bargaining chips in this agreement, it is up to the federal Government, not the provincial Governments, in my opinion, to provide retraining programs, income support and all the other assistance which is due our native people as a result of this agreement which was signed without the benefit of any cabinet Minister being available for the negotiation.
It is interesting that no cabinet Minister showed up to announce the agreement. When the Government announced

January 20, 1987
Softwood Lumber Products Export Charge Act
the $1 billion program of assistance to Canadian grain farmers at the Agriculture Outlook Conference, the Prime Minister (Mr. Mulroney) arrived at the Conference Centre here in Ottawa and made a dramatic announcement. If this agreement was such a victory, it is strange there were no ministers to announce it.
The Canadian Forest Industries Council has spoken out very strongly against this agreement. It has opposed this agreement in every possible way. It has worked for years on this issue and has spent something like $10 million opposing it before the United States Department of Commerce and the International Trade Commission and other regulatory bodies in the United States. Then it had the ground cut from under it. One of the reasons the Canadian Forest Industries Council oppose the agreement is the fact that if the Americans can make this deal stick on softwood lumber, obviously they can make it stick on pulp and paper.
If we look at the figures for 1986, we see that the first nine months of our production of lumber in Canada totalled some $5.2 million, but our total production of other sawmill products of pulpwood, newsprint and other paper products amounted to some $17.5 billion. I am told our exports of pulp and paper and so on are almost two to three times as large as our exports of softwood lumber. What the forest industry is concerned about is that it has had the ground cut out from under it with regard to softwood lumber and are without any profits.
The reason the mills were shut down in November and December in my part of the country is because what would have been profit is being paid in anticipation of a tax. A tax is now in place. Whether it is directed to Ottawa or to the U.S. makes no difference, these companies will become totally unprofitable.
The other great concern to Canadians is the fact that when the Government has negotiated an agreement with the provinces, which is something that may or may not happen, the U.S. wants to ensure that a tax on stumpage will be imposed at a rate which will provide the same amount of tax that is levied on these exports. If that is done then what we will end up with is a stumpage charge not only on the trees which result in export lumber but on lumber produced for sales to all countries, as well as domestic sales.
The deal which has been negotiated will end up costing all consumers, both export and domestic customers, something in the neighbourhood of $870 million. That is all part of the deal, which is why the lumber companies are concerned. When the deal is transferred into a stumpage charge, as has been proposed by the Government, instead of being $600 million it will amount to close to $870 million. This will raise the price of Canadian softwood lumber to all customers, including Pacific Rim customers, the European market, as well as domestic customers. It is an extremely bad deal about which the forest products industry is concerned. Companies in the industry do
not know how they will be able to operate and make any money, since they do not make $600 million in profit now. The industry as a whole does not make that much in profit, yet it will have to pay that in terms of the export tax.
Another aspect which is of great concern to Canadians is with respect to the powers which the United States has over this deal.


John Horton McDermid: Sit down!


Maurice Brydon Foster: I know that the Parliamentary Secretary does not like to hear the truth about the Bill which his Minister-


The Acting Speaker (Mr. Paproski):: I regret to interrupt the Hon. Member but his time has expired. Are there questions or comments? The Parliamentary Secretary to the Minister for International Trade (Mr. McDermid).


John Horton McDermid: Mr. Speaker, the Hon. Member obviously has his heart in this debate. He has done a great deal of work and research into the matter and he seems to understand it whole-heartedly. In terms of the lay-offs in the North about which the Hon. Member spoke, would he not be honest with Hon. Members and tell us that those lay-offs had to do with the traditional period of winter lay-offs? Also, is he not aware that in October Canadian lumber mills poured out a tremendous amount of production, which production was sent across the border? This is something about which he should be aware since it happened in his riding and close to his riding as well as in a number of other ridings.
If he had taken the time to consider the situation from Sault, Canada, to Sault, Michigan, he would have seen Canadian lumber stockpiled on the United States side of the border. Or if he had talked to the reloaders, as I did in Windsor the other day, he would know that they were so busy in October that they had to hire extra people to get the material into the United States. After that things quietened down in November, naturally, because of the stockpiling in the United States. When the Hon. Member talked about these myriad lay-offs did he not take that into consideration? Most of these mills are back producing today.


Maurice Brydon Foster: Mr. Speaker, I listened with great care to both the Minister and the Parliamentary Secretary, as well as to the Minister for Forestry and Mines (Mr. Merrithew), on many occasions. I have not heard them explain once how an industry that does not make $600 million worth of profits can pay that amount of tax and still make money and operate. I wish he would explain that to me at some point in time.
The Hon. Member asks about these lay-offs. I am delighted to be able to read to the Hon. Member a telex which was sent to the Prime Minister (Mr. Mulroney) on November 24, 1986. It is from the Senior Vice-President of E. B. Eddy Forest Products Ltd. who is a member of the Canadian Forest Industries Council. He operates the largest softwood lumber mill in eastern Canada which is in my constituency. It produced about 176,000 board feet of lumber last year,

January 20, 1987

making it the largest industry in Canada. This is what he had to say in his telex to the Prime Minister:
We at E. B. Eddy Forest Products were shocked to watch the Government of Canada take a 180 degree change in its position on the softwood lumber countervail case.
With large sawmill operations in Ontario and Quebec, it has been necessary for us to announce a suspension of operations at our mill in Nairn Centre, Ontario, which is the largest sawmill in the province.
We have spent thousands and thousands of dollars supporting the efforts of the Canadian Forest Industries Council only to have your Government annul all of that effort at the most critical time in the defence of our case.
It is unbelievable that any Government could so abandon such a large Canadian industry and all of its employees.
The telex is signed by E. F. Boswell, who is the Senior VicePresident of E. B. Eddy Forest Products Ltd. His telex does not sound as if his lumber mill shut down just for Christmas or for some other reason. The fact of the matter is this sawmill was an extremely profitable operation and it suddenly became unprofitable. It would not make anything if it had to pay 15 per cent in export tax. That is the situation today. It may well be that the mill will operate since it is difficult to walk away from markets and hope to have them there when one returns, especially when the company is a composite forest products company which produces chips for pulpmill operations.
I would now like to relate the situation at the Searchmont Mill which is also a very large softwood operation. This company was selling pine lumber to the United States at something like $400 per 1,000. At one point in time it suddenly found itself paying $60 of that in countervail duty. The management of the company finally said that it could not pay that sum and still operate. What I want to know and what I have not heard the Parliamentary Secretary or the Minister say is how companies can do this.


John Horton McDermid: Sit down and I will tell you.


Maurice Brydon Foster: There was clearly an opportunity to fight this situation. We had a very good chance of winning it before the GATT panel.


John Horton McDermid: Dream on!


Maurice Brydon Foster: If the GATT panel decided that this countervail duty infringed on our sovereignty, and responsible legal counsel has said that it certainly does, then we had a 100 per cent chance of winning our case. To capitulate the way we did and to say that we are subsidizing our softwood industry after fighting the case for all these years places companies such as E. B. Eddy, which put up hundreds of thousands of dollars, in jeopardy. In fact, the Canadian Forest Industries Council has spent something in the order of $10 million over the past year fighting the case only to have it cut out from underneath them by the Minister who did not even see it important enough to stay and negotiate the case. It is little wonder that the industry is furious.


Michael Morris Cassidy: She was fighting it on the beaches.


Maurice Brydon Foster: That's right, she was fighting it on the beaches.
Softwood Lumber Products Export Charge Act
There is also another company in my constituency which, although it did not shut down, switched products so that it now does most of its work in hardwood lumber as opposed to softwood lumber. It laid off one or two shifts at its Dubreuil-ville operation. There is no question that the lay-offs in northern Ontario which we saw in November, December, and January, were due to the countervail. These companies do not know how they will operate and have any profit to justify the existence of their operation.


John Horton McDermid: The Hon. Member said how we pay for the increased tax was not discussed. It is interesting to note that the consumers in the United States will pay for it. The cost of lumber in the United States has already gone from $190 to $202. It has gone up 13 per cent in the last two weeks since the agreement has been announced.


Michael Morris Cassidy: It is 6 per cent.


John Horton McDermid: The market remains strong for Canadian lumber. They are buying Canadian lumber in the United States. The prices are strong and rising. That is how it will be paid, by the consumer in the United States.


Michael Morris Cassidy: You are living on cloud cuckoo land.


John Horton McDermid: It has gone up $13.


Michael Morris Cassidy: Six per cent is not 15 per cent.


John Horton McDermid: That is right, it is not 15 per cent. I said that it has gone up $13.


Michael Morris Cassidy: Fine. So the Canadians pay the rest.


John Horton McDermid: Just relax. He said that the industry is paying the whole 15 per cent. They are not. Just relax and you will have your turn. No wonder the NDP kicked you out as Leader. Now I understand why.


John Carnell Crosbie: A bloody big lawn-mower.


John Horton McDermid: I wish to make one other thing clear-


Michael Morris Cassidy: They kicked your whole Party out of the legislature.


John Horton McDermid: The Hon. Member said that no Ministers were here to announce this particular agreement. That is not true. The Minister of State for Forestry (Mr. Merrithew) was here, a person who was vitally involved in the entire matter.


Maurice Brydon Foster: He wasn't at the press conference.


John Horton McDermid: He was at the press conference.


Maurice Brydon Foster: Was he under the table?


Michael Morris Cassidy: We didn't hear a peep from him.

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Mr. Oberle:: He spoke this morning, if you would wake up and get to work.


John Horton McDermid: He spoke this morning in the debate, had you got out of bed in time to hear him. The Minister was here and participated. The Hon. Member is misleading the House when he says that no Ministers were here. They were. The Minister was vitally involved in the negotiations all the way along. There is another bit of misinformation from the Hon. Member that we have been hearing all night in his speech.


Michael Morris Cassidy: The Minister was a Joe boy. That is all.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. On Debate, the Hon. Minister of State for Science and Technology (Mr. Oberle).


Frank Oberle: Mr. Speaker, I take pleasure in participating in this debate, perhaps not as much as the Minister of State for Science and Technology, but as a Member of Parliament from a lumber region in British Columbia which is perhaps the most important and most concentrated region to be affected by what we are doing here. It will also be affected by the events that have occurred over the last while as this problem re-emerged.
At the outset, I wish to make three brief points and then discharge them. One, if there was ever a case for the development of a comprehensive free trade agreement with the United States, this is the case.
May I make the analogy with the Auto Pact. Lumber has always been traded freely, and obviously it will not be in the future. If the Auto Pact was good for Ontario, and particular regions of Ontario, a free trade agreement involving lumber would be good for British Columbia, and for other regions. Knowing the benefits of the arrangement, be it sectorial as the Auto Pact is with the United States that provides regulated and free access of Canadian manufactured products, I cannot understand why the Premier of Ontario would stand in the way of other regions in Canada enjoying the same sense of security and benefits that flow from the type of arrangements that we are pursuing with the United States. That is point one. If there was ever a case for free trade, this is it.
Point two has to do with the sovereignty question. My friend and colleague, the Hon. Minister for International Trade (Miss Carney) spoke this morning, and surely, together with the Secretary of State for External Affairs (Mr. Clark), she put this question to bed. If there was ever a case of a red herring, that was it. There is no sovereignty question involved in the settlement that we managed to arrive at with the United States.
Point three deals with the settlement. Of course this is not the way we would have liked this issue to evolve. It would have been great if the tribunal, as it did in 1983, had decided that the Americans have no case against Canada, that it should be discharged from the agenda, and that we would be clear and free. That is not the case. We knew that there would be an
imposition of some duty, be it 15, 20, or 36 per cent, as the Pacific northwest producers were demanding. We knew that it was in the best interest to negotiate. The provinces asked us to negotiate, the responsible portions of the industries that knew what we were heading for and knew what would happen if we had to appeal to GATT suggested the mandate for us was that we enter into negotiation with the United States. Considering the options that were available to us, we arrived at the best possible deal.
The point I wish to make, Sir, and I know that I will be proven right eventually, is that there is a silver lining to this cloud. There is a disguised blessing here. The blessing is that the Americans may well have forced us to do in Canada what we, as politicians in the provinces, and to a lesser extent the federal Government, did not have the political courage and foresight to do ourselves; that is, to raise enough money in the form of economic rent, or from the harvest and the sale of the resource to make sure that in perpetuity we have a stable supply of this precious green gold that grows in every province and is so important to our economic well-being. Lumber and wood fibres are still the major and the main revenue source in terms of export earnings.
As you know, in 1979 I published a paper called "The Green Ghetto". Strangely enough, in 1979 I then defined $300 million as what it would have taken to make the adjustment from the farming mode of our forests to the intensive management regime that is in place in the United States, Sweden, and other countries. We now have that much money. The Americans have forced us to collect that money. We are obligated to pass that money through to the provinces.
If I may leave a message with my provincial colleagues and counterparts who are as foresighted as we are here, I would say to them to use that money wisely, and let us do some of the exciting things that we could do to create many new jobs, give us the stability and certainty that would enable us to pass on to future generations this great and precious resource with which we are so richly blessed.
These are the three points that I wished to introduce. I wish to come back to the last point a little later.
I have always made it a practice in my previous career to look fairly on both sides of an argument and an issue. I learned early in life that it is always good to know your adversary's position. As I said earlier, lumber has always been traded without restriction between Canada and the United States. However, in later years, and perhaps because of our dependence upon that particular industry for economic growth, our industry became increasingly more efficient.
There were several factors which brought this about, not the least of which was the fact that, since 95 per cent of timber in Canada was publicly owned, we were able to provide our private sector mills with the resource at a lesser economic rent than what private sector owners in the United States and other
January 20, 1987

countries had to charge. I readily admit, having been in the industry myself, that there may have been an advantage to Canadian producers. The Americans may argue that that is a subsidy, but I say: "No". The sovereignty question enters into it, that we shall not be dictated to by anyone outside the country with regard to the value we attach to our natural resources. However, there were other factors.
The Canadian dollar decreased in value in comparison with the U.S. dollar from $1.04 to 73 cents, which is its present value. Perhaps that is the most important and most salient factor in the whole argument. Our industry has a 30 per cent advantage in the exchange rate before our competitors in the Pacific northwest and in other lumber regions in the United States even go to work in the morning. Our industry prudently invested some of this money in modernizing our mills, making incredible gains in efficiency, to the point where we, particularly in the part of Canada which I represent, now have some of the world's most efficient and productive sawmills. We are competitive anywhere, but particularly in the regions of the Pacific northwest and other lumber regions in the United States.
I have travelled through these regions and I have witnessed the devasation of mill closures. They are as difficult in the United States as they are here. I spoke with my friends in the U.S. Senate whom I met over the years. I understand the political reality which they had to face in the United States. I knew in 1983 that this question was not resolved. I knew that it would come back to haunt us because our industry was not prudent enough at that time to read the signals and to put voluntary curbs on their shipments. We were cutting more timber than we ever did before, we were turning out more lumber than we ever did before, and we were getting less money for it because we were driving down the price.
What do the Americans want? They talk about a level playing field, but the playing field has never been level. Let us look at the argument about the need for a different management regime. If we look at the Province of British Columbia today, there are still large areas of virgin timber which have never been touched. There are even some isolated areas to which we do not have any access. There are some timber stands to which there will never be access by road; they will have to be harvested from the air.
In order to manage the resource properly, intelligently, and prudently, one would want to integrate these virgin timber areas into a total management regime. Unlike some people who are less informed about this important industry and its resource, a tree does not grow to heaven. It is a living thing-it is born, it puts down roots, it grows, it matures, and it dies. There is a finite rate of growth even to a tree. It does not grow to heaven. When it matures and dies, it becomes a hazard to nature because it is subject to lightning and fire. We know how the evolutionary chain goes.
There are large areas of timber which is over mature, dead, and no longer commercially viable in British Columbia, as perhaps there are in other provinces. It is a burden because
Softwood Lumber Products Export Charge Act
some of it is on prime land and to clear out the timber to make room for new growth is very costly. Thus a province or a manager of the resource would have to integrate these virgin stands into the total management regime. In order to do that in some cases roads must be built and they must go into remote areas. Therefore we said to the companies: "If you go in there and harvest this over mature timber before it dies and rots on us, we will give you a lesser stumpage". That is only prudent.
In turn, the Americans are harvesting third generation timber. First, they are not getting the same yield and, second, it costs more to grow second and third growth timber over the years. As well, the management of it is entirely different than the management of a virgin resource. That is an important point which the Americans have failed to understand, even though we have tried to make that argument repeatedly. It is not and has not been a level playing field, but it will be.
The Americans should have let us muddle along for another 30 years or 40 years, at which time we would have run out of timber in some prime forest areas in Canada, and the competitive factor would have been much less.
What do the Americans want? The American companies want and need an increase in price to be viable, and the imposition of this tax on Canadian lumber would bring about an increase in price. In the few days the tax has been in place there has already been a marked increase in price in the United States, so the American consumer is really paying the tax. However, we have to pass it through to the companies. It will be a very difficult adjustment but, as I said earlier, an adjustment which has a silver lining to it.
The Americans made the argument that our stumpage appraisal system and other techniques to manage our resource and to ask industry to convert the resource to economic rent and to social benefits was a subsidy. I do not care what argument they use because I was under no illusion with the political climate in Washington, having talked with my friends in the Congress and the Senate, that they would let us carry on increasing our market share, particularly as we did from 1983. At the same time as the dollar was at 73 cents, our market share in the United States went from 19 per cent to 34 per cent, where it is today.
I knew that we would be in deep trouble if we did not respond to it by finding some way to slow down, either voluntarily or otherwise, and perhaps develop better markets in the Asian countries or in Europe. In other words, I could understand that we had to relieve some of the pressure we had imposed upon Americans who were simply no longer competitive. That is the background.
We now have a tax which will raise between $500 million and $600 million, according to the estimates. It is a federal tax. There is a commitment by the Prime Minister (Mr. Mulroney) to the provinces that the tax will be passed through, that the revenues will be returned to the provinces where they

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were earned and where they belong, and that the provinces should be using that money as they see fit.
Perhaps I may take a moment to make some suggestions, particularly to the Province of British Columbia, and perhaps to other provinces, about how they might use that money. In a publication some years ago I made suggestions about how we might gradually move to a more intensive management regime. When we talk about forest renewal, it is synonymous with planting trees; that is one aspect of it. We have been planting trees in British Columbia and in other provinces for the last 20 years, and we are still planting trees. However, if that is all we do, we are not really managing our forests.
We have very productive forest regions in British Columbia where we have planted trees for the last 25 years. We have a 25 per cent survival rate and we still rely on nature to do the rest. That is not a good way to manage forests. I cannot begin to tell you how excited I am about the prospect of developing in Canada over the next decade or so a forest management regime of the type in place in Europe, in Sweden and in the United States. It is exciting stuff.


Michael Morris Cassidy: In socialist countries. You are praising Sweden?


Frank Oberle: If Members opposite consider Germany a socialist country, I will trade them anytime.


Michael Morris Cassidy: Germany has had an SDP Government for many years. What about Willie Brandt?


Frank Oberle: It starts with the highest of new biotechnology and tree genetics. I get under the skin of these socialists. I wish they would let me finish my speech. It starts perhaps with the most exciting rewarding activities in biotechnology and tree genetics. There will be no problem for our universities in British Columbia or throughout the country to develop programs in these exciting areas. $100 million would be no problem for our universities to absorb. Then you have the planting, the weeding and the seeding. There is an exciting new dimension here in the invention of new equipment and machinery to help us with our forest farming techniques.
I see, Mr. Speaker, that you are telling me that my time has almost expired. I would like to talk all night on this subject.
In my province most of the revenue is earned in the interior and in the north. How great it would be if we could set up a heritage fund as Ontario is contemplating. I compliment the Province of Ontario for this initiative. If we could set up a heritage fund for the north it would permit those regions which are solely dependent on one or two of the prime industries, being mining and forestry but particularly forestry, to begin making the adjustment to the new modern industrial setting, recognizing that we will have to get away from total dependence on one or the other of these industries and diversify, adding new dimensions to our forest industry. Perhaps we
could spend some of the money keeping pace with the social and the community infrastructure necessary as the industry expands and adds new dimensions. It is all very exciting and all permissible under the arrangement we have with the Americans that underlies the tax. There is no problem there.
This is just a suggestion to my colleagues in the provincial legislatures or wherever they are. It is an exciting prospect. I know that in five or six years from now the industry will be able to absorb this cost. Incidentally, my former peers in the industry tell me that they shall not have a problem absorbing this tax. Of course, it is painful when you have made efficiency gains and you see them eroded with a stroke of a pen as with 15 per cent taken away from the bottom line. Northern Ontario and other regions will be able to absorb it. When they have, and when this revenue is available to the provinces, I know it will be put to good use. In five or six years as this tax is phased out, as it is reflected in perhaps increased stumpage rates and some of the other things about which I have spoken, we will have people calling us from everywhere. Industrial, municipal and provincial leaders will say: "Thanks, federal Government, for what you have done. This was a stroke of brilliance under very difficult circumstances and you have done well for us."


Some Hon. Members:: Hear, hear!


The Acting Speaker (Mr. Paproski):: The Hon. Member's time has now expired. We have questions and comments. I will recognize the Hon. Member for Kamloops-Shuswap (Mr. Riis), the Hon. Member for Algoma (Mr. Foster) and then the Hon. Member for Cowichan-Malahat-The Islands (Mr. Manley).


Nelson Andrew Riis: Mr. Speaker, I will make my questions very brief in order to allow other Members to ask questions of the Hon. Minister. I listened to his interesting speech. I have two questions for the Minister. In the Minister's estimation, does the federal Government have the right to impose what some people have viewed as a tax on a provincial resource? I am thinking of the arguments during the federal Government's attempts some years ago to tax the petroleum resource in the Province of Alberta. Does the Minister believe that the federal Government has a right to do that?
Second, he knows in my own constituency some communities in the north Thompson Valley particularly, and in areas around the Shuswap, that may be hit significantly by this increased export tax. If they are hit, particularly the single industry towns, does the Minister see the federal Government stepping in with some program to provide special assistance to those people? Since IRDP has played such a critical role in his own constituency, will we be able to use IRDP funds for plant modernization as we have been doing in the interior and northern parts of British Columbia?


Frank Oberle: Mr. Speaker, there are three questions here. Incidentally there is a difference in the case the Member states of a well-head or source tax, as this is a manufactured product
January 20, 1987

that we are taxing. I am not a constitutional lawyer but the imposition of the tax comes mainly at the request of the provinces. The only people who would challenge us in the courts for the right to impose the tax would be the provinces. Logic tells me that that challenge simply would not be made. All we did was respond to a request from the provinces to find a way out of this dilemma.
Would the federal Government be willing to assist communities that may be affected by the imposition of this tax? The Member is using the programs extensively, the good Member that he is in Kamloops. For example, programs through the manpower adjustment and training programs are open to such communities. I feel absolutely confident, having been active in the industry as I was in my former incarnation, that the impact the Member predicts will simply not materialize. Should it, in an isolated area, the resources of the federal Government presently available in the programs would, of course, be applied.


Nelson Andrew Riis: In IRDP?


Maurice Brydon Foster: Mr. Speaker, I have just a couple of short questions for the Minister of State for Science and Technology (Mr. Oberle). He is a well known expert on lumber. I have attended a few Canada-U.S. interparliamentary relations meetings with United States congressmen. I have seen the Minister argue Sam Gibbons, chairman of the House subcommittee on trade almost to the floor that we were not subsidizing our stumpage in Canada. I compare his conversion to the belief that we are subsidizing to that fateful trip that Saul made on the road to Damascus, because he seems to be saying suddenly that we are subsidizing stumpage in Canada. What a wonderful time Sam Gibbons will have with the Minister if he gets the chance.
The Hon. Member said that lumber prices have gone up dramatically in the last few weeks. In fact lumber prices, at least in the Sault Ste. Marie market which is just across the border from Michigan, did go up last week marginally but have come back down this week. Since the B.C. strike was over last month, prices for spruce and jack pine, as reported to me by Marshall Beaumier of Dubreuil Bros. Limited in Sault Ste. Marie have softened. He says that prices have softened by $15 a thousand for random length spruce and jack pine and that with a tax of around $35 to $45 at 15 per cent they will be absorbing some $50 to $60 per thousand on lumber. Clearly they have a lot to absorb. The Hon. Member said that it could be easily absorbed, but I am not very sure that that is the case for Ontario where the lumber industry is paying perhaps four times the stumpage that is paid in British Columbia.
The question I wish to put to the Minister is, I believe, terribly important. I have not heard this matter debated very much. The United States has a veto over how the export tax is
Softwood Lumber Products Export Charge Act
converted to provincial stumpage. The United States administration is telling us that when we transfer that tax to stumpage, they want the tax to amount to the same as that on the lumber produced from those trees exported to the United States. We cannot have one stumpage charge for lumber going to the United States and another stumpage charge for lumber going to the Pacific Rim or the domestic market. It is claimed that when the total charge is converted into stumpage, rather than being $550 million or $575 million, it will be $870 million. Does the Minister really believe that a tax of that magnitude can be absorbed, leaving the forest products industry in the position of being able to make money, hire employees and modernize?


Frank Oberle: Mr. Speaker, the Hon. Member is quite right. If it were the desire of the provinces to offset the tax with stumpage alone, it is obvious that there could not be two different stumpage systems for export to Asia and Europe and for export to the United States. That would then result in an even larger imposition. What worries me more than that is that we would become less competitive in Asia and Europe because of the increase that would be offset against the tax. It is for that reason that I politely suggested that the provinces might consider techniques other than simply transferring the tax to stumpage.
The provinces may set up heritage funds and spend money, as I suggested, in converting to more intensive forest management procedures. This tax could be offset using such arrangements. The provinces could plan for industrial diversification in regions that are entirely dependent on one industry. I am sure the Hon. Member understands very well what I mean by that. We are always looking for opportunities to diversify industries and add additional dimensions to them in order to guarantee greater stability. A heritage fund could be spent on that.
The remote and isolated regions of Canada are dependent on single industries. In the foreseeable future, we will have to develop a program of diversification for these regions because Canada will not be able to depend as much on its primary resources as it has in the past, for a number of reasons, not the least of which is that there are now some important new players in the field from the developing world. Furthermore, the industrial revolution will very dramatically and profoundly change the industrial setting and will challenge primary resources through material substitution and dramatic downsizing. Commodity prices in the wood-converting sector in particular, as well as the mining and mineral sectors, will suffer declines.


The Acting Speaker (Mr. Paproski):: The Minister is great on this particular topic but I would like to entertain questions from the Hon. Member for Cowichan-Malahat-The Islands (Mr. Manly) and I will recognize him as the last questioner.


James Douglas Manly: Mr. Speaker, I listened to the Minister describe the wonderful effects that will flow from this 15 per cent export tax. He seemed to say that the United States has saved

January 20, 1987
Softwood Lumber Products Export Charge Act
us from ourselves. At one time there was a television sitcom called Father Knows Best and now we are engaged in a farce called "Uncle Knows Best".
I am sure the Minister did not mean to mislead the House when he said something to the effect that lumber has always been traded freely between Canada and the United States. That is not in fact the case. Donald MacKay in his book entitled Empire of Wood points out that in 1930, the Smoot-Hawley Bill imposed a 10 per cent tariff on B.C. lumber which decimated the entire forest industry. The workforce was cut in half from 21,000 to a little over 10,000. Exports which had been 360 million board feet in the late 1920s were cut back to 12 million board feet. In the early 1970s, the Americans wanted guarantees that we could continue to supply to their markets.
Are we not in fact being used by the United States as a classic case of a hinterland? Are we not being used by a colonial country which, when it wants our resources, wants our markets open, and when it does not want our resources, puts up tariff walls? Is that not in fact the relationship between our two countries?


Frank Oberle: Mr. Speaker, if the Hon. Member were to get into his car, drive down to the Pacific coast lumber regions and speak to the people, he would not find anyone who would consider Canada to be a hinterland. Americans are afraid of us and for very good reason. We out-perform them, we outmanoeuvre them and we out-produce them, and we have been doing so for quite a number of years.
I would remind the Hon. Member who has questioned the prospect of exciting job creation in intensive forest management that in his area, the mayors got together to form a survival group. They made some very exciting and interesting proposals long before this question came up. They said that with $20 million a year going to the forestry region the Hon. Member represents, 2,000 jobs a year could be created for people who would do nothing other than intensive forest management.
British Columbia will probably receive perhaps $300 million of the $500 million or $600 million that is to be received. Multiplying $20 million a year by the seven forestry regions in British Columbia means that we could put every British Columbian to work. This is new money that will be going into the coffers of the provincial Government. If it is applied properly, I am sure the Hon. Member would be the first to agree that there would not be an unemployment rate of 15 per cent in British Columbia. We could put literally every young person in British Columbia to work over a period of a year and a half if we did nothing more than apply this brilliant idea which came, not from the Hon. Member but from the mayors he represents.


Michael Morris Cassidy: Mr. Speaker, I wish to speak in general terms about the Bill which provides for what I believe is a bad tax badly applied. As well, I would like to
speak in particular of the impact of this government measure on the Province of Quebec.
I want to recall for Hon. Members that it was just 22 months ago that the Shamrock Summit took place in Quebec City. In embarking on free trade negotiations the President of the United States, the greatest country in the world, undertook to make sure trade harassment measures would not be taken against Canada. There was a spirit of sunshine and optimism surrounding those talks. Who could have imagined that in those 22 months the Americans would have taken measures against our natural gas, steel tubes, hogs and fish? The U.S. is using massive subsidies to undercut Canadian sales of wheat in traditional Canadian markets. We had the attack on shakes and shingles and now we have the American countervailing duties and negotiations which eventually brought us this proposal for an export tax of 15 per cent now before the House.
A number of Hon. Members on the government side have stood up and said this is great. They are taking a disastrous defeat and trying to interpret it as a victory. If you have been solidly beaten perhaps that is all you can do. One reason the Conservatives are in third place in the Gallup poll is specifically because they have been so incompetent in these and other negotiations. No amount of reinterpretation is going to change the fact that we have just had the most disastrous defeat this country has experienced, certainly in my memory, in its trade negotiations and discussions with our great trading partner to the south.
It was argued that this was the best solution available. I have to ask who got us into this mess? The Hon. Member for Prince George-Peace River (Mr. Oberle) said that in 1983 he recognized what was happening and felt strongly that Canada was underspending in reforestation and perhaps putting too much product into the U.S. market. There was a need for the Canadian industry to act more prudently so it would not risk this kind of action by American lumber producers. That is something I can understand. We in this country, for example, have imposed that kind of pressure on Japanese automobile manufacturers, as have the Americans, and they responded with voluntary quotas as a preferred alternative to the action we have the power to take under GATT. If leading members of the Government recognized, prior to coming to office in 1984, that there was a problem here which needed to be managed and resolved, one has to ask how they could bring us to a nowin situation as a number of Members have defined it.
The Government has said, either we endure the continuation of the countervailing duty or we impose the export tax. There is no other option available to us. The Hon. Member for Nanaimo-Alberni (Mr. Schellenberg) put it in rather stronger terms. He said there is give and take in our trading relationships. Canada gave a 15 per cent export tax and the Americans took back their countervailing duty. What he ignored was that the duty had just been put in place two
January 20, 1987

months before, and the precedent has been established whereby the Americans can get involved in this kind of give and take in every area where they believe we are too effective and competitive in our trade with the U.S. In other words, Canada gives and the Americans take. Canada will give and the Americans will take under free trade as defined by the Prime Minister (Mr. Mulroney) and the Progressive Conservative Government. That is not good enough for Canadians!


Some Hon. Members:: Louder!


Michael Morris Cassidy: Members opposite have contributed to the debate and some, like the Hon. Member for Prince George- Peace River, have been quite thoughtful. However, I want to introduce them to a bit of basic economics and what happens when an export tax of 15 per cent is imposed.
If the tax was applied evenly across the country, which it is not, and since Canada now has about 33 per cent of the American market, the impact will be, as any student of Economics 101 at any university will tell you, that the price will go up somewhat. Consumption in the American market will fall somewhat. U.S. production will rise somewhat because they become more competitive. Canadian production will be squeezed between a decline in consumption and an increase in American production. Some marginal Canadian producers will be shut down. Canadian profit margins will be cut and possibly turned into losses. Our ability to generate profits in order to invest and be more efficient will be reduced. It may well be that the American price will go up somewhat. This is a fluctuating market.
We had a cross-country tour last week involving lumber producers, industry unions and so on. We asked what are the effects so far? It is basically too soon to tell you. I can tell you what they fear. In Atlantic Canada they suggest 9,000 to
11,000	jobs lost in that region alone. However, it is too soon to say for sure. The pink slips have not yet gone out and a number of producers will for a time allow their profits to be cut into, or they will even operate at a loss in order to generate some cash flow to meet their depreciation and pay off their bank loans. It may be some months before the dust settles and we know exactly how this works.
However, the basic economics are not going to change. It is hard to see how the price in the U.S. is going to rise by 15 per cent because every rise of 1 per cent or 2 per cent in the price will allow some American producer to continue. It will allow some marginal American producers to come back into the market and displace some of the Canadian product. There is no question that a substantial amount of the 15 per cent tax will have to be eaten up by Canadian producers and Canadian workers, or in some other way.
It has been suggested that in the matter of shakes and shingles perhaps some of the forecasts made on this side of the House were a bit exaggerated. Some forecasts suggested the whole industry would be shut down. That has not proven to be the case. It is suggested now that Canadian producers of shakes and shingles are operating at about 80 per cent of
Softwood Lumber Products Export Charge Act
capacity, where previously they were operating flat out. Therefore, a 35 per cent tax resulted in a 20 per cent cut in Canadian production. A 15 per cent tax, whether it is an export tax or countervailing duty, may therefore result in a 5 per cent or 7 per cent cut in Canadian production. That is enough to affect a lot of communities, particularly when you recognize that this industry is not concentrated in one area. There are a great number of single industry towns with no alternatives for the company or workers.
In addition, shakes and shingles is a very different market. There was a limited American supply of cedar logs and they cannot meet their own needs. If Canada's production were to dry up the American price would sky-rocket because there is more demand than supply. It is a value added product. There was effective marketing, most of it in certain regions like the southwestern U.S. and California where, for reasons of architectural taste, cedar shakes and shingles are in particular demand.


John Horton McDermid: You just said there would be 10,000 layoffs.


Michael Morris Cassidy: Therefore it is a product where Canadians have a lot going for them as opposed to a product such as 2 by 4s and random lengths. Most users do not much care whether their 2 by 4s come from Georgia or Ontario or British Columbia.


John Horton McDermid: That is not true either.


Michael Morris Cassidy: All right, I recognize there are certain taste variations but not an awful lot. A lot of the users may be prepared to pay $5 extra a thousand feet for Canadian product, but not a huge sum extra. In shakes and shingles, nonetheless, Canadian profit margins have been shaved and Canadian production is down. U.S. prices have increased and U.S. production is up. That is what we are saying will happen in the lumber industry as a consequence of what the Government has done. That will be the consequence of the no-win negotiation policy which the Government followed.
When I spoke to the producers in Quebec last week it was very clear that when they agreed to the 10 per cent offer made by the Government in its sudden reversal of position in the early fall, they did so with a gun at their heads. When the 15 per cent was proposed to the First Ministers in early December, the producers had a half hour to consider it. They did not agree.
I am getting a bit sick of hearing government Members refer to what Jack Munro had to say in commenting on the box in which the Conservatives have put Canada because of their lousy and incompetent negotiating position. They continually ignore the fact that their friends, the producers, the members of the Boards of Trade, the Chambers of Commerce and the Canadian Manufacturers' Association,

January 20, 1987
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have turned on the Government because of its lack of competence in handling this situation.

Mr. Speaker, I would like to comment specifically on the very serious situation existing in Quebec today as a result of the pernicious tax proposed in Bill C-37 and the unfair implementation of this measure which will have a particularly prejudicial impact on softwood lumber producers in Ontario, Quebec and the Atlantic provinces.
Mr. Speaker, the Quebec Lumber Manufacturers Association sent a telegram to the Minister for International Trade (Miss Carney), dated January 7, 1987. In this telegram they said clearly that:
The Quebec Lumber Manufacturers Association deplores the terms of the agreement signed by your Government with the American Government, because:
1.	It gives U.S. industry an entirely unwarranted right to monitor the
progress of the operation and the implementation of replacement measures.
It is a matter of sovereignty, the same issue that was raised by my Leader (Mr. Broadbent) and the New Democratic Party.
2.	It completely ignores the case of Quebec companies which have asked
that a special rate apply to them.
3.	It may lead to plant closings, especially near the U.S. border.
Mr. Speaker, further to its telex, the same association contacted the Minister for International Trade to raise other points. They said, and I quote again:
-the agreement signed with the U.S. Government contains taxable products that were not taxable according to the preliminary decision by the Department of Commerce on October 16 last year.
We are levying an export tax on products that were not affected by U.S. tax proposals in the first place.
A great number of processed products will therefore become taxable, such as lath, fencing materials and processed lumber.
All three are exempted by the Americans.
The Quebec Lumber Manufacturers Association Inc. therefore asks you to review the terms of your agreement with the American Government so that it applies only to the items listed in the preliminary ruling of October 16.
Can the Government make such changes? Essentially, under the terms of the agreement, the answer is no. The Government has agreed to impose a tax on all exports with a value equal to 15 per cent of S500 million.
What I ask, Mr. Speaker, is this. Is it fair to impose this tax to Quebec and other Eastern producers when stumpage fees in Quebec are between 50 and 100 per cent higher than stumpage fees on the same volume of unprocessed lumber in British Columbia? Is this fair? Certainly not.
However, Mr. Speaker, Quebec producers will indeed be paying the same tax even though their stumpage fees are higher.
My second point, and I am telling this directly to the Parliamentary Secretary, is that the f.o.b. value, which is the price at the plant, is about $230 Canadian per 1000 feet while it is about $140 to $160 per 1000 feet in British Columbia.
The tax is imposed on the export value at the sawmill. That means a 15 per cent charge on $230 in Quebec and a 15 per cent charge on the sawmill price of $160 in British Columbia.
Now, generally speaking, that means that the average charge will amount to aproximately $24 per 1,000 board feet in British Columbia and $35 in Quebec, that is $11 more. On top of that, as the Parliamentary Secretary admitted, stumpage fees paid by Quebec producers are much higher than in British Columbia. Is it fair to impose an export tax which is not equal throughout Canada, which is almost 40 per cent higher in Eastern Canada than in Western Canada? Is it fair for all the Quebec Members of the Progressive Conservative Party who support the Government? Are they really going to vote in favour of a bill which will establish a tax of $35 per
1,000	board feet in Quebec and $24 per 1,000 board feet in British Columbia? Is that fair to the producers, the workers, the companies, the sawmills of Quebec, Mr. Speaker? I say it is not.
Thirdly, Mr. Speaker, there are in Quebec some 18 sawmill companies, small border sawmills in the Eastern townships and in the Gaspe Peninsula, on the border between Quebec and the State of Maine. Well, those companies listened to the new Conservative philosophy of Ronald Reagan and the American Government, and therefore they do not get their wood from Canadian forests, but from the forests of the State of Maine. Therefore, they compete to buy their raw wood on the American market under all the U.S. regulations, with all the competition, free trade, etc. They import that wood in Canada. In Canada, they produce lumber in the sawmills and then they re-export that lumber to the United States.
The United States have now challenged the Canadian stumpage system. The wood used by these 18 sawmills near the border with Maine comes from the United States. Consequently, it is not subject to our stumpage fee system, but to the American one. Nevertheless, exports from these border companies, except five which have been exempted, will be subject to the 15 per cent export tax. These are thirteen companies which will have to close, as they will not be in any position to compete, since they have to pay the wood in U.S. dollars and then the same taxes as other producers in Quebec.
Fourthly, Mr. Speaker, Quebec just passed a Bill, unanimously, to increase stumpage fees and force lumber companies to reforest and manage the forests in a better way.
Mr. Speaker, despite the fact that this new system is being introduced in Quebec, there is no guarantee that the companies, saddled with these new responsibilities, will be exempted from the 15 per cent tax. Since in Quebec taxes are higher, stumpage fees are also higher and there are now new responsibilities regarding forest management, I suppose that the export tax will be eliminated faster than in British Columbia. To be fair, the export tax should be higher in British Columbia or, alternatively, the stumpage fee increase should be more substantial than in the East. I suspect, however, that people from British Columbia will say: 15 per cent and no more.
January 20, 1987

Finally, Mr. Bourassa, the Quebec Premier, gave a commitment to the National Assembly that all revenues from this new forestry regime would be invested in the forest industry. How could anyone guarantee such a thing, Mr. Speaker? According to the terms of this agreement, the Americans, in consultation with the forest industry in the United States, will have not only the right to be consulted, but also the right and even the duty to give agreement to these measures.
I could go on like this, Mr. Speaker, but I will conclude with this: in Quebec, the profit margin is 7 or 8 per cent. Should this tax be imposed, all affluent producers will be in a losing position.


Lorne Everett Greenaway: Mr. Speaker, the Hon. Member was trying to equate this situation with shakes and shingles, telling us that the Americans preferred the shakes and shingles that we produce in Canada because of their high quality. He went on to say that he thought our lumber was not held in that high esteem and that a two-by-four is a two-by-four.
Let me quote briefly from an article that appeared in the Toronto Star on January 10. Harry Horrocks, a director of government affairs for the U.S. National Lumber and Building Material Dealers Association said:
Home builders prefer Canadian spruce over American species, such as yellow pine, for window frames, trim and wall supports.
In the same article, Kevin O'Neal, a senior buyer with the Universal Forest Products Company based in Grand Rapids, Michigan, said:
There are sound reasons why U.S. builders use Canadian softwood. It is far superior in many uses, so it isn't just a matter of price.
Canadian softwood has always been at a premium in the United States because it is so much superior to the product that is produced there. I want the Hon. Member to realize that, because it is not at all comparable to the shakes and shingles issue.


Michael Morris Cassidy: Mr. Speaker, I thank the Hon. Member for his intervention. I must cede to his knowledge. Perhaps I have been somewhat more indirectly aware of the fact that the quality of our lumber is superior even in places like Georgie where there is a healthy supply of native product, but is preferred for different applications. That is one reason why we have been competitive. I do stand corrected in that matter, but I was trying to say that in the case of cedar shakes and shingles there is simply not the supply in the United States to meet the demand.
In the case of the lumber industry, it is arguable that the Americans do need some products from Canada because we have a third of their market. However, there is ample supply and the United States could go without the Canadian product for a number of years, even if they would prefer to have the quality products that are available from here.
Softwood Lumber Products Export Charge Act
The Hon. Member will recall that I suggested that some of the export tax will translate into a higher price in the United States but will have other impacts, including a very substantial effect on profit margins. I said in French that Quebec producers suggest that their 7 per cent or 8 per cent margins prior to the export tax and U.S. countervail will be cut down to zero or perhaps minus 1 per cent or 2 per cent as a consequence. While it will not be minus 7 per cent or minus 8 per cent, it will certainly drop to a level where they cannot stay in business indefinitely. That is a serious situation.


Cyril Keeper: Mr. Speaker, I have a question for my hon. colleague. I am amazed to see that there is not a single Conservative Member representing Quebec to ask him questions.


Mrs.   Duplessis@: That is a little too much, Mr. Speaker!


Cyril Keeper: Mr. Speaker, it is quite clear that you have- [English]


The Acting Speaker (Mr. Paproski):: I do not want the Hon. Member to reflect who is in the House and who is not in the House. I can see Quebec Members, but I do not want any Member to reflect on who is or who is not in the House.


Mrs.   Duplessis@: Mr. Speaker, I wish to tell my hon. friend opposite that I am a Quebecer and that I represent the Louis-Hebert ridings which includes the cities of Sainte-Foy, Sillery, Cap-Rouge, and l'Ancienne Lorette. Unfortunately, it has no lumber industry. I will let my hon. colleagues who have lumber industries in their riding ask questions. It is because you said that there was no Member representing Quebec present in the House.


The Acting Speaker (Mr. Paproski):: I hope that Hon. Members would take it easy. It is that time of day. I hope he will not reflect on attendance in the chamber.


Cyril Keeper: Mr. Speaker, I did not mean to reflect on the presence or absence of any Member, but I am quite surprised that no Conservative Member representing Quebec availed himself of the opportunity to direct a question to our hon. colleague following his remarks, especially because he said this tax was unfair for Quebec and that the taxation level was higher in Quebec than in British Columbia.


The Acting Speaker (Mr. Paproski):: Does the Hon. Member have a question or comment for his colleague? If so, I wish he would put it. The Hon. Member for Ottawa Centre (Mr. Cassidy).

January 20, 1987
Softwood Lumber Products Export Charge Act [Translation]


Michael Morris Cassidy: Mr. Speaker, I think my colleague has asked a direct question, namely is the Government aware of the fact-

I will say this in English for the benefit of Members from outside Quebec. The tax will average $35 a thousand board feet on Quebec production compared to $24 a thousand board feet on British Columbia production if it is applied at the 15 per cent rate.


An Hon. Member:: What about Ontario?


Michael Morris Cassidy: Ontario will be somewhere in between. The undertaking to the Americans was $500 million that would be achieved by a 15 per cent rate. It does not appear as though the Government is prepared to charge the tax at a 8 per cent or 10 per cent rate on production coming from Quebec, which might be more reasonable.
In other words, the Canadian negotiators were either ill informed or were such bad negotiators that they agreed to apply a tax that is $11 a thousand board feet higher on the higher cost producers in eastern Canada than it is on the lower cost producers in western Canada.
How can Quebec Members of Parliament from the government side justify a tax which will be higher on the high cost producers in eastern Canada than on the lower cost producers in western Canada? I point out that traditionally the transportation costs to end points such as Chicago levelled out the prices. Therefore, when Quebec production reaches Chicago it will be $10 or $11 a thousand cubic feet higher than products coming from British Columbia. Prior to the imposition of the tax that production reached that centre at roughly the same price.


John Horton McDermid: Mr. Speaker, the Hon. Member said that business groups are not in favour of this measure. Since the Hon. Member likes to read telegrams and letters into the record, he might be interested in the following letter which is addressed to the Minister for International Trade (Miss Carney). It states:
This letter confirms our support for the negotiated settlement of the lumber duty problem between the Governments of Canada and the United States.
It goes on to be most supportive of the actions and, as a matter of fact, the last paragraph states:
Informed business leaders in the west recognize that you achieved the best resolution possible out of a very difficult situation.
It is signed by Graham Clarke, Chairman of the Vancouver Board of Trade, which is a very significant West Coast business organization. They are very much aware of this industry and many of its members are involved in it. I suggest that it is an excellent endorsement of the activities of the Government.
Let me quote another letter that is addressed to the Minister for International Trade. It is from Westar Timber Ltd. It
states:
Westar Timber wishes to offer its support for the negotiated settlement of the duty dispute over softwood lumber with our American neighbours.
The final paragraph reads:
As Westar Timber has withdrawn its membership from the Council of Forest Industries of British Columbia, we would appreciate being kept directly informed of any further developments.
I think it is fair to say that industries in general which are involved do support the decision which was taken and the solution.


Michael Morris Cassidy: Mr. Speaker, I did read into the record the telegram which was signed by Richard Lacasse, the director general of the Association of Lumber Producers of the Province of Quebec. Quebec is the second largest exporting province to the United States after British Columbia, with 20 per cent of the production. I can tell you that he is a very competent and legitimate spokesperson for his industry. I have no suggestion that there is any quarrel with the opposition that the association has taken to the Government's decision-


The Acting Speaker (Mr. Paproski):: Thank you.


Michael Morris Cassidy: -including when they make the point of the loss-


The Acting Speaker (Mr. Paproski):: Thank you. The time for questions and comments has now terminated. Debate.
Before I recognize the Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan), I would like to say that he is the last speaker for the 20 minutes. The eight hours will then commence. There will be 10-minute speeches after the Hon. Member for Cape Breton-The Sydneys completes his speech.


Jean-Robert Gauthier: Point of order, Mr. Speaker.


John Horton McDermid: Point of order, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: One at a time. The Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Michael Morris Cassidy: Read the letter from Adam Zimmerman. He speaks for the industry, doesn't he? You keep forgetting about him.


John Carnell Crosbie: He speaks for the NDP, not the industry.


Jean-Robert Gauthier: Mr. Speaker, there is disorder in this place.


The Acting Speaker (Mr. Paproski):: The Hon. Member for Ottawa-Vanier (Mr. Gauthier) on a point of order.


Jean-Robert Gauthier: I would just would like some information from the Chair. I understand that you, Mr. Speaker, just referred to the eight hours of debate allowed at this stage of debate. Does that include the 10 minutes allowed for questions and comments? If it does, is there a rationale for that, because actually the 10 minutes is not debate?
January 20, 1987


The Acting Speaker (Mr. Paproski):: I would have thought the Hon. Member would remember May 16, 1983, at page 25477 of the Commons Debates. The Chair had ruled at that time:
The Chair understands that the Special Committee intended the ten-minute period to be included in the eight hours.
The Chair concludes:
It is my conclusion that the time taken for the ten-minute question and answer period must be added to the actual time of speeches in determining the total eight-hour period during the second segment of consideration of second reading of a Bill.
I think that is clear. I know the Hon. Member will remember that.


John Horton McDermid: Mr. Speaker, I just have a point of clarification. I had checked with the Table earlier in the evening to ask when the eight-hour period would conclude. The information I was given was 7.36 p.m. That was the time that the eight-hour period was up.


Jean-Robert Gauthier: Order.


John Horton McDermid: I am sorry, if that has changed-


The Acting Speaker (Mr. Paproski):: I would like to bring to the attention of the Hon. Parliamentary Secretary that I have been keeping a very close time, along with the Table, and the final time was 7.43 p.m.
The Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan).


Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, I have a great deal more faith in your watch than the watch of the Parliamentary Secretary to the Minister for International Trade (Mr. McDermid).
I am very pleased to have this opportunity to speak on Bill C-37 because I believe it is an extremely important Bill, not only for what it brings forward in its contents but for its ramifications and what it is going to mean to this country if it is passed. I think this is a very bad Bill. The idea of the Bill is bad. What it is going to do to Canada's negotiating powers in the future I think will be even more detrimental than the detrimental contents of the Bill itself.
This whole idea of reducing and giving away Canada's sovereignty to the United States started in an ill-conceived speech in December to the Economic Club in New York. That was over two years ago. At that time the Prime Minister (Mr. Mulroney) said that Canada is open for business. In reply the Leader of the Opposition said: "It may be open for business but Canada is not for sale". These were very prophetic words, because what we are seeing now is Canada and Canadians for sale. The interests and heritage of Canadians are for sale.
This particular Memorandum of Understanding which was signed, and which brought about Bill C-37, is a very bad document. It was badly negotiated and badly thought out. Its principle is just horrible. It started primarily on December 30,
Softwood Lumber Products Export Charge Act
1986 when the Minister for International Trade (Miss Carney) made her first final offer to the United States to settle the dispute by raising provincial stumpage fees by 10 per cent. This was turned down by the United States. She made a second final offer on November 26 when she suggested there be imposed a 15 per cent export tax on Canadian softwood. However, this offer was rejected by the United States. On December 12 the United States made a counter-offer and the Minister for International Trade rejected it because she said if it was accepted the United States would be able to manage Canadian resources. Yet on December 30 the United States accepted an offer of 15 per cent and that is exactly what it is doing, managing Canadian resources.
This is a very, very sad commentary. It reveals that the Canadian delegation was very poorly prepared. In fact, a report shows that there is a strong rebound in the price of the lumber industry's products and that the financial condition of this industry improved during 1985-86. This is not something which was taken into consideration by the Canadian delegation. However, it was something taken into consideration by the American delegation which decided it would accept the 15 per cent offer from Canada because, if it did go any further, the improved condition of the American forest industry would be a detrimental position for it as far as the arbitration and settling of this situation is concerned.
What also has happened, in addition to the poor economic deal, the Government has created a very bad and detrimental precedent for the future of this country. It has given away the right to negotiate the price for its own resources. Certainly Canada will negotiate prices. It will negotiate the care and control of its own resources. However, here the precedent is that it has allowed the United States to dictate the prices for Canadian resources.
The Government is saying that this is the best deal it could possibly get. This is the deal that it accepted with the gun to its head. This is not a negotiation. This is a fire sale of Canadian resources and the interests of Canadians.
What is going to happen? Canadians do not believe that this deal is going to be beneficial to Canada. Certainly, Canadians do not believe that this precedent is going to do anything but harm to the future economic possibilities and aspirations of this country.
What is happening now is that the Minister is going to embark upon a $12 million advertisement campaign to try to force this deal down the throats of Canadians, to try to gloss with smoke and mirrors and pretty pictures the catastrophe which looms in before the softwood lumber industry and other industries if this precedent is followed, as I am afraid it may be.
What is going to happen? Canadians are not going to be fooled. This deal is going to continue to rebound in the face of the Government and in the face of Canadians. What kind of Government would force this upon Canadians? The aspects,

January 20, 1987
Softwood Lumber Products Export Charge Act
the eventualities which will happen in the future to this country have not been taken into consideration.
We have a 15 per cent export tax on softwood lumber. There is no allowance made in this agreement for a change in the difference between the Canadian and American dollar. If the Canadian dollar goes up vis-a-vis the American dollar this will just be devastating, wiping out a great many of our lumber producers in Canada, even more than will be wiped out by the agreement entered into and agreed to by by this Government. So there are many aspects to consider.
The Minister of State has called Clause 5a of the agreement the sovereignty clause because it provides the following:
The Government of Canada may reduce or eliminate the export charge on the basis of increased stumpage or other charges by provinces on softwood lumber production.
Yet Clause 2(3) of the Bill which is now before us states that the Memorandum of Understanding may be referred to in interpreting this Bill. This establishes that the Minister's sovereignty claim is not correct. In fact, Clause 5b of the agreement provides:
Calculation of the value of any replacement measures in relation to the export charge will be subject to further consultations and agreement between the two Governments.
The Government would have us believe that this export charge, presumably to be used by the federal Government and the provincial Governments, will go back into the lumber industry. The Americans have another idea with respect to the agreement. They do not for one minute expect that this money will go back into the industry. In fact, if it does go back into the industry they will consider it a breach of the agreement.
Clause 6 of the Memorandum of Understanding provides:
The Government of Canada will take no action, and will take all reasonable steps to ensure that no other governmental body in Canada takes any action, directly or indirectly, which has the effect of offsetting or reducing the export charge or replacement measures-
President Reagan has pledged in writing that he will take action if Canada does not live up to the terms of the agreement. Attached to the Memorandum of Understanding dated December 30 is a letter addressed to the Coalition for Fair Lumber Imports. In that letter U.S. Secretary of Commerce Malcolm Baldrige identifies seven different types of Canadian government assistance to industry which the U.S. will not accept. These include rebate, remission, deferral of the export charge, provision of grants or low-cost loans, exemption from other federal and provincial government charges, assumption of obligations currently borne by the industry, reduction in stumpage or other fees, changes in the way that the volume of timber harvest is measured, and the non-competitive awarding of contracts for silviculture, road-building, recreational and other forestry activities. This is something from which we will come away empty-handed.
I think that the only point the Government can make is that if we are to lose 15 per cent it is better that it remain in
Canadian hands as opposed to American hands. But that is the only point that the Government can possibly make.
So what are we giving up? First, we are giving up something that we probably need not have had to pay. We are giving up something that the economic indicators in the United States tell us is something that is not necessary because the lumber industry there is healthy, and getting healthier all the time. While it may regress later on, at this point in time it is getting healthier. That strengthens the Canadian position, but it is not something which the Canadians took into consideration in their haste to sign this Memorandum of Understanding.
Second, if there is a change in the American-Canadian dollar ratio, and if the Canadian dollar improves with respect to the American dollar then this measure will become even more detrimental to Canada.
Third, we are selling future relations and negotiations with the United States down the river as a result of entering into this agreement, not to mention the fourth point which is what it will do to the lumber industry in Canada. It has been stated by Bob Rivard of the Canadian Lumbermen's Assocation that lumber production could drop by as much as 25 per cent in 1987. The Government of Canada continues to insist that the provinces can use their share of the export charge revenue as they see fit. There will be a very interesting session of meetings between the federal Government and the provincial Governments. If the provincial Governments buy this federal government line I will be very surprised.
Fifth, what will this measure do to Canada's relations in the GATT? How can Canada now say that what the United States is doing to our country is wrong when Canada directly and blatantly violated the principles of GATT by entering into this Memorandum of Understanding with the United States? This is the first time that we have imposed a tax on trade with only one of our trading partners, which violates the first principle of international trade. What we have done is we have said: "United States, you can negotiate with us and enter into our business. You can pass judgment on our laws and regulations. If something hurts you, then you can hold us up at the border by threatening a countervailing tariff or an import charge and we will just knuckle under". Why should the Americans not believe this when we have given them every reason even before this to believe it? We did away with FIRA.
In the negotiations with the United States we were blatantly told what should and should not be included. The Government said that there would not be countervailing sanctions or tariffs on Canadian products. The Government said that the United States would not do that. Yet what happened? It has been doing it ever since. The way in which the Government has handled these negotiations amounts to nothing more than waving a big red flag in front of the American lobby organizations. By saying that we want free trade with the United States we have alarmed all the lobby organizations which have run to Washington to talk to their representatives and their Congressmen. What we have done is we have firmed up the position of
January 20, 1987

the industry in the United States by ensuring that Canadian imports and Canadian products will never be a threat again.
The softwood lumber case is not the only case to consider. I refer Hon. Members to the recent ruling of the Federal Energy Regulatory Commission in the United States with respect to the sale of natural gas from Canadian producers to American buyers. The way the situation has worked in the past is that Canadian producers enter into agreements with American buyers. Included in these agreements is a clause with respect to a charge for transportation through the Canadian pipeline system. That charge is passed along to the purchasers in the United States. This arrangement is set out in the agreements and agreed to by the National Energy Board, which is the Canadian regulatory body. On December 3 the Federal Energy Regulatory Commission in the United States said: "No. You cannot do that. Canadian natural gas is becoming too competitive". We are hearing this from the same country which three years ago said that we had to get rid of the National Energy Program and treat Americans the same as Canadians. They told us that we could not show bias to Canadians, that we had to open up our oil and gas industry to Americans.
What happened? We opened up the industry and they turned on us. I am referring to the same regulatory body which in 1984 outlawed Canadian take-or-pay contracts with the United States. We do away with take or pay contracts. We do it the way the Federal Energy Regulatory Commission wants, we will get a competitive edge on price for a fraction of time and then they change the rules on us again.
Why should they not think that they can change the rules on us again? We have been down on our knees to them for the last two years begging for a free trade agreement, saying that we do not care what it is in the free trade agreement, take what you want, but when we sign it, call it a free trade agreement.
That is not good enough for Canadians, and why should it be? Canadians are the losers. Not only are Canadians losing, but they are being shut out. It is the most one-sided negotiation in the history of Canadian trade. The Government is not saying that there is a tarnishment or a reduction in Canadian sovereignty. It is saying that there is no reduction, there is no imposition on Canadian sovereignty. That is what it is saying to us in the House, but that is not what it is meaning with respect to the Federal Energy Regulatory Commission decision.
The Minister of Energy, Mines and Resources (Mr. Masse) when he was in Los Angeles on January 7 said that this decision by the FERC was detrimental to Canada. He stated:
It also raises serious questions of extra-territoriality-the extension of U.S. regulatory practices to matters under Canadian jurisdiction.
Then he goes on to talk about the discriminatory Superfund levies on imported oil. He stated:
Softwood Lumber Products Export Charge Act
The U.S., also, has recently decided to implement discriminatory Superfund levies on imported oil. These additional tariffs, while small, represent an ominous step backwards in our progress towards freer bilateral energy trade. They are particularly burdensome to Canadian refiners who already face import duties on oil products exported to the United States, whereas American refiners incur no duties on almost all their exports to Canada. 1 am also concerned that this could establish a precedent for more substantial tariff increases.
Mr. Speaker, this is the Minister in the Government saying that the policies of this Government on trade with the United States is not working. He is saying that the extension of the U.S. regulatory practices raises serious questions, instead of saying that he is concerned that this could establish a precedent for more substantial tariff increases.
This Bill is not only detrimental, it will be a catastrophe for Canadian trade. The damage will not be pinpointed for a few years. As the years go on, we will look back on this legislation more and more with regret that we ever passed it.


The Acting Speaker (Mr. Paproski):: On questions or comments the Hon. Member for Vancouver-Kingsway (Mr. Waddell).


Ian Gardiner Waddell: I do not have an extensive comment. I know that my friend, the critic, has some comments. I will let him ask the questions.
I wish to congratulate the Hon. Member for flagging for the first time in this debate this additional issue. The fact is that there has recently been an implication that the Americans have continued on and have now moved to energy. They started with lumber, and now the Federal Energy Regulatory Commission has said that it does not like the way that Canadians are charging and pricing their natural gas. They even interfered in contracts that had been made in good faith by Canadian producers with American buyers. Where does it end? That is the flaw in the Government's case. It said that we will make a deal out of court. We will agree to a 15 per cent tariff and we will save the money. It could have been 30 per cent or 32 per cent. The flaw is that once you do that to a bully, and the United States is into a bully mood with Canada these days on trade, the bully will never stop. So this was the next step taken a week or two ago. It is outlined in a recent issue of The Financial Post. The Parliamentary Secretary would do well to read this. The United States is at it again. What is next? Steel, or other products? Hydro? They may not like the way we are handling our hydro.


John Horton McDermid: Don't forget the cut flowers and the raspberries.


Ian Gardiner Waddell: They think it is funny.


John Horton McDermid: No, we do not. We are trying to tell you to get into the real world.


The Acting Speaker (Mr. Paproski):: Order, please. The Member for Vancouver-Kingsway has the floor.


Ian Gardiner Waddell: The real world is that the Americans have started to continue this.

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Softwood Lumber Products Export Charge Act


An Hon. Member:: Ask a question.


Ian Gardiner Waddell: I am making a comment. The Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan) has flagged this issue. The fact is that the Americans are already moving from softwood lumber on to energy. The Government has led Canada into that and it will keep going that way.


John Horton McDermid: Check with the EEC and Japan and see what is happening there.


Benno Friesen: I have listened to the Hon. Member's speech. At one point he made reference to the fact that there will undoubtedly be a change in the value of the Canadian dollar, which could affect the flow of products across to the United States. It is a legitimate concern. In light of the point that he raised, I would ask the Hon. Member in all seriousness if he has read the entire Memorandum of Understanding?


Russell Gregoire MacLellan: I have not read the whole Memorandum of Understanding, but I have read a good part of it and excerpts. If there is a guard against that type of thing, I would appreciate the Hon. Member telling me.


Benno Friesen: I would like to point out that the Hon. Member made a very dramatic speech. I must say I enjoyed listening to it, even if it was full of errors. But it was a good speech from his point of view. It was flawed because he has not read the Memorandum. The Memorandum does allow for a reexamination of the entire agreement when there is a dramatic change in product flow across the border. If the Hon. Member examines the effect of the Canadian dollar on the cost of the product, he will quickly agree that when the cost of Canadian product increases and becomes uncompetitive there will be a dramatic drop. If the Canadian dollar will affect the flow, the Memorandum and the whole agreement will be re-examined.


Russell Gregoire MacLellan: If my speech is flawed, so far none of the flaws have been brought out by the Hon. Member. When it refers to product flow across the border, to say that relates to the exchange and the currencies between Canada and the United States is really stretching the point. There is absolutely no relation to the product flow and the fact of the difference in the currency rate.
I am glad that the Hon. Member is not a lawyer. If he drew up an agreement containing that terminology with the intent of bringing into the wording the exchange rate between Canada and the United States, we would be in more trouble than we are right now with this Government.


Steven W. Langdon: I have a relatively minor point to raise and register with the Member whose speech I have enjoyed. I wish to register the reports and briefs which we have received this week from the Canadian Paper Workers Union emphasizing their very strong opposition to this lumber agreement.
As the Hon. Member will know, they represent softwood lumber workers in the eastern half of Canada. Would the Hon. Member be able to explain the difference between perspectives which exist among workers in western Canada, represented through the IWA, and workers in the central and eastern parts of Canada, represented through the Canadian Paperworkers Union? Would he be able to comment on that?


Russell Gregoire MacLellan: Mr. Speaker, I do not think there are any people involved in the lumber industry who are more concerned than the people in Atlantic Canada. At the present time the stumpage fees in Atlantic Canada are considerably higher than they are in Quebec, Ontario, Alberta and British Columbia.
It could mean that the actual cost to Atlantic Canadians will be even more devastating than it is to Canadians in other provinces. This is an area where the economy is less able to bear any kind of strain than any other part of Canada; that is not to say that the other four provinces are very affluent. It certainly does not mean that.
However, the economy of Atlantic Canada, as the Minister of Transport (Mr. Crosbie) knows, is in a very bad state indeed. This is where the worst results and the worst impact will be felt.


The Acting Speaker (Mr. Paproski):: I will recognize the Hon. Parliamentary Secretary and the Hon. Member for Egmont (Mr. Henderson) on two very short questions.


John Horton McDermid: Mr. Speaker, I gather my hon. friend is a lawyer. He delivered a 20 minute speech in 35 minutes, trying to poke holes in an agreement which he had not even read. I find that to be absolutely irresponsible. I can understand why he got into politics and out of the practice of law.


Russell Gregoire MacLellan: Mr. Speaker, I am surprised by the comments of the Hon. Parliamentary Secretary. It just goes to show the straws which the Government and the Conservative Party are clutching. Those were the comments of a man who was putting forward the case for the Government, and the most significant thing he came up with was that I did not read the whole agreement. That is the worst thing he can say about what I said. I am still waiting for the flaws in my speech which Hon. Members opposite say are there. They have had their chance; obviously my speech was flawless, and I thank them for their plaudits.


George Roland Henderson: Mr. Speaker, I thank the Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan) for presenting an excellent speech, but I have one very quick question for him.
As he will know, only five softwood lumber producers in the Maritimes will be exempt under the agreement. Producers from Nova Scotia and New Brunswick especially complained about being hit not only by the 15 per cent tax but about the
January 20, 1987

fact that they were already paying the highest stumpage fees anywhere in Canada.
Since there has already been a diversion of softwood lumber which would normally be exported to the United States from Quebec, and since the 15 per cent tax has been put on that lumber, they are now undercutting the local New Brunswick and Nova Scotia markets.
Would the Hon. Member care to comment on that? Would he tell the House whether he has had any representations made to him by producers in Nova Scotia and New Brunswick?


Russell Gregoire MacLellan: I thank the Hon. Member for Egmont (Mr. Henderson) for raising that point; I forgot to mention it.
I received representations today from an association in Nova Scotia on that particular point.


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


Lorne Everett Greenaway: Mr. Speaker, I take it we are now on 10 minute speeches.


The Acting Speaker (Mr. Paproski):: That is right.


Lorne Everett Greenaway: Then I can throw away the first half of my speech; the second half is the best, anyway.
Now we can cut out a lot of the rhetoric and get down to the point of this debate. The only thing I could say relating to the first half of my speech would be: I wonder what opposition Members would have been saying for the last two days if they had awakened on December 31 and discovered that we had wound up with a 20 per cent tariff and all the money going to the United States because we had not negotiated. I throw that out for what it is worth. We were caught in a tough position. I think we got the best of the deal as it was laid out to us.
As industry representatives said to me last week in Vancouver, "It is done. It is over. Let us get on with it". I think that is what Canadians want us to do now. They want us to put it behind us and get on with trying to make what we have work.
The Hon. Member for Egmont (Mr. Henderson) asked a very good question. There are about 350 sawmills in Nova Scotia. It is basically a domestic market. They are justifiably worried. If provinces with lower stumpages start shipping lumber to the East and it ends up in Nova Scotia, it will devastate that province.
That is one of the reasons the Minister of State for Forestry and Mines (Mr. Merrithew) set up the Council of Forestry Ministers. I pay tribute to him for that. It is probably the most significant thing he has accomplished so far in that the Ministers of Forestry will be meeting on a regular basis.
I happened to attend a meeting with them in Vancouver two weeks ago, and I was amazed at the goodwill between provincial and federal Ministers. They elect their own chairman, and
Softwood Lumber Products Export Charge Act
the federal Minister sits as a member. They are now being called upon to work out some of the difficult details. It is not very difficult to collect it, but they are trying to work out all the problems over and above the problems caused by the implementation of the tax.
Hon. Members should know that in the determination which came down in October the commission found that 14.5 per cent of the 15 per cent tariff levied was due to a stumpage subsidy. This says to Canada that stumpage is the problem. The federal Government is caught in a position where it does not want to impose a tax on a provincial resource. Naturally we would like to get out of it as quickly as possible, but it will not be easy.
Someone mentioned earlier tonight that with the export tax there will be a $550 million per year levy on the industry. However, if we try to swing that over to stumpage, it will be over $800 million. If that were imposed upon the industry, it would be very disabling.
My own constituency produces 10 per cent of the softwood in Canada. The interior of B.C. ships 80 per cent of the softwood out of that province. If anything over 5 per cent of that 15 per cent were switched over to stumpage, it would be very dislocating. They could not take much more than that. They feel their stumpage system is pretty fair. I agree with them. I have looked into it very closely with an accountant friend and I think the interior of British Columbia-and there are two different stumpage systems-is paying its fair share.
1 am glad the Council of Forestry Ministers is in charge of looking after this very difficult and perhaps impossible situation. Who should know better, other than perhaps industry with whom they will be in close consultation, as to how to work out the percentage stumpage increases versus export tax? As we know, there are some provinces paying high enough stumpage now and should not be asked to pay any more. It is not going to be easy. We have problems with some of the "Reman"-the manufacturing people. They were here to see us today. I think they saw all Parties. We do not say we do not have problems, but that too will have to be worked out with the council and with External Affairs. Hopefully we can renegotiate some of those inequities.
I think we are all very concerned about where the $550 million is going. We have heard what Ontario is going to do with its portion. The Minister of State for Science and Technology (Mr. Oberle) came up with a very interesting proposal tonight. He suggested that my Province of British Columbia might look at something like a heritage fund and use some of the money to reforest and get into some permanent silviculture programs.


Ian Gardiner Waddell: Can we do that?


Lorne Everett Greenaway: I would hope we could. We cannot impose our will upon the provinces.

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Ian Gardiner Waddell: Do we have to ask the Americans?


Lorne Everett Greenaway: No, we do not. We can do it. What we cannot do is give money to upgrade a mill, build a road or things like that. To the best of my knowledge we can do reforesting and silviculture. We can also spend money on research, also badly needed, and we can spend money on educating foresters. Most forestry schools are in desperate need of extra funds to buy good new high-tech equipment. We have to look at the pursuit of new markets. We should be using this money for that.
In the Province of British Columbia there will be a windfall of about S350 million. Obviously B.C. will not put all of that back into the forest resource. I think my colleagues in the federal Government from British Columbia will be urging the Government to put much of that money back into forestry because we are behind in reforestation. We have to go to some better silviculture methods not only in B.C. but right across the country. What has always bothered me is that we have been using silviculture as a job creation project. What we really need is to get into long term silviculture projects as was mentioned earlier by the Minister of State for Science and Technology. On Vancouver Island the mayor set up a program called the Vancouver Island Mayor's Program for reforestation and silviculture. It is an ongoing program. It puts many people to work and it pays tremendous dividends. That is what we should be spending our money on.
Just to get in a plug for my own area, 80 per cent of the resource of softwood lumber shipped out of B.C. comes from the interior. I am saying to the provincial Government that 80 per cent of any money returned should be returned to the interior because that is where the tax will be coming from. Let us put it back where it is desperately needed.
Over the last few months, I have been the Parliamentary Secretary to the Minister of State for Forestry and Mines. The appointment was made in October. Ever since this Government took office in 1984 many of us have fought and fought hard to have the ministry of Forestry and Mines elevated to a full line ministry. After watching this develop over the last few months, I think we would have been well served by a full ministry, properly staffed with a budget. We would have had a much easier time working with the industry. We would probably have had better statistics. I am not going to say we did not have good negotiators, but I would have liked to have seen a full line ministry of forests take a more active role.


Some Hon. Members:: Hear, hear!


Lorne Everett Greenaway: That might not be popular with some members of the Government but I think it is common sense.


James Douglas Manly: Right on.


Lorne Everett Greenaway: If a man is going to be condemned in this place for saying a few things in that vein then so be it. Parliamentary secretaryships are not that expensive.


Some Hon. Members:: Oh, oh!


Lorne Everett Greenaway: I see the Hon. Member for Kamloops- Shuswap (Mr. Riis) here. He and I are in discussions at the moment. We have discovered that in his riding mainly and in part of mine we have an outbreak of spruce budworm which involves 200,000 hectares, which is a lot of land. The provincial ministry has not yet begun to get a handle on it. I have just received a report that if we could spend $7 million in this next season on spraying projects we might be able to get the problem under control. That is the kind of money we have to spend on our resource and that is what should be done.
I will leave it at that, Mr. Speaker. It is not a happy day for the country. We are not pleased with what happended. Anyone who thinks we could have got a better deal is whistling in the wind. I, for one, am pleased with what the Minister for International Trade (Miss Carney) has accomplished. I think she has made the best of a bad situation. Let us go on from here and see what we can do.


Some Hon. Members:: Hear, hear!


Jean-Robert Gauthier: Mr. Speaker, I rise on a point of order. The Hon. Member said at the beginning that he would have to throw half of his speech away and only read half of it. I would like to hear the other half now. I would give unanimous consent that he so proceed.


Some Hon. Members:: Oh, oh!


Lorne Everett Greenaway: The other half is all political.


Mr. Deputy Speaker:: Debate. The Hon. Member for Cowichan-Malahat-The Islands (Mr. Manly).


James Douglas Manly: Mr. Speaker, I welcome the opportunity to speak on an issue that is vitally important to my riding, to my Province of British Columbia and to Canada. I was very interested in the comments of the Hon. Member for Cariboo-Chilcotin (Mr. Greenaway) who just spoke. It was generally a low key defence. He did not want to storm the baricades in defence of this Bill at all, but I was particularly interested in his final comments calling attention to the need for a full ministry of forestry. That is something that anybody who comes from a constituency that depends upon the forest industry, as so many of us do, would urge upon the Government with a great deal of force and conviction. It is a promise the Government made in 1984 which has not been kept.
I believe, as the Hon. Member suggested, that it is a promise we are paying for because if the Government had kept its promise we would have had better statistics and people who would have been able to negotiate and represent us better in this whole issue than has been the case. I very much commend the Hon. Member for saying that, particularly as the Parliamentary Secretary to the Minister of State for Science and Technology. He knows whereof he speaks.
January 20, 1987

There is a legitimate debate taking place in British Columbia at the moment about whether or not the 15 per cent export tax was the best deal possible with the United States after it had imposed the 15 per cent countervail. There are two sides to that debate. Because of its effect on Canadian sovereignty and because of the very bad precedent it sets for other industries, I believe it is a bad deal. Quite apart from that debate, 1 do not think there can be any debate about the more basic facts that the Government has bungled the entire Canada-United States trading relationship from day one. The softwood lumber fiasco is only the most blatant example of this.
The basic flaw in the Government's approach was the Prime Minister's (Mr. Mulroney) belief that his personal friendship with the President of the United States could guarantee and even enhance Canada's trading relationship with that country. It is a naive and rather touching belief that President Reagan would veto any legislation that was protectionist against Canada. This badly underestimated the degree of protectionism in the United States.
The Member for Skeena (Mr. Fulton) two years ago warned about the dangers of protectionism and the way in which it would affect our softwood lumber. He urged that the Government get involved in a public relations campaign that would appeal to American consumers, home builders, home buyers and lumber retailers and urge that they put a balancing pressure on their Congressmen and Senators to prevent this kind of protectionism.
The Minister of State for Science and Technology (Mr. Oberle) who spoke earlier indicated that he was aware of this continuing threat ever since the last decision came down in 1983. Yet the Government chose not to act, believing rather that everything would turn out okay because of the Prime Minister's friendship with Ronald Reagan. Two years ago, the IWA recognized that we faced a serious situation and said that we should negotiate and make a deal when we could rather than wait for the last possible minute.
The American protectionist attitude followed two basic tracks. The first track was the legislative route and there were any number of Bills as we have mentioned in this debate before that were before both the House and the Senate calling for protectionist measures. Some Bills such as the Gibbons Bill contained measures which were specifically directed toward Canadian softwood lumber. The second track was the quasijudicial process by which the American lumber industry could appear before the International Trade Commission of the Department of Commerce to ask for a countervail duty against Canadian softwood because of what they consider to be unfair subsidies through low stumpage rates or other practices.
In return, Canada maintained a two-track defence. One track was that President Reagan would veto any Bill that imposed duties on Canada's softwood. The other was that our legal case was so strong that we would be able to win before a
Softwood Lumber Products Export Charge Act
quasi-judicial tribunal. Confidence in our two-track defence policy began to wilt and disappear last May and I can pinpoint the very time it happened. It happened on May 22 when President Reagan personally announced a 35 per cent tariff on shakes and shingles. It was interesting to watch the Prime Minister when he appeared in the House the day after that. We could see that he was visibly shaken and his comments indicated that he was.


Mr. St. Germain:: But he took the right action.


James Douglas Manly: He took the right action? He said:
We will try to prepare an appropriate response for the American administration which will convince them of the folly of this kind of action directed either against a great friend such as Canada or anyone else. This kind of thing is bad
news.
He said he would take the appropriate action but what did he do? He put duties on Christmas trees, books and computer parts.


Gerry St. Germain: Order in Council prohibiting the export of cedar logs and that's what counts, sir.


James Douglas Manly: He said he would take action to prevent that sort of thing from happening in the future. Instead, the Americans had a taste of blood and are now going for the jugular.
Far from convincing Americans of their folly as he said he would do, the Prime Minister whetted their appetite for our blood. A feeling developed in the government benches that even if we won in the courts, President Reagan could not protect Canadian softwood from American legislation. A basic distrust of our whole negotiating and defensive position has evolved.
We finally began to understand the price President Reagan was prepared to pay to get the fast track on the free trade negotiations. He mentioned that price in his letter to Senator Packwood which indicated that be would take all appropriate action to solve the softwood issue prior to and separate from the trade talks. Since then, we have seen a constant shift of position on the part of Canadians. First we talked of negotiating but Premier Bill Bennett of British Columbia said that he wanted to take a tough position. Canada started to take a tough position but then there was a change of premiers in British Columbia. Unfortunately, the wrong change was made and we are paying for it today.


Gerry St. Germain: That's your fault, Jim. You should have kept at it.


James Douglas Manly: We should have done more, I will admit that. Bill Vander Zalm began to make noises about raising stump-age fees. He sent the Americans the signal that we would not talk tough any longer and that we did not really have that much confidence in our judicial position. The Minister for International Trade (Miss Carney) flew to Washington in September to ask the Secretary of Commerce if the countervail process could be delayed somehow while British Columbia

January 20, 1987
Softwood Lumber Products Export Charge Act
reviewed its entire forest policy. Of course, the Americans said no.
In October, the Minister announced her final position. She said we were prepared to offer 10 per cent, take it or leave it. Of course, the Americans had absolutely no reason to take it.
Then the Minister said that she would talk tough. Once again, the Americans came down with a preliminary ruling on October 16 announcing the 15 per cent countervail. At first we were inclined to fight it and we pointed out that the decision was flawed, that its mathematics were poor and that it was a poor application of American law. We pointed out that it was a decision that discredited the entire countervail process and had some very serious implications for international trade relationships. We felt that we had a strong case, but once again, the Government of British Columbia and Premier Bill Vander Zalm wanted to negotiate. Once again, he undermined the Canadian position and the Canadian Government entered into negotiations. It finally came up with an agreement in the dying hours of 1986.
What is there about this agreement that is appealing? For one thing, as some Hon. Members have pointed out, it does keep the money in Canada, but on the other hand we must recognize that whether there is a 15 per cent American countervail or a 15 per cent export tax, jobs will be lost. It will be the working people of British Columbia and other lumber-producing provinces who will pay for the Government's bungling.
This afternoon during Question Period, the Hon. Member for Essex-Windsor (Mr. Langdon) pointed out that there are 23 companies making nine different products which will have to close-


Mr. Deputy Speaker:: Order, please. I am sorry to interrupt the Hon. Member. Could I ask him to conclude since his time has expired?


James Douglas Manly: Mr. Speaker, I will do so as quickly as possible. The Hon. Member for Essex-Windsor asked the Minister if he would be prepared to renegotiate the entire contract to provide exemptions for these products. The Minister chose to ignore that.
We have serious questions about the agreement itself and its effect on Canadian sovereignty. It will not save Canadian jobs and we must condemn the Government for the whole way in which it has bungled the process of negotiating the Canada-United States trade relationship.


Douglas Cockburn Frith: Mr. Speaker, I too would like to join in this debate. I recognize that time is not very long to put forward a case on behalf of the Opposition, but I welcome this opportunity to put forward my opinion on the effects of the recent settlement recommended for signature between Canada and the United States with respect to the export tax placed on our softwood lumber industry.
I wish to preface my remarks by indicating to you, Mr. Speaker, that to a large extent, many of the emotional feelings Canadians have about this agreement revolve around the issue of sovereignty and, in the long run, whether or not Canadians have faith that the Government is capable of negotiating any agreement with the United States in a competent and effective manner.
I say that in all sincerity because one must recognize that regardless of which political Party assumes the reins of power, any Government will find itself in a period of crisis, perhaps not of its own making. What determines the faith of the Canadian public in the ability of the Government is its ability to handle those crises. In December of 1986, some two years and three months after the Conservative Government assumed power, the people of Canada no longer have faith in its ability to put forward a political agenda and, more important, a Canadian point of view on a number of issues. Softwood lumber is the last in a series of crises affecting the Government and the outcome does not leave me with any feeling of certainty that it knows what it is doing in its negotiations with the U.S.
The specifics of the case I put before you are well known to the Canadian public. Speaker after speaker in this House has pointed out the effect of this export tax on the Canadian lumber industry. More important, it should be pointed out that the complaint by the U.S. industry that there was an unfair subsidy to the Canadian industry is not a new one. In the early 1980s the American lumber industry presented a case to the tribunal concerned which complained that Canada unfairly subsidized its industry's exports. As you will recall, Prime Minister Trudeau did not pursue a political settlement. He was adamant about protecting Canada's sovereignty. As a result, the Canadian Government worked hand in hand with the industry to present its case before the tribunal in the U.S. We were very fortunate in the sense that a ruling was made in favour of the Canadian viewpoint. That decision was arrived at in the fall of 1983. Yet within months of the Conservative Government assuming office in the fall of 1984, those same American interests once again complained of unfair subsidies to the Canadian industry.
For the life of me I cannot understand why the Conservative Government chose to abandon the quasi-judicial process, fail to defend Canada's sovereignty and this very important industry, and cave in, in my view and that of many Canadians, to the American demands. The net result, in my view, is the unnecessary imposition of a 15 per cent export tax which will make us less competitive in the U.S. market in the short term, and raise prices of lumber for consumers in the U.S. in the long term.
It comes as no surprise, given the difficulty consumer groups, whether here or in the U.S., have in arousing any sympathy for their cause. However, I do know the net result will be a loss of sovereignty and a loss of manoeuvrability here,
January 20, 1987

and higher prices in the U.S. I believe had the Conservative Government chosen a different route and worked hand in hand with, for example, Mr. Zimmerman and used our clout in the quasi-judicial process, we would once again have been successful in defending the Canadian view that there is no unfair subsidy.
I mentioned at the outset that Canadians no longer have faith in the Government's ability to put forward the Canadian viewpoint in its negotiations with the U.S. In my view this latest caving in to the Americans will be seen as a sign of weakness. While we are discussing the impact this will have on the lumber industry, I have no qualms in saying that other U.S. groups will see this Canadian weakness and institute proceedings which will affect other sectors of our economy in a similar way.
Perhaps my friends on the other side may feel that my reference to the fact that the Minister responsible for these negotiations was not even in the country at a crucial time was a cheap shot. However, the Canadian public deserve better than to have the Minister concerned at a distance from the negotiations at the time these crucial decisions were being made. It certainly did not give a feeling of comfort to the boardrooms and union halls of this country which will be adversely affected by this decision.
I represent a riding with a vested interest in the protection of the Canadian lumber industry. That industry is a very important component of the economic life of northern Ontario. We have a great fear that as a direct result of the imposition of this export tax we will see lay-offs in the industry. They have already occurred in northern Ontario as the Parliamentary Secretary to the Minister for International Trade (Mr. McDermid) well knows. There have been lay-offs in northern Ontario as a direct result of this tax.
It also comes as no surprise to those of us with some knowledge of the industry that there is now a fear in northern Ontario that the B.C. lumber industry will try to make up for its loss of market in the U.S. by taking some of the market which has traditionally belonged to the Ontario industry. We not only suffer as a result of these negotiations with the U.S., but we may see one province pitted against another in an attempt to make up for markets lost as a direct result of the imposition of this tax in Canada.
Finally, I want to point out the feedback I have been receiving from my constituents. They greatly resent the fact that the Canadian Government has given U.S. officials the right to object to how the Canadian Government decides to use the $600 million in Canada. Although the Conservative Government wants to mask the fact that it has given up our sovereignty, the people in our constituencies strongly believe that the Government has caved in to the United States interests and has not upheld Canadian interests in this matter. Frankly, they are very disappointed in the way in which the negotiations were completed.
Softwood Lumber Products Export Charge Act


Hon. Stewart Mclnnes (Minister of Public Works):: Mr. Speaker, I wish to participate in this debate because there are no issues more relevant to anyone in Canada, and particularly to people in Atlantic Canada, than trade and forestry. I have followed the debate closely with enthusiasm and great interest, and sometimes with fright and disbelief at the incredible remarks I have heard made by Members opposite. We have heard many statements based on fiction rather than fact. There are many inconsistencies among the Members opposite and, more particularly, among Members peculiar to a particular Party.
This issue must be debated with the general knowledge that Canada is in a very unique position with respect to trade. The difficulty which the Opposition has in presenting its case adequately is another example of the difficulty it has had in making intelligent or constructive comment on any matters relative to trade.
We must bear in mind that Canada is a very unique trading nation. We are more dependent upon trade than is any other country in the western world. One-third of everything we produce goes beyond our borders. We are a nation of only 25 million and are, therefore, more reliant upon trade than any other country. Only 10 per cent of what is produced in the United States is exported. Only 16 per cent of the production of Japan is sold abroad, and only 26 per cent of the produce of the United Kingdom is sold abroad. Therefore, the steps which we must take and the sensitivity which we must have is peculiar to Canada. Strategems which may have guided the destinies of other nations with regard to trade are obviously not appropriate for Canada. In 1970 Canada was the fourth largest trading nation in the world, just ahead of Japan. Today Japan has doubled its exports and Canada is in eighth place.
Some months ago we were hit with a countervail from the United States. That was not only a result of the protests of producers and purchasers of lumber in the United States about our situation with regard to lumber, but was symptomatic of everything that is happening in Canada with respect to trade with the United States. We experienced a series of tariffs, countervails, threats and protectionist legislation on hogs, beef, steel, fish, shakes and shingles, and raspberries. Every commodity of consequence which we have been sending south of the border has been subject to scrutiny, criticism, and attack from the elements there.
We are experiencing an international trade war. The European Common Market seemed unable to control its members who have participated in unfair trade practices. There has been retaliation by the United States. Recently a 200 per cent countervail duty was placed on the European Common Market. There will obviously be a reaction to that from the European Common Market and so on.
Members opposite ask us to ignore the realities of the situation. They say that we should allow the due process of law to proceed and take our chances in the legal and trade forums

January 20, 1987
Adjournment Debate
in the United States and GATT. The realities of the situation compel the conclusion that we would obviously not get a fair hearing. Our destiny was fixed. Therefore, after consulting with all of the provinces and receiving from them an endorsement and encouragement, the federal Government started negotiations with the United States. Those are the realities. My friends in the New Democratic Party must come out of their igloos. We are now in the 20th century. We must turn on the light bulb and become aware of the realities.
Members in that particular Party are against everything. It is about time they took a position with regard to what they are in favour of. I do not encourage them to take the position of the Liberal Party which has so many positions that it does not know where it stands on any issue. I plead with members of the New Democratic Party to tell us what they are in favour of and what position they would have taken in this matter.
If we had done nothing they would have asked why we did not stand up for Canada, why we did not take action to avoid the countervail, why we did not negotiate to minimize our losses when we had the opportunity to do so. Their chief argument, which has been repeated many times, is that we have conceded sovereignty. They say that we have allowed the United States to trespass upon the parameters of Canadian privacy and have, therefore, conceded our inalienable right forever and a day. They say that this is a precedent which will prejudice us forever.
During this debate Members have spoken about the sacrosanct Auto Pact. The Auto Pact is an agreement representing the positions of both countries. Is the Auto Pact a concession of sovereignty? Nay, Mr. Speaker. It is an assertion of sovereignty. When we enter a marriage contract, join a church, a political Party or an association, we assert our right and our sovereignty. We indicate which rights we wish to exercise with agreement and consultation with the other Party.
If the logic of Members opposite is followed, all of the international agreements which we have made throughout history involve a surrender of sovereignty. Obviously, that is not the case. There is no authority in Canada which will stand behind the representations made by Members opposite that our sovereignty has been intruded upon. I defy those Members to find an authority of consequence who would stand behind their position.
We have the money in our hands and we have the authority and discretion to spend that money for the betterment of forestry in Canada. I would like to compliment my colleague, the Minister of State for Forestry (Mr. Merrithew), who has promulgated the difficulties of his Ministry so well in Canada. He deserves the congratulations of this House as does the Minister of International Trade (Miss Carney).
In closing, this is a good deal for Atlantic Canada. It has the endorsement of the Maritime Lumber Bureau. They are saying
enthusiastically and unequivocally that this deal was in the best interest of Canada. They told me that five minutes ago.


Mr. Deputy Speaker:: Order, please.



PROCEEDINGS ON ADJOURNMENT MOTION

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

Mr. Dan Heap (Spadina):: Mr. Speaker, I wish to address the question of Canada's relations with Central America. This arises out of a question on Honduras that I put to the Government on December 11.
I asked if the Government would request Honduras to obey international law by ceasing to host the Contra forces attacking Nicaragua, on pain of losing a large amount of economic aid that Canada supplies. On December 15 I received an entirely unsatisfactory letter from the Secretary of State for External Affairs (Mr. Clark) in which he ignored the fact of Honduran support for the war against Nicaragua, but stated that Canadian aid is not "given on the satisfaction of certain political conditions". The Government tries to reduce terrorist attacks and violations of international law to questions of political conditions. The Hon. Minister ought to know that his letter obscures the difference between law and political considerations.
In 1981 Canada suspended bilateral aid to the Government of Guatemala because of its record of grossly tolerating human rights violations. Most Canadian church and non-government organizations informed about conditions in central America favoured that decision, supporting the rule of law, as did my own Party.
The Canadian Government halted Canadian bilateral aid also to El Salvador, again because that Government was tolerating human rights violations. However, Canada has now resumed bilateral aid to that country, claiming that the Duarte Government has substantially improved the human rights situation there. While I and many other informed Canadians believe that decision to be in error, Canada's Government clearly thought it was appropriate to make that decision on grounds the Minister would call political.
I might mention one further case. Canada stopped giving bilateral aid to Cuba on the grounds that it was supplying military aid to Angola, when Angola needed that support to resist external aggression by South Africa.
To claim that such considerations do not enter into decisions to grant or withhold bilateral aid, as the Minister claims, is
January 20, 1987

nonsense. Canadians know that it is nonsense. Honduras is the largest single recipient of Canadian bilateral aid in Central America. As the Minister points out in his letter, that Government has received over $43 million in aid during the period 1982 to 1986. That Government is directly involved in the support of the U.S.-sponsored war of terrorist attacks against the people of Nicaragua. It tolerates the existence of some
14,000	Contra terrorists and mercenaries on its soil. Rather than disarming the Contras, it disposes of its own people, some 800 of whom were evacuated from Contra occupied areas in October alone. It has turned over the Swan Islands off the Atlantic coast and El Tigre in the Gulf of Fonseca to the United States for training and supplying the Contras and for staging attacks on Nicaragua. It provides the Contras with a string of air bases within Honduras, and shares the base at El Agucate with U.S. and Contra forces.
As an apparent consequence of Honduran support for these terrorist attacks, human rights abuses in Honduras are on the increase. In September, 1986, at least 14 men were assassinated. In October, 28 men and women were murdered.
The Minister says that Canada wants to reduce the underlying economic and social causes of tension in Honduras. I say to the Minister that one of the underlying economic and social causes of tension in Honduras is the presence of Contra bases and the support that Honduras is providing for President Reagan's war.
The same could be said of El Salvador. Again, the impossibility of fundamental changes in economic and social structures, and in human rights, is closely linked to the U.S. program of low intensity warfare. El Salvador provides the United States and the Contras with air bases, including the one at Ilopango which has been used to supply Contra invaders in Nicaragua by Hassenfus and his associates. In return, the U.S. supports the strength of the military and right wing elites that, at minimum, prevent Duarte from engaging in fundamental reforms.
The Government may believe that its resumption of bilateral aid to El Salvador has improved human rights there. I say to the Minister that he has yet to convince the Canadian churches and non-governmental organizations that have experience in that sorry country. At this moment, the Government is considering the resumption of bilateral aid to Guatemala. I want to warn the Minister that resumption of bilateral aid at this time threatens to draw Canada into the same trap as in El Salvador and Honduras.
We cannot pretend that bilateral aid has no political or military implications in a war-torn region where everything and everyone is judged by their relationship to the American war. We cannot pretend to alleviate human rights violations by supporting governments which exist at the mercy of those military and economic interests which oppose basic economic and social change. We must remember that the U.S. doctrine of low intensity conflict calls for mixtures of military and
Adjournment Debate
economic or so-called humanitarian aid to support repressive local elites.
It is time this Government issued a clear call to the Government of Honduras to cease and desist its support for the Contras. It is time we went beyond words and took action. The largest single recipient of Canadian aid in Central America should not be the primary base for U.S. terrorism in that region, which Honduras is. Instead, we should direct Canadian aid away from that country to a country where, in the opinion of many of the churches and non-governmental organizations with first-hand experience in the region, it would do the most good. At present, that country is Nicaragua which is vigorously struggling to rebuild its education, agriculture, housing, health care and all the arts of peace. The very first step we should take, which would use only 10 per cent of what we are now wasting in Honduras, is to open an embassy in the capital of Nicaragua, Managua.


Mr. Jean-Guy Hudon (Parliamentary Secretary to Secretary of State for External Affairs):: Mr. Speaker, as he was told by the Secretary of State for External Affairs (Mr. Clark) in the letter dated December 15 last, the Hon. Member knows that Canada has clearly come out in favour of a pacific settlement of the current crisis in Central America. We are opposed to the intervention of a third party anywhere in that region, and we deplore the inclusion of Central America in the East-West dispute and the militarization of that region.
Canada is against the supply of weapons to the opposing factions of the region. The Honduran Government has proven to be moderate despite the difficult situation it has been put in by the presence of Contras and, more or less successfully, it has tried not to intervene militarily in the dispute. Apparently the Hondurans have formally requested that the Contra forces leave their territory. We are concerned about the raids made in Honduras by the Sandinistan soldiers in pursuit of Contras because this can only exacerbate existing tensions. It would be unrealistic to think, as the Hon. Member has suggested, that Honduras could act unilaterally and disarm the Contras which now have almost as many troops as it has. We hope that the problems created by the presence of insurgents in Central America will be solved through national and regional reconciliation efforts.
Canada has joined international initiatives to promote a regional peace plan by voicing strong support for the Contadora process and indicating its willingness to play a constructive role whenever it will be practical and appropriate. At the request of the Contadora group countries, we have conveyed our observations on the security and control measures contained in the proposed Contadora Act. The Secretary of State on January 18, 1987, reiterated Canada's support to the Contadora process in a message to the Foreign Affairs Ministers of the countries involved in the Contadora group and in the Lima Support Group, as well as to the Secretaries General of the United Nations Organization and the Organization of American States at a time when they are initiating a

January 20, 1987
Adjournment Debate
tour of the area to consider the prospects of a resumption of negotiations. The Minister was pleased with the Contadora group's latest initiative. The Government of Canada for its part feels that today more than ever, it is important that the process go on because it could help reduce tensions in the area and provide the framework for a possible solution.


IMMIGRATION-ACTION TAKEN BY IMMIGRATION APPEAL BOARD
Benno Friesen: Mr. Speaker, just before Christmas the people of the lower mainland of British Columbia became aware that the Immigration Appeal Board in Vancouver a year previous had prevented the deportation of Mr. John Michael Lewis from Canada. He was a convicted child molester. He landed in Canada in 1981 and was already wanted in Utah and California on outstanding 1980 and 1982 charges involving sexual exploitation of minors. He had already served a jail term in B.C. for sex offences with boys. He has been allowed to stay in Canada since 1985 when the Board stayed a deportation order against him.
I guess what infuriates the public, and certainly what infuriates me, is the fact that there are literally hundreds of thousands of people from around the world who want to come into Canada simply to enjoy the good life and provide for their families. These are people who want to live quiet and peaceful lives and who will never violate the law. Yet the Immigration Appeal Board goes out of its way to spend its concern for somebody who is a felon, someone who has been convicted of a criminal offense. There is no accounting for it. It violates the sense of rightness in society. It violates the values in society. It possibly exposes the children of our society to danger since it seems that this man had a proclivity to children. There is no excuse for it.
The Immigration Act, 1976, in Section 19 outlines the inadmissible classes and states:
(1) No person shall be granted admission if he is a member of any of the
following classes:
(c) persons who have been convicted of an offence that, if committed in Canada, constitutes or, if committed outside Canada, would constitute an offence that may be punishable under any Act of Parliament and for which a maximum term of imprisonment of ten years or more may be imposed-
Mr. Lewis falls into an inadmissible class. The Act goes on to state the following in Section 21:
Where a removal order is made against any person with respect to whom an inquiry is held as a result of a report made pursuant to subsection 20(1), the removal order against that person may be made on the basis that that person is a member of any inadmissible class.
I want to know why the Immigration Appeal Board, which was appointed by the previous Government I might add, ruled as it did in this case. I wish to give credit where credit is due and point out that one member of the Board was the former Leader of the Liberal Party in British Columbia. He voted
against this application. It is the other two who are the guilty ones.
In the House before Christmas I asked if it would be possible to bring these Immigration Appeal Board people to justice for violating the law of Canada. I took the trouble to look at the oath of office which they take. I have never seen such an insipid, milquetoast oath that anyone has to take. It is clear that on that type of an oath they can do anything they want. They are not even asked to swear to uphold the law of Canada. I say to the Minister that it is time we looked at the oath of office so that those who sit on these appeal boards and adjudicate have at least to take an oath of office to uphold the law of Canada, as they did not do in this case.
I seek an assurance from the Minister that he will pursue the appeal about which he spoke in the House and that he will re-evaluate the process under which the immigration appeal system works and that the oath of office will change to make these people uphold the law of Canada.


Mr. Gordon Towers (Parliamentary Secretary to Minister of State for Science and Technology):: Mr. Speaker, I welcome the opportunity to expand on the reply given by the Minister of State for Immigration (Mr. Weiner) to the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen) on December 16, 1986. I have a great deal of respect for the judgment of the Hon. Member and am very conscious of his concern with respect to this matter.
Where a permanent resident is ordered deported he may appeal that order to the Immigration Appeal Board. The Board has sole and exclusive jurisdiction to decide upon such matters, subject only to appeal on a question of law or jurisdiction to the Federal Court of Canada. There cannot be any political interference by the Government in these decisions of an independent judicial body.
In November, 1984, the Board exercised its lawful discretion and stayed the execution of the deportation order, subject to review in February, 1989, or at such earlier date as determined by the Board. Based on suspected non-compliance of the terms and conditions set by the Board when its decision was reached, a motion to review was filed by Immigration officials requesting that the Board reconsider its original decision. This motion was dismissed on December 5, 1986, as the Board was not satisfied that Mr, Lewis had failed to comply with its terms and conditions. The Department has therefore initiated action in the Federal Court of Canada challenging the Board's decision.
[ Translation]


NATIONAL RESEARCH COUNCIL-(A) ALGONQUIN RADIO OBSERVATORY (B) PROFESSIONALS' FUTURE PROSPECTS
Jean-Robert Gauthier: Mr. Speaker, on November 3, 1986, I asked a question in this House concerning the Algonquin Radio Observatory, a project that came under the National Research Council, and I asked the
January 20, 1987

Minister of Science and Technology (Mr. Oberle) whether the Government had in fact made the decision, as reported by certain newspapers, to close that radio observatory.
The Minister answered he was not quite sure, that he did not know whether the report would be confirmed and, as far as he was concerned, if a decision had been made, it had been by the National Research Council rather than by the Government.
Now, Mr. Speaker, the matter of research and development is of concern to me and to many Members in this House. I for one believe that research and development do create jobs in Canada and that we will go on being provided with that means of remaining competitive on international markets.
But the closing down of that radio observatory does not involve jobs only-there is also the whole matter of increased efforts by the scientific world to try and get from this Government funding and concrete support for research and development.
Mr. Speaker, I am not alone in sounding the alarm, in stating that the Government is slashing, cutting, reducing research and development funding. At the National Research Council, and the Committee got it straight from the President himself, some $60 million was cut in this year's budget, and further similar cuts are expected in order to transfer funds to the so-called space agency that is supposed to be set up shortly.
Mr. Speaker, during the holidays I was reading some newspaper articles on the subject of where we are headed in the science and technology sector. I clipped an article in Le Droit by Dexter, an editorial writer, who wrote on January 6 of this year, and 1 quote:
The Government in Ottawa and pure research, a shocking state of affairs.
He went on to say:
The Government in Ottawa is threatening our pure research sector by treating the National Research Council of Canada like a business. When Brian Mulroney poses for the camera and hands a cheque for $1 million to Rick Hansen, while NRC researchers get their pink slip, we see the sad spectacle of a head of state who has no understanding of the role of pure research in a society's maturing process.
Mr. Speaker, it was the Conservative Government that made the cut in the NRC budget. It is going to divert these monies to the private sector and to the creation of a Canadian space agency. This proves how inconsistent the Government is. Perhaps I may recall certain facts that will show how shortsighted this Government is, its total lack of vision and lack of any consistent policy.
The latest research and development effort undertaken since the NASA program is without a doubt the new research program dubbed Star Wars. The U.S. Administration has asked the Canadian Government whether it wanted to be associated with the project, and the Canadian Government said no, we are not interested. I can't blame it for that. It exercised its right as a Government to make that decision.
However, ever since the Conservatives came to power, more than $120 million have been cut from the NRC budget. The last cuts totalling $20 million, announced last October, will
Adjournment Debate
oblige the NRC to cut between 100 and 150 jobs. The Minister has announced a project worth $1 billion in investments, but this amount will come not from investments, but from commitments from the private sector if everything goes well. This is not new money, but promises.
The Conservative Government has announced the creation of a space agency which will take part in the manned orbiting station project of NASA. We refused to take part in the Star Wars program, but as we all know, there are rumors that we shall join the Pentagon for a space station project which will eventually be used for Star Wars. This is not really consistent or logical, but what can you expect?
Canada will therefore take part indirectly in Star Wars because it will take part in the space station project.
The Government is not being very farsighted in this affair, Mr. Speaker. We deserve some explanation and I hope that the Parliamentary Secretary will be able to clarify this issue. For my part, I do not understand how we can say no to Star Wars while taking part in the space agency project.
If we seriously want to do research in electronics and microelectronics, we shall have to do so through recognized scientific organizations such as the National Research Council.
In closing, as my allotted time is about to expire, I would like to say that I do not object to the proposed space agency. On the contrary, I believe that it should be integrated with the National Research Council, which has the capability to provide the necessary expertise and which has facilities here, in Ottawa. So I hope that the decision to set up this space program will be translated into a real Government objective, that it will be implemented, and that the National Research Council will be asked to play a leading role. Once the necessary and adequate funding has been provided by the Government, we might have a better research and development program, more jobs, more stable employment, more competition at the international level, and perhaps better Canadian products.


Thomas Gordon Towers: Mr. Speaker, I am pleased to have the opportunity to reply to the Hon. Member's original question where he asked the Minister to explain what was happening with the Algonquin Radio Observatory. For some reason there is much misinformation and concern in respect of this particular item, and I welcome this chance to set the record straight.
NRC's mandate includes the responsiblity to "operate and administer any astronomical observatories established or maintained by the Government of Canada". At present, NRC runs three facilities-radio telescopes in Algonquin and Penticton, and an optical telescope and computation centre in Victoria. NRC also contributes to the Canada-France-Hawaii optical telescope in Mauna Kea, Hawaii, gaining thereby 40

January 20, 1987
Adjournment Debate
per cent of the operating time. These instruments are heavily used by university researchers from Canada and other countries. As well, NRC has many fine astronomers in its own right.
The Algonquin Radio Observatory consists of three instruments-a 46 metre fully steerable parabolic reflector, a compound solar interferometer and a small solar radio telescope. The large reflector was constructed over 20 years ago and needs major refurbishment so that it can operate at millimeter wavelengths. This reflector is also expensive to operate and some astronomers question the cost-benefit payoff from continuing to use the telescope as is.
Since an initial decision to proceed, the estimated cost of the refurbishment rose from $7.9 million to $11.7 million. In view of this, plans to refurbish the telescope have been cancelled. In the words of Dr. Kerwin, "We do not have the money and therefore we cannot resurface and therefore it becomes obsolete". The Minister of State for Science and Technology (Mr. Oberle) had no role in directing the reductions toward the Algonquin Radio Observatory. NRC management took that decision.
As of now, no other decisions have been made. The facility will operate this winter, and further decisions may be made next summer. In addition, the NRC task group is reviewing NRC's decision on the telescope right now.
NRC, in consultation with Canadian astronomers, is looking at a variety of options for the Algonquin Radio Observatory. They want to give Canadians access to the best possible facilities within budget constraints. Alternative sources of funding are being sought which would permit the telescope to be operated at less cost to NRC. Ways of strengthing other facilities are being looked at so that some of the same services can be provided elsewhere. Finally, NRC is looking into obtaining increased access to existing observatories.
It is not a pleasant task to have to review existing operations and re-allocate resources. Nevertheless, if federal research efforts are to be focused on agreed priorities, priorities which have emerged after long and careful thought by all interested parties, then the issue must be faced squarely and appropriate decisions taken.


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


[Stage Direction]
The House adjourned at 9.26 p.m.
[Stage Direction]

Wednesday, January 21, 1987