L068 - Thu 12 Dec 1985 / Jeu 12 déc 1985
SELECT COMMITTEE ON ECONOMIC AFFAIRS (CONTINUED)
SELECT COMMITTEE ON ECONOMIC AFFAIRS (CONTINUED)
The House resumed at 8 p.m.
REPORT
SELECT COMMITTEE ON ECONOMIC AFFAIRS (CONTINUED)
Resuming the adjourned debate on the motion for adoption of the recommendations contained in the interim report of the select committee on economic affairs -- Ontario Trade Review.
Mr. D. R. Cooke: If I may assess the usefulness of some of us in bringing about necessary changes for the good of our province and for the good of our country -- and I speak primarily of those of us who are new to this Legislature -- the work done to prepare the interim report of the select committee on economic affairs has been a work of joy, a work of real value, because we are, in my opinion, the only policymakers in the country who have had lengthy and consistent open hearings on the very important subject of bilateral trade options, particularly as they concern the United States.
The period from July 10 to the presentation of this report on November 7 therefore seems to me as chairman of this committee to have been a very worthwhile period and one that overshadows the sitting through of the turgid, meaningless and ill-prepared debate that seems to go on in this House on so many other subjects.
Members of the committee have worked very hard on the report, and I speak particularly of the eight members of the committee whom I was fortunate enough to have for the full 37 working days of the committee. The very professional work of our committee clerk, Douglas Arnott, made things function extremely smoothly, whether it was in the day-to-day hearings, in his impeccable arrangements for travel when we had to travel or in his assistance in the preparation of the report.
When I was assigned the chairmanship of this committee, I did not have any experience of this nature. There were those who suggested to me that it would be necessary to set up a very elaborate staffing situation, including consultants, who seemed to be available by the dozens, having graduated from the former government here as well as the former government in Ottawa.
There were those who even said that management consultant firms had been hired in the past and that perhaps they should be hired for chores of this sort.
I am pleased to report that I was able to staff the research department entirely with Fernando Traficante, who was seconded from the legislative library and thus worked for the committee at what was essentially no cost to the taxpayer. Mr. Traficante's analysis of the thinking process of committee members was excellent and, needless to say, it is his firm hand that is seen in the fleshing out of all the recommendations of the committee members.
I want to speak particularly as well about my vice-chairman, the member for Kent-Elgin (Mr. McGuigan), who assisted the committee by taking a more extensive tour of the US than the rest of us and by bringing this urban member and other urban members of the committee up short time and again by relating matters to the state of hogs, strawberries, wheat, logs or eggs. The committee was never able to lose that perspective, because it was always there and it was always thoroughly thought out, perhaps much more thoroughly thought out than is often the case. It was always very clear to me where we should stand in these matters after we heard from the member.
I was also delighted with the diligent hard work of the three novice government members of the committee, my seatmates the member for Halton-Burlington (Mr. Knight), the member for Wellington South (Mr. Ferraro) and the member for Downsview (Mr. Cordiano). We four became real soulmates in this task.
Another fresh face on the committee was the member for Eglinton (Mr. McFadden). If I may single him out, his diligence was coupled with a real knowledge of business law that I did not possess. He brought that to bear time and again through his personal experience in his practice.
The member for Prince Edward-Lennox (Mr. Taylor) needs to be singled out. He was perhaps the dean of the committee. I am certain he knew from the beginning that a lot of our toiling in the summer months might not be appreciated by the folks back home in the sense that it would not be terribly practical. He did not need to do that work and yet he did it. Some of us who were novices perhaps did think we were going to be appreciated by the folks back home. I have not said this to him privately, but I had an image of the member for Prince Edward-Lennox that was built up over years of following him in the media, and I found that he is in person a much more sensitive and extremely aware person than his media image shows.
I would also like to say that the information and debate brought to bear by the member for Hamilton East (Mr. Mackenzie) and the member for Sault Ste. Marie (Mr. Morin-Strom) were extremely valuable. In particular, the member for Hamilton East brought the perspective of his background as a union organizer to bear time and again on many of the issues the committee was addressing.
The first and foremost problem that must be addressed is that Canada's share of international wealth is not increasing. Canada's standard of living is not growing at the rate it should be. Unless something is done other than maintaining the status quo, we may be in for tough times. I am not certain I speak for the New Democratic Party members when I say that, but I know that I speak for all the rest of the members of the committee, and I think to a large extent I speak as well for the New Democrats in that their dissent really refers to a difference about what must be done.
Canada has the slowest growth in high-technology industries of the seven major industrial countries in the world. Manufacturing that has been the lifeblood of employment since the Industrial Revolution does not look to be the lifeblood of employment in the future. These are basic things we must come to grips with.
It may come as a bit of a shock to the academics who appeared before us, in particular such luminaries as Professor Ronald Wonnacott and Professor Richard Lipsey, but we did listen carefully to their arguments and we have assimilated them into our thinking. I am only certain that I speak for the members of the Liberal and Conservative parties in this regard, but I am certain I speak for all of them.
I was impressed with the fine arguments presented to us by them and by other economists. I impress on this House that the great majority of academic economists in this country make it clear that in the long run it is in our best interest as a country to attempt to free up the trading relationship between Canada and the US.
8:10 p.m.
I was particularly impressed with Professor Lipsey's argument that politicians often confuse balance-of-payments problems. I have often felt that the balance of trade this country had was at least as important as any deficit problems the provincial or federal governments might have. For one thing, government deficits should be looked at in the whole as opposed to the deficit of any one government, especially in view of the extent to which this federal system endorses transfer payments from one level of government to the other.
Rather, it should be argued that what we do in our trading with others is more important. The analogy to the family can be proffered. Most family units have children and perhaps even one spouse whose income and expenditure position is in deficit. This is not really harmful to the economy of a family, however, as long as total family expenditures do not exceed income.
Professor Lipsey points out on page 2 of his report to the committee: "A great deal of emphasis in evidence before you has concerned the balance of trade, either on particular items or on our trade as a whole. Such commentators are judging the nation's balance of payments just as they would the accounts of a single firm. Just as a firm is supposed to show a profit, according to this view, the nation is supposed to secure a balance-of-payments surplus, with the benefits being derived from international trade measured by the size of the surplus.
"In holding such views today, people are echoing an ancient economic doctrine called mercantilism. The original mercantilists judged the success of trade by the size of the country's trade balance. In many cases this doctrine made sense in terms of their objective, which was to use international trade as a means of building up the political and military power of the state rather than raising the living standards of its citizens. A balance-of-payments surplus allowed the nation to acquire foreign exchange reserves. These could then be used to pay armies composed partly of foreign mercenaries, purchase weapons abroad, and generally finance colonial adventures.
"If, contrary to the mercantilists, we take the view that the object of economic activity is to promote the welfare and living standards of ordinary citizens rather than the power of governments, then the mercantilist focus on the balance of trade makes no sense. What we understand today is that average living standards are maximized by having individuals, regions and countries specialize in the things they can produce relatively cheaply, and then trading these for the things they could produce at home only relatively expensively. The more specialization, the more trade.
"In this view, the gains from trade are to be judged by the volume of trade. The situation in which there is a large volume of trade but a zero balance of trade is then seen to be very satisfactory. The benefit to the country's living standards and employment depends on the volume and not the balance of trade."
This basic lesson in economics by Professor Lipsey is one that has not been learned by the US Congress. As we learned when we visited that country, its Congress is in a state of real fear. Americans are really concerned that, for one of the few times in their history, they have a deficit balance of trade. They are concerned that this balance particularly favours Pacific Rim countries. There is a great deal of what our American friends refer to, even privately to us, as Japanese-bashing going on in that country. As a result, there are apparently more than 400 protectionist measures being brought before the US Congress for consideration. Most have to do with protecting that country from offshore competition.
There is no concern, indeed no awareness of Canada, and there is little or no feeling one way or the other about protecting or hurting us as a country. There is a certain sense of goodwill towards Canada in the US, but there is also an awareness that we are second only to Japan in our trade surplus with the US at the present time.
What we learned time and again is that Canada is extremely poor at mining a value out of the goodwill we have. When we visited Ottawa, we saw no particular worthwhile attempt to mine that goodwill. Rather, we saw what I can only describe as sheer panic on the part of our federal government officials at the thought of Canada being subject, perhaps inadvertently, to dozens of tariff measures in the US Congress.
Rather than working at educating the American legislature as to the value of the continued good relationship with its biggest trading partner, Canada, the federal officials are accepting the rising protectionist fever in the US and feel they can rely on the ideological bent of the Reagan administration towards free trade to negotiate a deal which would get us on the other side of the tariff wall before it is built.
What is most frightening about the Ottawa perspective is they have absolutely no concept of what they want to have included in the agreement and what they want excluded. They have indicated to us they have done no preparation. They have had no sectoral analysis available, no scheme as to who should be protected and who forsaken, even though an agreement of this sort would have a far-reaching effect on hundreds of thousands of Canadian workers.
We were advised by the officials of the Department of External Affairs and the Department of Finance on August 29 that there was some sectoral analysis going on at this time, and some reports were being prepared for them by economists. We were promised we would be provided copies of these reports the moment they were available. Absolutely nothing has been sent to the committees at this time, so I must assume the decision on September 26 to ask the President of the United States to enter into free trade negotiations with Canada was made with absolutely no background information. I must also assume that today, almost three months later, there is still absolutely no background information from the federal government or available to the federal government.
Fortunately, our own government in this province has been preparing background briefings, including the three fine reports released a few short weeks ago by the Minister of Industry, Trade and Technology (Mr. O'Neil). With the co-operation of our officials not only in the Ministry of Industry, Trade and Technology, but also in the ministries of Treasury and Economics, Northern Development and Mines, Natural Resources, and Agriculture and Food, we have a good idea of what is being done in this province and what is being done openly to protect the workers in this province from the ill-prepared negotiations taking place.
As well, we have commissioned four research projects ourselves to answer specific questions concerning the future of manufacturing industry in Ontario; the future of high-technology industry and how it might be attracted, with or without bilateral negotiations, or how they may affect it; the whole question of branch plant operations and what decisions may be made as a result of an agreement, and a number of other subtle questions which will need to be answered before real talks can take place.
Fortunately, the Trade and Tariffs Act of 1984 in the US is such a cumbersome piece of legislation that we do have some time to commission these research projects and we hope some time in the new year, perhaps on Saturdays or Sundays if we get permission from the House to sit on those days, we can study in depth what these research projects mean. The Trade and Tariffs Act of 1984 has never had to be administered or carried out. The US has a free trade agreement with Israel which it put into place in 1985, but it is essentially an agreement motivated by politics rather than economics and it did not have to run the gauntlet of congressional negotiations with the President that this agreement will have to have.
8:20 p.m.
It is my understanding that the day before yesterday President Reagan wrote to the Congress and asked it for permission to enter into free trade negotiations with Canada. Congress will have 60 working days to answer, and 60 working days could take many months. The President is not allowed to talk to us until that period has ended. Even after those working days are completed, the American administration will have to enter into a very detailed sector analysis and keep Congress informed every step of the way.
In other words, there will be no fewer than 536 negotiators in the US negotiating with 11 parties in this country. The federal government in this country is complaining that it has to deal with 10 provinces. The difference is that in the US they know what they want; in Canada at the moment, only one of the 11 governments -- possibly two or three in the very near future -- seems to know clearly what it wants, and this government is extremely busy determining that even more clearly.
Getting back to what we want, to use Professor Lipsey's analogy, what we really want is a higher volume of trade in total. That is why it is extremely important that the very first recommendation of this interim report was a recommendation that the General Agreement on Tariffs and Trade negotiations, which recommenced in September rather quietly, be encouraged to the ultimate degree. This is where our future lies and, frankly, it is where the future of the US lies too.
I am concerned that we purport to speak the same language as the Americans, but in fact we do not. When we were in the US, we talked to Americans about our desire to preserve our cultural heritage and our social security system. Without question, all those with whom we spoke, be they administration officials, Congressmen or lobbyists, were adamant that there was no interest in the US in dismantling our social security system or our culture.
I believe they were all sincere when they said that. In the same breath, however, these same people would tell us they were very interested in such issues as publishing and border broadcasting. The anomaly was lost on them. They would talk about negotiating on a level playing field, but when we questioned them about what they meant by a level playing field, it soon became obvious that each and everyone of them wanted a playing field tilted in his direction.
The US has and uses what is called countervailing legislation. Canada has, but seldom uses, very cumbersome anti-dumping legislation. Countervailing legislation in the US involves two hearings which go on more or less concurrently. In each of the two hearings, a producer within the US alleges that he has been harmed by an importer. The importer must show to the satisfaction of the government that certain activity has not occurred. In one of the hearings, he must show that there has been no government subsidy to the production of the product. In the other hearing, he must show that the American domestic producer has not been harmed.
I ask the members of the House to weigh carefully the difficulties in showing that a domestic producer has not been harmed by an import and in showing in our culture, where there is so much economic development in what we do, that the government has not assisted in the production of the product being exported.
This is where, when it comes to maritime fishing problems, the Americans will suddenly say it is unfair for us to pay unemployment insurance to fishermen in the winter. To the American way of thinking, that is government assistance to the producer.
I am quite certain the Americans are most sincere when they say they do not wish to interfere with our social system, our economic support systems or our regional economic supports. I am also quite certain, however, that when the chips are down and they are applying their countervailing legislation, what we call our social fabric, they will be calling unfair government support. While this may never be mentioned in our negotiations with that country, two or three years down the line when it is too late, they could be calling for the dismantling of our social system.
I attempted to bring these concerns to the attention of certain officials in the US, as did other members of the committee. The member for Prince Edward-Lennox was most delightful when he suggested that if they wanted a level playing field, we wanted a level ice surface.
Even with that analogy, we found our American friends, in attempting to appease us, started to talk about ice fields. They were not used to the idea of an ice surface. I am not a geologist, but I do believe ice fields are not very often level.
Mr. McGuigan: They are a slippery bunch.
Mr. D. R. Cooke: They are slippery.
I respectfully suggest to the negotiator, Mr. Reisman, that if he is going to place everything on the table, and it sounds as if that is what is going to be done, we should demand that the Americans place everything on the table as well. We must demand that they place their countervailing legislation on the table. They must at least be ready to get rid of it.
So much of their high-tech industry and an incredible amount of their present economic prosperity is dependent on and entirely related to their huge, monstrous defence industry. If we are being asked to put our cultural and social industries on the bargaining table, as we are being asked to put our agricultural industry on the bargaining table, to put the auto pact on the bargaining table and to put so many other things on the bargaining table, then we must demand that the Americans do the same thing. In essence, this means placing their whole defence industry on the bargaining table.
I am not questioning the need for a defence industry in the US. It happens, however, that virtually their entire defence production industry is built upon a government support system, upon legitimately categorized, nontariff barriers. If Mr. Kelleher, the federal Minister for International Trade, and Mr. Merkin, of the Office of the US Trade Representative, state that all these things should be put on the bargaining table, then at least the financing of defence production in the US should be closed down and replaced with a new system.
As I understand it, the US has mortgage deductibility in its income tax legislation. This means American workers are given a great deal of government support by being allowed to deduct the. cost of their mortgage interest from their income tax. That would have to be changed. That is a nontariff barrier, a government support, and it should be on the bargaining table if we are going to negotiate seriously.
Another thing our committee has considered very seriously, as members will see in the report, is the myriad of barriers that exist between the provinces of Canada. Ontario has some of these barriers -- we do not come with clean hands -- but some of the other provinces have many more. This includes some of the natural-resource provinces that are most anxious to enter into a free trade agreement.
We are saying they should put their money where their mouths are. They must reduce interprovincial tariff barriers. This is something that should be worked on for the good of all Canada and for the good of our GATT negotiations, whether or not we get very far in our negotiations with the US.
Another suggestion we have made is that we open up an Ontario House in Washington to assist Ontario exporters to develop, in cooperation with the government of Canada, a better means of communicating their trade concerns to the US government and its legislators.
8:30 p.m.
One of the most impressive presentations we had was made by John D. Allan, the president and chief executive officer of Stelco Inc. In 1984, Mr. Allan found that his company was the target, to some extent inadvertently, of a tariff bill in the US Congress. He spent most of 1984 in Washington before he successfully, albeit temporarily, overcame the problem. His plant, like many plants, has now streamlined its operation with long production runs geared in part to the US market. Stelco plants in Swansea, Brantford and Gananoque are dependent on this. Fifteen per cent of their production is exported to the US, a smaller percentage, I might add, than that of the Algoma Steel Corp. Ltd.
After much lobbying in the US Congress and in the administration, the sale to the US still would have been blocked had it not been that some of their steel is used in the Michelin tire plant to build steel-belted tires in South Carolina. The senator for that state happens to have a great deal of seniority in the US Senate. When the Michelin tire plant became aware that the loss of this steel could lose it an important source of product and possibly end up putting some South Carolina boys out of work, that senator became concerned, the dominoes fell, as they apparently do in the middle of the night when legislation is being negotiated in the back rooms of the US Senate, and Canada was exempted.
Mr. Rae: Do they actually bargain their legislation? That is just terrible.
Mr. D. R. Cooke: Yes, they do. We have to become aware of that and we have to become part and parcel of it if we are going to make our way in the US market. We must remember that the US is 90 per cent of Ontario's market.
What we must do in the US is educate each and every one of 535 congressmen about what jobs in their congressional district are dependent, and to what extent they are dependent, on Canadian imports. Once that information is available to them, and only when that information is available to them, will they start paying attention to Canada when they are considering their protectionist legislation.
If we do this and do it well, then we will not be tied, and will not need to worry about being tied, to the US as a market. We will be able to look to a great horizon and will be able to cover this whole globe looking for expanded trade. We will be able to expand our trade with the US as we simultaneously expand trade to much more exotic spots in the world.
In the meantime, it is very important to make sure once again that certain items are not on the bargaining table unless the US is similarly willing to put things near and dear to it on the bargaining table. I would seriously suggest that neither country be required to do so.
My colleague the member for Kent-Elgin is going to talk about agriculture. There is no doubt the auto pact -- which is content legislation, not free trade -- is currently beneficial to Canada. There is no doubt in my mind that the exciting announcement this morning by Toyota to operate in this country will have a dramatic effect on the area around my riding, the Kitchener area. There is no doubt that they are certain and anxious to become involved in the auto pact.
The Americans are not interested in negotiating anything similar to the auto pact. In fact, they would probably like to get out of the auto pact if they could because it is not benefiting their country at this time as much as it is ours. While it might not be a bad idea to tinker with it if we could, there is just too much danger in trying to do so; so it must not be touched. Our defence production-sharing agreement similarly must not be touched.
We have a lot more to say; there is a lot we do not know at this time. We will eventually have a chance to comment further, I am sure. In the meantime, I would like to say once again how grateful I am to have had the opportunity to work with such a great group of people; how grateful I am that the previous government endorsed so many of the views that are in this report and that the opposition still endorses it; and that this government, particularly the Premier (Mr. Peterson) and the Minister of Industry, Trade and Technology, have endorsed, to my knowledge, a great deal of this report. We take this as a compliment and we intend to keep working hard.
Mr. Mackenzie: On a point of privilege, Mr. Speaker: The procedure generally in a debate on a committee report like this is that the parties split the time, which would be 50 minutes to each party. I hope the Speaker will keep track of time because otherwise it is going to be difficult. We have had 34 minutes for the first speaker.
The Acting Speaker (Mr. Morin): I understand there was no agreement announced.
Mr. Mackenzie: That has always been the practice.
Mr. Harris: Perhaps while the debate proceeds, the honourable members who wish to participate in debate may want collectively to ascertain how they would like to do it. Otherwise, what happens when they do not get together, when there is not an agreement, is we may have an honourable member who might like to go to about 10:25 p.m.
The Acting Speaker: There were no agreements announced. Therefore, the debate will continue.
Mr. Hennessy: Before I proceed, I should like to take this opportunity to say I was very pleased to serve on this committee. The chairman did an excellent job of chairing the meetings and I was very pleased with the members. It was a good committee and I enjoyed serving on it. The clerk of the committee and also the research officer were a good group. It was a well-picked team. I must congratulate the chairman for the job he has done in regard to this committee.
I am pleased to have this opportunity to talk about free trade and the report of the select committee on economic affairs. The report of the committee is a good one. It represents well the many opinions we heard from people all over the province. Nothing is more likely to cause an argument these days than a discussion on free trade. That is understandable. Trade is very important to Canada and trade is very important to Ontario.
Our province is among the great trading countries of the world. Ontario depends on more trade overseas than does Japan or West Germany. We must have overseas markets for our industries to succeed and for our people to have jobs. With trading being so important to our nation's wellbeing, it is natural there is a great deal of concern with any trade agreement. Unlike many nations in the world, Canada has only one neighbour, the US of America, and our neighbour is also our biggest business customer. Because of the size and wealth of the US, there is concern that its industries will overpower ours.
Again, because of the size and the influence of US culture, there is a concern that less formal relations between our two nations will make Canada less Canadian. I do not buy that argument. Canadians are Canadians, no matter where they are, and I agree that there are certain things we just do not trade away in a new trade agreement. There are some things we just do not touch. In committee, I brought up the fact that our social support programs should not be a topic of discussion for free trade or a freer trade deal. That only makes sense. We are all proud of what our social system has achieved. There is no need to trade it away.
I am reading the recommendations made by this committee, of which I was very pleased to be part:
"It is imperative that the Canadian government guarantee that we do not compromise our social, cultural, regional and linguistic heritage in any trade discussions with the US. This heritage includes, but is not limited to, government programs such as the medicare system; pension and social security programs; the system of workers' compensation boards; national unemployment insurance; regional development programs, and protection for Canadian content in the nation's media.
"Any discussions and possible agreements should specifically protect Canada's continuing right to unique social, cultural and economic policies and programs based on its own distinct needs."
8:40 p.m.
While we must be on our guard to preserve our unique and good way of life, there is no reason we should not go to the bargaining table with the Americans. If one listens to the US Congress, as I have and as my colleagues on the economic affairs committee have, what do the US politicians say? They say to close up the US borders to imported goods. That means they want to close up the border to Canadian goods, and that means less business and fewer jobs.
If the US administration says it is willing to open up American markets to Canadian goods, it makes sense that we should sit down and see what it is proposing. We should not run away from trade negotiations. We should sit down and take advantage of this situation. We should sit down and get the best deal we can for Canadian goods and workers. This does not mean we are going to give away our culture or wind up our social programs. All it means is that we are going to talk and listen. If we can make a deal, we will make it. If we cannot, at least we will have tried.
Canadians and Canadian industry are much tougher than we give them credit for. Our industries can compete on world markets. We can compete and win.
The committee's first recommendation is that Ontario should encourage Ottawa to get the best trade deal it can. Second, Ottawa should continue to open new markets for our goods with traditional trade partners and with new ones. Third, we ask for a reduction of interprovincial trade barriers. Let us strengthen east-west trade within Canada while, fourth, we look at new markets abroad. Fifth, we should sit down with the US and hammer out an agreement that will work to everyone's benefit.
We are a big nation now. We have the ability to make a name for ourselves. We should not run away from the potential that freer trade can offer Canada.
In closing, if we do not negotiate, we will not know what the other fellow is offering. If we walk away without even discussing it, it is like somebody who wants to get married: if he does not ask the girl, he will never know whether she would have said yes or no.
With all due respect, we have nothing to lose by negotiating. If the terms are not satisfactory to the people of Ontario or to the members of this Legislature, we do not have to accept them. We would be very foolish not to see at least what they have to offer.
It is like going shopping. You go to four or five different stores. You do not intend to buy anything, you are just looking around, but you may see something you want to buy. If you did not take the opportunity to look around, you would never know what you could get. In all fairness, we should sit down and discuss the situation. If it is not satisfactory, we do not accept it; if it is satisfactory, then we have made a good deal.
Mr. Rae: If I may rise initially on a point of order, Mr. Speaker, it is my understanding that some agreement has been reached between the parties and that we have agreed to a roughly 50-minute division between us with respect to the time, which is a sensible arrangement.
I appreciate the opportunity to participate in the debate. I was not a member of the committee, but I can tell the chairman I followed it with a great deal of interest and had many discussions with my colleagues the member for Hamilton East and the member for Sault Ste. Marie (Mr. Morin-Strom), who were on the committee.
Without giving the House an extensive autobiography, this subject is one that has been of considerable personal interest to me. I have been called the son of many things, but in fact I am the son of a diplomat who served in the US for many years.
Mr. Andrewes: The member is the son of a QC.
Mr. Rae: The member for Eglinton was going to say a son of a something else, but I know he would not want to be on the record as saying that.
I grew up in the US, in Washington, DC, as a small boy and young man, until I was 15 years of age. I attended school there and have maintained a connection with American life and events in the US ever since. I was a student in the US and have travelled extensively there.
When I was in federal politics, I was a first member of the Canada-US interparliamentary committee and was subsequently the vice-chairman of that committee. I was involved in very extensive discussions with American senators and congressmen on that committee, including Senator Baucas, who I know is a very active opponent of Canadian lumber exports into the US.
Congressman Gibbons was a very active member of the interparliamentary committee and at that time was an enormous advocate of free trade from the US point of view. I can remember very critical comments Mr. Gibbons made back in those days -- I am talking about 1979-80 -- about any attempts in Congress to restrict Japanese or other imports. I find it somewhat ironic, having watched Mr. Gibbons in action as an enormously resourceful politician, to hear his remarks these days, which are substantially different from what he was saying at that time.
It is with a tremendous amount of personal interest in our relationships with the US and in the light of the well-known history of our party's concern for the future of our country and for the structural problems facing our economy and nation, given the degree of foreign ownership and the degree of American domination of our economy, that I participate in this debate.
I have always felt that while the 19th century saw the British imperial economy as the primary exponent of free trade, it is ironic that up until very recently it was the American imperial economy in the world that was expressing again a desire for free trade as the only way to go.
It is fair to say -- and one probably saw this stated no more clearly and explicitly than in the report of Donald Macdonald's Royal Commission on Economic Union and Development Prospects for Canada, which was released this fall -- that the political impetus for the idea of free trade is very much tied to the ideology of free markets and to the notion that government intervention is a bad thing, that free markets must prevail not only on the national level but also on the international level and that any interference with those markets will produce less wealth and less efficiency and will somehow produce an economy that is working in less than good balance and good health.
That is basically the attitude taken by Professor Lipsey, who is perhaps the classical exponent of classical 19th-century liberalism, which has become in many respects 20th-century conservatism. I want to tell the House that my concern about the arguments for free trade is very directly parallel to my concern about arguments put in an abstract way about the benefits of an economy that works on an entirely free market basis.
We should be under no illusions. My concern is simply that if Canada signs an agreement with the US that provides for a comprehensive economic treaty with respect to the establishment of free trade with the US, we should be under no illusion that we are severely restricting the ability of governments, both federal and provincial, to do the job that Canadians and Ontarians have historically always wanted governments to do.
I noted with interest the comments yesterday by Mr. Kelleher that some items would not be on the table. However, the only issue that he stated specifically would be taken away in a sense was that we do have some concerns about our cultural sovereignty, which he said not all Americans understand. We also have special policies to protect and promote our cultural industries, such as publishing, broadcasting, records and films. These are vulnerable in any small country that borders on a larger one, and we will continue to take special pains to preserve them.
8:50 p.m.
If we take just one example, agriculture, we will find that historically in this country, political and social movements have grown up in the past 100 years to restrict severely the operation of a so-called pure market economy with respect to agriculture. If we sign a comprehensive economic treaty with the US on free trade and it includes agricultural products, it will take away from governments a role they have had with respect to agriculture in this country since before the First World War.
Let us be under no illusion about that. We do not have free trade in agricultural products even within the Ontario economy. Why do we not have it? It is not because of some socialist conspiracy. We do not have it for the simple reason that people who have farmed for a living have historically said to themselves: "We simply have to get together to control the price of our product in the marketplace."
Whether it is eggs, milk, wheat or any number of other products sold, eaten and consumed daily or exported, Canadians have a strong record of saying, "We want to establish marketing arrangements that are more stable than those a natural free market economy would give us."
From time to time, we get these wide-eyed, bushy-tailed reports from various economic councils telling us what a terrible thing marketing boards are and how, if only we had the same arrangements they have in other countries, eggs would be priced at three or four cents less a dozen or whatever it might happen to be.
That is not going to happen for a simple reason. It is not because all the egg producers in Ontario are good New Democrats -- I see the member for Kent-Elgin smiling at me; he knows how ironic I am being when I say that -- but because they are protecting their own economic self-interest. Perhaps they are New Democrats without being fully conscious that is what they are.
That is only one example of people working together. I am going to come to the Minister of Agriculture and Food (Mr. Riddell) in a moment. I listened with interest to comments he has made on the radio about free trade. I used that as only one example to suggest that when we talk about the role of government in the economy or when we talk about free trade and free markets, we have to get away from the tyranny of abstractions. We have to relate much more directly to how Canadians make a living and to how we have organized our economy, not as matter of chance but as a matter of choice.
I listened to the comments made by the Minister of Agriculture and Food on Radio Noon one day, since I always listen to the radio when I am in my car. He was talking about the effects of a free trade agreement on our agricultural economy. He may correct me if I am wrong, but I clearly heard him say the sectors that had chosen agricultural marketing boards, various mechanisms for market stability and various kinds of producer arrangements for controlling supply in an attempt to control prices would be the ones that would be most severely affected by any free trade arrangement with the US. For the record, the Minister of Agriculture and Food is smiling and nodding.
The sectors that have not been protected by these kinds of marketing arrangements would have to fend for themselves in a sense. Whether they were able to penetrate American markets would depend on price, North American supply and our old friend the exchange rate about which, thank God, Gerald Bouey did not succeed when he wanted to keep the Canadian dollar at 90 cents, otherwise we would be in a pickle today. That is the reality.
I have taken agriculture as an example, not because it is a field in which I have any sense of natural knowledge but because I wanted to use it as an example to show that when we talk about the impact of free trade and about arguments for free trade, we are not talking just about big unions or about how it is just people who are trying to hide behind some kind of protection.
What we are talking about, and I come back to this point, is how all our country's social and economic institutions over the years have grown by choice and not by chance. We have chosen to do things differently from the Americans, yet our agriculture industry has been devastated by the effects of low prices, high interest rates and uncertain markets.
Those things are as true here as they are in the US, but those sectors that have fared best in the past 10 years of enormous uncertainty have been precisely those agricultural sectors that have chosen to do more about controlling their markets, prices and supplies. We have done better than the American farmers in each of those sectors with respect to survival and protection from bankruptcy.
I do not think the House will disagree dramatically with anything I am saying. There are many members in other parties who, from personal experience, know full well and better what I am talking about.
It is all well and good to talk, as the federal government and Mr. Mulroney do, about the importance of our having a stronger relationship with the US and the need to work out our frictions -- I want to come back to that because I fully agree with that point -- but when people start talking about a comprehensive free trade treaty with the US, what they are talking about is a completely different kettle of fish from any kind of trade relationship we have established with any other country in recent memory.
We are talking about the potential destruction of some very important institutions in this country, not only government institutions but also social institutions that have been built by farmers, co-operatives and people trying to find a degree of security for themselves in a world that has been very insecure, particularly over the past five years.
I am getting a little tired of hearing from various economists and politicians who say that those of us who are concerned about that degree of protection are simply afraid of something. I am not afraid of anything. I am simply saying we have built a series of institutions in this country and we ought to be proud of them. We should stand up for them and recognize that one cannot put all those things on the table and say: "Here you are. Let us put those up alongside yours, and we will be ready to trade them away."
The member for Fort William (Mr. Hennessy) suggested there was nothing wrong with window-shopping or with sitting down to have some chats. With great respect to the member for Fort William, that is not what Mr. Mulroney is proposing. Mr. Mulroney is not proposing a chat about our trade with the US. He is proposing that the public agenda of our relationship between our two countries should include a comprehensive trade treaty that would limit severely the ability of our government to help people and to respond to their needs.
What is being suggested is not necessary. It is not a discussion of those areas in which we have a real dispute or of those problems that have arisen in the past few years and have been particularly difficult. What is being proposed is a comprehensive approach to the American Congress and government. This approach is simply wrongheaded. If it succeeds, it will take away much of the historic argument over the past 120 years for a different kind of government and a different kind of approach to public policy on the northern half of the North American continent.
Not only do I endorse the view of Mr. Bourassa when he said the implication of free trade is to destroy our sovereignty; it is also a view I have expressed on many different occasions. One cannot say, "Take away from government institutions in Canada their right to control and deal in certain key areas of the economy," and at the same time say, "But we are not saying anything about sovereignty."
Sovereignty is not simply a question of national dress. We are not talking about some sort of folkloric survival of our country here. We are talking about the viability, strength and vitality of our institutions. If one takes away from those institutions the ability to intervene constructively and help people, one has done something to destroy the very raison d'être for Canada itself.
9 p.m.
We are at a crossroads. It is because of our historic sense that a very real choice is to be made that we in our party have had some difficulty with the approach taken by the select committee and, if I may say so, the approach taken by the Premier and by the Leader of the Opposition (Mr. Grossman). It is because there is a historic choice to be made that I think the issue has to be clearly joined with the federal government. I am sure there are various tactical reasons why the Premier does not want to do that, but I suggest to him it is a very risky business he is involved in.
I want to say from my experience, contrary to what the member for Fort William said, that negotiations have a certain sense of momentum. Once the government of Canada is committed to a process of attempting to get some kind of treaty at the end of the road, that in itself will establish a momentum which will make it extraordinarily difficult for any one person to say, "I think we have gone far enough; it is time to quit."
The continued vagueness that pervades our national life and national debate as to what these discussions are going to be all about is enormously dangerous for our country. We cannot send Simon Reisman into a room unless we know precisely what it is he is trying to get.
I say, again contrary to the member for Fort William, the idea of saying that all we are doing is talking with the Americans not only is naïve but also is not what the process is all about. The government of Canada is entering into discussions for one reason and one reason alone: it wants to sign a comprehensive treaty with respect to free trade between Canada and the US. That is what it is all about.
The issue should have been more clearly joined. That is the difference of approach between ourselves and the other parties with respect to this report. We have said very clearly that we do not think a free trade discussion should be started. We think there should be discussions on other issues. We think there should be discussions on our bilateral relationship as it affects lumber and steel. We think we need to establish some mechanisms. We agree completely with those people who are saying we have to be more aggressive in the US in selling what is in the relationship between our two countries and that it is not in the Americans' self-interest to stop Canadian exports from going into the US.
We do not support the idea of a comprehensive treaty. The fact that the issue has not been clearly joined and that there remains such vagueness as to what the discussions are all about, and even as to what the powers of the provinces are all about, is not healthy. Ultimately, I believe it is going to make it even more difficult for those of us who believe this is an issue that has to be dealt with in a very different way.
I have heard that the Premier thinks he has some kind of veto over these discussions. He bases his view as to whether he has a veto on a communiqué that was agreed to by him, all the other Premiers and the Prime Minister of Canada. To the best of my knowledge, that communiqué has not been read into the record in this House. I want to read it into the record because that communiqué is the document which the Premier says gives him a veto. I want members to listen very carefully to it. It is quite long, but I hope not to take too long in reading it.
"The ministers agreed to the principle of full provincial participation in the forthcoming trade negotiations between Canada and the US and in the GATT. The Canada-US negotiations are now in the preparatory phase. During that phase, the ministers agreed to give effect within the next 90 days to the principle of full provincial participation through, among other things: (1) establishing a common basis of facts and analysis, (2) each province and the federal government setting out their objectives for the negotiations and (3) establishing an agreed view of the obstacles to the achievement of these objectives that may exist in the US.
"The ministers agreed further that this preparatory phase should include the determination of how best to give effect to the principle of full provincial participation in subsequent phases of negotiation and that the work might be accomplished, among other ways, through holding further meetings at the level of ministers or first ministers if necessary."
I have heard gobbledegook in my time, but I think this reaches a state of the art. It says the work might be accomplished, among other ways. I might say it also might not be accomplished because that is what the word "might" means. It might or might not be; maybe yes, maybe no. If ever there was a maybe document, this is it. Yet this is the basis upon which the Premier comes back waving a piece of paper, saying, "I have the veto." No wonder Mr. Kelleher says, "No, there is no veto." No wonder even Joe Clark, bless his heart, says, "No, there is no veto."
I want to suggest it is all very amusing for us to question whether the Premier got the better of Mr. Clark or Mr. Clark got the better of the Premier. If Mr. Clark got the better of the Premier, that puts the Premier in a category all by himself in the history of Canadian politics.
I want to suggest in all seriousness that it is essential, at this stage of these kinds of discussions, that there be a clear statement from the government of Ontario that says simply, "The government of Ontario is opposed to a comprehensive free trade treaty with the US of America. We are opposed to discussions entered into with the US Congress or anyone else on that basis." In my judgement, that should be the end of it.
Do we have a problem with American protectionism? Yes, of course we do. Is there a crisis at the heart of the American Congress with respect to trade? There are severe difficulties, there is no doubt about that. I might say that is a historical point stemming in good measure from a dollar that is severely overvalued with respect to other currencies. It relates to some balances and imbalances that change from year to year and are going to be subject to various political pressures. For us to take that excuse as a reason for selling out our bargaining strength, and indeed our birthright and independence as a nation, is folly of the highest order.
I just finished reading a book called The Triumph of Folly by the historian Barbara Tuchman. It is an interesting account of how, at various times, governments have engaged and persisted in policies that are ultimately destructive of the very ends they say they are trying to achieve. In fact, the policies are so self-destructive the historian is inclined to ask the question, "How is it possible that people persisted in the folly for so long when it was clearly not even in their own interest to do so?"
There are various reasons it happens. One is that it takes too long for those who see a folly and those who say they see something as a folly to respond. I think this government has taken too long. The Premier's approach is simply too fuzzy, ambivalent and ambiguous to give Ontario and Canada the kind of negotiating power and leverage we deserve.
It is for that reason my colleagues in the Legislature, the member for Hamilton East and the member for Sault Ste. Marie, issued such an effective dissent. I know they will both want to discuss that at greater length this evening.
9:10 p.m.
MINISTER'S COMMENTS
Mr. Speaker: I wonder if the members would give me a moment or two.
Earlier today, there was a discussion in question period between two members when another member got up on a point of order. I have had an opportunity to review Hansard and I would say, first, I should not have allowed the question in the first place, as it did not pertain to the honourable minister's ministerial responsibility.
However, the question was raised by the member for Don Mills (Mr. Timbrell) as to whether or not the minister today in the House accused the members of not telling the truth.
Referring to the Hansard record, it would appear that the minister was reporting on what he actually said on December 9 in Rainy River. What was said at that time cannot be considered out of order here in the House. If such an accusation was in the House, then it would be a matter of order and not of privilege. As this matter is not within the jurisdiction of the House, the members could look into the question of any civil remedy.
Mr. Timbrell: On a point of order, Mr. Speaker: Perhaps you could help me --
Mr. Speaker: Actually, that is a ruling and it is not debatable. However, what is the point of order?
Mr. Timbrell: The point of order is that you could perhaps help me by telling me the difference. I am looking at page 4, clause 19(d)10 of the standing orders, where it says: "(d) In debate, a member shall be called to order by the Speaker if he charges another member with uttering a deliberate falsehood."
Would you tell me the difference between calling another member a liar and saying that another member does not tell the truth and why that distinction, whatever it is, would not lead to the member being called to order?
Mr. Speaker: I am not here to debate the ruling. The member knows full well he can challenge my ruling. However, I looked at Hansard very carefully and each time the member said, "I cannot say that he did tell the truth." Before that he said, "I said," and referred to what he said outside the House, if you look at it very carefully.
REPORT
SELECT COMMITTEE ON ECONOMIC AFFAIRS (CONTINUED)
Mr. McGuigan: It is a pleasure to take part in this debate, as it was a pleasure to take part in this study. It is one of those times when members get down and do some serious work that impinges upon the future of this great country.
Members from all parties looked at this program in a pragmatic way. There was very little retreat to dogmatic, traditional political stances, and a great deal of very good work was done. It would be hard to come down and say any one conclusion was false or wrong, because we are speculating about the future. We are talking about a great many unknown things and each point of view is valid.
I want to talk about agriculture because I believe I was put on the committee to represent that segment of our society. I want to talk a bit about the historical background and why we are so different from the US. The leader of the third party touched upon those things and I would like to add a little more definition.
Taking the situation that existed in the 1930s in Ontario, it was a time when chain stores were expanding and when Canada Packers was swallowing up a whole lot of other packers. It was a time of conglomerates. The farmers thought they were the victims of all the evils of the unfettered capitalistic system. They cast about for some answers and actually found one in Australia. The Australians had begun marketing boards. The farmers had a series of court cases where things were challenged as to whether they were legal, and in 1937 the government of Mitchell Hepburn passed the legislation that would allow marketing boards.
Out in western Canada, we had a situation during the Second World War when they actually sold the wheat overseas cheaper than they did in Canada to assist in the war effort and help Britain along. After the war, as compensation to the farmers of western Canada, the Canadian Wheat Board was brought in and said wheat and feed grains would be handled by one board.
I will show the members how well that worked. In 1971, the Russians came to North America. They had lost their crops that year and decided to replace the grain with American grain, of which there were large surpluses. They went to the seven major grain companies and placed orders. Within a matter of a week or 10 days, they bought up the entire surplus of grain in the US.
Because the independent sellers were all operating in the secrecy of their own operations, none realized what was happening. By the end of the week or 10 days, the Russians had bought all the grain at extremely low prices. That was the great grain robbery. At the time, it was figured that in terms of gold they had bought the grain for about $1 a bushel, which was an extremely low price.
However, the Canadian Wheat Board, being a single seller representing all the farmers of western Canada, realized what was going on and stayed out of the market. After the American grain had been sold, it entered the market, which by that time had reached a peak at $5 a bushel. Those are some of the benefits of selling under a one-desk system.
In Ontario, we looked at the relative advantages of producing in the US and in Canada. We decided we could not play on a level playing field because of climate and soil -- mostly climate -- and the presence of the Mississippi River as a great avenue of trade, a cheap way to move grain. We decided we could not compete with them. Our tariffs at the time were very low. As time went on and inflation raised the prices, we found that the existing tariffs in those days became rather meaningless. Where they might have been of some use at one time, as prices rose they became meaningless.
That is why we developed the system of marketing boards that limited the amount of production. We tried to gauge what the market was and we limited our production to that, so that the farmer got a reasonable price for his crop and the consumer paid most of the price for the product.
The US chose another route. They chose to subsidize farmers with a vast array of systems that guaranteed prices and the difference between market prices and target prices. They poured billions of dollars into that agricultural system to the extent that during the last four-year Agricultural Trade Act from 1981 to 1985 it was supposedly going to cost the US government $11 billion. At the end of the four years, it had actually expended $63 billion. There is a huge system of subsidies in the US to subsidize grain.
They do not subsidize livestock very much. In Ontario, some of the livestock items that lent themselves to marketing boards were dairy products, eggs and poultry, including turkeys. We set those organizations up so that they return a decent price to the producer.
9:20 p.m.
We do not have much time to explore these, although I would like to. I want to move on to horticulture, one of the important elements in southern Ontario. It is important because it provides a local supply and because it is a very large consumer of labour; it is labour-intensive. It is important not only to the horticultural producers, but also to a great many people who work in that industry.
As I mentioned earlier, we had some level of tariff, but during the Tokyo round, which concluded in 1977, we were actually able to gain some measure of protection by modernizing the tariff rates. Today in a good many of the soft fruits, we have protection levels of 10 per cent or 15 per cent on the value of the crop. That revitalized the horticultural industry, so that today, instead of being a dying industry, at least it is holding its own.
What would happen if we adopted the American system? As has been mentioned by other speakers, they say: "Our system is the most successful in the world; everyone else must play by our rules." In the case of eggs, it would mean we would get rid of our quotas. We would free up the border to allow any amount to come in and we would simply wipe out our egg production industry.
In the US that industry is controlled by the brewing companies, which, I remind members, are the big buyers of grain, the brewing byproducts of which they feed into the poultry market. They would control and wipe out our family egg producers. They would do the same with poultry and meat producers, as they would with turkey producers.
American firms would do the same with tobacco. In the US they have a five-year supply of tobacco. We are worrying about the problems we have here; we see on television that the producers are demonstrating in Ottawa. I believe we have about a two-year supply; they have a five-year supply. They would swamp us in those items.
When it comes to corn, there is very little impediment to corn moving across the border. We are at a point now where there is a zero tariff, so there would be no effect. In the case of soybeans, we do not produce enough for the market, and so we allow soybeans in duty-free in order to help our livestock industries and also the chemical and food industries that use soybean products. Regarding vegetables, we would be inundated with most of them for the reason that they produce them in larger quantities.
US industries are highly subsidized in ways different from ours. For one thing, the money that is borrowed by farmers in the US is usually at about two per cent less interest than in Canada. They have rural electrification subsidies. There are huge transportation subsidies to the American highway network.
The American southwest, which produces a great many of the vegetables, in California and in Arizona, is very highly subsidized in the matter of water. Those farms could not exist were it not for the billions of dollars poured into water systems to bring water down from the Rocky Mountains into those dry areas.
I submit there are very few areas in which we would gain in agriculture. The one obvious one is hog production, where we could eliminate the countervailing tariff they charge against our hogs; however, I do not think we in this country want to limit ourselves to the production of one livestock item. The prospect for cattle is not quite such a clear situation, because beef cattle do move freely both ways across the border, depending upon the time of year.
As the leader of the third party has mentioned, there are very good reasons for the committee decision that Ontario agriculture should not be part of that bargaining situation.
I believe we have already obtained some benefits in talking in that the members of the General Agreement on Tariff and Trade have changed their stance, which was to avoid talking because we are coming up with a new round of GATT. They have now said they will do some talking. I think our talks may have inspired a little sense on the part of Congress, in that it is not in a position to be able to say to the President he is not doing anything; the President is doing something.
I recognize there are dangers in this thing, but I do not think we can start the action and just withdraw precipitately. I am reminded of the Chinese proverb, "Those who would ride on the back of the tiger better be careful they do not end up inside." I share those sentiments. I wish I had more time to go into greater detail, but other members wish to talk, so I will surrender to them.
Mr. McFadden: First of all, let me congratulate the chairman of the select committee. I think he did an absolutely first-rate job over a lengthy period of time, day after day. I know a lot of members right after the election, with the calling of the assembly, were finding it a bit tiresome going for three and four days a week through the summer and then on through the fall; but throughout all of the committee hearings he kept his temper and ran everything well in the face of large numbers of witnesses, arguments among members and discussion. He deserves a lot of credit for having done an excellent job as chairman of the committee.
I enjoyed my work with all the members of the committee. It was a hardworking group that took its responsibilities very seriously. During the course of our work from July right through until the House came back in mid-October, we heard witnesses from a tremendously broad range of organizations, with an equally broad range of points of view and perspectives.
I was tremendously impressed with the commitment of members of the committee to investigate seriously and thoroughly the trade and other economic issues facing Ontario and, as well, the dedication of the members to develop policy approaches which will protect and enhance the economic and social wellbeing of Ontario and Canadians more generally.
The one matter I found a bit disappointing in the process was the tone of the dissent filed by New Democratic Party members of the committee. There were two specific passages I found a bit disconcerting and disappointing. One passage of the dissenting view went as follows: "The Liberal and Conservative members of the committee, in our view, have done a grave disservice not only to the people of Ontario but to the country as a whole. Indeed, it is hard to believe that we all sat in the same rooms and listened to the same evidence and submissions, because the majority has ignored the recommendations of all the labour organizations and many of the industries that appeared before us."
The dissent goes on to say a little later on: "We hoped that the committee would treat its mandate seriously, that it would carefully weigh the benefits and the cost of free trade, that it would carefully examine the options, and that it would explore the alternatives to free trade. We hoped that, in so doing, the government of Ontario could provide national leadership on the issue of free trade.
"Unfortunately, the ideological biases of our Liberal and Conservative colleagues have got in the way."
I personally felt those passages and a couple of other references were denigrating to the other members of the committee, because every member of that committee, whether Liberal, Conservative or New Democrat, took his job seriously. What I found in those remarks was some kind of political macho game being played here, which implied that somehow the dissenting members of the committee were better Canadians than the other members of this committee. I am proud to be a Canadian and, not only that, I am proud to be a Canadian nationalist. I take my responsibilities to this province seriously, as I know the other members of the committee did.
9:30 p.m.
The committee was engaged in a serious consideration about the future of Ontario. All the members of the committee took that obligation seriously. I do not think that process is in any way enhanced or that any consensus-building is even possible with the kind of partisan posturing set out in the dissenting statement. There is nothing wrong with having a difference of opinion and a thoroughly good argument. That is what makes our system work well. It was the type of denigrating tone that did a disservice to the work of the committee.
I move on now to look at the issues raised before the committee and in the report, and to discuss those in the context of the Ontario economy and our future direction. The current discussion across Canada about trade with the US is a healthy development. It is forcing Canadians to confront, for the first time in a long while, the realities of current economic life worldwide. It is bringing into clear focus for all Canadians the importance of international trade in a way that many Canadians did not realize and is clearly establishing in Canadian minds the growing dependence we have on the US market.
Canada's reliance on the US is overwhelming. The reliance of the Ontario economy on the US is alarming. Page 2 of the report has a graph which shows that some 90 per cent of Ontario's exports are to the US. The next largest market for our goods is Europe, with only four per cent. Any company, jurisdiction, country or province that depends on one market for 90 per cent of its export is in a potentially very unhealthy situation.
Canada's reliance on the US has increased precipitously during the past century. In 1911, only 35 per cent of Canada's exports went to the US, and that was during the election when reciprocity with the US was a tremendous issue. There were real concerns even then about Canada's dependence on the American market. We are now, in the 1980s, in a situation where 80 per cent of Canada's exports and 90 per cent of Ontario's exports go to the US.
The vital, direct importance of this trade to Canadians, and particularly Ontarians, is reflected in the statistics shown on page 18 of the report. They show that some one million workers in Ontario depend for their employment on exports to the US, considerably greater than the 700,000 other Canadians who depend on those exports. One million Ontarians are dependent for their living on our ongoing trade relations with the Americans. That means one job in four in Ontario is dependent on exports to the US, and fully one job in every two jobs in the manufacturing sector is dependent on American exports.
Given our dependence on exports, it is essential that we look in a very serious and comprehensive way at the world economic scene and our role in it. Traditionally, until virtually the current day, our national and provincial wealth depended on the production and export of raw materials and natural resources, mining, forestry products, fishing and agriculture. Today, our position as a supplier of natural resources is being challenged by developing countries, and further is being called into question by a changing market demand for commodities.
As the natural resource sector upon which we depended for so many years comes under increasing pressure, we also witness the development of new industrial centres such as Japan, Korea, Taiwan and Hong Kong, to name only a few. The concern is that these countries are no longer technologically inferior to Canada or to Ontario. In some respects they are superior to us technologically. When we see the impact Japan has had, we can only imagine the effect a newly industrialized China or India could have on Canada and on North America. These gradually industrializing countries are new and very potent competitors.
However, we should also remember that as those countries grow and become wealthier and more able to buy things, China, India, Hong Kong, Korea and Japan represent a new and very large market for our goods and services as well. The shock for Canada is that we are moving from a world that needed our resources to a world in which we will have to compete with other countries on a very equal footing in a good many areas.
Given this increasingly competitive world, we are going to have to move ahead aggressively with a tremendous degree of innovation. We cannot simply pull up some form of economic drawbridge and create a new fortress Canada, as some people seem to suggest. We are going to have to develop a practical and realistic strategy, both domestically and in our international trade relations. The interim report of the select committee provides a useful starting point, but only a starting point; a great deal needs to be done.
I would like to comment on three specific areas of trade policy: (1) interprovincial trade, (2) Canada-US trade and (3) international trade beyond the USA.
We currently do not have free and unrestricted trade within Canada. There is a whole variety of barriers, ranging from government procurement policies to various regulatory policies, that limits and restricts trade between provinces within our country. These artificial barriers within this country stunt the growth of Canadian companies and ensure in many cases that we are uncompetitive internationally, both in selling abroad and competing domestically against goods being imported. It means that many of our companies cannot secure economies of scale even in servicing the domestic market, since market access is artificially limited in this country within an already small national market.
To deal with the highly competitive world our corporations are facing, it is essential that we work to break down existing interprovincial barriers to trade. This was the thrust of the third and fourth recommendations of the select committee's report, which we strongly endorse.
The important thing is that Ontario must lead the way in the breaking down of interprovincial trade barriers. It is all right and it is justifiable for us as a province to ask for a provincial voice in the negotiations with the US on the next GATT round, but it is even more essential, in my view, that Ontario provide leadership within this country to ensure that negotiations on the removal of interprovincial trade barriers move ahead at the same time as any trade talks that might be in progress to enhance or enlarge trade with the US or the rest of the world.
We cannot afford either to get involved in some enhanced treaty agreement with the US or to open our markets under a new round of GATT with the existing network of interprovincial trade barriers. In my view, we must follow as a general principle the idea that Canada should be open to all Canadians.
9:40 p.m.
The second area to which I would like to turn is Canada-US trade. As we have heard tonight, as is clear from reading the newspapers or watching television, and as was reflected in our committee hearings, opinion is very divided on the Canada-US trading relationship and where we should go from here.
Opinions from witnesses who appeared before our committee ranged from those who favour a comprehensive free trade agreement with the US to those who favour trade talks to enhance trade opportunities and to protect existing US markets, all the way to those who want no talks with the US on virtually anything.
The overwhelming majority of companies, associations and individuals appearing before our committee favoured holding trade talks with the US. The preponderant number, as the chairman commented, was very clearly in favour of at least protecting our existing markets and, if possible, expanding further opportunities in the US.
This view of expanding relations with the US and protecting existing markets was expressed by a broad range of groups: Algoma Steel, Stelco, Polysar, Connaught Laboratories, the Canadian Business Equipment Manufacturers Association, the Royal Bank of Canada, the Bank of Montreal, Manufacturers Life, the Canadian Wall Covering Distributors Association, the Consumers' Association of Canada, the Canadian Manufacturers' Association and the Board of Trade of Metropolitan Toronto, to name several of them.
Of course, others who appeared before the committee were opposed to any talks whatsoever or wanted them in a very restricted way.
It was the view of the committee, and our view on this side of the House, that trade talks with the US are essential. However, there are certain matters that are not negotiable and should not be on the table. These matters relate to cultural and political sovereignty and the whole range of social security programs we have developed in this country.
There is no way our unemployment insurance system, our medicare program or any of the other programs that form a vital and essential part of our security system in this country should be open to negotiation.
Recommendation 17 of the report specifically says agriculture should not be on the negotiating table. That is our strong opinion. We are also strongly of the view, as reflected in recommendation 16 of the report, that the auto pact should not be renegotiated and should not be on the table; rather, it should be looked to as a model for future trade discussions.
Our overriding concern must be to protect our nation's vital economic and social interests in these discussions. Who knows what the results of any trade talks with the US will be? We might have no agreement whatsoever. We might not even get started. Congress could turn it down next spring.
On the other hand, we might wind up with a far-reaching trade agreement with the US. We might wind up with a series of sectoral arrangements in certain mutually agreeable areas, such as steel and chemicals. We might even develop a process to arbitrate and settle disputes through some form of Canadian-American trade dispute tribunal.
Undoubtedly, no matter what comes out of this, we are launching ourselves upon a long and complex process. The member for York South (Mr. Rae) commented on the provincial role in this process. I endorse, as does our party and the committee, a role for the provinces in the negotiations. That is essential. The only matter Canadians should address, and this is my strong view, is the appropriate role for provincial governments in the negotiation of economic treaties or any other form of international relations.
As Canadians, we should think twice before allowing the provinces to have a power of veto over international agreements. There is no country in the world that submits its treaties for possible veto by member states within it, whether it is the US, any country in Europe or countries around the world. That does not mean the provinces should not be consulted, and it does not mean the provinces cannot take actions that could undermine a treaty, as we could do, for example, in liquor regulations.
We have to be very careful about endorsing a role that would allow the provinces, either singly or in a group, to veto international treaties. As Canadians and on principle, in line with constitutional law, that is taking a very large step and we ought to think twice before we get involved in that approach.
However, we strongly endorse the very direct involvement of the provinces in the whole discussion and planning process. It is essential that our provinces and the national government safeguard our vulnerable industries and communities. We must ensure that vulnerable communities, companies and people in the work force are not sacrificed in any trade discussions.
Above all, we must be hard-headed and practical negotiators who are not afraid to walk away from the discussion table if necessary, if the deal being negotiated is not a good one. As the late President John F. Kennedy said, we should never negotiate out of fear, but we should never fear to negotiate.
In the context of our long, close and friendly relationship with the US, we should approach the talks with a positive attitude, looking for ways and means of increasing jobs for Canadians and enhancing the wealth of our country. If this cannot be done, or if part of the price is too high, then so be it; at least we will have tried to look for opportunities for Canadians as well as protecting their jobs. There is nothing wrong with going out into the world, meeting with the Americans and trying to improve and safeguard our position.
The final area I would like to turn to relates to international trade beyond the US. I think there is a general agreement that, as a country and a province, we are too dependent on the American market. Unfortunately, witness after witness, when cross-examined, was vague about real alternatives. For example, I can recall talking to the Stelco and Algoma executives who appeared before the committee. We asked them, "If the American market were closed off or in some way limited, where are your alternative markets? Could you sell more steel in Canada?" They said no. "Could you replace your exports to the US by sales to countries in other parts of the world?" They said no.
We have to be very careful in these discussions about what our real position is and what we are going to be capable of exporting worldwide. The committee's report is supportive of reducing impediments to trade through the new round of GATT negotiations and of expanding and diversifying our trade relationships. This area clearly requires a great deal more study, not just by this committee but also by the government of Ontario, the federal government and industry across Canada.
Canada and the rest of the world have benefited tremendously by the general liberalization of trade worldwide since the Second World War.
When I hear some people talk about current trade relations and how we are going to set up trade barriers, do this and do that, I have to think of R. B. Bennett. In the Great Depression, he came up with the strategy of setting up tariff walls around Canada. We were going to become self-sufficient. We were not going to be invaded by American imports or imports from other countries. We were going to blast our way into world markets.
Do members remember R. B. Bennett? Some may. If they have read the history books, they will recall R. B. Bennett's policy towards international trade and business was that he was going to blast his way into the world market. The only thing that got blasted was R. B. Bennett. The voters blasted him out of office. That policy did not work in the 1930s and it will not work in the 1980s or 1990s.
9:50 p.m.
Very clearly, any policy in the world today that is based upon beggaring one's neighbour, or limiting or trying to keep people out, if it spreads worldwide will fail consistently and will only bring economic hardship and unemployment. We are going to have to be very innovative in dealing with our international trade, because innovation is the way in which we are going to be successful.
The new round of GATT discussions could be as important, and also as difficult, as the proposed talks with the US. It may well be that the GATT talks will be more difficult than those with the Americans. The one thing we can count on when the GATT discussions open is that the developing world is going to negotiate tenaciously with us. The developing countries will want access to our markets as well as to the markets of other developed countries.
We hear about the problems of the clothing and shoe industries. The problems of our clothing industry do not come from the US; they come from the developing countries. We can only expect in the years ahead, and in any new GATT round, that pressure from the developing countries will grow and become far more severe.
Having said that, as I mentioned earlier there are major and expanding opportunities for trade with the countries of developing world as their economies grow and their incomes increase. The one thing we cannot expect is that the opportunities for trade will come in raw materials, the traditional area for our exports. The opportunities in all likelihood will lie in specialized manufactured products and various services.
We are going to have to display a great deal of flexibility, innovation, imagination and drive if we are to be successful in the changing international economic order. We are going to be forced to display a level of innovation that we have not had to put forward in the course of our history. In my view, the interim report sets out a reasonable and practical starting point. The report sets out the further work and research that needs to be done.
The timetable of the select committee may have to be expanded past July 1986 if we are going to justify the mandate we have been given by this Legislature. We cannot carry out the volume of vital work that needs to be done in the short time we have ahead, given the legislative calendar. Our approach to this whole issue is governed by our view of our country and our people. In a changing world, Canada will either have to adapt to change or be broken by it. The one thing we cannot do is stop the clock. This Legislature is the only part of the world where one can stop clocks on the wall.
We cannot move back into a simpler world that needed and even hungered after our products. The world does not hunger after our products in the same way any more. We are going to have to be prepared to go anywhere and to talk to anyone to advance the best interests of Canada. I am confident that in partnership with farsighted governments, our scientists, technicians, inventors, engineers, workers and entrepreneurs will be equal to this challenge. That is why our party supports the positive point of view taken by the interim report.
Mr. Mackenzie: I want to join my colleagues in giving credit to the chairman of the committee for a very fair handling of the committee. There was never any question about that and about the right of everybody on the committee to have his say. I also want to give credit to the staff, to Mr. Traficante and the clerk, Doug Arnott.
I agree on at least one point with my colleague to my right, and that is that it was a hardworking committee, probably one of the more interesting and hardworking committees of the number I have had the privilege to be on in my 10 years in this House.
Having said that, I want to make it clear that I am glad the member for Eglinton picked up the difference, the dissent, between us and himself and his party and the Liberal Party on the other side of the House.
This is an issue that bothers me considerably. I think Mr. Mulroney and his Conservative Party and Donald Macdonald and his Royal Commission on Economic Union and Development Prospects for Canada have set an economic agenda for this country of ours that threatens Canadians, both those who have jobs and those who do not. That threat, in my opinion, is the whole comprehensive free trade argument we are now getting.
Despite the technical arguments, the debate is not about simple trade between our two countries and it is not just about tariff or nontariff barriers. The debate is about Canada and fundamental issues such as whose interests the economy of this country should serve and what our social priorities should be. I think free trade is drawing the lines of confrontation between multinationals and working people in this country.
Free traders want a Canada that pays allegiance to the marketplace, that has as its standards the two themes of economic efficiency and international competitiveness and that allows its social priorities to be determined not by the will of the people but by the throw of the economic dice. I think there is a growing consensus in this country that says this vision is the wrong vision and believes that in fundamental ways our economy has failed us. It is a consensus, I think, that argues basically for jobs, for decent incomes, for equality and for security, and I do not see those down the free trade road.
It is against this rising tide that Mulroney's Conservatives, armed with the report of the Macdonald royal commission, seem to be fighting their battle. The Macdonald royal commission has correctly understood that Canada is at the crossroads. A number of others have mentioned that.
The royal commission is quite clear in stating that major changes are necessary, changes it describes as "radical and not cosmetic." But the radical change it envisions is in reality more of the same. The ship of state, according to the royal commission, has free trade as its engine, market forces as the fuel and multinationals seem to be at the helm. For working people, commission members have constructed a few lifeboats, but there are not enough lifejackets to go around.
I want to explore what is behind the logic of free trade. I want to talk about what the theory of competitive advantage means for Canadians, what international competition requires of working people and what economic efficiency implies to our social programs. I think that is the language of free trade.
Free trade is predicated upon the concept of comparative advantage. All professed long-term benefits for Canada under a free trade agreement with the US are based on that abstract theory. In Canada, when we hear the phrase "comparative advantage." We all know what it means. It means the cycle of our resource dependency is strengthened, not broken. It means we will have come full circle back to be the hewers of wood and drawers of water. The Macdonald royal commission itself is very clear on this point. It argued that "Only by moving in this direction will Canada achieve full benefit from its trade." That is found on page 270.
Free traders admit that comparative advantage in Canada in Canadian terms will lead to an expansion of resource-related activities but a significant contraction within many major manufacturing areas. What does that mean for Canada? We know that the growth in world trade is in manufactured end-products and not in the commodity sectors. We know the terms of trade in resources are not in Canada's favour. We know we have a deficit in the technology sector which amounts to a staggering $12 billion a year. We know the whole concept of comparative advantage is shifting from geography to high technology and cheap labour.
Why, then, should we reinforce our competitive disadvantages? If the political and economic leaders of Japan back in the 1960s had accepted that country's future as an exporter of souvenir trinkets, I wonder where Japan would be today. Comparative advantage spells disaster for many Canadian industries. Even the free traders who were before our committee admit that food processing, beverages, textiles and clothing, furniture, metal fabricating, household appliances, hardware and tools, motor vehicles, machinery and important industries in the service sector will be losers under free trade. I think it would be a disaster for working Canadians.
10 p.m.
It has been estimated that as many as 20,000 textile and clothing jobs could be lost, as many as 45,000 electrical jobs, 10,000 household furniture jobs and more than half the brewery jobs in this province; and the list goes on. The tens of thousands of Canadian workers who will lose their jobs as a result of free trade are told they will have to become more mobile, they will get some transitional assistance from governments and there will be offsetting jobs created somewhere else.
One of the funny things about the committee hearings was that we asked this question time and again of those who favoured free trade, and nobody could tell us where the new jobs would be. These are not the reassurances that would or should compel us to take a leap of faith into a free trade agreement with the US.
Canadians are being told to give up real jobs today for the imaginary jobs of tomorrow; and I say to that, "Thanks, but no thanks." Free traders are constantly clamouring about the need for Canada to become more competitive in international markets. They believe a free trade agreement with the US will accomplish that goal. In other words, free traders believe that forced and unplanned industrial restructuring is precisely what Canada needs. They admit there will be a difficult period of adjustment, but they argue that in the end we will be better off.
Who will really be better off? I would suggest that the new rules of international competitiveness always mean it is the multinationals that are better off and not ordinary working people. International competitiveness in a world that can successfully combine the technology of advanced capital with the labour conditions of feudalism can only serve to undermine our standard of living.
Let me point out what I mean by that. The most modern steel mill in the world today is in Nigeria, where workers earn about $400 a month. South Korean workers produce high-technology goods for a couple of dollars an hour, and Filipino workers earn a fraction of even that amount. The case for international competitiveness is in fact an attempt to impose the international labour market on Canadians.
From the perspective of competitiveness, Canadian wages will always be too high, environmental and occupational health regulations too stringent, the cost of social programs too exorbitant and the corporate tax load too burdensome. From the standpoint of competitiveness, everything is a cost. How will we care for our sick, our needy, our old? These will also be construed as competitive disadvantages. We have seen this already in the unemployment insurance benefits arguments involving our fishermen on the east coast.
Competition, free-trade style, is simply a mug's game. The optimistic claim that free trade will encourage companies in Canada to specialize, rationalize production, increase productivity, capture new export markets and generate offsetting jobs is simply not supported by the facts or by any evidence that came before the select committee on economic affairs.
If free trade is the answer to our perceived lack of competitiveness, why does the forest industry, which operates in a North American context of free trade now, by its own admission have the equipment that was put in place 70 years ago, while the auto industry, which operates in a North American context of trade safeguards, is one of our most technologically intensive industrial sectors, with computer-aided design and computer-aided manufacturing robotics, just-in-time inventory and what have you?
By 1987, as a result of the Tokyo round of GATT, more than 80 per cent of Canada's exports will enter the US duty-free and 65 per cent of US exports to Canada will be duty-free. This staged reduction in tariffs has not brought about the anticipated benefits predicted by free traders. In fact, during that period our trade deficit in value-added manufacturing products has actually increased.
There is now no reason to believe that a further staged reduction in tariffs and in nontariff barriers will accomplish what has yet to be accomplished. Instead, we will see Canadian companies move south, and there was ample evidence of that before the committee; we will see US branch plants repatriated or moved offshore and we will see Canada become even more vulnerable to high value-added imports.
Free trade, we are told, will bring about greater economic efficiency. We all share that goal. We all want Canada to be more productive; we are all in favour of greater economic efficiency. However, here again free trade arguments distort rather than reveal the issue. What is so efficient about the extracting and selling of our nonrenewable resources to pay for our colour televisions or our fall wardrobes? What is so economically efficient about the marketplace when it comes to the aerospace industry, as an example?
Remember, it was the private sector in the marketplace which has already once abandoned the aerospace industry in Canada. The entire global aerospace industry is dependent on government procurement, public purchases -- not the marketplace.
No one would argue Japan is inefficient. It now has a five-year plan to become a major player in the aerospace industry. Did Japan decide that, given all the rules of comparative advantage and economic efficiency, it would just buy aerospace products on the international market? This is a recent decision. No, it did not.
Instead, Japan invited US companies to set up in Japan to meet demands for local content and technology transfers. That requires strategic planning, but in Canada, free traders want to abandon that opportunity and leave the fate of our industrial economy to the decisions of foreign countries and producers.
Once again, we can see what lies behind their claims. Economic efficiency, free-trade style, is about supporting the leaner, meaner industrial machine; it is not about rational or national economic decisions. Economic efficiency, free-trade style, is about subordinating social needs to the marketplace.
Again, the Macdonald commission is very clear on that point. It talks about how our social policy instrument should impose minimum constraints on market mechanisms and thus minimum constraints on efficiency. In other words, economic efficiency will mean tradeoffs.
However, what are the tradeoffs? For working people, they mean giving up what we believe economic activity should be all about: security, expanded social services, improved equality. These are precisely the issues which for multinationals are not tradeoffs at all. These are the things against which big businesses have always fought.
Free traders have taken legitimate national concerns and used them as an opportunity to promote the corporate vision of Canada. For example, it is clear that the rising tide of protectionism in the US must be stemmed. It is true that increasing trade friction between our two countries must be addressed, but we have seen the skirmishes and trade wars between Canada and the US in steel, hogs, lumber, fish, urban transit, etc. At last count, there were about 300 protectionist pieces of legislation percolating in Washington. While very little of this legislation is focused specifically on Canada, we could be sideswiped in the process.
We know that these problems are real, but free trade is not an honest, open approach to resolving these issues; it uses our current problems as a way to promote the interests of business, not those of the Canadian community. That is why the alternatives to free trade are never explored. That is why, when alternatives are raised, they are so quickly rejected.
Free traders have rejected managed trade, fair trade or the alternative to free trade, but look at the current situation, Mr. Speaker. Much of the trade between Canada and the US is composed of parent companies trading with their subsidiaries or associates; in other words, it is already managed trade. It is just that it is managed by individual corporate headquarters.
Managed trade between countries would involve countries determining what is in the national interest, but free trade, that is managed trade between companies, involves decisions about what is best for the companies' tax accounts, labour costs, overheads and the bottom line. Free trade chooses one set of managed trade relations over a different set and then hides them in the choices and language of the free market.
Those of us who oppose free trade are sometimes called naive, myopic, protectionist, narrow, arrogant and what have you. However, I am convinced that, once again, when the true costs of free trade are explored and the false promises exploded, Canadians will overwhelmingly reject it. They already may be doing that. It was obvious in the federal Tory background paper that said, "Hey, we should keep this issue as low-profile as possible." That clearly indicated they did not want the discussion if they could help it.
The Macdonald commission is startlingly frank in its observation of our choices. The commissioners have argued that, if we do not accept free trade, our current situation might lead very quickly over the next few years to one that calls for a planned economy.
Right there we have the story. That is what frightens free traders. Rather than face the prospect of managed trade and seize the opportunity to plan our economy, free traders would rather risk Canada's sovereignty; they would rather see the complete integration of our economy with that of the US; they would rather see our workers compete against workers in parts of the globe where even basic human justice is denied. I do not think that is the route for our country to go.
I close by saying that once we start this free trade route and open up the negotiations, we are putting everything on the table. The minute we put everything on the table, we start the trade-off. That would be a mistake and that is why our party is so vehement in its opposition to free trade in this country.
10:10 p.m.
Mr. Stevenson: There has been a suggestion that we reverse the order here so that if I have any time left over, the member for Wellington South can use it.
Mr. Speaker: It is agreeable with me if it is agreeable with the House.
Ms. Fish: There are only 11 minutes left.
Mr. Stevenson: Eleven minutes. I thought there were 15. There will not be much time left over then.
My party wishes to go on record as being opposed, in the strongest possible terms, to the inclusion of agriculture in the discussion of free trade between Canada and the US. I will get to a few possible exceptions later, but we are in favour of a general exclusion or, in other words, we are opposed to a general inclusion.
I will go very briefly through a few of the agricultural sectors and expand somewhat on my thoughts. In the fruit and vegetable area, we could not compete with most crops. We simply do not have the length of growing season that California, Florida and Texas have. That means our capital investment in a lot of these crops is not used as efficiently as that in the US where similar crops are grown. In general, we find ourselves in a more costly production area with much lower seasonal yields than the US tends to get in many crops in those areas.
For the commodities in which we do have orderly marketing, free trade would destroy much of that marketing system. The retailers of the produce would simply pick up the phone to call a wholesaler or broker and order their needs in by the truckload from the US. They would not go to the somewhat extra effort of dealing with the smaller producers here in Ontario.
In the area of fruit and vegetable processing, most of our processors could not compete with those in the southern US who run year-round and, quite often, on one commodity. They do not find it necessary to switch commodities many times over the same processing equipment, as we do here in Ontario.
In the area of supply-management marketing boards, we just have to look at the dairy, feather and tobacco industries in order.
The whole marketing structure of the dairy industry would likely be destroyed under totally free trade. That would mean financial disaster to most of our dairy producers. It is interesting to note that in some years the excess production of dairy products in the US is enough to supply the whole Canadian market. It is very difficult to deal with a production giant such as we have south of the border in a situation such as that.
In the feather industries -- eggs, broilers and turkeys -- certainly the likelihood is that our supply management and orderly marketing would again be gone. This is not just a loss to producers; it is also a loss to consumers who have a uniform supply of excellent-quality product available to them every day of the year and available from Ontario and Canadian producers.
For example, in the southern US, where great numbers of broilers are produced, they are produced in very cheap barns with quite inexpensive labour. A few people may recall two years ago when there was a heavy, wet snowfall in some of the northern areas of the southern US. That heavy snow caused the collapse of many very cheap buildings in which the broilers were housed. Large numbers of chickens suffocated under the weight of the buildings and snow.
That clearly indicates the sort of facilities they have built there, the cheapness of those structures and the toughness of the competition Ontario producers would have to go up against in a free trade situation. In our climate, we have to build fairly costly, well-insulated structures for these birds to be produced, particularly in the wintertime. It is very difficult to see how our producers, without some degree of protection, could possibly compete with those in the much milder climates of the southern US.
In much of the US, the production of eggs and chicken meat is totally integrated. There are huge operations; by and large, the family farm has disappeared in these production structures. In the few cases where the family faun does exist, generally speaking the farmer is paid only for his labour. Many times the barns are put up by the companies involved and quite often they are subsidized by state governments.
To get a processing industry in a particular part of the state, they will help that industry become established. These barns go up, usually with excess space for production of birds, which generally leads to overproduction. The farmers feed the poultry, and that is about their input. They get some very modest amounts of money to do that sort of work.
It is also very clear that as the feather industry would most certainly be diminished in Canada, so too go the processors. It would be impossible for our processors to compete against the processors in the southern US, partly because of the nature of the facilities and because of the much less expensive labour there. It would have a great social impact and a great impact on our economy to reduce the processing area. Certainly, one cannot have production without processing or vice versa. We do have a very well co-ordinated industry in this province and in Canada. It is beyond me why anybody would want to tamper with it to the extent the federal government appears prepared to tamper with it in free trade.
10:20 p.m.
We can look over various commodities in agriculture and see where some might wish to explore free trade just for protection. As I understand the position of the lumber and steel industries, they are largely interested in free trade discussions to stop countervail action against them in the US. I was not part of the committee and I did not hear their presentations, but from following the media and doing some research on my own, it certainly seems their main interest is largely for protection and somewhat less for the expansion of markets. To that extent, it is possible the Ontario Pork Producers' Marketing Board and the Ontario Cattlemen's Association may wish to have their commodities included in discussions for free trade, again for protection.
As well, not only tariff protection but also nontariff items frequently come up in food imports and exports. All we have to think of there is the chloramphenicol situation that occurred this past spring, where some states stopped accepting Ontario pork products because of the use of the chloramphenicol drug in swine production.
I also want to mention agricultural machinery very briefly. There was some thought a while ago that free trade in agricultural machinery might be to the mutual benefit of both countries, and I believe some companies may still feel this way. However, anyone who read the Toronto Star last Sunday will know that it contained an article about Gerry Brouwer, a very successful businessman in the Keswick area who produces sod equipment, turf grass equipment, and has developed a very successful company in the last 10 or 15 years. He stated quite emphatically in this article that he would have great difficulty competing in the American market in a situation of free trade and that he would certainly have to reassess his production standards and his production organization if free trade came about.
In summary, there may be a few cases in which agricultural commodities may want to be included, but certainly in general it appears to me that most of the impact will be negative, and we have to look at this very carefully.
Mr. Ferraro: I wish to thank the member for Durham-York (Mr. Stevenson) for the intent if not for the reality.
In the extensive amount of time I have, I would like to say initially that it was a pleasure for me to participate with the other members of that committee. I offer my congratulations to the chairman, who so very ably filled that position.
As indicated earlier, the mandate of the committee was essentially to deal with issues relating to bilateral trade between the two countries, Canada and the US, and to review their implications for Ontario.
What did we conclude? We unanimously concluded that the idea of comprehensive free trade was not possible. That the New Democrats indicated -- and I agree with the member for Eglinton -- that the majority decision of the Liberals and Conservatives was to some degree un-Canadian really surprised me, because I think one can respect one another's views, as I do. I respect their views without being sarcastic. I think that was uncalled-for.
Let me conclude by saying that the report is good. The 20 recommendations set the tone for Ontario's involvement. I look forward to the upcoming discussions in the committee.
Mr. Morin-Strom: Clearly, Canada is once again in a serious fight in this issue of free trade with the US. This debate has recurred regularly in Canadian history and it has always ended with the same conclusion, a conclusion I share with a growing majority of Canadians. That conclusion is that Canada will lose from economic integration with the US, becoming a resource colony. Quite literally, we will be the "hewers of wood and drawers of water," an expression originally coined by Nova Scotia scientist Abraham Gesner in a similar debate in 1849.
Prime Minister Mulroney and the federal government have now started negotiations towards a comprehensive free trade deal with the US. However, even the 2,000-page Macdonald commission report could provide no tangible evidence of the benefits to Canadians from such a deal. Instead, we are asked to rely on a leap of faith.
After reviewing the reports of the federal task force and the Macdonald commission and after participating in 10 weeks of hearings before Ontario's select committee on economic affairs, I am strongly opposed even to discussing freer trade with the US. As a New Democratic Party member of the select committee on economic affairs, I cannot agree with the perspective of the majority. While I support a number of the recommendations contained in the majority report, I do not share the enthusiasm of the Liberals and Conservatives for the concept of bilateral free trade with the US.
The submissions the committee received, whether from those in favour of free trade or from those opposed, contained a number of themes. First, there were serious concerns about the consequences of free trade. Second, as a country we do not know enough about the impact of free trade on various regions, sectors and communities. Third, there is clearly not a national consensus on this issue.
Instead of responding to these concerns, instead of saying clearly that the Prime Minister's initiative is premature and instead of saying that we as a nation require a solid consensus before proceeding, the Liberals and Conservatives have joined together to accept the agenda and schedule of the federal Conservatives. In contrast, the New Democratic members of the committee strongly object to the Prime Minister's decision to begin negotiations on a bilateral free trade agreement with the US.
There is no question about the importance of our US trade ties, but the extent of our open trading relationship leaves Canada vulnerable to US protectionist actions or threats. Any further movement towards economic integration would leave Canada even more vulnerable in the future.
In dealing with the US, I would far prefer us to be operating from a position of strength rather than from one of weakness. Brian Mulroney to date has shown nothing but weakness. He has given in to Reagan completely on issues such as the Foreign Investment Review Agency, the national energy program, cruise missile testing and acid rain. We have got nothing back in return. These could have been strong negotiating tools.
Many free trade advocates suffer from a branch plant mentality of Canadian inferiority and subservience to the US. In fact, many are former executives of Canadian subsidiaries of US companies, as in the case of both Brian Mulroney and Donald Macdonald.
The most serious problem facing Canada in this debate is the American definition of free trade. It bears no resemblance to what the words might mean to the average citizen. Continually in our hearings, we heard references to the US desire for a level playing field. The American concerns are not tariffs, but rather our economic and social policies. Any economic, social or political policy that would give a cost advantage to a Canadian firm over an American one is viewed by the Americans as a subsidy that must be eliminated under their definition of free trade.
There would be pressure on the Canadian government to match the US in such fields as taxation policies, labour laws, environmental regulations and private ownership of our forests. It could mean the end of many Canadian social programs, agricultural marketing boards, government purchase preference for Canadian-made goods and regional development grants.
Most seriously, a free trade agreement would take away Canada's option to develop a serious industrial strategy. More than any other recommendation, the economic affairs committee heard repeated witnesses stress the need for an industrial strategy before we set out on a new trade policy. Our economy remains severely unbalanced. We run large surpluses in raw materials and semi-finished commodities that utilize our valuable resources, while providing relatively few jobs. At the same time, we have a large deficit in finished manufactured goods that are high value-added and more job-intensive.
In Ontario, we need an industrial strategy that reduces our dependence on foreign ownership and resource exploitation. Rather than trade liberalization, we should aim for greater self-reliance by focusing on import replacement, more Canadian content requirements and putting more value-added in our resources by manufacturing finished products here in Canada.
10:30 p.m.
The issue is jobs. I believe that only through a coherent industrial strategy can we generate the new jobs Canada needs. Under free trade, most of the jobs will move to the US, and that is where workers would have to move also.
Northern Ontario's opportunities for industrial diversification would be especially hard hit because regional incentive programs would disappear. Like Abraham Gesner 140 years ago, I fear that free trade will reduce Canadians to the literal hewers of wood and drawers of water for the American empire. This is the historical challenge we face and I am here to ensure that does not happen.
On a motion by Hon. Mr. Sweeney, the debate was adjourned.
Mr. Speaker: The question that this House do now adjourn is deemed to have been made.
MINISTER'S COMMENTS
Mr. Speaker: Pursuant to standing order 28, the member for Rainy River has given notice of his dissatisfaction with the answer to his question given by the Minister of Northern Development and Mines. The member has up to five minutes and the minister has up to five minutes to respond.
Mr. Pierce: I would like to speak with reference to standing order 28(a). This afternoon in question period, I asked a question of the member for Cochrane North. The question was simple and straightforward. I will repeat it now:
"My question is for the Minister of Northern Development and Mines. Did the minister make the statement in Fort Frances on Saturday, December 7, 1985, `Jack Pierce and Leo Bernier are liars and if you do not believe me, go and ask God.' It is a question that requires nothing more than a straight yes or no answer."
The question is straightforward. There is no catch to it; there are no hidden surprises; there is no long preamble. It simply asks the minister if he made the statement quoted. I think this is a serious matter. The entire incident and the way it has been handled reflect on my privileges as a member, as well as those of the member for Kenos (Mr. Bernier). More than that, this incident reflects on the Legislature; it reflects on all the members of this House and this government.
As a new member, the rules and regulations that govern debate, that set out a procedure for the passage of legislation and establish what can and what cannot be said in this chamber at times seemed a little old-fashioned to me. In the few short months I have been a member of this House, however, I have realized that these rules, however strange they may seem at a glance, serve a very useful purpose. They set a tone for debate and they assure the public that business is conducted in this Legislature in a proper and fitting manner.
I recognize, as has been pointed out by the member for Brant-Oxford-Norfolk (Mr. Nixon), that these rules do not apply outside this chamber. I recognize and appreciate the limitations that are set on your office, Mr. Speaker, to ensure that members carry on in a reasonable and responsible manner in public at all times.
I brought up this question because I am disturbed. I am also appalled that the expression belongs to the member from Brantford. I am disturbed when a member makes an allegation such as lying against another member, especially a new member.
The people of the northwest know the member for Kenora; he has represented their interests for many years. They know how to judge any statement made about that member being a liar. But I am a new member. I am still establishing a profile in the House and in the great riding of Rainy River. I am far from having the public reputation the member for Kenora enjoys.
When a minister of the crown comes to my riding and tells the council of the chief community there that I am a liar, I am concerned. I asked the question of the minister because I wanted his reply on the record of this chamber. This is not a simple case of one member's word against another's. I first heard about the minister's expressions about my character and the character of the member for Kenora from a local radio station. A trained journalist heard the remarks I have repeated in this House today and stands behind them.
I can understand that there is a need for care and caution when dealing with situations like this. Perhaps the suggestion posed by the member for Don Mills (Mr. Timbrell) is the best. In the meantime, I believe I deserve a full and frank answer to my question. All I asked for was a simple yes or no. I believe I and the member for Kenora deserve that respect and consideration from the member for Cochrane North.
The people of Rainy River and Kenora who heard that radio broadcast want to know if the member will stand behind his words. I think the whole House deserves that answer also.
I do not want a discussion of ethics. I and the member for Kenora are also members of a church and follow the precepts of a faith. We are as concerned about personal integrity and honesty as the member for Cochrane North. We deserve an answer. I hope he will use his good offices to provide us with it.
Hon. Mr. Fontaine: First, when I went to Fort Frances I took a tape too, because I did not trust the two Conservatives in that riding. I bought a tape and listened to it today, and I never said the member for Kenora or the member for Rainy River were liars. I have the tape over here. It is not a Ministry of Northern Development and Mines tape, but people at the ministry did it for me.
Mr. D. S. Cooke: How many minutes are missing?
Hon. Mr. Fontaine: I could talk for five minutes but I will not do it. First, there were two questions asked of me by the mayor. He said, "I was told the Dash-8 will not fly over here." Second, he said to me that, about the affidavit, the member had said, "We are going to hold a grudge on Mr. Pierce." First, I said there are a few politicians who want to capitalize on the issue. The Dash-8 was the question that was discussed there. Okay?
Then about what the member says about lying, I could say it is close to a lie but I will not say that because I am a good Catholic. I never mentioned the member's name. That is it. That is a transcript by the Ministry of Northern Affairs and Mines. That is all.
Interjections.
Mr. Speaker: Order.
FAMILY BENEFITS REQUIREMENTS
Mr. Speaker: The next matter before the House is the member for Ottawa Centre gave notice of her dissatisfaction with the answer given by the Minister of Community and Social Services. The member has up to five minutes and the minister has up to five minutes to respond.
Ms. Gigantes: You will recall, Mr. Speaker, the question I raised this afternoon flowed from a recent decision in the Ontario Supreme Court in which Mr. Justice Steele decided that a woman who had made an application on behalf of herself and her child to receive family benefits was not eligible to receive them because, when questioned about the paternity of her child, she was willing only to provide a statutory declaration saying she did not know who the father was.
I think that decision raises in the minds of many people the legitimacy of the kind of regulations and interpretation of policy of the Ministry of Community and Social Services as it touches on benefits which we wish to see flow to women who are responsible for their children and need support to raise them. The lives of men and women are different and will continue to be so. The responsibilities for the birth, raising and care of children have been, continue to be, and will continue to be for a long time to come, perhaps forever, the major responsibility of the women of this society.
10:40 p.m.
We acknowledge that in the kind of social legislation we have developed, particularly in the Family Benefits Act, we have sought to provide for the support of women and children when a woman is not capable of providing for self-support and the support of her child. To deny the benefits that should flow to a woman who has taken on that responsibility, and in particular to the child of such a woman, on the basis she strongly wishes not to indicate who is the father or produces a statutory declaration in which says she does not know who the father is; to deny benefits to that woman and that child, on the basis that she must be subject to further questioning and further explanations, having given such a statement, strikes me and I think will strike most of the people of Ontario as an inadequate policy in 1985.
The answer I had from the minister on the question I raised was inadequate because essentially it said we have to make sure when we give a public benefit, with public money, that the woman involved in the application is not avoiding a claim she should be making on a male, the father.
That assumes that a woman knows who the father of the child is and given life as it has been lived, is lived now and will be lived for years to come, it does happen in life that women have children without knowing who the fathers actually are. It has been known to happen in history. We have all known it to happen and it will continue happening. To deny benefits meant for women and children on the basis that a woman says she does not know who the father is, is to impose some kind of silly, outdated, moral, high-horse kind of attitude to what should be a legitimate claim to public assistance. Remember, Mr. Speaker, there is a child involved.
We do not ask men, when they apply for welfare, whom they have been sleeping with and whether they have had an abortion; we do not ask them whether they have fathered children. We should not put such strictures on women for whom we provide legislated financial public support so that they can provide for themselves and the children for which they have taken responsibility.
Hon. Mr. Sweeney: I am a little unsure as to the purpose of tonight. I can fully understand why the member may disagree with the answer I gave, but quite frankly I cannot understand why the answer I gave would be perceived as being wrong, incorrect, inaccurate or not consistent with the present policy of my ministry, which is what I understood to be the purpose of these evening sessions.
Nevertheless, let us deal with the question.
Mr. Morin-Strom: Can the minister not change the policy?
Hon. Mr. Sweeney: That is not the purpose of tonight's hearing. That is not the reason we have this kind of session at 10:30 p.m. That is another matter altogether and is dealt with at another time and in another way.
At any rate, let us deal with it. First, the income support programs of my ministry are designed for people who are in need, and for which a need can be proved. One of the factors that is taken into consideration to arrive at that kind of decision is whether the applicant has other resources.
The whole case with respect to Deborah Clifton rests on the fact she refused to divulge sufficient information as to whether it was even possible she would have other sources of income. Whether it would prove to be the case or not is not the issue.
She went before the income maintenance officer and refused to give the information. It was appealed to the Social Assistance Review Board. She again refused to give the information. It went before the Supreme Court of Ontario and she again refused to give the information. In every single case, the result was the same. It was agreed that the director has the right to that information if it is available.
It is not enough simply to say "I do not know" and then refuse -- and this is what happened -- even to discuss it any further, refuse to share any other information that might permit someone else, if not her, to get the information that was being sought. There was no co-operation whatsoever.
Keep in mind also that we have 63,000 single mothers who are receiving income support, all with valid reasons. However, in each of those cases those single mothers are required to provide sufficient information to be sure they qualify for that support.
Deborah Clifton came along and said, "I refuse to do that." She says it would be an invasion of her privacy; that is the argument she gave. I am not quarrelling with what she said or why she said it; I am simply repeating what she said.
Mr. Justice Steele clearly said that one cannot use this argument when one is applying for a benefit. One must divulge the information so the income maintenance officer, the director or, in the case of Deborah Clifton, one step further, the Social Assistance Review Board, can determine whether she qualifies. It is simply incorrect to say that Deborah Clifton was in any way treated improperly, inappropriately or any differently from anyone else. It was simply her refusal to co-operate.
Let me also put it this way: Part of the issue before us clearly revolves around the responsibility of the ministry of the government to be sure that the funds it distributes to other people when there is a proven need are given in the proper way. Simply to distribute funds without adequate information is a dereliction of duty.
Keep in mind also that there is a ministry policy that clearly gives discretion to an income maintenance officer or a director, where information is presented to him or her indicating that the requirement for support should not be proceeded with, to waive it. That is done in a number of cases. I checked after question period today, and the answer was yes.
Mr. Speaker: The minister's time has expired.
Hon. Mr. Sweeney: Where there are obviously personal reasons not to pursue it, it will not be pursued; but the applicant must co-operate.
The House adjourned at 10:48 p.m.