That, in view of the growing protectionism in the United States, which is reminiscent of the counterproductive behaviour that led to the great depression of the 1930s, this House calls upon the Government to intervene forthwith and persistently, with the United States Administration, and the Congress, in order to protect Canadian jobs, and urge the United States to respect its international agreements including the Canada-United States Trade Agreement (CUSTA), the North American Free Trade Agreement (NAFTA), and the World Trade Organisation (WTO).
He said: Mr. Speaker, it is with pleasure that I rise today to speak to this motion, a tremendously important motion because for Canada no trade issue or policy is more important or as complex as our relationship with the United States. The amazing level of integration between our economies makes this a complex relationship, but by and large a very positive one.
That is why it is more important for us to strengthen our relationship, especially now, during this economic crisis.
Our relationship with the United States transcends economics and politics. We are friends, neighbours and family. We share common values. We believe in equality, democracy and the rule of law. We share common interests and we face common challenges, whether in security, the environment or economic policy.
The fact is, we trade $1.5 billion worth of goods and services every day across the Canada-U.S. border, and since 1989 Canada-U.S. trade has more than tripled to over $700 billion this year. That increase is about 10% every single year.
We are each other's biggest trading partners. In fact, Canada is the most important destination for exports from 39 U.S. states. The Canada-U.S. trade relationship is responsible directly and indirectly for seven million U.S. jobs.
The U.S. economy is heavily dependent on trade and investment linkages with Canada and this interdependence between Canada and the U.S. has only increased over time. In fact, 40% of our bilateral trade is intrafirm, trade within divisions of the same company or corporate family.
Companies on both sides of the border have integrated their North American operations to take advantage of economies of scale and to become more competitive in North America, and to compete and succeed globally.
In terms of our energy market, Canada is the largest supplier of energy products to the United States, supplying 94% of U.S. natural gas imports, nearly 100% of electricity imports, and 35% of uranium imports used for nuclear power generation.
The U.S. imports more petroleum from Canada than from any other country, including Saudi Arabia and Venezuela. This is particularly important, given the continued U.S. concern around energy security.
The North American gas, electricity and oil sectors are highly integrated, as is our infrastructure for transporting energy and other commercial products. Our shared infrastructure is increasingly being organized on north-south continental lines.
Canada and the United States do more than simply trade. We build things together. The average North American car crosses the Canada-U.S. border the equivalent of four times before it is completed.
Each province in Canada now trades more with the United States than with each other. Two-thirds of our trade between our nations is within established supply chains. Our economies are so intertwined that if we were ever to try to separate them, it would be like trying unscramble an omelette.
Canada is also the largest purchaser of American exports. These facts are important because they illustrate why protectionism, whether in Canada or the U.S., is bad for both of our economies. Increasingly, during a time of economic crisis, protectionism anywhere can turn a downturn into a depression. That is what happened in the 1930s with the Smoot-Hawley tariff act, which raised tariffs on 20,000 goods and ignited retaliation globally against U.S. protectionist measures.
The response from the government to the current situation in the U.S. and the rising protectionism has been late, and has demonstrated a lack of foresight in failing to see it coming during an economic downturn. At a time when some U.S. legislators are proposing buy American plans, the response from the NDP has been to support the U.S. buy American programs and to say that in fact we should introduce buy Canadian plans.
If I look at what social democrat leaders and parties around the world are espousing today, they are espousing trade. They understand that in today's world, trade is critical, that during an economic downturn, the worst thing we could do would be to put up protectionist barriers.
I am hoping that during this debate we can convince the New Democrats to join their social democrat colleagues from around the world who understand the importance in today's modern global economy of trade in terms of protecting Canadian jobs and interests, because when it comes time to vote on this motion, if they do not vote to support the motion, that simply applies pressure to U.S. legislators to avoid these kinds of protectionist measures that can hurt Canadian jobs, they will be voting against Canadian interests.
I hope that during this debate we can have a rational debate that engages New Democrat members, Conservative members and Bloc members in what ought to be a less partisan approach to Canada-U.S. relations, an important foreign policy and trade policy area for us.
The fact is that President Obama has demonstrated great leadership this week. He has moved forward and has set a tone that I hope will have a significant influence on what happens in both the Congress and the Senate, not just on this issue but on future issues, because protectionism continues to percolate. There is a strong vein of protectionist sentiment in the U.S. Congress.
We have not seen that kind of leadership on this issue here in Canada from the or the . When we see American congressmen move forward with protectionist measures, we should be responding immediately. We should be working through established relationships. One of the problems is that the Conservatives have focused so much over the last three years on building relationships with Republicans that they have completely forgotten to build relationships with Democrats. They have put their narrow partisan agenda ahead of the interests of Canada, and now, when there has been a sea change in American politics, Canada is disadvantaged.
This is really important, because on issues of foreign policy and trade policy, we cannot pick one party or another. We have to have bipartisan relations that are strong during the good times and that help protect our joint interests during the tough times.
We must recognize the importance of the Obama agenda and how positive it can be not just for the Americans but for the Canadians, and the importance of our working with President Obama in terms of his priorities. Securing access for Canadian business to the U.S. market is one of our priorities, but how can we expect American politicians to take action on our priorities if we are unwilling to take action on theirs?
If one looks at the Obama government's stimulus package, at the measures on greening the American economy, investing in education and creating the jobs of tomorrow, it is starkly different from the budget recently presented in this House by the Conservatives. It is no surprise that a green economy is a priority for the Obama administration. In fact, Ambassador Wilson recently stated:
We should expect policies [from the Obama administration] designed to move the country noticeably away from a carbon-based economy. Policies reinforced by a strong commitment to technological change and greater reliance on alternative energy sources.
Yet we are increasingly seen as both foreign in an adverse sense, and purveyors of dirty fuel.
What we ought to be doing is making the case to the Obama administration that we are going to be not just their energy partner but their clean energy partner. We are going to invest in cleaning our oil sands operations and CO2 sequestration more vigorously than in the past, in cleaner conventionals, cleaner oil and cleaner gas. We are going to invest more in alternatives and we are going to be the clean energy partner that Americans need and that Obama wants.
We know that addressing climate change is a priority for the Obama administration. We know that as the U.S. moves forward with a cap-and-trade system and as the U.S. Congress moves forward with a form of carbon tariff aimed at imports from other countries, Canada will be disadvantaged. This is another case where the Conservative government is failing to look ahead. It is failing to look at the challenges of the future and to prepare for those challenges.
The Obama administration realizes that bad environmental policy is ultimately bad economic policy. We have a responsibility to move ahead as a partner in progress with the Obama administration and the Americans and to build the clean energy solutions of the future.
There are other issues, not just this immediate protectionist issue, where the Conservative government has failed to see a challenge looming and has failed to take action early.
I have talked to business people and business organizations across Canada. The thickening of the Canada-U.S. border is a number one issue for many of them. The smart borders initiative introduced by the Chrétien and Martin governments has not moved forward effectively under the Conservative government. On January 23, U.S. Department of Homeland Security Secretary Janet Napolitano issued an action directive on the northern border strategy. It reads:
The northern border of the United States has become, since 9/11, important to our national security. As we have designed programs to afford greater protection against unlawful entry, members of Congress and homeland security experts have called for increased attention to the Canadian border.
That is ominous when we now see a January 23rd letter from the U.S. Secretary of Homeland Security speaking of the risks at the Canadian border. Much of that is based on what I believe to be a false impression of our border and an impression we should be correcting.
Once again, relationships come into play. The should be speaking with the president. We should be reaching out to legislators and members of the Obama administration and making the case that this kind of thickening of the border will not enhance U.S. security and in fact, will do everything to undermine Canada-U.S. economic prosperity. But once again, there is silence from the Conservative government until the issue becomes a crisis.
In terms of ITAR, the fact is that Canadian companies are subject to ITAR restrictions by the Americans which actually prevent Canadian companies in many cases from competing for and succeeding in obtaining U.S. defence and aerospace contracts.
We saw that as one of the principal reasons MacDonald, Dettwiler said that to succeed in achieving contracts with the U.S. Space Agency it actually had to become a U.S. company. That was one of the rationales. The company pointed to the fact that Australia and the U.K. have successfully negotiated exemptions from ITAR from the Americans, but we have not. We are a trade partner with the Americans. We are a security partner. We are a defence partner. We are a friend of the Americans, and it is inexcusable that the Conservative government has not negotiated ITAR exemptions from the Americans.
It is clear that there needs to be greater cooperation and a better and stronger relationship between not just the and the president and their administrations, but between legislators.
Another issue that we have seen in recent months is the negotiation on the bailout of the Detroit three.
The Conservative government sat back and allowed those negotiations to proceed in the U.S. without trying to get a seat at the table, without having any influence on what was happening down there. While we were sitting up here saying that once the deal was done we could provide them with a commensurate amount of money, perhaps 20%, to reflect the Canadian auto sector's percentage of the North American operation, while that was going on and we were sitting back, American legislators, congressmen and senators, were demanding commitments from the auto sector companies to invest in jobs and good product mandates.
Back in 1979 when the Chrysler bailout was being discussed, Gordon Ritchie, a Canadian negotiator, was part of those negotiations. Canada was successful at that time. Negotiators were successful in getting the mandate for the Chrysler mini-vans, which was a very successful mandate. Now we are at the end of the current negotiations and Canada does not have any leverage whatsoever.
We saw the spectacle a few weeks ago when the went down to Washington to meet with the auto sector leaders but they were all in Detroit. In fact, while he was in Washington he was not able to get any meetings with influential legislators. It is bad enough that we are not at the table, but the minister cannot even find the table. At the end of these negotiations, Canadian auto workers will be lucky to find crumbs off the table.
It is critically important that we work together on an ongoing basis and that we do not ignore the Canada-U.S. relationship as badly as the Conservative government has done.
These are just some examples--the border, the ITAR issue, the auto sector negotiations--of where the Conservative government, long before the current issue around protectionist policies in the U.S. Congress emerged, had already failed Canadians on the Canada-U.S. relationship.
Behind every trade statistic is a personal relationship or a human story. Relationships are important. When building relationships in the U.S., they need to be bipartisan. As the Conservatives over the last three years fawned almost exclusively on the Bush Republicans, they missed the sea change that was going on in U.S. politics.
The 's Office interfered in the U.S. primaries, and the whole NAFTA-gate issue prematurely biased the new administration against the Prime Minister. There is a new U.S. president who provides hope to Americans while our Prime Minister deals in fear. President Obama is a uniter. Our Prime Minister is a divider. President Obama is a multilateralist. We have a Prime Minister in Canada who is a unilateralist who does not trust multilateralist organizations. President Obama appeals to people's better angels. Our Prime Minister pits one group against another. President Obama is a dreamer. In Canada we have a Prime Minister who is a schemer.
In a speech which Ambassador Wilson made on January 19, he said, “These personal relationships matter a lot in Washington, at all levels, especially with new administration officials and staff”.
The has not built the relationships in the U.S. that are important to protect Canadian interests and it should not surprise Canadians because he has not built relationships within Canada. We should not wait for an economic and political crisis to build these relationships. It is a little bit like trying to fix the roof during a rain storm. We should not wait for an economic or protectionist crisis to point out the importance of Canada-U.S. trade and economic relations to the U.S. economy to American legislators. We should be communicating on an ongoing basis as allies and as friends.
Building those relationships one by one during the good times is essential to protecting Canada's national interests during the tough times. On issues we have to look ahead. The Conservatives failed to see the protectionist sentiment brewing in Congress. They failed to see the political sea change happening in the U.S. They failed to recognize the importance of building relationships on both sides of the House.
Wayne Gretzky, that great Canadian economic and political theorist, once said, “I skate to where the puck is going to be, not where it has been”. The Conservative government has ignored where the world is going and where the Americans are going under their new leader.
The Conservative government's narrow ideological and partisan focus in the U.S., in ignoring the Democrats, has hurt Canada's national interests. We cannot only focus on both parties in the U.S., we have to focus on both ends of Pennsylvania Avenue. It is not enough to deepen our relationship with the presidential administration. We have to one by one as legislators do more to deepen our relations with individual legislators.
Premiers are tremendously important. The relationship that premiers and governors have is tremendously important. Four of the last six presidents were former governors. President Obama four years ago was a state legislator. These relationships are important. Governor Howard Dean once spoke to me about his relationships with Canadian premiers. He said that we are all in the same boat and there are a lot of commonalities. If the wants to deepen relations with the Americans and to improve his chance of defending our interests, he had better start with building better relationships with Canadian premiers. Bill Clinton was a governor. The former U.S. ambassador to Canada, James Blanchard, started as a governor. These relationships are critically important.
The fact is relationships do matter. My leader knows people like Larry Summers, one of the chief economic advisers to President Obama, and Cass Sunstein, the regulatory czar of the Obama administration, and Samantha Power, a senior foreign policy adviser to the Obama administration. We need to reach out on a bipartisan basis in Canada to people like Frank McKenna and people like Gordon Giffin in the U.S., people like Derek Burney. There is a lot of expertise. We cannot be partisan in whom we work with in the U.S. or Canada on what is our most critical trade and foreign policy relations.
Mr. Speaker, I do not think I have had the opportunity to congratulate you on your new posting since the last Parliament.
Today I am pleased to join the debate on Canada's competitiveness and place in the world, specifically with regard to the stimulus bill that is being discussed in the United States House of Representatives. Within the stimulus bill, there is a provision that would only allow steel and iron from the United States be used for infrastructure projects as identified within the stimulus bill.
Today we are cautiously encouraged to the news that the United States Senate has voted in favour of softening the buy American provision within this massive stimulus package. Our government has worked extremely hard with our American counterparts and we have made some great headway. We will continue to see this through to a successful conclusion.
Why we are concerned about this issue is simple. It has been identified already in the House. Our government recognizes that in this time of global uncertainty, protectionism is not the answer.
We know from history that protectionist legislation winds up not only hurting the economy in which that protectionist legislation is moved, but it invariably hurts economies that surround it. We are telling our friends in the United States that now is not the time to shut the door. Seven million U.S. jobs are supported by trade with Canada.
The reality is our North American economy is an integrated one and the stimulus package that is being put together will impact and has to benefit not only the Americans but also trading partners. As long as governments do not succumb to the lure of protectionism, the spillover effects of this stimulus package can be overwhelmingly positive. Given the magnitude of the challenges that we all face, no individual country is likely to be able to save itself without help from trading partners.
We are living in a world where economies are tightly interwoven, in a world where global supply chains are intertwined, a world where not only capital and products but ideas that our future travel great distances at an ever increasing velocity.
It is worthwhile to remind ourselves that our closest economic relationship in the world is the one that we share with the United States. Raw materials and finished goods, services, finance and people criss-cross our border daily in volumes that are unmatched anywhere else in the world.
We all know the numbers: $1.7 billion in two-way trade, 45,000 trucks and 300,000 people move across the border each and every day. The United States is one of our largest sources of foreign investment and innovation, and we are its largest and most secure supplier of energy products, as well as being its biggest customers for agricultural exports.
As the U.S. economy flourishes, so does our economy. All this contributes not only to our prosperity, but we believe it gives us a special understanding of our neighbours to the south.
I think we would all agree that there is a strong link between a healthy Canadian industry and our own competitiveness. Obviously competitiveness is a concern to all Canadians, to this Conservative government and to all members of the House.
The government is well aware that a central challenge facing businesses today is to improve competitiveness by increasing the value of product lines and reducing production costs. This is especially the case for the manufacturing sector, which has been adjusting to higher commodity prices, increased international competition and global economic challenges.
The first thing I would note is our global competitiveness has improved significantly in recent years. According to the Global Competitiveness Report 2008-2009, published by the World Economic Forum, Canada's world ranking in global competitiveness moved up from 15th in 2004 to 10th place in 2008.
This report highlights that Canada's improvement is mainly due to our superior transportation and communications infrastructure. It is also due to our highly efficient markets, particularly the labour and financial markets. Our education system also got excellent marks for its quality. This means that Canada's workforce is top quality and is well positioned to adopt the latest technologies for productivity enhancements and to create new high value-added products for the world markets.
As we all know, the economies of the world are facing a deep global recession that will draw upon all of our resourcefulness and best cooperative efforts. Governments around the world have found themselves moving into turbulent financial and economic waters, and certainly Canada is not immune. However, there is a general consensus among economists and experts that the Canadian economy will perform better while many other industrialized OECD countries will struggle over the next two or three years. This is largely due to the core strength of our economy.
The balance sheets of our financial institutions are also in relatively good shape. Canada's financial system is one of the best in the world. It is sound, well regulated and well functioning. Nevertheless, because of globalization and the interdependence of the world financial markets, the Canadian economy is impacted by the adverse consequences of the current crisis.
Looking beyond the current market turmoil, our focus should be on improving our productivity, as it is the fundamental determinant of our quality of life and our competitiveness.
When the G20 leaders met in Washington, D.C. in November 2008, there was a wide range of views regarding both the nature and the seriousness of the current situation. In spite of these differences, the G20 leaders were able to agree to provide timely stimulus to domestic demand while also maintaining long-run fiscal sustainability.
I am proud to say that the Conservative Party of Canada is strongly committed to supporting a productive economy. Our government is committed to creating a competitive environment and putting in place support for business that encourages innovation and entrepreneurship, and rewards investment.
Canada's economic action plan, to which the members opposite have given their support, addresses both the short-term downturn and the financial constraints, while also stimulating productivity in the long term. It will stimulate the economy through investments to build infrastructure, by reducing taxes and freezing employment insurance rates, by stimulating housing construction, by improving access to credit, and by strengthening Canada's financial system, helping Canadians access training programs, and supporting businesses and communities.
Our economic action plan will provide over $20 billion in new tax relief over the 2008-09 year and the following five fiscal years. The economic action plan has launched the Canada skills and transition strategy to help Canadians weather the economic storm and provide them with the necessary training to prosper in a changing economy.
This government is also taking significant action to assist key sectors, such as forestry, agriculture, shipbuilding, automotive and aerospace industries.
To alleviate the pressure on financing, we increased the resources, scope and action of Export Development Canada, EDC, and the Business Development Bank of Canada, BDC, to ensure they have the extra financial capacity to provide firms with financial assistance. Last year we approved a $2 billion increase in borrowing authority of Export Development Canada, and an increase of $1.8 billion in the borrowing capacity of the Business Development Bank of Canada. This is enabling them to offer additional credit to their clients. This is in addition to the $350 million in capital committed to each of these financial crown corporations to support about a further $3 billion in increased credit.
The way we mutually manage our border with the United States is important to our competitiveness. Our gateways to the United States are of particular concern to our highly integrated North American car industry. Our government knows that we cannot remain competitive with a border that clogs and slows down the smooth operation of an integrated industry.
Our economic action plan is accelerating and expanding federal investments in infrastructure with almost $12 billion in new infrastructure stimulus funding over the next two years. This is in addition to $33 billion in funding that was provided in budget 2007 to build modern infrastructure to keep these gateways open for business.
With many companies operating on both sides of the border, one-third of our trade is between related firms, it is in the national interests of both Canada and the United States to work together to find constructive solutions to the economic crisis. This is particularly critical in those industries that are especially closely integrated. For example, the auto sector represents 12% of Canada's manufacturing base and employs 130,000 people in Ontario alone. Vehicle production represents one-fifth of the North American total. The majority of this activity is in support of the big three automakers.
Our economic action plan also streamlines the federal approval process so that more provincial, territorial and municipal projects under the building Canada plan can start in the upcoming construction season. These investments will support productivity and competitiveness for years to come.
Advantage Canada provides a detailed policy agenda which builds on Canada's strengths and seeks to improve our long-term competitiveness performance. Through ongoing reductions in corporate taxes, we are on track to establish the lowest rate of tax on new business investment in the G7.
Our Conservative government is making it a priority to regulate smarter and reduce the paperwork burden on small and medium size enterprises. We increased the amount of small business income eligible for a reduced federal tax rate of 11% to $500,000 from its current limit of $400,000.
Our government created the Competition Policy Review Panel to look at Canada's competition and investment policies. It submitted its final report last June. We will proceed with legislation to modernize and improve Canada's competition and investment laws by implementing many of the recommendations of the Competition Policy Review Panel. This will make product and financial markets more effective and efficient to promote investment and innovation and to create jobs for Canadians.
Our government has also adopted a number of measures to support innovation in recent years. Budget 2008 provides reforms to enhance Canada's scientific research and experimental development and creates an automotive innovation fund to support strategic large-scale research and development projects to build innovative, greener and more fuel-efficient vehicles. Recently, the committed to boosting the value of this fund by $200 million so that more investments in state of the art assembly plants and leading-edge technologies can be made.
We are aggressively opening markets abroad for Canadian goods, services and investments through the conclusion of ongoing trade negotiations. The is working to fight protectionist sentiments among our trading partners, and we will launch new initiatives, such as an economic partnership with the European Union.
Clearly, this Conservative government has taken many significant steps and has made significant investments to improve Canada's competitiveness.
As the laid out in Canada's economic action plan, our government will continue to manage spending responsibly. We will ensure that the programs and services are efficient and aligned with the priorities of Canadians. We will take steps to enhance credit availability for Canadian businesses that are affected by the global credit crisis. We will continue to consult with the provinces and territories and Canadians to develop responses to short-term economic issues while continuing to implement our long-term economic plan.
Finally, this Conservative government recognizes that free, open and fair trade can help Canada weather this financial storm. As the stated in the House earlier this week, “With the current crisis squarely upon us, it is crucial to resist the temptation to move towards protectionism. History showed during the Great Depression that imposing trade barriers is not the answer”.
The United States has seen its manufacturing base reduced, its deficits swell and the rise of new global competitors. The financial industry crisis and the reversal of the housing market have meant a reduction in confidence and even fear of the future. It is therefore not surprising that the voice of protectionism is heard in difficult times.
As I stated earlier, thanks to the hard work of this Conservative government, the team of my colleagues and our government ministers, we are making great headway. We are encouraged by the softening of the buy American provisions in the United States stimulus package. We are also encouraged by the recent statements by President Obama. The will continue to stay in close contact with his American counterparts and to monitor this legislative process very closely.
Mr. Speaker, I am pleased to speak to this issue today in light of the circumstances affecting international trade and the United States of America's attempts at protectionism.
Let us reread the motion together.
That, in view of the growing protectionism in the United States, which is reminiscent of the counterproductive behaviour that led to the great depression of the 1930s, this House calls upon the Government to intervene forthwith and persistently, with the United States Administration, and the Congress, in order to protect Canadian jobs, and urge the United States to respect its international agreements including the Canada-United States Trade Agreement (CUSTA), the North American Free Trade Agreement (NAFTA), and the World Trade Organisation (WTO).
The notice of motion was submitted at least a day ago, before the Senate announced that it would not take such a hard line when it comes to international agreements.
We might be tempted to believe that the situation is resolved and that this is the end of the story. However, it would be very dangerous to let the American government get started with protectionist measures. This will do nothing to stop the United States from taking what I would call their protectionist measures even further. Measures viewed as admissible under the WTO or even NAFTA could enable them to keep implementing protectionist measures. In fact, some articles could legitimize the United States' actions and enable that country to defend itself and possibly even win in court. So we have to be very vigilant and not let them put one over on us.
In principle, when governments make purchases, companies from countries that have signed these agreements—like Canada and Quebec—have the right to submit bids. But that is just in principle. The two agreements include a number of exceptions, exceptions that say, among other things, that when it comes to contracts, governments can do whatever they want.
Take, for example, a contract to build a government building. Contracts valued below a certain amount are excluded. If I remember correctly, that amount is $5 million under the AGP and $5 million in constant dollars under NAFTA. That being said, all transport department contracts for roads, bridges and so on are excluded. If I am not mistaken, this is not about construction contracts per se, but about the purchase of the structural steel and rebar used in construction. That part is much less clear.
Construction contracts are a service, whereas structural steel and rebar are goods. It is likely that Canada will contest the American measure claiming that it concerns the purchase of a good, which is covered by the agreements involving Canadian businesses. The United States will say in its defence that the purchases are part of a construction contract, not covered by the agreements. At first glance, the Americans appear likely to win their case, as I was saying. Unless I am mistaken, most purchases will not be made directly by the federal government. The buyer will be either a state or a municipality or a construction company. In all of these cases, the buyer is not covered by the agreements. So the issue is not with the awarding of contracts, but with the awarding of a subsidy, which is not covered.
Will the subsidy be considered an indirect purchase by the arbitration tribunals, so that it would be considered illegitimate subterfuge aimed solely at enabling the United States to circumvent its commitments? It is hard to say. We are not familiar with jurisprudence that would enable us to guess how the international arbitration tribunals might decide. I am assuming that the two cases may be argued, although I am not a lawyer, and even though it seems to me that Canada's case could be very weak under the circumstances and in light of the limited pressure exerted by the Conservative government.
As the matter is very complex, we will likely get bogged down in a long, drawn out dispute. As a decision in this matter is likely to be made long after any contracts have been awarded, the legal avenue is of no interest. The matter must be resolved politically, and a request that the raise the matter when he meets Mr. Obama seems perfectly legitimate.
American protectionism and legislation, such as the 1930 Smoot-Hawley Act, together with the increased cost of transportation, reduced the flow of trade and protracted the 1929 crisis. Some provisions of the Buy American Act of 1933 continue to apply in the United States, in the case of government procurement, for example.
American protectionism in the steel industry was counterproductive. A study by the Institute for International Economics found that the Bush government's protectionist measures for the steel industry in 2000 were counterproductive. I have a text here that says:
In 2000, President George W. Bush implemented protectionist measures for steel imports in response to pleas from the unproductive big businesses in that sector. The effects seem to have been negative in the end because the measures saved 3,500 jobs but destroyed between 12,000 and 43,000 in steel-using businesses.
These situations could be catastrophic for the United States—although not in the short term—and difficult for Canada and Quebec. In the long term, protectionist measures could spread around the world. The first response from other countries is significant: when one country imposes protectionist measures, other countries follow suit.
Obama's stimulus plan proposes extending measures for American steel. This action would threaten Quebec's steel industry, which exports 40% of its production. In Quebec alone, 2,000 jobs would be on the line. The less stringent plan proposed by the Senate, which would add respect for international agreements to the controversial section, does not make this clause any less dangerous. Even though the clause is clearly protectionist and goes against the spirit of international agreements, it does not necessarily violate those agreements.
Purchases made by American federal authorities are subject to NAFTA, but in the United States, almost all of the large contracts in the transportation sector are administered by state or municipal authorities or by private business, all of which are excluded from the NAFTA chapter on government procurement. This chapter deals with federal funding, and so those projects can be excluded, despite the fact that it is a type of subsidy in disguise.
There is a huge risk. We are not in the time of barter anymore. Simple as things were, even back then people tried to pass off worthless items as being valuable. And so, when Europeans arrived in the new world, the aboriginals of the time were exploited and that has not stopped. Eventually, the financial market and high finance appeared and paper was created.
This is the system that has put the whole world in a difficult situation and deepened the current economic crisis.
Quebec is a trading nation. It has always supported the North American Free Trade Agreement. The United States is Quebec’s largest trading partner, and in these recessionary times, Quebec cannot stand to lose its access to the market of its most important trading partner. The Bloc would rather see a diplomatic solution than recourse to the courts as a way of resolving the dispute between Canada and the United States over protectionism. Although there is often a protectionist reflex in times of economic downturn, it is essential to keep markets open in order to encourage trade and economic recovery.
The Government of Canada has a solemn duty to put pressure on the United States and ensure that Quebec businesses can export to its markets. Although President Obama has apparently backed down on the Buy American Act, the government must keep up the pressure to persuade the United States to allow Quebec and Canadian companies to access the U.S. market.
Apart from these trade issues, the Conservative government has proved negligent in its management of the economic crisis. We will obviously be in favour of the Liberal motion.
As I was saying, Quebec is a trading nation. Our companies, and especially our cutting-edge companies, could not survive on just the domestic market. International exports account for one-third of Quebec’s GDP. If interprovincial trade is added, exports represented 52% of Quebec’s GDP in 2005. Protectionism is not in our interests, and that is why Quebec, and most of all Quebec sovereignists, massively supported the Free Trade Agreement with the United States and then NAFTA. The trade environment has worsened considerably over the last few years. Between 2003 and 2007, Quebec went from a large trade surplus to a $13 billion deficit. In 2007, every Quebecker therefore consumed $2,000 more than he or she produced. And that is not to mention our international trade balance, to which must be added another $5 billion deficit in interprovincial trade.
We obviously became a lot poorer last year. The steep rise in the Canadian dollar, fuelled by Alberta’s oil exports, reduced the competitiveness of Quebec businesses on the U.S. market, while at the same time a number of emerging countries were taking over world markets. Given the changes in the trade environment, our priorities will have to change as well. Our manufacturing industry was badly hurt by the worsening trade environment because it is more dependent on exports and more exposed to international competition than services are. The Bloc Québécois has long made access to international markets its most important trade priority. The changes that have occurred in the trade environment, especially the rise of China, have revealed cracks in the system. The major international agreements negotiated under the aegis of the WTO are not intended solely to liberalize trade but also to establish a certain number of rules and conditions that must be complied with in order to access world markets. This aspect of the agreements has been neglected over the last few years.
In order for us all to benefit from trade, we must do more than just liberalize it. We must also civilize it in order to have healthy international competition and clean up the terms of trade. If countries want to access foreign markets, they should have to abide by certain rules.
Take social dumping, for example:
Social dumping is a serious problem. Trading in a product manufactured in violation of major international agreements on labour, the environment or human rights is a form of unfair competition. It puts enormous pressure on our industry, gives offenders an advantage over countries that honour their international commitments and promotes the exploitation of foreign workers and environmental degradation. This development model is unsustainable in the long term.
The Bloc Québécois has outlined a series of international trade measures, including specific measures to restore balance and healthy competition to trade.
modernizing our trade laws to better protect our companies against foreign dumping;
no longer rejecting the findings of the Canadian International Trade Tribunal when it recommends implementing safeguards;
allowing workers to submit complaints themselves about subsidies and dumping to the Canadian International Trade Tribunal;
making the fight against social dumping Canada's top priority in negotiations at the WTO;
putting the emphasis back on multilateral negotiations at the WTO, because only then will it be possible to adopt rules to civilize international trade;
combatting social dumping by ratifying the following fundamental conventions of the International Labour Organization: the forced labour convention, the convention on the right to organize and collective bargaining, and the convention on the minimum age for admission to employment.
As I said earlier, the protectionist measures the United States is considering are in keeping with its Buy American Act, a vestige of the protectionist measures implemented in the wake of the great depression of 1930. Under that act, road construction, infrastructure construction, transit and airport projects that receive government funding are required to use American products. As a result, federal funding for road construction will be granted only if American steel and iron are used.
The U.S. government is getting around NAFTA by funding work carried out by the states, which does not come under NAFTA. President Obama's plan contains a provision that would extend the Buy American clause to all sorts of projects, with the result that all projects funded by the recovery plan would have to use American iron and steel. At a time of economic crisis, such a measure would threaten 2,000 jobs in Quebec.
President Obama announced that he was prepared to water down the clause. Early information suggests that the clause will be amended to indicate that protectionist measures must not contravene international agreements. Toning down the American bill will not solve problems affecting the steel industry in Canada and Quebec, but it will be much less damaging to Quebec industry than the Senate's initial bill, which wanted the Buy American clause to apply to all purchased goods.
We are at an important turning point in what I would call the fight against the global economic situation.
For some time now, our government has also had the means, not to circumvent the spirit of free trade, but to bring forward solutions to protect certain industries in Canada and Quebec. The government has failed to do so.
Now the U.S. government is preparing to introduce measures that will significantly restrict free trade with Canada, its closest trading partner, and, for all practical purposes and all things being equal, its primary trading partner, given Canada's size.
Protectionist measures imposed by the world's largest economic power, which is nearly on the brink of bankruptcy, would have a negative impact on the entire global economy and every person on this planet.
Madam Speaker, this is a rather fundamental debate that we are having today. Unfortunately the motion does not address the issues that we as Canadian parliamentarians must address; what it does is put in very stark relief the two ends of this House of Commons.
Sitting at one end of the House and crossing over the aisle sits the Liberal-Conservative coalition, which is essentially a group of flamboyant and radical free traders. These members read in a textbook that free trade is good, so they do not make any sort of intervention, attempt any sort of managed trade, or implement any policies that would lead to job development or industrial strategies in this country. That is what we have seen over the last 20 years.
Many Canadians know that this approach has led to the collapse of our manufacturing industry, to the collapse of many of our strategic industries and, as I will point out later on, to an actual fall in real income for most Canadians.
One would think these radical free traders would look to see if the economic theories that they have learned in a textbook actually work, but no, there is no evaluation. There is no real, consistent understanding of the impact these policies have had, and that is unfortunate.
The never actually ran a business and never met a payroll. He learned his economics from textbooks, and it shows. The Conservative government has been appallingly shortsighted in putting in place industrial strategies for the automobile sector, for the steel sector, for our shipbuilding sector, for our softwood lumber sector, and for a whole range of vital and strategic industries. We have seen the loss of real jobs, and that is due in part to the fact that we have not had a trade strategy that makes any sense.
At the other end of the House, stretching across both aisles now as a result of the new members we earned in the last election, sits the New Democratic Party. We are strong fair traders. We believe that trade needs to generate additional jobs. We also believe that the people in the country have a role to play in ensuring that industrial strategies are put into place for the preservation and enhancement of our automobile sector, our steel industry, our softwood lumber industry, and our shipbuilding industry.
We in the New Democratic Party believe that government, working with the public sector and the private sector in mixed economic development, has a role to ensure there is a rise in real income for most Canadians.
Perhaps nothing throws the difference between fair traders and radical free traders into more relief than the motion we see before us today.
I would like to discuss certain aspects of the NDP approach to fair trade before continuing with my speech on specific considerations.
The NDP believes in fair trade that promotes human rights such as women's and union's rights. We believe that international free trade must be adjusted to increase the capacity of individuals to negotiate collective agreements, tackle gender equality issues and reinforce human rights, not diminish them. In the case of the Canada-Colombia agreement, this government's approach—and that of the previous government—has diminished human rights rather than advancing them.
We also believe in respect for institutions that promote fair trade, such as the Canadian Wheat Board, as well as supply management. Our farmers and communities across Canada depend on these institutions to keep the local economy going. In our opinion, these fair trade organizations must be protected; however, the other parties, the Liberal and Conservative parties, do not believe in them.
We also believe in agreements that respect the environment by relying on sustainable development. That is the main difference between the Conservative-Liberal coalition and the New Democratic Party. Free trade agreements have been used to contravene environmental regulations. Many companies have found ways to get around all the environmental regulations that most Canadians want.
We believe that our fair trade agreements must serve to strengthen a policy and an approach based on sustainable development and respect for the environment. We also believe in fair agreements that respect economic diversity and also, for example, the existence of a third sector. We often speak of a public and private sector. However, there is also a cooperative sector, where communities can put together their economic resources in order to develop. I could give you many examples where the cooperative sector has strengthened local or regional economies.
Thus, fair trade must be used to strengthen this economic diversity. In a sense, we believe in economic diversity. The Conservatives and the Liberals, who are working together, have similar views on trade and believe in only one approach: the private sector and big business. The right regulations can stimulate the economy. Otherwise we end up with a monoculture. By putting all our eggs in one basket we are not strengthening community ties and local economies.
We have here the issue of this particular motion. There is that difference between Liberals and Conservatives, who are perfectly happy selling out Canadian jobs, and the NDP that believes firmly in reinforcing our economy, reinforcing our vital industries like the automotive sector, the softwood lumber sector, shipbuilding and I can go on and on, but there is a very clear difference in our approaches.
We have this motion today that has three elements and I would like to touch on each one of them. Unfortunately, some of them are factually wrong. It is too bad, but it is a fairly innocuous motion. We will have to decide in the next few days how we take all this together. The first element states:
That, in view of the growing protectionism in the United States, which is reminiscent of the counterproductive behaviour that led to the great depression of the 1930s,--
In this sense the Liberal motion changes history unfortunately. I think it is referring to Smoot-Hawley back in the early 1930s. The Liberals are radical free traders. These theoretical folks just love to look at their textbooks and say, “This theory will have to work”, without ever checking on the consequences of their actions. They say that Smoot-Hawley was the cause of the Great Depression. That is simply not true. Smoot-Hawley came as a result of the Great Depression, which had already started. Essentially, the Great Depression, in part, came from a lack of regulation. Does that sound familiar? Of course it does.
I would like to cite one of our international colleagues, the Australian Labor Party, which is part of the same international entity that the NDP is part of, and the new Prime Minister, Kevin Rudd, who said, “The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes”.
Prime Minister Rudd is referring to the fact that a lack of regulation, again, has put us back in the same kind of economic circumstances that we saw in the 1930s. Smoot-Hawley was not the cause. Smoot-Hawley was a right wing Republican attempt to deal with the crisis that began with no regulations, no protections in place for the public across North America.
Curiously, this particular motion does not refer to what the antidote was for the Great Depression, which was not only a series of regulations to protect the public but, what the NDP has always been calling for, the great economic stimulus that came out of the New Deal. That was missing from the Republican approach. There was no economic stimulus. There was no investment. What Franklin Delano Roosevelt did with the New Deal was provide that economic stimulus that the NDP has been pushing now for months, convinced our Liberal partners to come on the majority coalition, and then they sold us out and went with the Conservatives.
In any event, we will see if the Conservatives can be trusted to bring in that economic stimulus in a fair and effective way. Many of us do not believe that they can be trusted. Certainly, they have broken their word before. However, the point I am making is that it was economic stimulus in the New Deal that actually started to push the United States out of the Great Depression.
Therefore, the first clause of the motion is factually wrong. It is, I guess, in keeping with the proud Liberal tradition, but aside from that factual error perhaps pretty innocuous.
Second, it states:
--this House calls upon the Government to intervene forthwith and persistently, with the United States Administration, and the Congress, in order to protect Canadian jobs,--
That is something certainly that we could support. That is something that we have been pushing for. However, let me preface my remarks in this regard with what is actually happening in the United States and in Canada.
Since NAFTA was implemented in 1989, and we have the figures right here, there has been a hollowing out of Canada. Essentially, for most Canadians they have lost in real income. We have seen a loss of real income that is the equivalent for the lowest 20% of the Canadian population of about a month and a half of income. In real terms, they have lost a month and a half of income since NAFTA was implemented. For the lower middle class they have lost about two weeks of income.
Each and every Canadian family in that income class, and we are talking about more than six million Canadians in those families, has lost about two weeks of income in real terms. The middle class has lost about a week of income in real terms for each and every year since NAFTA was implemented.
This is not solely a result of NAFTA. It is also because of the foolish economic policies or lack of economic policies that were put in by the Liberals. Like the Conservatives, they do not seem to change much as they bounce across the floor, but fundamentally we can say that the bottom line is that they have failed over the past 20 years. When most Canadian families are earning less in real terms than they were 20 years ago, one would think that one member of the Conservative-Liberal Party would say, “Well gee, maybe we should change our economic approach”.
What the NDP is saying, with a growing number of Canadians, is that since Liberals and Conservatives are not changing their economic approaches, we are looking to change the government. That is why we are seeing more and more New Democrats in this House of Commons as we go through each election. We understand that this is not sustainable. Telling the middle class to accept less every year and telling the poorest Canadians to accept much less every year is simply not a sustainable economic policy.
I will just conclude my remarks on the Canadian income categories by saying that the wealthiest 20%, which is what these economic policies have been intended to do, not a flood upwards, the wealthiest 20% now take most Canadian income. The Canadian income pie is less and less equal, more and more skewed to corporate lawyers and to corporate CEOs. That is why the NDP is saying that we need a much more balanced approach, a much more mature approach, in keeping with what we are seeing around the world.
We are saying in this motion that we want to intervene with the United States administration. The important thing to note is that when we are talking to President Obama and talking to Americans, we have to understand that they are going through exactly the same thing. Two right wing, radical free traders, Kenneth Sheve and Matthew Slaughter, who has the oxymoronic title of being a former economic policy adviser to George Bush, said in a recent issue of Foreign Affairs:
[Income] inequality in the United States is greater today than at any time since the 1920s. Less than four percent of workers were in educational groups that enjoyed increases in mean real money earnings from 2000 to 2005; mean real money earnings rose for workers with doctorates and professional graduate degrees--
--corporate lawyers and CEOs--
--and fell for all others.
That is nearly 97% of Americans who saw their real income go down.
These explanations around the issue of so-called protectionism miss a basic point. U.S. policy is becoming more protectionist because the American public is becoming more protectionist, and this shift in attitude is a result of stagnant and falling incomes.
It is no secret why President Obama was elected on a platform of renegotiating NAFTA, rebuilding it on a fair trade model. It is no secret why we have seen this in the House of Representatives. I was on the phone yesterday talking to friends of mine in the U.S. Congress. They are talking about these issues. The senate rejected senator McCain's ridiculous amendment, certainly not an amendment that was in keeping with the way most American senators felt. It was rejected 65 to 31. It is because Americans are increasingly concerned about the same income fall that we have seen.
If we are intervening with the United States administration, we have to start on that basis. We have to start on the basis that these free trade agreements and all the economic right wing policies that have gone with them have not been good for American workers and they have not been good for Canadian workers. That is the fundamental problem. I would hope that at least one of our colleagues from the Conservative or Liberal Party would actually start to look at the real facts, the bottom line, not the textbook theory.
We all know the textbook theory. I can spout the textbook theory as well as anyone in this House, but the real, practical results are a fall in real income for Canadians, a fall in real income for Americans, and that is why we are having to deal with these issues, where more and more workers are saying, “We have to protect jobs here at home”.
How do we communicate with the United States administration and Congress? We can do it on a win-win basis.
I will cite the most recent figures available. November 2008, for Canadian trade with U.S. from iron and steel mills, targeted, as we know, in the house of representatives bill and targeted, as well, in the senate bill, they will go into conference but one can assume that iron and steel will get through that conference and we will have to contend with this and deal with the administration, the American senate and congress, in a meaningful way.
In November 2008, we exported $349 million worth of iron and steel to the U.S. and imported $401 million from the United States. In other words, the U.S. has a trade deficit with us in iron and steel. That essentially means that we buy more iron and steel from it than it buys from us. In November 2008, that is, essentially, what those figures mean. What that means is that we have an opportunity for a win-win. We have an opportunity to go to American senators and members of congress and say that we would like to exempt them from a “buy Canada” clause so we can use American iron and steel and we would like them to do the same with the “buy America” clause.
There is just one tiny wrinkle in that. Over the last 20 years of Liberal inaction and Conservative inaction, and their lack of industrial strategies, neither government chose at any time to put in place a “buy Canada” clause. That is something the NDP has been pushing for, which is why there are more New Democrats in this House as we go through each election and why we overflow from one side to the other side of this House. Canadians want to know why the Liberals did not bring this in and why the Conservatives are not bringing in a 'buy Canada' clause. They will simply say that it must be illegal or that it is not in keeping with their textbook theory. However, the reality is that this would provide us with the leverage we need to sit down with the American administration and have a win-win negotiation by exempting our iron and steel in the same way that we would exempt theirs.
I come to the third part of the motion which states, “urge the United States to respect its international agreements”. I will cite a couple of articles, first, by the Canadian director of the United Steelworkers, Ken Neumann, and second, by the United Steelworkers president, Leo Gerard, a very proud Canadian.
Ken Neumann stated:
The US has had laws requiring the use of domestically-produced goods for government contracts since the 1933 Buy American Act. These laws are consistent with international trade obligations.
Linda Diebel said the same thing in the Toronto Star.
Buy Canada is legal and buy America is legal for provincial and municipal entities as it is for state and municipal entities. Instead, we are sending millions of taxpayer dollars to buy overseas what we could be building here at home. Many people have cited the Navistar plant, where we are spending $274 million for military contracts in Texas when we, as taxpayers, provided $65 million to the Navistar plant in Chatham, Ontario.
This approach does not make sense, a purely theoretical approach that we will not have buy Canada because it would interfere with our theoretical approach on free trade. It is legal. It would create more jobs in Canada and that is why the NDP is pressing the government and its Liberal colleagues to put in place a buy Canada policy and save Canadian jobs.
Mr. Speaker, I appreciate the chance to participate in the debate. I congratulate my colleague, the member for , for introducing this motion. I have listened with great interest to the discussion and debate.
I will have some comments to make about the speech of the member for , but I want to indicate my strong support for a simple proposition, which I do not believe is because I am the captive of some strange ideology that has been ascribed to members of this party.
My support for the resolution comes from an intensely practical sense. Right now we are facing a challenge as a country because our greatest and closest trading partner is introducing an $850 billion to $900 billion stimulus package, which has provisions attached to it that will discriminate against Canadian companies.
For my friends in the New Democratic Party, if they are not prepared to defend that, then in my view they are not prepared to defend the interests of Canadian workers and Canadian business. They are missing the point and they are missing the boat. The New Democratic Party is the captive of an ideology.
The British Labour Party, the French Socialist Party, the German Social Democratic Party, the Swedish Social Democratic Party, the Norwegian social democratic party, I say with great respect, is a movement of which I know something.
The neo-isolationist view that is taken by the current federal New Democratic Party is removing it from every intelligent debate about trade, globalization, economic change and economic progress that has taken place over the last 30 years.
In listening to the speech from the member for , I must confess I was taken aback. If anything could be described as a lecture in some abstract political philosophy and political theory, it is the speech we just heard from him.
We face a practical challenge as a country. Our greatest trading partner is about to engage in an act of protectionism. We have an obligation as Canadians and we have an obligation as members of Parliament to intervene forcefully on behalf of Canadian workers and Canadian businesses in the face of that protectionist spirit.
The dilemma facing the United Steelworkers, an organization with which I am extremely familiar and with which I have had close ties over many years, of which I am extremely proud, is it has decided to take a position that says it can defend the interest of American workers, as it sees it, by excluding products from other countries and it can do it without side-swiping Canada. We will see whether that happens.
I am not interested in advancing the interests of anyone other than the interests of Canadian workers, Canadian businesses and Canadian economic interests. If I think friends of mine who I have worked with over the years are making a mistake, I have no hesitation in saying they are making a mistake.
I am certainly not here to argue their case. I am not here to say I am arguing their case as if it is in the general interests of the people of Canada because it is not. Workers in Sault Ste. Marie will be laid off as a result of this measure being introduced in the United States. Workers in Hamilton will be laid off as a result of this measure. Workers at IPSCO steel in Regina will be laid off as a result of this measure.
The member for can engage in all the political philosophy and all the pirouetting he wants, but he cannot ignore the fact that the position being taken today by the New Democratic Party of Canada is contrary to the interests of Canadian working people and of Canadian businesses.
This notion that somehow what has happened to the Canadian economy and what has happened to the standard of living in North America is a product solely of the North American Free Trade Agreement is preposterous. Those members should open up their eyes, look beyond the horizon, see the transformation of India and China and see what the whole process of globalization has meant. Has it produced hardship for many Canadians? Yes, of course it has. Has it resulted in the loss of jobs in the country? Yes, of course it has. We cannot look at trade agreements alone and say that it is those trade agreements which are the cause of what has taken place in the country. It is a silly proposition.
I repeat this point. The social democratic parties in virtually every advanced industrial country have recognized that the best way to produce wealth is through markets. This is not the product of ideology; this is the product of experience.
Do we need governments? Of course we need governments. Do we need governments to intervene? Of course we do. Governments make up somewhere between 30%,45% and 48% of the GDP of economies across the OECD countries. We can see where we have been in the mix, but we are all mixed economies. However, at the basis of that mixed economy has to be strong markets. Are markets getting bigger? Yes. Are they becoming coordinated? Yes. Are they coming together? Yes. Is the world globalizing? Yes. The sooner the New Democratic Party recognizes that fact, the better off it will be and, frankly, the better off the level of debate and discourse in the House will be.
We have to come to terms with the fact that we are members of NAFTA. I fought NAFTA. I did not like NAFTA. Why? Because I believed at the time that the Conservative government was mistaken in thinking that somehow, if we signed that agreement, we would be able to avoid American protectionism.
The argument that was made by the Conservative Party at the time, by the prime minister of the day, was that if we signed the agreement, we would somehow come under an umbrella and we would not be subject to the kind of side-swiping which we have seen.
I spent 12 years working with the private sector and for much of that time, I was involved in the softwood lumber dispute. My family appreciated the fact that I was so involved, because it was a long and arduous negotiation and discussion.
The American Congress is not deeply attached to the notion of free trade between Canada and the United States. It likes to say it is, but every time we have a competitive advantage, every time we have an advantage which gives us access to markets in the United States, which is greater than the Americans would like to see, it responds.
The free trade agreement did not and has not protected us against that. It has not had the effect of protecting us against American protectionism. We have to simply accept that fact and say that there is a level of integration that has taken place under NAFTA, there are issues that we still have, but we have to deal with the world as we find it.
I also find it interesting that the member for says that any kind of buy Canada provision that we would want to put in would be legal. That would depend on what the provision was. I am not ideologically opposed to a sensible buy Canada provision if I think it will match what other countries are doing, it is something we have to do and it is in the framework of our legal structure and of our international obligations. However, we are members of WTO. We are a trading country. Our co-ops depend on trade. Our co-ops depend on access to international trade.
One of the most ludicrous comments the member made was to suggest that somehow the members of the Liberal Party were opposed to the co-operative movement. Tell that to my friend, the former minister of agriculture, who has done more to build up co-ops, supply management, intervention and the third sector in Canada. We do not need to take any lessons from the New Democratic Party in how we build up the third sector in our country. The fact remains, it has to be done in conformity with the law. It has to be done in conformity with our international obligations and with the fact that we are part of a big world. That world is good for our prosperity, it is good for Canadians and, frankly, there is no other way than for us to be engaged in this world in a positive and constructive way.
That is why, in my conversations with American congressmen and with American senators, I say time and again that it is not that we understand what they are doing and that they should go ahead and do it because it is good for them and somehow we will cope with it all. That is a ridiculous message for a Canadian politicians to be delivering to our friends in the United States. The message I have been delivering is that their concern has to be, not simply with the short-term prosperity that they think they are buying with this measure, with what this will do to the whole pattern of world trade and to the pattern of world investment.
We are in the middle of a very difficult financial crisis, not only in Canada, not only in the United States, but around the world.
When the leaders of the G20 met, Social Democrats, Conservatives, Liberals, representing a variety of political parties and political traditions, what did they all agree on? One of the premises that they all agreed on was that we would not play beggar thy neighbour. We would not try to advance our own short-term interests at the expense of our neighbours. We would not try to bring in a measure that might look as if it were helping workers in Indiana, or Ohio, or Pennsylvania or Florida. In fact, it would not have that great beneficial effect, but it would have a hardening effect on the sense of understanding, on the sense of reciprocity and on expanding commerce and expanding trade. That has to be a critical feature of our coming out of this crisis into a greater world of prosperity.
My colleague from has spoken very effectively about what we need to do together as a Parliament to make this change happen. He has spoken very effectively about the need for us to intervene. He has spoken very effectively about the need for us to improve relationships. He has spoken very effectively about how some of the positions taken by the Conservatives in the past have not particularly helped with respect to our developing ties and understanding with members on both sides of the aisle in the United States. It will require us in Canada to up our game and to improve how we are engaged and how we relate to our friends in the United States.
I particularly want to emphasize the importance of this resolution at this moment in our history and in the discussions that are going on in the United States. Let there be no doubt in the United States where Canada stands. Let there be no doubt of the sense in the House as to our common interests.
I was very interested in what the hon. member for Sherbrooke had to say. He made some critical comments about how important trade is not only to Quebec but to all of Canada. This is not just a Quebec issue or an Ontario issue or a British Columbia issue. All Canadians are affected, and I would even say, the whole world.
We have a shared interest as members of Parliament in insisting that the rising protectionism in the United States does not help really us achieve the joint prosperity we all want and does not help to create more open, prosperous markets. What we want is to build a world together that respects the creative power of markets.
We adhere to the principles of social partnership and social justice and believe that the moment of decision has come for this House. Now is the time for us to say with one voice that this is in the interests of all Canadians, and frankly, in the interests of all our American friends as well.
We have to appeal not only to our sense of fairness to our friends in the United States, not only to their sense of what their international obligations are under the law, but we also have to appeal to their common sense and common interest. It is not in the interests of the United States to adopt measures that would limit the trade, the commerce and the exchange which needs to exist between our two countries.
As my friend from has said, a full 40% of the trade that takes place between Canada and the United States takes place within companies. There is no such thing as a Canadian car or an American car. The parts from Ohio move to Ontario. Cars are being assembled in Ontario and the other parts from Ohio are being added. This is a fully integrated industry. It is true as well for steel. It is true on so many dimensions and at so many levels.
If the Americans pass this measure, will we have to respond in some way? Of course we will. Should we sit back and say we are not going to take it? Of course we will have to respond effectively.
Let no one think for a moment that we are creating these autarchic economic models in our head, where the picture of the economy in our heads seems to be one where some bright boffin in Ottawa will manage the trade between one country and another and say that one country will produce over here and the other will produce over there. The world does not work that way. It is not the way the world should work. It is not the way the world will work.
The sooner we come to grips with these two things we will be better off: first, what is happening in the world economy and how we have to understand it more deeply and respond more effectively and collectively to what we are facing; and second, that the moment of decision is coming in the American Congress and it is our responsibility to respond effectively and aggressively to those protectionist steps being taken in the Congress.
The sooner we come to grips with these two simple facts, not political philosophy, not some abstract economic ideology, of the way things are right now, the better off we will all be.
Madam Speaker, before I start my speech I will go a little further on the question that I just raised, because I think it is only common sense. It behooves everyone in this place to have a reasonable and respectful relationship with our trading partners around the world, regardless of who those trading partners are.
Certainly we are making a serious mistake if anyone in this place thinks that we do not have to have a rules-based trading relationship with the United States of America, our closest neighbour, our greatest ally and our largest trading partner. It is absolutely essential to our ongoing livelihood here in Canada. It is in the best interests of our workers, it is in the best interests of our businesses and it is in the best interests of all Canadians. The money generated from those economies helps to pay for everything that Canadians receive.
There has been some attempt, I believe a playful one, at trying to drive a wedge between the government, the American administration and the new President. That is sheer folly and sheer foolishness, because regardless of the political party in power in Canada and regardless of the political party or person in power in the United States, it is absolutely incumbent upon both administrations to have a good, solid, respectful relationship, because both countries benefit. That is not rocket science in any way, shape or form.
As you know, Madam Speaker, there has been a discussion in the House on this issue today. There has been some interesting debate, and the economic stimulus package is making its way through the U.S. congressional legislative process. We have been watching with great interest and trying to have as much influence as possible on the decisions that the Congress in the United States will make.
We need to put the measures that are moving through the Congress in perspective. Governments around the world have all found themselves in the same position. We are moving into turbulent economic times, and these are very recent changes. These changes occurred in the last quarter, and we expect they will deepen in this quarter.
When the G20 leaders met in Washington in November of last year, there was a wide range of views regarding both the nature and the seriousness of the situation. Certainly the situation had not progressed to the degree that it has today. In spite of these differences, however, the G20 leaders were able to agree to provide timely stimulus to domestic demand while also maintaining long-run fiscal sustainability.
In Canada we acted on our own commitment. On January 27 we tabled our economic action plan, a plan to stimulate economic growth, restore confidence and support Canadians and their families during this synchronized global recession. The action plan will stimulate the economy by building infrastructure, reducing taxes, freezing EI rates, stimulating housing construction, improving access to financing and strengthening Canada's financial system by helping Canadians through training programs.
Just as our economic action plan is meant to provide stimulus in Canada, the American Recovery and Reinvestment Act of 2009 is predominantly meant to stimulate the U.S. economy. The cost of that bill is now approaching $900 billion. It includes extensive tax cuts, assistance to state and local authorities for education investment, new health care investments, unemployment benefits, and infrastructure and energy investments.
However, there is another reality, the reality of the integrated North American economy of today. That stimulus package will also benefit the neighbours across the border, Mexico and Canada, and as long as everyone is contributing to the solution, we should be welcome within that stimulus package.
That is a clear message to the United States. Given the magnitude of the challenges we all face, no individual country is likely able to save itself without help from its trading partners. No individual country in the world is an island. Now is not the time to allow protectionism to rear its head. It will drive the economy downward; it will be a downward spiral not seen in the global economy since the 1930s.
We are extremely concerned that the broadening of the buy American provisions in the U.S. stimulus package will lead to other countries following similar protectionist policies and will create that downward spiral and fuel a greater economic crisis. That is why our government was making our concerns known to the American administration, legislators and other stakeholders long before the opposition was on this file.
One-third of all cross-border trade between Canada and the United States takes place with companies with a presence on both sides of the border, and two-thirds is within established supply chains. If either government were to introduce new barriers or preferences now, it would increase costs, cause delay and disrupt the way that businesses have organized themselves on the continent, thereby resulting in decreased North American competitiveness. I do not think any of us on the North American continent can afford that at the present time.
The recently met with U.S. trade officials and strongly indicated Canada's concerns about increased U.S. protectionism and the pressures and possible broadening of buy American provisions in the proposed stimulus package. He said, “We know from history that protectionist legislation winds up hurting one’s own economy and invariably hurting the economies around it”. In a follow-up letter to the acting U.S. trade representative, he wrote, “Canada believes that elements of ARRA now under consideration are protectionist in nature and contrary to the very goals of economic recovery that this bill is intended to address”.
That is the very start of what happened and how this issue has grown. It is important for all Canadians to know that we have taken our message to the American government. We have used all of the assets at our disposal, including one-on-one discussions with American legislators, congressmen and senators. We have certainly been in broad and thorough diplomatic discussions with the United States. We know how serious this issue will become if we are not able to nip it in the bud.
Certainly, we are not alone in our concerns and we are not alone in the lobby. America's other trading partners have expressed concerns. There is domestic opposition as well from companies as diverse as Caterpillar, which has a tremendous national market in the United States but also is an exporting company. There are many national business organizations and corporations that have now taken another look at the bill and said that it looks good on paper, because protectionism always looks good on paper, but what are the results of it? The results are that America would lose jobs, would lose opportunity and would lose income.
Canada has tremendous political capital with our closest friend and ally, the United States. We are optimistic that the United States will not proceed with a bill that would be damaging to international trade. After all, the greatest danger to global economic stability is that other countries would retaliate with protectionist measures of their own.
Last night's vote by the U.S. Senate to ensure that the U.S. stimulus package meets all international trade obligations is an encouraging sign. It is the first crack and an encouraging sign that our combined efforts are making progress.
At the G20 in November our pushed for progress on four initiatives to address the causes of the global financial crisis, initiatives that were ultimately endorsed by the G20 leaders. We pressed for action to address the crisis, commitments to strengthen domestic financial regimes, an agreement to conduct transparent international assessments of national financial systems, and a commitment to resist protectionism and maintain open markets.
We owe it to all of our trading partners to resist protectionism and maintain an open marketplace.
Meanwhile, Canadians and Americans share the largest and most comprehensive economic partnership in the world. We are one another's largest customers and largest suppliers. We are joined at the hip. We are dovetailed together. Anyone in this place or any other place who thinks that we are not dependent upon the American economy and the American economy is not dependent on us is making a very serious lapse in judgment.
Although our precise policies may differ because we are separate countries, our objectives as nations are similar. We seek prosperity, security and a good life for all of our citizens. The prosperity of our neighbours is inextricably tied to our own. Our two economies are so integrated that we must address this downturn together.
The hon. has called upon the government to intervene forthwith and persistently with the United States administration and Congress in light of what he characterizes as growing protectionism in the United States.
As this House knows, the government has responded quickly and effectively to specific protectionist elements which appeared in the stimulus package being prepared by the U.S. House of Representatives and the U.S. Senate. It certainly does not stop there.
Canadians will be gratified to learn that a committed and gifted team of civil servants and Canadian diplomatic representatives have been working around the clock on this file engaging their counterparts on the other side of the border, but also working with their contacts in industry, trade and academia.
American newspapers, talk shows and radio phone-ins have been filled to the brim with debate on this issue, and yes, Canada can take plenty of credit for broadening the public discourse in America. Last night our friends in the Pearson Building received a note from our advocacy team in Miami. I will read a few lines of it.
“On February 4, Miami head of mission, Marcy Grossman, addressed the 100-plus members and guests of the board of the Greater Miami Chamber of Commerce, the leading business organization in this town with over 2,500 members. While the event had been arranged for Miami's head of mission to present the highlights of our newly available study of the Canada-Florida economic relationship, she used the occasion instead to deliver the Canadian message on buy American. Our timing was unusually felicitous because the Greater Miami Chamber of Commerce board also considered today its advocacy priorities for the U.S. federal and state authorities in the next few weeks. In addition, the members of the board's international advocacy group were already considering what the chamber wants to say on this stimulus legislation to the Florida representatives in the U.S. Congress. The result was an immediate invitation for us to provide our information to the key people today, so they can consider it in their approach to Congress on the stimulus package. We have already sent them a package containing the basic talking points, Ambassador Wilson's letter to the Senate leadership, and the letters from the CME, the Canadian American Business Council, and the U.S. chamber and industry associations”.
This morning the The Miami Herald published an op-ed piece by the respected Latin American columnist, Andres Oppenheimer, urging the U.S. Congress to kill the bill's buy American provisions. In it he observed that the exact details of the bill are far less important than the message it sends to the rest of the world. The column quotes Canadian Ambassador Michael Wilson and ultimately concludes:
If it gives U.S. trade partners an excuse to pass their own ''Buy national'' laws, U.S. exports will plummet even more and more U.S. jobs will be lost than this provision would help save. Now, please make sure that “Buy America” doesn't turn into “Bye America.”
This debate has come full circle certainly in the United States. We have made great headway in the House of Commons. There are more of us in agreement on this issue than there are in disagreement.
Our interventions and our interlocutors across the U.S. are being heard loud and clear. We have like-minded stakeholders in business, in industry and in academia. We have a situation where for the first time in many years, more than 100 major U.S. corporations have signed a common letter to the U.S. Senate leaders warning them about expanding protectionist measures, and their comments ring loud and clear in Canada as well as in the United States.
There are lots of people weighing in on this debate. One U.S. economist at the Peterson Institute for International Economics has concluded that buy American provisions in the bill will cost more jobs than it will create. Most of us are in agreement with that. Earlier this week President Obama spoke out about the need to avoid sending a protectionist message when trying to stimulate the economy and about the need to make sure that the provisions in the legislation will not trigger a trade war. Again, I think the Americans have come full circle on this.
Quite frankly, as the said last night, we are not out of the woods yet. The decision is yet to be made, so it is no time at all to give up on a full court press. It is no time to slacken the pressure that we are exerting on our American friends and colleagues. In many different arenas, in academia, in industry, in business and diplomatically, we have pursued this with great zeal on behalf of the citizens of Canada.
I would like to thank the hon. member for for this timely motion. It is an important debate. It is a debate that needed to be had. It has allowed all of us in the House to clarify our position vis-à-vis whether we are going to move in a protectionist direction, join the downward spiral of nations that would destroy the economy of Canada and potentially of North America, or if we are going to stick to our formula that has worked for more than the past decade of rules-based trading that is fair and equitable to all of the players, that allows everyone in every economy to join with their allies, whether they be across the American border, the Mexican border, the Colombian border, the Costa Rican border or the Peruvian border.
The world is moving toward more free trade, not more protectionism. To turn our backs on that at the present time would be a serious mistake for our nation. It would be a worse mistake for our citizens, because we would let them down and be directly responsible for a greater loss of jobs than we are seeing in this downturn.
Madam Speaker, I will be sharing my time this afternoon with the wonderful, outspoken and generous member for , affectionately known as the “Malpequer” by many of our colleagues. I also want to thank the member for for bringing forward this important motion and making it a subject of debate here in the House and across the country.
The motion itself, if ordinary Canadians read it, might seem technical, but for ordinary Canadians or ordinary Labradorians who are involved in industries impacted by the legislation or the economic stimulus package in the United States, it is about their jobs, it is about how they are going to pay their bills. While it may seem technical to them, it hits home for many people.
Our trading relationship with the United States is very important and it has to be based on mutual respect and on the rules. The riding of has a very direct role in the Canadian and international iron and steel industry. Our iron ore industry has a longstanding close relationship with Canadian and American steel industries, having been developed by North American steel makers in the 1950s and 1960s.
Iron ore production in Labrador in 2008 was estimated at $2.5 billion, no small chunk of change. We have two of the three most important iron ore producers in Canada, those being Wabush Mines, the Iron Ore Company of Canada and the other being Quebec Cartier, neighbouring us in northern Quebec out of Fermont.
We also have a number of new iron ore projects in the advanced exploration at the pre-development stage. I will mention just a couple, those with the New Millennium group and the ironsands project. Up until a few years ago, iron ore represented over 90% of the mineral production in the entire province of Newfoundland and Labrador, and that was before Voisey's Bay nickel came on stream.
Labrador now represents 98% of the mining industry in our province. Nickel production at Voisey's Bay last year is estimated at $2.2 billion, with over half a billion dollars more in related copper and cobalt production from the same mine. Nickel of course is a component in many types of steel as well as iron ore. Among the three operating mines in Labrador, Wabush, the Iron Ore Company of Canada and Voisey's Bay, they account for nearly 10% of the value of all Canadian mining in 2006.
In the past several years they have generated tens and even hundreds of millions of dollars in royalties which are paid to the provincial government. In certain instances a share of those revenues are transferred to the Nunatsiavut government, the Labrador Inuit self-governing body, and the Innu nation representing the Innu people of Newfoundland and Labrador.
It is not hard to see from these facts that the economy of my riding of is very closely tied in with the Canadian international iron and steel industries. We have a direct interest in the domestic and international policies and politics that have an impact on this vital sector.
Along with many other Canadians I was fascinated to watch the recent American election unfold and to see President Obama inaugurated just a few weeks ago. When the American stimulus package was drawn up, it included the problematic buy American clause. I and many in my riding were immediately concerned about the impact on the industries that were situated there which our economy was dependent upon.
It seems that many on this side of the aisle and indeed throughout Canada, the U.S. and around the world share that concern. In the past few days and hours the president has signalled that he is open to measures to avert what could be an unfortunate international trade dispute, not just with Canada, but with other countries.
It is unfortunate that the Conservative government seems to have been caught off guard, flat-footed and, in some respects, dumbfounded by some of the protectionist developments south of the border. It seems to have no strategy and no comprehensive response, just a shotgun reaction.
While the mine industry in Labrador has had boom times, in the past few months we have seen our share of trouble and there is more on the horizon. In western Labrador, we have already seen a number of projects deferred or cancelled, the announcement of 160 layoffs at Wabush Mines and scheduled shutdowns that will contribute to the hurt. In northern Labrador, Voisey's Bay has scheduled a summer shutdown this year as well.
Our mine operators and especially mining employees are watching the global economic situation. They are keenly aware of the impact of the world situation on their jobs, their lives and their communities.
In Labrador, just like the rest of the country, my people watched as the Conservative government denied the economic downturn, then ignored it, then delayed a response and now has brought forward a haphazard stimulus package.
Canada needs to stand firm in ensuring that protectionist measures do not exasperate the stresses that our people now face in the metal producing industry. Workers in my riding need assurances that the Conservative government will fight for their interests now and in the months and years to come.
Madam Speaker, I am pleased to speak to the motion from the member for but, given my voice today, I will do an unusual thing. I will speak slow and low and hope my voice lasts the 10 minutes.
The motion really calls upon the government to intervene forthwith and persistently with the United States administration and the congress in order to protect Canadian jobs. Simply put, what the motion really means to those opposite is that the Conservative government must wake up. The U.S. is becoming more protectionist and the government needs to be on top of this file. It needs to stand up for Canadians, not be asleep at the switch.
This motion has become necessary simply because the United States, at the height of a global downturn, is looking inward and is becoming more protectionist. We saw back in the dirty thirties what happens when we have an economic downturn, or did not see, as my hon. colleague is laughing over there, or read about it in a history book. We know history and when we add an economic downturn and protectionist policies that basically seize up trading relationships between nations, then that makes matters even worse for all countries globally involved.
Therefore, on the one hand, we have the U.S. becoming more protectionist, and on the other, the fact that the Conservative government seems to be asleep at the switch. Worse than that, the government record on this issue has been very poor. We know where it was on the softwood lumber dispute where the U.S. basically took the government to the cleaners. Canadians who work in the forestry industry and in the lumber plants, whether it is eastern Canada or western Canada, have suffered ever since.
Canada is a trading nation. In fact, we are more dependent on trade than almost any other nation in the world and we are very dependent on the United States market. I see the is here and he will know that no industry is more dependent upon that trade than the agricultural industry, for which I am agriculture critic for the official opposition.
Sixty per cent of our hogs are exported, not all of them to the United States but we are greatly dependent on that market. Fifty per cent of our beef is exported and an even higher percentage of wheat, but the wheat industry is not as dependent on the United States market as it is around the rest of the world.
Trade is extremely important. Yes, we need to expand our relationships around the world. In fact, I believe the minister made an announcement the other day in opening up an additional market for beef, and that is good, but the fact is that the U.S. is our closest trading partner. It is our neighbour and our friend most times and we will always be extremely dependent upon that market, and that cuts both ways. Both countries gain extensively from that trading relationship.
Farmers, though, perhaps more than most, can tell us the impact upon their livelihoods when all of a sudden the United States uses whatever levers or excuse it has and becomes protectionist. No industry, bar none, was as integrated as the Canada and United States livestock industries, up until five or six years ago when we exported feeders to the United States and brought up slaughter cattle from the U.S., but then we had a situation where we had one cow with a case of BSE and immediately the border was closed.
As a result of that border closing, in what I believe were protectionist measures taken by the cattle industry in the United States and supported by congress and the senate, cattle farmers in Canada today are still suffering even though the border is now open. Billions of dollars have been lost. As a result, the previous government and the present government had to pump considerable millions of dollars into the industry to support it in its time of need. Those are the consequences.We have seen first-hand in the cattle industry the consequences of measures taken that will bring in protectionist measures and isolate certain industries from trading relationships.
We know very well that congress and the senate especially can be very protectionist and the government opposite should know that. However, the government seemed to be caught off guard, just like it was on the economy. We heard stories during the election that this country would not see a deficit next year. Now we know differently. Instead of being on the ball and paying attention to what was happening in the U.S., it seems to have been caught off guard as the U.S. Congress and Senate take more and more protectionist measures.
The purpose of this motion today is to push the Government of Canada to be more accountable, to take aggressive action with the United States, to send delegations to the United States from the ministerial level and to be on top of its counterparts in pushing the issue of good, open trade relationships between the two countries.
When Ron Kirk was put forward as the United States' trade representative, he was quoted in a Reuters news service report saying:
The United States cannot afford to turn its back on trade as it tries to dig its way out of a deep recession, President-elect Barack Obama's choice to be U.S. trade representative said on Sunday.
He went on to say, talking to mayors:
But I also know there are mayors in this room that represent communities that feel very differently about that, and part of our challenge as we go forward is to make sure we have a trade policy that basically makes sense to the American public.
Mr. Kirk has pointed out very clearly the consequences of the United States becoming more protectionist. It would drive the recession even further. His second point is that, yes, there are mayors, communities, congressmen and senators who feel differently about that, and that is where our government needs to be on the ball. It needs to be on the ball talking to people at the congressional level, senate level and administration level to enforce the point of how valuable that trading relationship is to both our countries.
I am a member of the Canada-United States parliamentary association, as some members are on the other side. One of our members, a co-chair, Senator Grafstein, has been to the United States several times in the last few weeks. In my view, he, as one senator, has been more aggressively pushing the fact and informing Americans on how serious these trade protectionist measures they are taking could be. I ask the government to catch up to the senator in terms of being aggressive and protecting Canadian interests, building understanding in the United States that this trade relationship is important to both our countries and pushing them to cease and desist on the protectionist measures that will undermine both our economies and livelihoods into the future.
I am pleased to support the motion put forward by the member for . It basically tells the government to aggressively pursue the U.S. administration to cease and desist on the protectionist measures it is proposing through its stimulus package.