Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, OCTOBER 27, 1992

Volume 5, No. 20

[ Page 3635 ]

The House met at 2:07 p.m.

Prayers.

D. Schreck: In the gallery this afternoon are the three North Shore mayors: Mayor Mark Sager, Mayor Murray Dykeman and Mayor Jack Loucks. Joining them is the city administrator for North Vancouver. Would the House please join me in making them welcome.

D. Streifel: We have many visitors in the gallery today, some from as far away as Nova Scotia. I would like to introduce Allison Cosentino and her father, Fabian Sutherland, from my wife's hometown of Dartmouth, Nova Scotia. They are accompanied by her sister Joanne Sutherland, from Banff, Alberta.

While I'm up, I notice a former colleague of mine in the gallery, the secretary-treasurer of the United Food and Commercial Workers, Mr. Jack Allard. I bid the House make them welcome.

Hon. M. Sihota: For reasons that entirely escape me, I notice that joining us in the precincts today is Mr. Ken Georgetti, president of the B.C. Federation of Labour, and his delegation; Kathy Sanderson and her delegation from the Coalition of B.C. Businesses; and Mr. Jim Matkin and his delegation from the Business Council of B.C. Would all members please join me in extending a warm welcome to them.

J. Pullinger: For similarly elusive reasons I see a member of the Nanaimo, Duncan and District Labour Council in the galleries today, Ms. Teresa Cairns. Would the House please help me welcome her.

Hon. A. Edwards: I would like to ask the House to join me in welcoming Mr. Tom Waterland, the president of the Mining Association of B.C.

Hon. J. Cashore: I'd like to acknowledge another distinguished guest, who, among other things, was the first chairperson of the B.C. Round Table on the Environment and the Economy and who has recently retired from that post: Mr. Chuck Connaghan.

L. Reid: I would like the House to welcome today Mr. Ron Dickson, who is a councillor for the city of Richmond.

F. Randall: Up in the gallery I see four old friends: Greg Harris, business manager of the labourers' Local 602; John Wynne, business manager of the UA, which is the plumbers' Local 170; Cliff Rundgren, business manager of the IBEW Local 213; and Lorne McRae from the painters' Local 138. Would the House please make them welcome.

Introduction of Bills

LABOUR RELATIONS CODE

Hon. M. Sihota presented a message from His Honour the Lieutenant-Governor: a bill intituled Labour Relations Code.

Hon. M. Sihota: In January of this year this government appointed a panel of special advisers to make recommendations for labour law reform in the province of British Columbia. In February I asked a subcommittee of special advisers to review the Vander Zalm administration's Industrial Relations Act and to bring forward recommendations for change, having regard for the need to create fair laws which would promote harmony and a climate conducive to investment in British Columbia. The panel consulted with both large and small businesses in British Columbia, as well as representatives from the labour movement. It held public hearings in 11 communities in the province and received 203 oral submissions and 269 written submissions. Among the panel's findings was the observation: "Few people today see Bill 19 as the product of meaningful consultation. No one seriously attempted to defend Bill 19 as balanced legislation."

Hon. Speaker, today marks the beginning of the end of Bill 19 in British Columbia. Without balance and fairness, British Columbians can neither create the investment climate nor pull together in the way we know we must in this tough international economy that we compete in. Remarkably, the advisers considered the balance of interests and achieved unanimity on all but four issues. They reached agreement on 98 percent of the provisions of the Labour Relations Code that we are introducing here today. The government carefully considered the advisers' opinions on the four remaining issues, and I believe that in the context of 1992, we have resolved them in a similarly balanced fashion.

The advisers said of their report and draft legislation: "There are aspects which will disappoint the employer community and aspects that will disappoint the trade union community. We firmly believe that the recommendations achieve an overall balance." That balance is in the bill that I've put before the House today -- a solid basis for fairness, mutual respect and economic performance. It's legislation that is in the interests of all British Columbians.

[2:15]

Bill 84 introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Oral Questions

PRESS RELEASE BY MINISTER OF
LABOUR AND CONSUMER SERVICES

G. Wilson: My question today to the Premier is predicated on the assumption that in this province an individual is innocent until proven guilty in a court of law. Does the Premier agree that that is true? If so, what disciplinary action is he prepared to take against a 

[ Page 3636 ]

minister who would charge someone by way of a press release prior to a trial date?

Hon. M. Harcourt: Hon. Speaker, the Leader of the Opposition, I take it, is referring to the recent court decision out of Kelowna. Is that the case he is referring to?

The Speaker: Leader of the official opposition? I would encourage the hon. member to frame his question precisely.

G. Wilson: Hon. Speaker, we weren't aware that there was a long list of ministerial indiscretions in terms of how we deal with this. However, let me be specific. I am indeed referring to the press release that was released on March 10, 1992, by the Minister of Labour and Consumer Services and to the judgment that was brought down by the justice hearing the case, who used the words "most unfortunate" with respect to the interference this minister made in the provision of justice in the province of British Columbia.

My question again to the Premier is: what disciplinary action is the Premier prepared to take against a minister who has so desperately crossed the line with respect to where the minister's privileges lie?

Hon. M. Harcourt: I am pleased that the Leader of the Opposition finally let us know which case he was referring to. Just for your edification, it is the case of Her Majesty the Queen v. Melford Keith Johnson. I have read the judgment, and I will be filing it with the Legislature; I'll table it right now. I can say....

Interjections.

The Speaker: Order, order. Would the Premier take his seat. Is the House prepared to grant leave at this time for the Premier to table this document?

Leave not granted.

Interjections.

The Speaker: Order, please. Would the House come to order. Would the Premier like to complete his answer to the question.

Hon. M. Harcourt: Well, hon. Speaker, I'm amazed that the opposition doesn't want to hear the truth or read the judgment. They're not prepared to hear what the judge has said. I would be quite prepared to paraphrase what the judge said. I have read the judgment, and I would advise, before they start making judgment calls themselves, that the opposition read through this judgment. That's why I was quite prepared to table it for them to read.

The judge's conclusion is that there was no undue interference; that there was no reason to stay the charges before him. I think that, yes, it is a tough judgment call to maintain a balance between preserving the right of an individual to a fair trial and warning the people of British Columbia, as the Minister of Consumer Services did, of frauds that are taking place in a systemic way in this province. The minister has a duty to warn British Columbians about that, and he did.

The Speaker: Before I recognize the next questioner, I would advise the House that in view of the Chair's interjection we will extend question period by that amount of time.

G. Wilson: The Premier is quite correct: it is a question of judgment by this minister, who we know was in large measure responsible for the Charlottetown accord, which received judgment from the people of British Columbia yesterday, and who we know is tabling the labour bill. My question is with respect to the role of the minister in terms of the provision of justice in this province. Is the Premier saying that the former Forests minister, who had an indiscretion and who now serves three months in the penalty box, was in any way more guilty than this minister, who has overstepped the bounds of what is accepted practice by ministries in this province?

Hon. M. Harcourt: I will only add to my previous comments by saying that the people of British Columbia can expect the Minister of Consumer Services to stick up for consumers in this province, not for fraud artists.

ECONOMIC EFFECTS OF
CONSTITUTIONAL DEBATE

J. Tyabji: My question is for the Minister of Finance. Last week he urged a Yes vote for the economic security of the country. Today the dollar is trading up. He also said that his investment friends convinced him we're going to have to pay higher interest rates. This morning major chartered banks announced a reduction. Will the minister apologize now for his fearmongering and erroneous statements during the Charlottetown debate?

Hon. G. Clark: I don't think that now is the time to play politics with this question. Interest rates rose 200 basis points -- the largest increase in interest rates in the history of Canada -- just a couple of weeks ago as a result of investor uncertainty around the constitution. It is naive in the extreme to take a daily review of this situation and then make some conclusions. I suggest to members opposite that they review the record. I was very careful in saying this, and it is still the case today that uncertainty around the future of Canada is of concern to international investors and people from whom the provinces and the country borrow money internationally. I want to advise the House that my comments still stand. Interest rates are higher today because of that uncertainty, and they will likely be higher in the future, although it is nothing that cannot be overcome with hard work and a reaffirmation of the future of the country. I think it behooves all of us in this chamber as politicians and leaders in the province to....

C. Serwa: A point of order.

[ Page 3637 ]

The Speaker: Hon. member, I would like to take that point of order after question period. Would the minister quickly conclude his remarks.

Hon. G. Clark: I think it's important that all of us in this chamber, as elected people in British Columbia, reaffirm our commitment to a united Canada and send the reassuring message around the world that Canada is strong and will continue regardless of constitutional bickering, which has gone on for some time in this country.

J. Tyabji: Hon. Speaker, I understand that the government feels a little lost without their Yes buttons, and that they're a little shell-shocked from yesterday. However, we're talking about the economic judgment of this minister.

During question period last week the Finance minister compared the British Columbia economy with that of western Europe. However, according to his own statistics, the Pacific Rim now accounts for one-third of B.C.'s exports, while western Europe is only 12.9 percent. With our real competition in the Pacific Rim, can the Minister of Finance explain why he is still touting our competitive advantage over countries like Belgium?

Hon. G. Clark: I'm a bit puzzled by the question, but let me reiterate my remarks. The economic growth rate in British Columbia is the highest of any province in Canada. The economic growth rate of British Columbia is among the highest of any state in the United States and of any country in western Europe.

Interjections.

The Speaker: Order! Would the minister take his seat. The Chair cannot hear the answer to the question, and I would call the House to order. Minister, would you please continue with your answer.

Hon. G. Clark: Hon. Speaker, my point is very clear. There is work to be done, and we're working hard on this side of the House to reassure international investors about the security of the country.

I can tell you what they're saying about British Columbia. We have the highest credit rating of any province in Canada, the same as Canada's; we have the lowest debt per capita of any province in Canada; we have the best economic performance of any province in Canada or of any jurisdiction in North America. We are doing well, and we're determined to do better.

KORBIN COMMISSION REPORT

J. Weisgerber: Thank you for the testimonial. It's very much appreciated.

My question is to the Premier. Has his government decided to implement the Korbin commission report before making it public? And more specifically, has he decided to terminate all contractors who don't agree to join the BCGEU?

Hon. M. Harcourt: I think the member answered his own question. The report is still ongoing. Therefore we haven't seen the report, and therefore he's talking about future policy.

J. Weisgerber: A supplementary question to the Minister of Advanced Education. Can the minister explain why his ministry has advised contractors that their only option for continued employment is to join the BCGEU? Can he tell us on whose authority he has offered to pay three months' union dues to the BCGEU for every contractor who agrees to join?

Hon. T. Perry: Hon. Speaker, I've heard some unusual questions in three years in the House. That's one of the most extraordinary. If the member would care to inform me what he's referring to, I might be able to give a coherent response, but I've never heard of anything of the kind.

J. Weisgerber: Again to the Minister of Advanced Education. I have in my hand a document sent from your ministry to a contract worker in Prince George that lays out specific terms and conditions for continued employment, citing recommendations of the Korbin commission. Section 8 of this document says: "For each individual who is assigned to employee status, the employer shall pay three months' union dues to the BCGEU." The contractor in question was led to believe that this payoff to the BCGEU would be retroactive. Can the minister confirm that this is the case?

Hon. T. Perry: If the hon. member would be kind enough to either table the document or forward a copy, I will be glad to take it on notice and get back to him with an answer.

INTERNATIONAL INVESTMENT IN B.C.

J. Tyabji: Back to the Minister of Finance, who got off the hook for the second supplemental. His answer to the first question was basically that we have a great economy, and he's mismanaging it into an historic deficit.

Investment is flowing to the Far East, where growth rates of 3.5 to 8.5 percent are far higher than in B.C. It's obvious that the Finance minister does not understand international investment, nor does he know how to attract it from our competitors. Will the minister consent to keep a lower profile in the interests of B.C.'s investment community?

[2:30]

Hon. G. Clark: The member is correct. The only jurisdictions in the world doing better than British Columbia are the Asia-Pacific countries. That's why our Premier has taken the trade portfolio, of vital importance to the people of British Columbia, to enhance our trade relationships with those countries, and that's why 40 percent of our trade is with those Asian countries, unlike other provinces in Canada. That's a vital ingredient in the reason British Columbia is doing better than anywhere else in Canada, and it's something that we 

[ Page 3638 ]

have a chance to build on. With the leadership of the Premier, we will build on it and improve the standard of living in British Columbia.

FAIR WAGE POLICY

G. Farrell-Collins: I hope that's different leadership than we've seen from the Premier over the last 12 months.

Last year the Minister of Labour introduced the fair wage policy in this House. We've now seen the disastrous implementation that took place afterwards. We have Mr. Hodgetts, who's the director of the fair wage policy, saying that 5,000 employees -- construction workers -- are going to be out of work because they can't get certification by January 1. Will the minister agree with that?

Hon. M. Sihota: The hon. member makes reference to the fair wage policy, and he calls it drastic. I think the record should be corrected with regard to that point. The hon. member should know that, contrary to the points he made in this House, every fair wage contract that we looked at across this province -- 26 have gone union; 18 have gone non-union -- has, on average, come in 3 to 5 percent below budget. That's the result. So much for the-sky-is-falling rhetoric of the member opposite.

Let me also say that the trade qualification certificate program has been an unqualified success, as individuals are now lining up to secure their trade qualification certificates. It has been an unqualified success for the young people of this province, who have now been able to take advantage of apprenticeship opportunities that weren't there prior to the introduction of this program.

G. Farrell-Collins: The member spread garbage around this province for the last six weeks, and he's doing it again in this House. It's simply not true.

This minister brought in a fair wage policy that has done nothing but harm the education facilities in this province. I have a school in my own constituency that's $1.8 million over budget. If he had been paying attention to the economy of this province instead of to the constitution, he would have seen that himself. Does the minister stand by his fair wage policy, and if he does, will he introduce the motion on the order paper for debate today?

The Speaker: The Chair is going to ask you to repeat your question. I am sorry, but the Chair missed exactly what the question was.

G. Farrell-Collins: I love the opportunity to ask the same question twice. My question to the Minister of Labour was: why has he implemented a fair wage policy that has been a disaster, and if he thinks it's such a wonderful policy, will he commit it to debate it today? It's on the order paper. We can call it today. Will he commit to do that?

The Speaker: I am going to ask the minister's indulgence.

Hon. M. Sihota: Let me respond to the hon. member's question by saying the following. This government isn't at all hesitant to debate any policy in this House at any time, including the fair wage policy. The hon. member makes reference to the need for this government to pay attention to the economy. I want the hon. member to understand that our province is the fastest-growing in Canada. We've seen more jobs created in British Columbia than in any other province in Canada: a 1.7 percent increase in employment over the last six months and a 34 percent increase in housing starts over the time that this government's been in power. These are the benefits that have accrued to this province by virtue of the fact that there's a government in this province that is going out of its way to protect the jobs and paycheques of ordinary working British Columbians.

The Speaker: The bell signals the end of question period. I will now recognize the point of order from the member for Okanagan West.

C. Serwa: My point of order is in reference to 47A(b) in the handbook. Clearly the government ministers are abusing the purpose of question period. Rather than short, precise answers, they're long rambling statements, particularly from the Minister of Finance. Whether it's a communicable disease that lurks in his quarters or not, he certainly has caught it.

The Speaker: The Chair always welcomes the opportunity to remind all hon. members of the guidelines provided for both questions and answers. They should be brief, precise and stated without argument and opinion. I'm sure all hon. members asking questions and giving answers will review those guidelines.

The leader of the third party tabled a document entitled "The Korbin Commission Contractor/Employee Remedy."

Orders of the Day

Hon. G. Clark: I call Motion 64 for debate under the name of the Minister of Economic Development. Motion without Notice

NORTH AMERICAN
FREE TRADE AGREEMENT

Hon. D. Zirnhelt: I move the following motion: "Be it resolved that this Legislature call upon the government of Canada to not ratify the North American free trade agreement as initialed on October 7, 1992."

The Speaker: Would the member forward a copy of that motion to the Chair.

Hon. D. Zirnhelt: We recognize that British Columbia is heavily dependent and reliant on trade 

[ Page 3639 ]

with other nations. British Columbia wants to conduct trade in a fair manner with its trading partners. British Columbia must promote trade partnerships that are beneficial to its economy. Some trade partnerships promoted by the federal government tend not to be useful to us. NAFTA will not allow us to have a trade policy or an economic development policy that is in the best interests of B.C. NAFTA does nothing for the workers of British Columbia or for the environment. The federal government has opened Canada's borders without ensuring Canadians have been properly prepared. British Columbia must therefore seek to establish its own trade priorities. For these reasons I feel that it is in British Columbia's best interest that the federal government does not ratify NAFTA.

I'd like to elaborate on those points. The first one is that British Columbia is heavily reliant on trade with other nations. We know that British Columbia is vitally dependent on international trade. International exports generate 25 percent of our gross domestic product. More than one in five jobs in B.C. is dependent on international trade.

British Columbia wants to conduct fair trade with its trading partners. Because of the importance of international trade to B.C.'s economy, we must have secure, reliable access to foreign markets. This secure access is essential to establish and build our export markets. In B.C. we want fair trade that benefits not only our own economy but also the economies of our trading partners. If we lift up our trading partners, I think we lift up our own economy; they then have the means with which to purchase goods from us, and we mutually benefit from the exchange of goods.

British Columbia repeatedly urged the federal government to ensure that access to foreign markets for our products is its highest priority in international trade negotiations. The federal government stated that we should gain better and more secure access from the Canada-U.S. free trade agreement. They have said that the same thing will happen under NAFTA. It clearly didn't happen under the Canada-U.S. agreement, so they are right when they say that the same thing will happen under NAFTA.

Canada expected there would be a significant decrease in the number of unfair trade actions launched by the U.S. against Canada as a result of the FTA. In fact, the magnitude of potential damage to the British Columbia economy from these unfair trade actions would appear to have increased since the FTA. The softwood lumber countervailing duty investigation is a prime example of the way the U.S. used its trade laws to challenge British Columbia's and Canada's access to its markets. The evidence presented before the U.S. government clearly shows that Canadian exports of softwood lumber are not injuring U.S. producers, and that our timber pricing and log export controls do not provide subsidies to British Columbia softwood lumber producers. So what happened? The U.S. imposed a duty on our softwood lumber exports.

As the Premier and I have said before, it is clear from the actions of the United States that they are not willing to live by the spirit of the commitment made in the Canada-U.S. free trade agreement. The dependent nature of the smaller economic partners to these agreements only serves to ensure that U.S. political pressure will continue to perpetuate unfair trade actions against Canada.

The third main point I made is that British Columbia must promote trade partnerships that are beneficial to its economy. Some trade partnerships promoted by the federal government tend not to be so useful to us. Approximately 70 percent of Canada's exports go to the United States. British Columbia's trade is far more diversified and is dependent on Pacific Rim countries. In fact, our exports to the Pacific Rim are almost equal to those of the United States: 43 percent to the U.S. compared with 38 percent to the Pacific Rim.

Trade agreements that threaten our relationship with the Pacific Rim are not in British Columbia's interests. NAFTA not only does nothing to improve relationships with Pacific Rim trading partners; it will actually hurt them by diverting Pacific Rim investments in Canada.

Since British Columbia's economy is based on natural resources, unlike the manufacturing base of central Canada, we have very different interests in trade agreements. In negotiating NAFTA, for example, central Canada was interested in winning concessions for textile and automotive producers. Our exports to the U.S. are primarily natural resource products. These already entered the U.S. duty-free before NAFTA. So what benefit did B.C. gain and at what cost? Where do we have the value-added exports? These are largely products in specialty markets, where price is not the prime competitive factor. In this category, some of our exporters have gained markets in the U.S.; equally, others have lost.

The fourth point is that NAFTA will not allow us to have a trade policy or an economic development policy that is in the best interests of B.C. As with the FTA, NAFTA has eroded the government's ability to implement economic strategies that utilize tax and regulatory policy levers to manage provincial resources and control foreign investment. The FTA's national treatment provisions cover numerous services regulated by provincial governments, including forestry, agriculture, mining, construction, insurance and tourism. As a result, British Columbia can no longer institute regulatory changes favouring Canadian companies over American companies operating in these sectors.

The FTA also grants national treatment to U.S. investors who wish to establish, purchase and sell Canadian businesses. As a result, new initiatives favouring Canadian investors over U.S. investors are not allowed under the FTA. Export restrictions used to conserve scarce resources or to encourage value-added processing are constrained under GATT. The FTA imposes further restrictions by banning export taxes between Canada and the U.S.

In addition, certain provisions, or lack thereof, may create problems in the management of our resources. For example, the federal government has said it does not believe that large-scale water projects and exports are subject to international trade agreements. If this is so, why were they unable to secure a provision in NAFTA clarifying this? Does this not leave us open for 

[ Page 3640 ]

being forced to export water to the United States? I don't know the answer, but neither does the federal government. That makes it pretty frightening.

The fifth point is that NAFTA does nothing for workers or for the environment. NAFTA does not protect workers' rights, nor will it ensure that labour standards are established and enforced. Workers are going to be negatively affected by NAFTA, but the Prime Minister has said that there will be no worker adjustment programs to deal with job losses. Mr. Mulroney promised adjustment assistance with the FTA, and it didn't happen. This time we have to give Mr. Mulroney credit for being honest. George Bush has promised assistance to American workers. Why can't we do the same in Canada?

In the same light, the environmental provisions of NAFTA are also a major disappointment. The ones that are in the agreement are weak and largely unenforceable -- no teeth, as we say. There is nothing that will ensure that Mexico will enforce its environmental standards.

[2:45]

The sixth point is that the federal government has opened Canada's borders without ensuring that Canadians have been properly prepared. British Columbia must therefore seek to establish its own trade priorities. The federal government has set a policy of opening our borders in order to force Canadians to become more competitive. Its attitude is that most of the sectors that were negatively affected were in trouble anyway. The federal government obviously needs to learn to be more competitive, as other governments are, by assisting firms to learn how to be more competitive. B.C. does this through the B.C. Trade Development Corporation, which has a number of programs to assist exporters.

Our access to the U.S. market was not enhanced by the FTA, and NAFTA does nothing to improve the situation. Our softwood lumber producers, for example, will be just as vulnerable to unfair attacks under NAFTA as they were under the free trade agreement. In fact, with NAFTA, Canada and the U.S. have eliminated their FTA commitments to reform trade remedy laws, such as the U.S. countervailing duty law. So it's up to British Columbia.

We must ensure that our relationships with our most important trading partners are not damaged by NAFTA. Japan and several other Asian nations, including Australia and New Zealand, have expressed concern about the effect of NAFTA on their trade with North America. There is a strong possibility of investment diversion from B.C. and the rest of Canada to Mexico.

For these reasons, I feel that it is in British Columbia's best interests that the federal government does not ratify NAFTA. Canada needs to look at alternative trade policies and arrange agreements that will allow us greater market access while not tying our hands in undertaking economic development activities.

J. Tyabji: I find it unfortunate that the day after such a significant and historic vote in the country we find ourselves debating a motion that is not legally binding and does little more than express an opinion when there are much more pressing issues at stake. As it exists right now, the North American free trade agreement has no legal text. We have a long time before it will be in any kind of final form. We're sitting with the situation in the United States where they will no doubt have a change in government, and that government may have a very different direction from the current American government. I don't know that this is a very effective way for us to spend our time in the Legislature the day after a historic vote and the same day we have an enormous labour bill tabled in the House.

An Hon. Member: Are you whining?

J. Tyabji: It's amazing that I hear, "Are you whining?" from the back bench over there, because these are the same people who ridiculed our comments about the 50 government members who stood in solidarity with their Yes buttons on when almost 70 percent of the population disagreed with them.

Hon. Speaker, as far as this motion goes, they consider it's whining to say that the people of the province want us to focus on the economy. That was the commitment we had last night from this government: that they had been fooling around with other issues long enough. Here's another example of an issue that has nothing to do with B.C.'s economy in the short term, that is really a loose concept that has yet to evolve both south of the border and on this side of the border, and here we are spinning our wheels on the North American free trade agreement.

This opposition is very concerned with the direction that this government is trying to take us and with the motives that this government may have had in introducing this motion in the first place. We would rather have spent some time on the business of the House this afternoon, which includes the labour legislation, rather than looking at the North American free trade agreement as a concept and having some loose motion that this Legislature call upon the government not to ratify it. There isn't even a legal text. What are we talking about? What exactly are we discussing? It seems contemptuous in the extreme. I believe that the government has the same understanding of NAFTA that they had of the Charlottetown accord, and they don't understand the difference between a political document and legal text. So here we are back at square one.

One of the biggest problems that the opposition has with the entire concept of NAFTA is that there is no legal text and this is only a concept, and because we have governments both south and north of the border who need a renewal of their mandate before they have any political legitimacy, we are faced with a situation where we're basically debating a very loose concept that has no implications for the provincial House.

Hon. Speaker, I'd like to introduce an amendment to the motion to make it slightly more relevant to what we're doing in the House. This is something that from the opposition's point of view makes the debate somewhat reasonable in terms of making it relevant to what we're doing here; we were supposed to be talking about the economy in the first place. We are here the day after an historic vote that has eroded the political legitimacy 

[ Page 3641 ]

of the governments who supported the concept of the Charlottetown accord. The motion reads: "Be it resolved that this Legislature call upon the government of Canada to not ratify the North American free trade agreement as initialled on October 7, 1992." The amendment of the opposition would read: "...and negotiation on the agreement be suspended until the federal government receives a new mandate."

The Speaker: The Chair has received a copy of the amendment. For the House's clarification, it would add to the motion before you the words "...and negotiation on the agreement be suspended until the federal government receives a new mandate." So we are now debating the amendment.

On the amendment.

Hon. D. Zirnhelt: On a point of order, I think it changes the intent.

The Speaker: With due respect, hon. member, the Chair has received a copy of the amendment and will allow debate to continue while the Chair considers that amendment.

J. Tyabji: The reason the opposition felt it was absolutely necessary to introduce a motion to bring some kind of relevancy to this debate is that we, quite frankly, are not happy about spending three and a half hours in the House debating a loosely worded motion on a concept that really hasn't evolved -- nor will it evolve for another year -- especially the day after we had an historic vote where the people of the country said to the political leaders who negotiated the Charlottetown accord: "I'm sorry, we disagree with your vision." Here we have something on NAFTA coming before this House that's a very loose concept at this stage. It's totally irrelevant, specifically when we look at the political legitimacy of the federal government as it sits today.

It doesn't take somebody with a lot of political smarts to realize that south of the border they will probably have a change, not only in government but in mandate. With that new mandate, the American government will go in a different direction than it has in the past. As the NAFTA document evolves, the changes in the direction of the government will be taken into consideration.

After last night, I think it is only fair for us to look at the erosion of the political legitimacy of many of the governments across the country...

An Hon. Member: And across the floor.

J. Tyabji: And across the floor. ...specifically the federal government, and insist that no further negotiations on behalf of Canadians be made by a government that doesn't have a renewed mandate. The current federal government does not have a mandate to go forward with a North American free trade agreement. As we saw yesterday, there was a repudiation by most of the people in the country of their vision of the country.

Hon. R. Blencoe: Boring.

J. Tyabji: It's very interesting that some of the members of cabinet are heckling "Boring" across the floor. I assume that they would find it boring, because they are quite shell-shocked by the fact that people didn't like the little Yes buttons they wore all last week.

In order to make the debate relevant at all, and not a complete contempt of the House and of the fact that we have important legislation before us, we have introduced this amendment. We hope that the government recognizes the critical need for a new mandate for the federal government before they move forward on behalf of Canadians. The current federal government is running very short in the term that is allocated to them. It's obvious that with yesterday's vote they have very little political legitimacy, and we need a new mandate as soon as possible before we go forward on NAFTA. I hope the government will recognize this and vote in favour of our amendment.

Hon. D. Zirnhelt: I'd like to speak against the amendment. I think we would have introduced the motion if we supported the federal government in its trade policy.

First of all, I think the motion as I introduced it stands on its own. The main reason we introduced it in its form was that there's critical concern out there among the population about the effects of the free trade agreement, and the federal government has been trying to sell the NAFTA on the basis of it being an improvement. The economy of Canada is reeling from the effects of the 350,000 jobs that have been lost in manufacturing and another 150,000 jobs in other sectors of the economy.

We feel that the suspension until after the federal government receives a new mandate is a little bit out in the future. It may be some time, and it may never happen, that they get another mandate. My feeling is that this is a critical debate, the trade agreements are an important part of the economy, and I think we should get on with the debate today.

As for the text, the text that we have was delivered to the opposition for their comments. It's about that thick. It is a legal text, and therefore you can make your comments based on it. I'm opposed to the amendment.

G. Wilson: I'm absolutely amazed that the government would not recognize the need for a renewed mandate for the federal government of Canada. I find that absolutely incredible. The amendment simply says that we do not want to act like an ostrich by sticking our head in the sand and not recognizing that there is going to be some kind of freedom to trade in continental North America. That there will be some kind of agreement with Mexico is inevitable. It's clear to me that we in the opposition have suggested that there needs to be a renewed mandate in Ottawa prior to any government, no matter what political stripe, negotiating such an important document on behalf of Canadians. 

[ Page 3642 ]

For this government to stand up and oppose such an amendment tells me that they're perfectly prepared to allow the current Mulroney government to carry forward and continue to negotiate this most incredibly important document on behalf of British Columbians. I find that absolutely unbelievable. Perhaps there was more than just a political alliance born over the last six weeks. Maybe over the last six weeks, when the Premier was carrying the bags of the Prime Minister around the province, there was more than that taking place.

Let's be specific on the reason for this amendment in a second point. The fact of the matter is that this motion says: "Be it resolved that this Legislature call upon the government of Canada to not ratify the North American free trade agreement as initialled on October 7, 1992." The minister who moved this must know how the Commons works and that the only thing initialled on October 7, 1992, had the signatures of three Finance ministers. We do not have a legal text that was signed by the leaders of state from three countries, which is what is going to necessarily be the subject for debate in the House of Commons. Neither do we have any kind of concurrence from the current three candidates for the presidency of the United States of America with respect to how they wish to proceed with the document that has been initialled. So as this motion is placed by the minister, it is completely useless in terms of its intent and purpose.

We have tried to send a signal to the government in Ottawa and the two opposition parties, both Liberal and New Democrat, that prior to entering into this most important free trade agreement, the people of British Columbia want to make sure that they have an opportunity to exercise their democratic right. Particularly in light of the fiasco that the Prime Minister suffered last evening, they have the democratic right to renew the mandate of the federal government prior to such an important negotiation taking place. Quite frankly, I find it incredible that this government would so quickly rush to the defence of Prime Minister Mulroney and his government, which is in the last days of its mandate.

[3:00]

D. Miller: I rise to speak against the amendment, and I rise to speak against the do-nothing Liberal opposition. To every issue we face in this nation -- including the very important trade issue that we want to debate today, which has a lot of bearing on industry in British Columbia -- their answer is: do nothing. To the Leader of the Opposition, who obviously has puffed himself up on the fact that 70 percent -- or a considerable number of people -- have voted no, and who has pumped himself up and is somehow preening with pride....

C. Tanner: On a point of order, Madam Speaker. This is not appropriate comment for this debate. These are comments of a side that lost its vote yesterday and is trying to make up for it today. That is not a point of debate at all.

The Speaker: Order, please. I would remind hon. members that personal comment or personal attack are never appropriate in the House. I am sure the hon. member will confine his comments to the motion before us.

D. Miller: I certainly hope that the Leader of the Opposition is not taking any of this personally, but it is clear that the member has puffed himself up on the fact that there has been a significant rejection....

The Speaker: Would all members take their seats. I have asked the member who had the floor to remember that personal comment is not appropriate in debate. I again ask the hon. member to get off the line of discussion that he has been on and to get back to debating the motion before the House. Please continue, hon. member.

D. Miller: I was trying to make the point -- sometimes one requires some emphasis to do that -- that doing nothing is not a solution, and that saying no all the time is not a solution. If it's felt that the do-nothing Liberal opposition....

The amendment says that British Columbia and the federal government should do nothing in this important area of international trade until there is an election, without even knowing when an election might come, and that we should simply not engage in any discussion on anything in terms of this very important issue. It's simply not good enough. It's certainly not good enough to always offer the No solution when it comes to trying to build a nation, and it's not good enough when it comes to protecting British Columbia's trade interests. It simply doesn't work. I would hope that we could defeat this amendment and get on to some reasonable debate on the very important issue put forward by the motion of the minister.

D. Symons: I did not intend to enter this debate, but I have real difficulty understanding the previous speaker's reasoning. I want to help him, having been a teacher for many years, possibly with reading.

I am reading the motion by the government, as it is without our amendment, and it says that "the Legislature call upon the government of Canada to not ratify...." And he was saying that we are naysayers? Not to ratify sounds like it means a no, and the previous speaker is not able to recognize that this is a No statement they're saying here.

What we are asking is that we wait until the federal government has changed, and we're going to discuss free trade. It has to be discussed. It's going to impinge upon this nation, no matter what government we have there. But the current government has lost credibility with the people of this country, and there's no point in giving any motion of this sort to the current government. All we have to do is say: "Let us wait until we have a government that has a mandate from the people of Canada." Certainly the previous speaker kept on referring to the fact that we are putting our heads in the sand and waiting -- we are the naysayers. Certainly this motion, in their form before we amended it, is 

[ Page 3643 ]

indeed exactly that sort of thing. He's guilty of reversing his own motion, not our amendment. So all those pious words refer strictly to the original motion. Our amendment is trying to correct what he was criticizing.

Hon. R. Blencoe: It's incumbent upon the government side to point out the ludicrous position that the opposition is taking on this issue. The member who introduced the amendment, seconded by the Leader of the Opposition, clearly doesn't understand what governments are all about. That member refers to a loose agreement. Here is the agreement; here is the text. It's not a loose agreement. It's on the books; it's been negotiated. It's before the people of the country and this province.

I think we should show the people of this province that if this opposition were in government, they would bring government to a halt. They would stop negotiations on something they didn't want to see happen. Governments are elected to govern; they're elected to negotiate. When jobs are at stake, trade is at stake, Canadian industry is at stake, the Canadian forestry industry is at stake, and international trade is at stake. The legal text is here before us. And heaven forbid that this opposition should get into power. They would bring government to a standstill, because they don't know what governing is all about.

This side of the House will negotiate. It's not a loose agreement, hon. member. You should learn the facts of life before you tell the people of British Columbia you would bring government to a standstill in the province. We want to get on with the business of this province. We want economic renewal in British Columbia. We want jobs for British Columbians. You want to bring everything to a standstill.

My colleague is correct: we have to negotiate. It is reality. If this opposition had its way, it would bring government to a standstill in British Columbia. We won't do that; we will negotiate on behalf of British Columbians for jobs now and not in the future.

F. Gingell: I really am a little bewildered now. We heard the Minister....

Interjection.

F. Gingell: Just now. You were saying this agreement should not be initialed. You weren't talking about negotiations; you were just saying this should not be initialed. Our amendment says to wait until we have a government we can trust, who understands the need of Canadians for economic renewal and for jobs.

This minister says to vote for this resolution, which says don't initial it, don't negotiate it, and don't do anything. And the minister sitting to his right stands up and takes completely the opposite position. Just think about this: the North American free trade agreement, whether we like it or not, while the Mulroney government is in office in Ottawa with their present voting strength, is going to pass. The only way we can get this agreement changed to protect British Columbia workers, to protect British Columbia jobs, to allow us to finally get some form of economic renewal plan going in this country and in this province, which we have anxiously awaited for the last year without any signs of encouragement.... The only way to make this work is to wait until the government in Ottawa has changed.

You keep saying: "Well, when is it going to happen?" The minister thought this could never be. The last election was in November 1988. What you do is write down 1988, and you put a five underneath it, and you draw a line, and you add them up; that will come to 1993. There has to be a federal election before November 1993. Doesn't the minister understand that?

What this amendment does is bring common sense into how we deal with the parlance of the North American free trade agreement. You can't just stick your head in the sand and believe that it's not going to happen. You have to get a government in Ottawa negotiating on our behalf, to negotiate out of it the areas that we see to be problems and to negotiate into it the things that we need to allow the British Columbia economy to grow. The Minister of Economic Development, Small Business and Trade, during his speech in favour of the motion, elucidated those things very well; he made the point excellently. Why doesn't he realize that if he wants it to happen, from a practical point of view, he will have to wait until after the next federal election?

Interjection.

F. Gingell: When? I assure you all, there will be a new government in Ottawa.

The Speaker: Seeing no further speakers on the amendment, I call the motion on the amendment. The amendment is to add the following words to the main motion: "and negotiation on the agreement be suspended until the federal government receives a new mandate."

[3:15]

Amendment negatived on the following division:

On the main motion.

G. Wilson: Speaking to the main motion, I find the fact that we were unable to move an amendment is perhaps testimony to the lack of conviction from the members opposite that one of the federal parties that might be forming the next election might be wearing the same political stripe that they have. As a result, they have tended to wish to stick with the Mulroney government and have the Mulroney government negotiate the free trade agreements.

[E. Barnes in chair.]

With respect to the NAFTA, there is no question that the tide toward free trade is coming in and coming in very quickly across North America, because it is a global reality as much as a continental reality. The North American free trade agreement that is being put forward -- even though we have no legal text, even though there is still negotiation underway and even though there is going to be considerable political change in both Canada and the United States prior to any formal or final ratification of any agreement -- is clearly moving us into a new era of economic development and trade, and is developing a new era in terms of cooperative management of all our economies: Mexico, the United States and Canada. The motion itself requests and requires that the government of Canada take a rather ostrich-like position that simply sticks its head in the sand and says nothing. I find it interesting that the member for North Coast claims that the Liberal opposition always wants to do nothing. He should read the intent and the language of the motion itself. It effectively says that we should somehow pack up our tent, walk away and assume that by sticking our head in the sand, this North American free trade agreement is not going to come to be.

I think freedom to trade is desirable in North America. The greater freedom we have in terms of our ability to trade, the more we'll build and expand our economies -- not retract and diminish them. We hear the concern for the number of jobs that have been lost across Canada. It's interesting that if we look at where the jobs have been lost in the last year and a half to two years, the predominant job losses occurred in the heartland region of Canada -- that is, in Ontario. We have to ask ourselves which government forms the provincial government in Ontario. Maybe there's something a little more directly related to the kinds of provincial policies than to some of the things we've been hearing about federally.

With respect to this motion, it's very important for Canadians -- and British Columbians in particular -- to know that there is a proposition for ongoing negotiation that is going to be worthwhile with respect to the protection of the interests we have. We have legitimate interests, and our critic responsible for trade will elaborate on those concerns in far more detail than I intend to right now.

We have concerns with respect to some of the provisions in the North American free trade agreement. We are listening very carefully to the words of the three candidates for President of the United States because, whomever it may be.... It would seem, if the polls are correct, that Mr. Clinton may well be the next president. If that's so, we would argue, from the words coming from that particular candidate, that there will not be a wholesale renegotiation of this deal, but there might be some form of discussion with a new government of Canada. At least he, unlike the members opposite, recognizes that he's going to have to deal with a very different federal government in Canada by the time he assumes and enforces his own agenda in the White House in the United States.

So there is a very real opportunity for us to get down to the details of negotiation with Mexico and our trading partners in the United States and to put in place a very positive, constructive agreement that will advance the economies of Canada and look after the interests within Canada, regional as they may be -- i.e., in British Columbia -- so that we do have an opportunity to expand our economy.

Putting our head in the sand like an ostrich is being advocated by the minister opposite. To simply reject the possibility of waiting until we have a new and renewed mandate in Canada I think spells something far more directed toward the national agenda of the New Democratic Party and their attempt to skirt around their position over the last six to eight weeks, so that they can try to capture NAFTA as the major issue for the next federal election, which they know is coming forward.

Hon. Speaker, I suggest to you that members of this Legislature should not fall prey to the kind of political strategies that are being driven by any political party that is functioning from Ottawa today. What we have to be, as elected members of this Legislative Assembly, is responsible to the constituents who have elected us to do the business of the province of British Columbia. We should not be preoccupied -- as the members opposite are with the national strategy of their own political party, so that they can essentially embrace their own national leader, who I understand is now embarking on a national tour to speak out about how bad NAFTA is.

Quite clearly, we are not spending our time here today in this Legislature to advance a meaningful, honest negotiation on how the North American free trade agreement might advantage the people and the economy of British Columbia. We are simply playing into a political strategy that has a lot more to do with a national agenda of the national NDP than it has to do with the interests of British Columbians. What we requested of the Minister of Labour today in question period was to have a fair wage in British Columbia on the order paper for debate today. That is an integral part of what is going on in the province today. What we need to be talking about is relevant legislation that is coming before us and is going to affect the constituents who have elected us to office here today, and not waste our time talking about a North American free trade agree-

[ Page 3645 ]

ment that is not in legal text, that only has the signatures of the ministers of trade, that does not have the signatures of the leaders of state, and that is going to undergo considerable renegotiation and discussion as it enters into the U.S. Congress and as it eventually comes with a renewed mandate into the Commons in Ottawa.

We in the Liberal opposition believe that freedom to trade is essential. We believe that free trade in North America is inevitable. It is going to happen, and we do not wish to mimic those members opposite in government who, like King Canute, would sit there and pretend they can somehow stop this tide from coming in. We are prepared to start to look at the detail of what is being discussed and move sensible, honest amendment and direction to try to make this package the very best it can be for British Columbians. That is what we intend to do. As a result of that, we in the Liberal opposition cannot support the motion that's before us today.

[3:30]

D. Miller: I think we got into a bit of a semantical debate on the amendment. Just to try to get things refocussed in terms of the issue, I think that all of us in British Columbia have a great deal of concern about the NAFTA. The wording of the motion put by the minister is quite appropriate: that we call on the federal government not to ratify the agreement initialed on October 7 of this year. The amendment said that we do nothing until the federal government receives a new mandate, and the way they're speaking and the way everybody in this country seems to be speaking, I would suggest that the current federal government may never receive a new mandate. In which case, we would never discuss the topic. Obviously that's not acceptable.

It is difficult at times to put national or provincial interests ahead of political interests. That is a topic that people in political life should give some thought to. It's very easy to put political interests ahead of those other interests, but I don't think people fundamentally would want us to do that.

I want to deal with some of the reasons why British Columbia's interest would not be served by the NAFTA agreement as it stands. I want to say in prefacing my remarks that I am not opposed to British Columbia having to face the trade issue squarely, nor am I opposed to trade agreements. It makes eminent sense to enter into trade agreements that further your national interest -- in this case our provincial interest -- with the long-term view of maintaining employment and ensuring that your internal policies are not destroyed by those trade agreements.

We in the NDP were very vocal about the deficiencies of the current free trade agreement. We have witnessed some of the ramifications of that agreement, and they have not been very good for British Columbia. I do recall that the Social Credit government rushed headlong to embrace the free trade agreement that was signed by the current federal government. They did not think British Columbia's position through. They did not identify the sectors that could be harmed, nor did they secure adequate protection in some of those sectors. I'll draw the House's attention to some of those.

I think all of us would agree -- although I'm not quite certain what the Liberal position is. It seems to change from day to day, or whenever the leader gets up to open his mouth. The Liberal election platform of 1991 said: "The Liberals do, however, have grave doubts about the Mulroney government's actions, as they are continental in nature." They seem to be suggesting in that phrase that they are opposed to entering into trade agreements on the continent of North America. I am somewhat puzzled by the remarks I have heard today, which seem to fly in the face of that. Perhaps that contradiction can be cleared up by subsequent speakers on the Liberal side. Perhaps not. We will wait and see.

The free trade agreement that currently governs issues of trade between the United States and Canada contains a specific clause. I want to cite it, because I think it's illustrative of some of the problems that we have, and it is one of the reasons that I feel very strongly about not entering into the NAFTA with the United States. People will be aware that under chapter 12 of the free trade agreement there were explicit exclusions with respect to some areas of trade. Specifically, in article 1203, "Miscellaneous Exceptions," the provisions of the FTA did not apply to "controls by the United States of America on the export of logs of all species," and "controls by Canada on the export of logs of all species." That was a specific condition of the free trade agreement.

"Free trade" is quite a misnomer, in my view. It provided....

F. Gingell: Fair wages.

D. Miller: Precisely. Well, perhaps more to the point, fair taxes.

This is important in terms of public confidence. Fairly clearly, some comfort was taken by people in British Columbia that the vital issue of continuing to have some regulatory legislative control over the export of raw resources was protected. That was a plain statement. There were no qualifications to the statement. It very clearly and explicitly said that those were excluded from trade relations between the United States and Canada. Yet the history of our trade relations since 1983 -- and I'm going to deal exclusively with the issue of forest products -- which is after the Reagan Republicans took over in the United States, has been one of completely ignoring that element of the free trade agreement. They have said, in a sense: "We don't care if the free trade agreement says that we're not going to raise the issue of log exports in any kind of trade issue." They have done precisely that.

I have some idea of the internal circumstances in the United States that led to some of the trade issues. But it has been quite vexatious to see that the United States brought countervailing duty action against the importation of Canadian softwood lumber in 1983. We won that in the United States arena. We went through all of the tests of the International Trade Commission and the rest, and we won it. Their own tribunals declared that we were not subsidizing softwood lumber production in British Columbia.

[ Page 3646 ]

Lo and behold, some three years later, in 1986, the same issue was brought forward again. There was another countervailing duty. I've been very harsh on my predecessors in the former Social Credit administration in terms of the way they handled that, but I have some understanding of the frustration they felt in trying to deal with it, when some three years after winning the case we get the same case again. What happened when we got the same case again? Well, the United States simply changed their law: "If we lost on that one, let's change 'er, boys, and try it again." And they won, because the governments of British Columbia and Canada mismanaged it, quite frankly.

We saw at that time the imposition of a stumpage system in British Columbia that still prevails, a comparative value system that was made in the United States. They manufactured a stumpage system in the United States and said to Canada: "You're going to buy it. And British Columbia, you're going to implement it." And we did. You would think that after suffering that kind of indignity, that kind of loss of sovereignty with respect to the most important industry in this province, there would be some element of caution with respect to dealing with the United States.

Sure enough, when the former administration and other Canadian provinces convinced the federal government to abrogate the MOU, as it was known -- the memorandum of understanding on softwood lumber -- the United States brought in another countervailing duty. The result of that so far is the imposition of an additional 6 1/2 percent tariff on top of the 15 percent that is already built into our stumpage system internally. We're talking in excess of 21 percent.

To add insult to injury, the ruling by the International Trade Commission that came down this year with respect to that agreement found that we were guilty. Despite the fact that the free trade agreement specifically states that log export controls, either in the United States or Canada, are not part of, and cannot be brought into, trade issues, they found us guilty of subsidizing our forest products in British Columbia because we have log export controls. Let me read a section of the ruling: "The department determined that log export restrictions are specific within the meaning of the countervailing duty law. The department determined that log export restrictions in British Columbia result in lower log prices within that province and therefore constitute a subsidy." How can anyone be convinced that we should enter into a specific trade agreement with the United States when they refuse to honour the agreement that we have with them already?

I want to talk very briefly. I hope there will be some changes, because my view is that right-wing governments throughout the world have abandoned their responsibility to protect national interests and to enter into trade agreements that make sense in terms of not having artificial trade barriers and not relying on protectionism. Because protectionism doesn't work; it doesn't expose domestic industries to the kind of competition that they need to be exposed to. We need to recognize that the world is different, that countries are different, and that we need to protect our national and, in this case, British Columbia's interests. There is nothing wrong with that. Every trading country in the world does that. There is absolutely nothing wrong with it; there is nothing nefarious at all.

I very much think that the issue in the United States is the fact that with the neo-conservative agenda, issues of trade policy have been handed over to business. Therefore the imperative is not the national interest; it is capital's interest. I hope I don't offend anybody by talking about capital as an entity, but capital, it seems to me, is determining a lot of these trade issues. We would be much better served dealing honestly and straightforwardly with a nation like the United States. I admire the people in the United States. They are good traders, and I like dealing with good, tough traders. But we would be much better served dealing with a national government in the United States that had a sense of national purpose, that simply didn't abandon these trade issues to the larger issues of capital.

The countervail is a case in point. It is no secret -- I have endless letters here -- that what drove the countervail issue within the United States was the personal interest of one of the largest forestry corporations in the world: Georgia-Pacific. It is no secret that imposing a tariff on Canadian softwood lumber going into the United States allowed the price of lumber to rise and created that increase in price, and that overnight it increased the value of Georgia-Pacific's private landholdings in the U.S. south. That is corporate interest; it is not national interest.

It was to our dismay, in trying to deal with the United States administration, that we couldn't find anybody we could really deal with. In the end it got quite bizarre. We were actually dealing with someone from the National Security Council. Issues of trade were not in the dominion of people charged with dealing with trade. We're quite prepared to deal with those people, but they ended up in the political arena. I couldn't figure it out. As the former Minister of Forests, I had messages coming from all over the United States. It was impossible to deal with.

So the message we sent and the message that was respected is that, as a government in British Columbia, we are not prepared to negotiate away our national interests -- if I can use that term in relation to a province. I think there was some respect for that position. I think that the Yankee trader has some respect for someone who's prepared to take those tough positions and deal realistically.

Why should we enter into a North American free trade agreement when we now have a free trade agreement with the United States which they do not respect? How can we deal...? What lesson do we give, what message do we send to the United States if we say we're quite prepared to accept this abuse on softwood lumber? It's not just softwood lumber; there have been a host of issues since the free trade agreement. If we're simply prepared to accept this abuse and say: "Well, sure, we'll blithely go into the North American free trade agreement with you...." Why? There's no reason to trust.

[3:45]

There are lots of issues in terms of protecting national interests. I was struck by the issue, and I think 

[ Page 3647 ]

it's an important one. It may come up, and I hope we do get into some good and spirited debate with respect to the new provisions in the Labour Code. It's my belief that if you look around the world at those countries that have traditionally done very well economically -- and that I think will always do well economically -- they're generally the higher-wage countries. They're generally countries where working people can expect a decent wage, a decent standard of living and all that that entails. It's fairly clear in terms of the issue of trade: do we want to accept the lowest common denominator? Why would we? In terms of our international trade agreements, for example, why would we not insist that we're not prepared to sacrifice the interests of British Columbia and Canadian workers? Why was that never on the agenda?

I'll quote from an article in the Globe and Mail -- a statistical analysis by Bruce Gajerski:

"In the United States, more restrictive labour legislation has created low-wage ghettos in many regions. In some states, minimum wages are less than $2 an hour. In others, no minimum wage law exists. Compounding the situation has been the introduction of right-to-work laws in 21 states....

"Median weekly earnings in the United States were $475 for union workers and $372 for non-union workers...a 34 percent difference." That was in 1989. "Similar differences in earnings exist here. A Statistics Canada study released in 1991 found average weekly occupational earnings in 1987 to be $508 for union members and $356 for non-union workers.

"The overall conclusion to the analysis -- that union establishments are more productive than non-union firms -- is that the legislating of right-to-work laws may serve as an incentive to attract investment" -- the needs of capital -- "but productivity and income levels will be restrained. To achieve higher earnings, higher unionization rates are necessary."

We'll get into that debate subsequently. But my point is that our economy is benefited by having the best-paid, highest-skilled and most-motivated and -productive workforce that you can possibly produce. It's not served by entering into trade agreements with our trading partners, which only serve to take away from labour and from our national interests. For that reason, I think the motion put forward by the minister makes eminent sense.

I want to make the point -- I don't know if these messages go much beyond this chamber; I sometimes suspect that they don't -- that the United States is not the only one. Japan has some deep concerns about the implications of NAFTA and what it might mean in terms of this North American bloc. That's fair enough. We are interested in expanding our trade with every nation -- and I want to talk about trade in forest products around the world. We're also interested in making sure that where we can assist, whether it's through technology or assistance in terms of building up those economies.... It is important to build up those Third World economies. I think it's absolutely true that the very high standard of living that we have here in Canada is probably due in some respects to the exploitation of workers in other parts of the world, particularly Third World countries -- and we should not feel any sense of comfort or pride in that. We should feel an obligation to do what we can to improve those economies. In the long run we will all be better served if the economies of places like Mexico and other countries around the world are improved and the standard of living for their workers is improved. If the wage rates for their workers is improved, we will all be better off. We cannot continue to be the exploiters. But we do not want to enter into trade agreements that simply result in the conditions of our workers being downgraded.

Japan. We are interested. I think there are significant opportunities to improve trade in forest products with Japan. I'm absolutely convinced, and the trade mission I went on earlier this year simply cemented that fact in my mind. But Japan has to listen to British Columbia as well, because they maintain an 8 percent tariff on softwood lumber going into Japan. It's not good enough for them to say that they have concerns about NAFTA. They have to understand that we don't like that 8 percent any more than we like the 6 1/2 percent that the United States has imposed on the countervailing duty. So there's a message to other nations as well. We'll be free traders. We'll be competitors. We'll protect our national interests. But we don't like those trade barriers that you put up.

Hon. Speaker, we do a considerable amount of trade, and it is absolutely important that we maintain and expand those trade links around the world. Just looking at forest products, the figures are roughly $1.8 billion with respect to Europe, about $2 billion in the United States, and about $2 billion in terms of the Asia-Pacific -- the bulk of that being Japan. This is significant for British Columbia. It brings in a significant amount of money. It maintains a significant number of jobs within British Columbia. I have every confidence that firms within British Columbia have the capability, and workers have the skills, to compete anywhere in the world. We've got the ability to compete. We also have, I think, in terms of our manufacturing facilities, the ability to be the best in the world. And if I want to throw in a non-trade issue, in my view it will not be too long before British Columbia is leading the world in terms of how we manage our forest lands. We will be world leaders.

But we cannot ignore those. This is not a head-in-the-sand position that we are taking with respect to trade. We have to know those markets, and we have to understand them. We have to be tough, and we have to be savvy. We've got to spend some time.... Every time the minister or the Premier goes on a trade mission, it's a bit disturbing to get the carping criticism from the doomsayers, the nitpickers and the naysayers on the Liberal benches, who always want to have it both ways. They complain that we should be doing more, and when we do more, they complain that we're spending money going on a trip. So I can't quite figure them out.

We will do more. Perhaps there will be more initiatives like the cooperative overseas market development program and the kinds of initiatives we have taken in Japan, with cooperation between industry here in British Columbia; COFI; the government, through B.C. Trade and the minister's own ministry, Economic Development; and the federal government, whereby we are working that marketplace in Japan. We are gaining 

[ Page 3648 ]

more and more information. We are finding out about markets and about what the opportunities are. We're seeing more and more of the manufacturing process being returned to British Columbia and benefiting workers and the economy here.

We cannot accept that when we enter into a trade agreement -- and there's nothing in the world wrong with that -- whether it be with the United States or any other country.... We should not be prepared to enter into new agreements if they do not live up to the current one. We are not here to take the abuse of a trading partner, in this case the United States. I think that message is one that needs to go out. We may be small in terms of our population and our economy compared to the United States. Some might argue that we have no choice in these matters and that we don't have the clout to fight the United States. I'm telling you that people around the world respect it when you take a tough position and stick to it. So British Columbia should take that position with respect to NAFTA. It's a consistent position outlined by the minister here in British Columbia. I think the notion that we would somehow bury our head in the sand and refuse to discuss trade issues is not one that will serve our national interests here in British Columbia.

Let's know what the issues are. Let's make sure that our trading partners understand that we are traders. As the Premier said, "British Columbians should be better traders than the Phoenicians." We're capable of doing that. But if our trading partners do not live up to agreements, then our signal to them has got to be that we're not prepared to enter into new ones.

L. Stephens: It gives me great pleasure to rise and debate this motion before the House. I would just like to assure the member for North Coast that the Liberal position is quite clear on this debate. I'll deal with the NDP position at a later date.

D. Miller: Have you read it?

L. Stephens: I have indeed.

The free trade debate has been with us almost as long as Canada has existed. In 1911 and in 1988; federal elections were fought over free trade with the United States. As we approach the 1993 election, it would seem that once again we will repeat this. Traditionally Liberals, speaking in the classic philosophical sense, have been free traders. This has always been a truism: that is, that Canada is a trading nation or a fading nation. That statement simply couldn't be truer, particularly for British Columbia. Economists have long bemoaned the fact of high trade borders, which countries have built in a mistaken effort to protect home industries. In fact, these trade barriers have more often led to the retardation of home industries, as technological advancements made in other nations were not passed on.

Prior to 1988 Canada had the highest levels of tariffs and relied more on tariff-related programs for protection than any other OECD country. The 1957 Gordon royal commission recognized the cost of this policy when it stated that Canadians had been willing to pay the price that tariffs exact on lower average incomes. Our tariff policy has been a hindrance not only to the economic growth of the country but also to the socioeconomic growth which accompanies such economic activity. Hence Liberals have been proponents of free trade as a method of improving the economic well-being of the nation. Free trade can and should be an integral component of any industrial strategy proposed by any level of government.

To this end, we believe that to ignore the global nature of the economic system is to banish British Columbia to the resource sector for a long period of time. The fact is that the world economy is moving into one not controlled by the nation state but instead controlled by groups of nation states: the trading bloc. Trading blocs are rising in all corners of the globe, whether it be Europe, North America or the Far East. To believe that one country could stand alone and attempt to resist this tide is simply not feasible. The president of Mexico, Carlos Salinas de Gortari, has realized that fact. President Salinas says:

"I believe that the free trade agreement is inevitable, inevitable in the sense that the trend of the world is to create trading regions.

"With Europe getting together, with Japan and Asia-Pacific countries making their own region, the only way to compete with them is by getting together. It's a matter of economic viability in the medium...run. It will happen sooner or later. If it's later, the better for our competitors."

Leading British Columbia business leaders have already discounted the possibility of large numbers of B.C. businesses heading south as a result of this deal. The trade volume between our two countries is very small, and about 80 percent of that is already free of barriers. We don't do a lot of trade with Mexico, because it is a low-income country; and beyond vegetables, there's not much else they can export to us right now. In addition, B.C. Central Credit Union chief economist Richard Allen stated that the Mexican economy will not turn around overnight into a rich economy, and that is why he predicts that the benefits for British Columbia will be in the long run.

The Liberal caucus certainly believes that a key to having efficient industry is the ability of that industry to function competitively in a market system which is free from harmful trade barriers. The Liberal Party endorses the principle of freer trade, but we do not blindly endorse NAFTA. This analysis is based on the elements of the tentative agreement and not the legal text. Given the complexity of the issues, some important questions cannot be answered until that legal text is available.

[4:00]

The NAFTA is a comprehensive agreement, covering most areas of trade in both goods and services between the three countries. It builds upon both the FTA and the current GATT negotiations. If ratified, it will supersede the FTA, except in two areas: energy and agriculture. In many areas, the NAFTA will apply to both national and subnational governments. This NAFTA is far, far from a done deal. It must be ratified by all three governments, and under the U.S. fast-track process, Congress must be given 90 days to examine the deal once the legal text is 

[ Page 3649 ]

available. Given the presidential election in November, the deal will obviously not be ratified in the U.S.A. before spring 1993. The deal is not to come into effect until January 1, 1994.

Once again, the North American free trade agreement is what we are here to debate this afternoon, but as the government is fond of saying, no agreement is perfect. Once again, this is not a perfect deal. The major concerns that we have on this particular agreement include the absence of a subsidies and anti-dumping code. This will leave us exposed to ongoing U.S. trade harassment, as the member for North Coast has pointed out. The deal's negotiators failed to get this code, under which the three countries would agree on how to define what is and what is not a subsidy. Therefore domestic trade laws will continue to apply and be subject to binational panels. However, if a GATT Uruguay round is reached, the subsidies and anti-dumping codes will be inserted into the NAFTA deal. This is very important for our agricultural and softwood lumber sectors: Canada's supply management system will be respected under the NAFTA.

Number two is the dispute-settlement panels -- they are now permanent under NAFTA -- and also the addition of a trilateral trade commission. There are procedures for the selection of panellists, provisions for scientific advice from environmentalists and other experts, and greater transparency. The possibility of unilateral action by any one country has been limited. However, the panel's rulings are not binding in all cases, and nothing in the NAFTA will speed up the lengthy and costly dispute-settlement process.

Our third area of concern is the adjustment programs. This is a major concern to us here in British Columbia. There is a complete lack of programs for Canadian firms and particularly workers. The U.S. administration is preparing a $2 billion to $4 billion adjustment and restructuring plan to retrain workers. The Canadian federal government does not appear to have any strategy whatsoever to create jobs and to help Canadian workers adapt. As well, we have heard nothing from this NDP provincial government in that regard.

[The Speaker in the chair.]

Number four, environmental protection. There is no agreement on the U.S. side to allow for trade sanctions against countries using low environmental standards to attract investment. Environmental protection will be left to a country's "best endeavours." There was also no agreement on harmonization upward, whereby establishing the highest-level environmental protection as the objective of harmonization of standards.... Also missing is a reverse onus of proof for disputes on environmental protection measures, requiring the challenging party to demonstrate that an alternative, equally effective and less restrictive measure is available where an environmental measure is deemed restrictive. The decision to disregard these suggestions demonstrates that the Canadian government is not as serious about environmental protection as it pretends to be.

Our fifth issue is energy. Canadian trade in energy will continue to be governed by the Canada-U.S. FTA. However, there are clear rules that will make it difficult for the U.S. to restrict Canadian energy exports. Also, in times of shortage Canada will still be required to supply the American energy market. NAFTA promotes cross-border trade in natural gas and basic petrochemicals, which could result in increases of natural gas prices and of U.S. demand for Canadian natural gas. Mexico has cut a separate deal with the U.S. and will retain full control over its energy reserves.

Our sixth area of concern is water exports. Water exports or diversions are not an item that has been discussed in the North American free trade negotiations, nor are they specifically included, discussed or defined in the draft text. The federal government has indicated that it will include in the NAFTA implementing legislation similar provisions to those found in the FTA implementing legislation. This Canadian free trade implementation act states that water is a good when packaged in a bottle or placed in a tank, but natural surface and ground water in liquid, gaseous or solid states is not covered by the FTA. This act is only binding on Canada, and this definition is not in the FTA or the NAFTA text. Water is deemed a good or a product subject to GATT and FTA rules when it is packaged or contained. Therefore water in bottles, railcars, tanker trucks, marine tankers, man-made canals and pipelines would likely be deemed a product or a good, and its export could not be prohibited or restricted. Water diversions are not specifically covered by the GATT, the FTA or the draft NAFTA documents. The implications for British Columbia in this is that this draft text does not clarify or remove questions and concerns over the trade of water. British Columbia requested an exclusion of water in and/or transported by canals, pipelines, streams, rivers or other natural or man-made methods of transportation. Simply including an exclusion in a non-binding, domestic implementation act is not sufficient to alleviate the concerns of British Columbians. An exclusion for water should have been included in the NAFTA.

The Liberal Party of B.C. recommends and promotes that parallel accords be negotiated with regard to the environment and for water displacement, worker displacement, job protection and retraining programs. Two areas that the Liberal Party would particularly like to push for are parallel accords that address these two important issues, which have been completely left out of the NAFTA.

There are some major improvements in the NAFTA over the existing FTA. Number one is the tighter rules of origin. Rules of origin are the foundation of any free trade agreement. They specify the basic requirements that goods produced in one country must satisfy in order to qualify for preferential access to the markets of other countries in the free trade area. The NAFTA rules are based on the FTA. Goods are deemed to be of North American origin if they are wholly obtained or produced in one or more countries in the free trade area. In most cases a sufficient transformation would be a prescribed change in tariff classification. In some cases the product must meet both a tariff change and a 

[ Page 3650 ]

value-added requirement. In general it would appear that Canada and B.C. are better off under the newly negotiated rules of origin.

The gains are that the value-added formula offers exporters the choice of determining value-added either by the old FTA transaction-value method or by a new, simpler net-cost method. This has been accepted. This new method for determining value added should reduce the risk of unilateral interpretations by customs officials, as was the case with the recent Honda dispute.

We also have duty drawback. Under the FTA all Canadian duty drawbacks on offshore inputs used in the manufacture of goods exported to the U.S. were to be eliminated by January 1, 1994. These drawback programs have been extended for two years, to 1996, under the NAFTA and will therefore be replaced by a permanent duty-refund system for both NAFTA and most-favoured-nation trade. Mexico, however, has until 2001 to eliminate similar programs.

The implication for British Columbia is that most British Columbia exports are raw resource products that already entered the U.S. duty-free before the FTA. Consequently they are unaffected by the NAFTA rules of origin. The effect of new NAFTA rules of origin on our value-added exports should be minimal, because the basis for determining North American origin is largely unchanged from the FTA.

There is a second component that has been added to the FTA that is also extremely important, and that is the accession clause. A NAFTA could lead to a comprehensive, regional free trade area comprised of several countries in the western hemisphere. The agreement provides that other countries or groups of countries may be admitted into the agreement if the NAFTA countries agree, subject to the terms and conditions that the members require and subject to the completion of domestic approval procedures in each country. The direct implication for the province of an accession clause will not be clear until the legal drafting of the NAFTA is complete. Chile and other Latin American countries, such as Costa Rica and Venezuela, have expressed interest in joining an extended and expanded NAFTA.

The third important area for a multilateral or trilateral agreement is market access and tariffs. Canada and Mexico have agreed to phase out virtually all tariffs over a maximum of ten years. Mexico has also agreed to eliminate import licences. The tariff reductions will either be immediate or generally phased out in equal annual cuts over five or ten years. Mexico will provide immediate duty-free access for many of Canada's key export interests, including many fish items, some grains, many important ferrous and non-ferrous minerals and metals, fertilizers and sulphur, certain wood and paper items, most telecommunications equipment and many types of machinery manufactured in Canada, including agricultural, resource and industrial, as well as health and medical equipment.

Canada's tariffs on key import-sensitive sectors will be phased out over the long term, including such areas as apparel, most footwear, toys, plastic articles and other miscellaneous manufactured articles. Canada will impose special tariffs to prevent sudden surges of imports of certain fresh, frozen or prepared fruits and vegetables, and cut flowers.

Tariff cuts to Mexico's import-sensitive sectors will also be phased in over ten years, including furniture, pharmaceuticals, certain grains, some wood products, some finished metal products, toys and some supporting goods. Both Canada and Mexico have the right to take safeguard measures that allow them to reimpose duties to protect producers from surges of imports. British Columbia has not been a major user of safeguard actions. However, it's important that the proposed NAFTA allow selective safeguard actions against Mexico and the U.S.

What is in this agreement for British Columbia in particular? There are a number of areas where British Columbia has an opportunity to expand trade, and one of them.... We've got quite a few, actually, and I'm going to read them all: the immediate elimination of Mexico's tariff on coal, sulphur and some wood and paper, including SPF lumber for construction, softwood mouldings, shakes and shingles, log prefabricated houses, chemical pulp and some newsprint; immediate elimination of Mexican tariffs on fish, including Pacific salmon; import quotas maintained for supply-managed egg, poultry and dairy sectors; improved access for apples, raspberries and blueberries; safeguards established to moderate sudden import surges of most sensitive fruits and vegetables; immediate elimination of the tariffs on most telecommunications; improved access to the developing Mexican market for professional services, including management, engineering, accounting and legal services; provincially regulated professions encouraged but not forced to recognize credentials from other NAFTA countries; rules to ease the temporary entry of business people, and duty exemption for their accompanying tools and equipment; access for specialty air services, including aerial mapping, heli-logging and surveying to both the U.S. and the Mexican markets; better access to government procurement contracts -- very important -- including for construction materials, telecommunications equipment, high-tech software and consulting engineering -- procurement at the provincial and municipal level is unaffected by the NAFTA; clearer rules for the repair of U.S. vessels in Canadian shipyards; clearer disciplines on energy regulators to avoid discriminatory actions against contractual arrangements benefiting Canadian gas exporters; and comprehensive provisions on intellectual property, including pharmaceuticals, in line with the recent extension of patent protection in Canada and consistent with the GATT proposals.

[4:15]

There are some key export sectors to the world market that British Columbia is particularly attuned to, and these are the wood industry, paper, fish, primary metals, food products, mining machinery, consulting services, pharmaceuticals and so on. The opportunities for British Columbia in some of these areas are the early elimination...on some wood, pulp and paper products.

It is expected that the Mexican demand for pulp will grow by about 50 percent over the next ten years. The Mexican forestry equipment and services market is expected to be worth $55 million by 1994. Imports 

[ Page 3651 ]

accounted for 84 percent of their market in 1989, and with the NAFTA, B.C. companies will be positioned to expand their market share.

The Mexican market for fish and shellfish products is expected to increase at an average annual rate of 3.5 percent to reach $1.4 billion by 1994. Immediate elimination of duties on fresh and frozen salmon will result in greater opportunities for B.C.'s fish industry.

It is estimated as well that the NAFTA would stimulate a 13.2 percent increase in Mexican mining production over the first ten years simply from increased economic growth and demand for basic minerals. B.C. companies stand to benefit from this increase, and Mexico's capital goods market is expected to grow 8 percent a year during the next five years as Mexican manufacturers improve productivity to compete under a NAFTA. B.C. firms in this sector will be well positioned to take advantage of this opportunity.

There were some key objectives in the initial proposed NAFTA agreement. Some of these seem to have been addressed and eliminated: the phase-out of tariffs; the elimination of Mexican import licensing; the opportunities to bid for major Mexican procurement contracts; the ability of Canadian financial services to open subsidiaries, and invest in and acquire financial institutions, banking securities and insurance in Mexico; a major liberalization of the restrictive Mexican investment regime; and the liberalization of the Mexican services market, including land transportation and so on.

The benefits plus the improvements of an FTA are: the Auto Pact remains; Canada's cultural industries are protected; social and health services are protected; high health, safety and environmental standards are preserved and can and should be strengthened -- and this is one of the areas, particularly environmental standards, that we would like to advance through a parallel accord; Canada's supply management import quotas for egg, dairy and poultry products are not affected.

There are clearer North American content rules. The impact of the new rules of origin for textiles and apparel is offset by increases in the quotas giving preferential access to the U.S. market for Canadian goods that do not meet the rules of origin. And there's the two-year extension of the duty drawback, the clearer disciplines on energy regulators, more stringent discipline on the United States in imposing border restrictions against imports from Canada, and the improved dispute settlement procedures.

The Mexican government is strongly motivated by a need to improve the productivity and incomes of Mexicans. Liberal economic reforms are required to meet that goal, which will improve both private and public living standards in Mexico. Mexico has already taken giant steps toward free trade within the GATT framework and its own domestic policy. They have resolved their most pressing foreign debt problems, improved their foreign investment rules, corrected their budgetary imbalances and inflation excesses, and invested in more public infrastructure. All these changes are leading to substantial repatriation of Mexican capital and more foreign investment aimed at export industries. Trade and investment leading to real economic growth are much better solutions than foreign aid for the absolute poverty that afflicts as much as 40 percent of the Mexican population.

Should Canada and B.C. participate in a trilateral trade agreement with the U.S. and Mexico? We believe we have no choice. The NAFTA agreement would create the world's largest trading bloc with 370 million consumers. At present, Canada's trade with Mexico is relatively small: the two-way trade total was only $3 billion in 1991. This agreement will not significantly increase trade flows in the short to medium term; however, if Canada does not have equal access to the Mexican market, investors will have some additional incentive to locate in the United States so as to serve all three markets or even in Mexico to serve two of these three. U.S. investors might win rights and protections within Mexico that are not available to Canadians, giving U.S. investors an advantage in investing in Mexico for North American production. At a bare minimum, Canadian exporters would face import barriers in Mexico that U.S. exporters would not, and Canadian consumers and businesses would pay tariffs on Mexican imports that Americans would not. Canada must be part of a multilateral agreement that expands the FTA. NAFTA does this in three important areas: the rules of origin, the tariff removal and the accession clause. Therefore the Liberal opposition does not support the government motion.

These remarks aside, I would like to now turn my attention to the rather schizophrenic reaction the NDP government has taken in regard to the North American free trade agreement. On June 4 of this year the Premier delivered a letter to the Prime Minister in which he urged the Prime Minister to withdraw Canada from the trilateral negotiations. This was based in part on the attempt at multilateral negotiations that the province had undertaken.

The NDP government does not yet understand that the global economy is undertaking a fundamental shift in the way it conducts business. No longer are individual countries isolated in their trade negotiations; they function through strength provided under trade umbrellas. With the implementation of the measures making up the Europe '92 project, the 12-member European Community will achieve a level of economic integration not yet seen among sovereign states. The EC has approximately 340 million people. Together with the 33 million people of the European Free Trade Association, that represents a huge market that Canadian businesses simply cannot afford to ignore. The market potential of the former communist countries in eastern Europe adds even more significance to the EC market integration. The presence of a single, unified European market will dramatically improve the competitiveness of the EC economy, and this will mean more competition for Canadian businesses not only in European and other international markets but at home as well. This will be exacerbated by the increased scarcity of foreign capital, which Canada and British Columbia in particular have grown dependent upon as the EEC attracts more and more international capital, 

[ Page 3652 ]

and traditional suppliers like Germany face greater internal demand.

The Royal Bank, in its Econoscope publication, has identified one important lesson for Canada from Europe's experience, in relation to free trade with the United States and the inclusion of Mexico. It is that extensive economic integration is possible without surrendering cultural identity, without widespread migration of people to richer countries and without massive relocation of industries to low-cost countries.

The NDP hasn't yet mastered the basic principle of economics that we are discussing, that being the benefit of being within the North American free trade agreement. In fact, the Premier has stated that he wanted the British Columbia representative to be a silent participant in the negotiations. This stance is rather curious, considering the tune he sang on his world tour. He stated: "We have to prepare for the global economy. We cannot prepare for it by building walls around ourselves." However, this seems to be exactly what the Premier is doing by taking his marching orders from the federal NDP and the Canadian labour leaders who are not only against the agreement but are, coincidentally, NDP contributors. The only way for British Columbia to have its concerns voiced is to be a direct participant in these negotiations. We believe that this must happen if British Columbia is to be adequately represented and receive a fair settlement in the NAFTA confirmation process.

Obviously, political considerations in both the United States and our federal political system will have an effect on determining what form of this agreement, if any, is finally signed. We feel it is essential that British Columbia engage in these discussions in order to present our arguments, both positive and negative, about this deal, and to this end we reject the present motion before this House.

J. Weisgerber: I rise to speak in opposition to the motion. In British Columbia there is a crisis of confidence in this government. We see the results every day. Indeed, we saw yesterday one clear demonstration of the lack of confidence that British Columbians have in this government. There is no confidence in British Columbia in this government's ability to deal with the economy. That's the issue that is concerning the average British Columbian today. They want more job security. They want the government to do something about unemployment. They want the government to do something about high taxes. Those are the issues that British Columbians see as key for them.

One of the ways in which government could build confidence in our economy -- an economy that thrives on exports -- would be to embrace freer trade, trade with more people and fewer trade restrictions. Instead we have a motion that this Legislature call on the government of Canada to not ratify the North American free trade agreement. That's the response of this government to the need to expand our economy. What we have is the picture of our Premier travelling to California to talk about free trade with California. It was a great way to get out of British Columbia while the constitutional debate was going on, and it was a nice little ten-day sojourn. We were led to believe that this was a commitment that the Premier made several months ago, and that it was important to the economy of this province that he get down to California to talk to the Governor and the people who make decisions. Then what did we see? We saw the Minister of Economic Development, the minister who had Trade ripped away from his portfolio, sitting at the Peace Arch with a bunch of demonstrators from the United States protesting free trade within North America. Those are the kinds of visions and symbols that this government is creating. This government is destroying confidence in the economy.

[4:30]

So we see this motion introduced today. Why today, of all days, would we introduce a motion to debate free trade? This Legislature has absolutely no power to affect the decisions made by the governments of Canada, the United States and Mexico. We have all kinds of pressing issues in this province, so why are we taking the afternoon to debate this issue? Perhaps it's an attempt to deflect some attention from the labour legislation that was just introduced. I can understand why the government would want to deflect attention from that particular bit of business. But it may well have been that the government felt they could deflect a bit of attention from the performance of their leader, the Premier, over the past month. I can certainly understand the spin doctors wanting to deflect attention from that little bit of business, because we all understand how seriously the Premier's credibility has been undermined by his performance in this province over the last six weeks or so.

Let's think again about the other symbols that this government is creating -- this government that expresses the need for greater economic growth and that says it's interested in trade and free trade but not at any price, this government whose Ministry of Tourism says -- Tourism, no less; the people who are reaching out to bring people to British Columbia -- that if you want to tender any work for us, don't bother to apply unless your company is B.C.-owned. Not Canada-owned, not owned in North America; if it's not a B.C.-based company, even though the majority of its employees may reside in British Columbia and are British Columbia taxpayers, this Ministry of Tourism says: "Don't apply."

L. Reid: Unless you're an NDPer from Manitoba.

J. Weisgerber: An NDPer from Manitoba may have had an opportunity, but maybe now even that opportunity's been lost. Here we see the continued erosion of confidence in the economy of this province and of this government's ability to manage the economy.

Shortly after he was sworn in, the Premier went to Asia. As a matter of fact, I think the Minister of Economic Development -- and then Minister of Trade -- went with him. Many of us will recall the Premier promising, in Japan and in China, that there would be no new taxes. We remember that same Premier promising Asian investors that there would be no radical new 

[ Page 3653 ]

labour legislation. We've seen the budget, and more importantly, those potential investors in Asia have seen the budget. They know that they didn't get the straight goods from the Premier.

They also saw the Premier come directly back from that mission and go to the B.C. Fed convention and promise the opposite of what had been committed to in those communities. And we wonder why there's a crisis of confidence in this province. The crisis of confidence is a direct result of the activities -- or lack of activities -- of this government, the government which today tabled the most backward-looking bit of labour legislation that we've seen in 20 or 30 years, labour legislation that takes us back to the Barrett days of 1974, labour legislation that is exactly contradictory to this government's objectives as stated and would destroy those things that the government would have us believe it is trying to achieve by voting against the free trade agreement. That's the notion that this government is asking us to believe, that by voting to reject the North American free trade agreement we are somehow helping to create a stronger British Columbia. The Premier said the other day that regardless of which way the vote on the constitution goes, we're going to be dealing with our number one issue: the crisis in the economy. And this is the way this government does it. Their way of dealing with a crisis in the economy is to say: "Let's reject the North American free trade agreement. Let's build protective barriers around ourselves. Let's introduce labour law that will drive up the cost of labour and build protections -- we'll be a protectionist little society." And, hon. Speaker, that is exactly the wrong direction to go. So I would say to you....

An Hon. Member: Why do you like the NAFTA?

J. Weisgerber: Well, I'm going to get to the free trade agreement. But before we get there, let's consider the environment that brings us this motion, the environment that sees our Minister of Aboriginal Affairs out signing joint stewardship agreements without any consultation with the municipalities that are going to be affected or with the third-party interests. That is somehow to add to the confidence that investors have in our province. We see the member for North Coast sitting in the penalty box while his ministry, the Ministry of Forests, is turned over to a member who hasn't been able to demonstrate an ability to deal with even his own Highways ministry, never mind taking on the additional responsibilities of Forests. The number one industry in this province is being looked after by a caretaker minister while the real minister is in the penalty box. Now that is the way to add confidence to the investment community in British Columbia.

This same Minister of Transportation and Highways who is now pinch-hitting while the minister is in the penalty box is the same guy who wants to put those supermarket checkouts in our highways and bridges, so that when you drive your car over, the little identification plate can send you out a bill for how many miles you've travelled. That's a great way to instil confidence. That's a wonderful idea.

What have we got with the free trade agreement? An opportunity to expand trade across North America, to take the U.S.-Canada free trade agreement, to expand it and to improve on it. We heard the former Minister of Forests, the minister in the penalty box, talk about the shortcomings of the free trade agreement as it relates to softwood. There's no question that I was angry when the U.S. again brought in restrictions and impediments to Canadian lumber.

What are our responses? We don't like what the U.S. is doing. So how do we deal with that? Well, we can pout and say: "We're not going to sign any more agreements until you're nicer to us." Or we can go out and try and negotiate a better deal and look for some improvements. This document provides an opportunity to improve the dispute resolution mechanisms in our existing free trade agreement. A far more positive response would have been to say: "Yes, we want to proceed with freer trade in North America, but we see some shortcomings in the deal we have, and we won't go forward until there are improvements." That would have been a responsible response from a government that's seeking to create a climate of economic confidence. This government, unfortunately, has failed to take advantage of the opportunities that exist.

I'm sure that the Minister of Economic Development must know that one out of every three jobs in British Columbia depends directly on trade. But the same minister introduces a motion that suggests we should reject freer trade. I don't understand the logic. I suppose for that I should be eternally grateful, and I am grateful. It seems to me that this proposed free trade agreement provides a tremendous opportunity to sit down and create a better agreement between all three jurisdictions. The existing bilateral trade dispute mechanisms can be strengthened by using this agreement as the basis.

We understand that one of the great fears this government has about free trade with Mexico is the threat of competition from cheap labour in Mexico. Look around. The Asian competitors and trading partners who are most competitive with us are not the low-wage economies such as Malaysia; they're the high-wage economies of Japan and Taiwan. Those are our competitors and the jurisdictions that compete with us head to head in most of our markets. We shouldn't be afraid of competition with Mexico. If we can't compete with a low-capital, low-productivity labour force like the Mexican labour force, then we are making a serious mistake. We are making a statement contrary....

J. Beattie: What about the commodity of labour?

J. Weisgerber: We hope that the hecklers across the way will stand up and have the courage to give us their vision of free trade, of how to strengthen the economy. But I'll tell you that if this NDP government doesn't have enough confidence in British Columbia workers to believe that they, who are among the most productive and best equipped workers in the world, can compete head to head with workers around the world, then they have less confidence in the workers of this province than I have. I think you will not serve 

[ Page 3654 ]

British Columbia workers or investors very well if you don't have that kind of confidence in the workforce of this province.

I believe that we can be competitive in a world market. I believe that we are very competitive in the world market and that as we expand trade around the world, we will be a better country and a better province as a result. I don't think we should ignore the potential hazards that are in a free trade agreement. I think we should learn from our last experience that there need to be solid negotiations, that we need to ensure that there is in fact free trade, and that there is not a competition that would see us reduce environmental standards in order to attract capital. There are certain standards that should be built into a free trade agreement, but to run scared from a low-cost, low-productivity market and labour force is a serious mistake. It reflects poorly on the government's perception of our economy and the people who work in it.

So let me close by saying that I oppose this motion. I would encourage the government to move positively to influence the final draft of this free trade agreement to ensure that the interests of Canada and British Columbia are fairly represented.

[4:45]

B. Simpson: This afternoon I want to deal specifically with the attitude of Asian countries towards NAFTA. This is a crucial question to all British Columbians. No other province has more to lose if these countries in Asia turn inward. That is exactly what is developing. Prominent Asians are now advocating the development of their own trade group.

The Malaysian Prime Minister, Dr. Mohamad, has been a strong advocate of an East Asian trade group. The Singapore Prime Minister, Tong, has also warned that if other countries are forming trade arrangements, there will be no choice for Asian countries but to look after their own interests by following what others do. Similar views have been expressed in Japan.

I have a fax here from our Canadian Embassy in Japan, which was sent to me this morning. This fax summarizes the newspaper accounts of the Japanese attitude towards NAFTA from the date the agreement was signed till now. I want to quote to you some of these very important messages that Japan is now delivering to the world about the free trade agreement.

The October 21 edition of one of the Japanese newspapers said the Japanese Prime Minister met with the chairman of the bilateral panel Forum 2000, who is, incidentally, Peter Lougheed, and expressed his concern that the North American free trade agreement may turn into a protectionist trade bloc.

Another newspaper on October 20 expressed the concern that the new interpretation of local-content calculation in the NAFTA, which has raised a minimum of local content to 62.5 percent from the 50 percent presently required under the Canada free trade agreement, is oppressive. The president of Honda Canada said that he will continue producing cars in Canada, but will have to become more cautious about further investment in Canada.

The September 30 edition of one of the Japanese papers announced that MITI, which is equivalent to the Trade ministry, announced that it will ask the secretary to the General Agreement on Tariffs and Trade to set up a committee to assess whether NAFTA is in full conformity with the GATT rules.

An August 31 edition of one of the Japanese papers was highlighting the concerns of Asian countries such as the People's Republic of China, Taiwan, Thailand and Indonesia, whose home electronic appliances and textile products will compete with the Mexican goods. These countries are voicing fear that their entry into the North American market will become difficult, if not impossible. It points out that the Malaysian proposal to set up an all-East Asian economic bloc will gain strength.

Japan's trade minister said last week in Toronto that the North American free trade agreement could damage Japan's trade and investment relations with Canada. He stated: "Under NAFTA, only products which are defined as North American are given preferential treatment, and non-North American products are at a relative disadvantage."

A recent study prepared for the Japanese government makes a devastating attack on the unfair U.S. trading practices as they relate to the automobile provisions of the free trade act. The study states that NAFTA will violate international trade rules, and that Tokyo could have grounds to challenge key parts of NAFTA under provisions of the General Agreement on Tariffs and Trade. The Japanese are particularly concerned about what they perceive as discrimination by the U.S. Customs Service toward the export of Honda Civics to the United States.

I find it interesting that the members of the opposition seem to be preoccupied with talking to each other, while the Japanese are expressing a concern that will have a vital impact on the financial well-being of their constituents.

Interjection.

B. Simpson: I'm sure that the Japanese will take notice of the opposition's dismay over their concern.

R. Neufeld: It's how interesting you are.

B. Simpson: Well, it is interesting, and I assure you I will express your interest in the Japanese dilemma the next time I see the Japanese consul general.

In the Japanese study entitled "A Report on Unfair Trade Policies by Major Trading Partners," it is stated that "the U.S. customs services is attempting to apply, in the context of the Canada-U.S. free trade agreement, a total arbitrary and restrictive interpretation of value-added origin rules in order to restrict the U.S. imports of products made in Canada."

It should be noted that since the mid-1980s, Japanese auto-makers have invested over $1 billion in Canada. They have created thousands of jobs for Canadians and have actively engaged in increasing business and sourcing opportunities for Canadian suppliers currently in the range of $700 million annually. The 

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Japanese rely on the promise of sustained, secure access to the U.S. Japanese plants in Canada currently export more than 75 percent of their total production to the U.S., thus contributing significantly to the Canadian economy and to Canada's export trade.

The Financial Post recently reported that Washington's attack on the Ontario-built Hondas is seen by the Japanese as a political issue aimed at them, rather than at Ottawa. The fact is that if a decision goes against the Japanese, it can endanger billions in potential investment in Canada. They will conclude -- just as many Canadians are now concluding as a result of the shabby treatment that Canada has been given with regard to the softwood lumber tariff -- that the Canada-U.S. free trade agreement doesn't offer the access to the U.S. as promised.

I do not believe that it was the intention of those who negotiated on behalf of the United States to establish a Canada-U.S. free trade agreement to create a western hemispheric bloc -- a fortress North America -- that impedes trade with other nations. However, the power of the American special-interest groups, their protectionist allies in the U.S. Congress and the inability or unwillingness of the administration to control these forces have resulted in exactly that.

A Clinton White House will probably result in the Americans looking even more inward. The Democrats are traditionally more protectionist than the free-trading Republicans. Americans are now preoccupied with their sagging economy and lack of health care programs, and they are telling their politicians to focus on their domestic problems instead of on America's role in the global picture.

What does all this mean for British Columbia? What does the evolution of protectionism in the United States and the reaction of the Asian countries toward the development of their own trade bloc mean to British Columbians? Approximately 70 percent of Canada's exports go to the United States. Provincial exports to the Pacific Rim almost equal those going to the United States. Shortly our exports to the Asia Pacific will be exceeding our exports to the United States. What is in jeopardy for the province is the approximately $7 billion worth of exports in this past year to the Asia Pacific. Investment in British Columbia from the Asia Pacific has resulted in billions of dollars flowing into this province during the last three years. These funds have resulted in economic activity that far surpasses activity anywhere else in Canada. As a result of these extensive exports to the Asia Pacific and the flow of investment money from the Asia Pacific, we have been able to escape the ravages of the recession that have devastated much of the rest of Canada. It should be apparent to all of us sitting in this Legislature that if this agreement goes through, the standard of living of each and every British Columbian will be affected.

Tomorrow afternoon our Premier will be hosting a reception with 250 business leaders from the Asia Pacific. Representatives from over 100 Japanese companies who are active in British Columbia will be present. Representatives of all of the countries from the Asia Pacific will be present, including Japan, China, Taiwan, Korea, Singapore, Malaysia, the Philippines, Thailand and Indonesia. These countries' representatives and the business leaders will be meeting with the Premier to discuss increasing investment in this province and enhancing trade between British Columbia and those countries in the Asia Pacific.

While our political leaders throughout the country are talking, the time has come to start focusing on the economy. In view of the historic events of last night, our Premier has taken action -- as he did over a year ago, a few days after assuming office from the disgraced Social Credit government, when he made that crucial trip to the Asia Pacific to encourage investment and trade. During the first six months of this year over $500 million worth of Asian investment has been placed in this province. NAFTA, which was imposed upon this province by a federal government that has shown its insensitivity to the needs of British Columbians, threatens to jeopardize the significant progress that the government has made in fostering relations with our Asian trading partners. When will the Prime Minister and his Finance minister stop their paternalistic attitude towards British Columbia and stop telling us what is best for our economy and the future of our children?

British Columbia is not like the rest of Canada. The policies that the federal government may think are beneficial to the rest of Canada could very well be harmful to us. Certainly that is the case with NAFTA. What is of concern to central Canada is not necessarily of concern to us. British Columbia's economy is based on natural resources, which makes up approximately 70 percent of our exports. We do not have the manufacturing base that central Canada has, so we have very different interests in trade agreements. For example, with the NAFTA central Canada was interested in winning concessions for its textile producers and automotive producers; that has very little relevance to us in British Columbia.

Most British Columbia exports to the U.S. are natural resource products, which have already entered the U.S. duty free before the free trade agreement; thus there is little benefit to those producers from tariff reductions under the agreement. Despite statements from the federal government that NAFTA will be beneficial to British Columbians, the fact is that NAFTA restricts the use of non-North American input in products that can qualify for tariff reductions between the three countries. As a result, Pacific Rim inputs will be less attractive in North America. Those countries that would have established plants in British Columbia, such as Japan, are now rushing to establish plants in Mexico. This explains why there has been so little Japanese investment in Canada since the free trade agreement. Apart from natural resources and real estate, Asian investors are looking for greener pastures to make profits, such as Mexico, southern China and Vietnam. These pastures will not include Canada, and in particular British Columbia, in view of the protectionism that is now developing in North America.

British Columbia must enhance its relationship with the Pacific Rim to ensure that we are able to remain attractive for these investment flows. NAFTA will not help us nurture our relationship with the Pacific Rim. Our best bet in enhancing our trade relations with Japan 

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is through the GATT negotiations. Agreements such as NAFTA are doing substantial damage to our relationship with the Pacific Rim countries. In fact, the Asians were far more preoccupied with possible exclusion from the North American market as a consequence of NAFTA than with the instability that might result from the No vote in the constitution, according to Royal Bank chairman Allan Taylor. British Columbia must ensure that its trade relationships with its most important trading partners are not damaged. The preference would be to utilize multinational solutions like the GATT, rather than preferential agreements that exclude our fastest growing markets in Asia.

It is for the above reasons that I feel it is in British Columbia's best interests that the federal government does not ratify the NAFTA.

R. Neufeld: I also rise to speak against the motion from the government on NAFTA, and it certainly is no surprise what the NDP are doing with the agenda of this sitting. We understood it was the intent of the fall session to discuss the labour law changes as proposed by this government -- a proposed labour law that will put B.C. back in the dark ages. The agenda changed. Now we are discussing the NAFTA, an agreement which, if ratified by the federal government, would not come into effect until January 1994 anyhow -- and only if the Mexican government, the U.S. government facing an election and our federal government facing an election ratify it in their respective countries.

Debating NAFTA is a red herring, something that the NDP government wants to throw into the debate before the labour legislation to divert attention from their labour law and to blame those agreements for a loss of jobs in Canada. This is nonsense. It's the same red herring this government tried to throw out to the people about the Charlottetown accord -- the scare tactics, the doom and gloom. It didn't work in the Charlottetown accord, and it won't work with the NAFTA.

The people of B.C. are much wiser than what the NDP government gives them credit for. Certainly the free trade agreement did cause some job loss in central Canada. No doubt about it. But the free trade agreement was not the sole reason for the reduction in jobs. A severe recession in Canada had some effect. A natural change in technology effected some change, and certainly a socialist government in Ontario contributed to job loss. This government will debate labour law much the same as Ontario and will probably contribute to a job loss, especially in the small business sector. NAFTA will, of course, be blamed for all the job losses we will experience as a result of flawed labour legislation.

[5:00]

Coming from a free-thinking, free enterprise background, I do not have a lot of trouble with free trade. I believe it to be a natural event, one in today's world that we must be prepared for. It's a change that we must accept. It is no secret that for every billion dollars' worth of export from Canada there will be 15,000 new jobs. When I am out and about in my constituency, or anywhere in the province, the issue that I hear most about is jobs. People want jobs. They want to work, raise their families and be secure in the knowledge that they live in a secure country.

Creating jobs is not easy. Creating jobs as this government is currently doing is not conducive to a good economy. Jobs in government -- government-funded jobs -- are not the answer. We need jobs in the private sector, jobs driven by the private-sector economy, real paying jobs, jobs that increase government revenue not through tax increases but through a widening of the economy. NAFTA will help provide that widening in our economy and supply more revenue to governments so we can continue to enjoy the benefits we have today. The NAFTA could avail British Columbia and Canada to a market of some 360 million people with a gross domestic product of some $6 trillion. This is larger than the EEC, which has approximately 346 million people and a GDP of about $4.7 trillion. This agreement allows B.C. companies to expand their trade and thus create new private sector jobs. Immediate removal of some Mexican tariffs and complete removal within ten years will allow expansion in our exports immediately, and those industries that may be negatively affected have ten years to adjust.

There are a number of areas where British Columbians could gain exports in products we produce. One of the members previously listed them verbatim, and I will just list a few: immediate elimination of Mexico's tariffs on coal, sulphur and some wood and paper, including spruce, pine, fir, lumber for construction, softwood moldings, shakes and shingles, log prefabricated houses, chemical pulp and some newsprint -- that's from the industry that is the engine of British Columbia, the forest industry; those jobs are possible -- immediate elimination of Mexican tariffs on fish, including Pacific salmon; improved access for apples, raspberries and blueberries to help our agricultural community; strong commitments to sustainable development, environmental protection and conservation; recognition that NAFTA countries could not lower environmental standards to attract investment; export opportunities for B.C. environmental equipment and services; access for specialty air services, including aerial mapping, heli-logging and surveying of both the U.S. and Mexican markets; and clearer disciplines on energy regulators to avoid discriminatory actions against contractual arrangements benefiting Canadian gas exporters.

There are all kinds of opportunities here for British Columbians and Canadians to enhance their markets and thus create jobs in British Columbia. It is what people really want. They do not want to see taxes continually increased and a closing economy where we just want to live within our little glass house. That won't work; that's for days of the past. We cannot live within our own economy anymore, and we have to stretch out to the world further and further all the time if we are going to survive.

F. Garden: Tell the farmers in the Peace River that.

R. Neufeld: Hon. Speaker, there's a little voice in the back here that keeps nattering about the farmers in the North Peace. And it's absolutely amazing that he 

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would bring this up, because if there is anything that this government is not doing, it's helping those people in the North Peace in the agricultural industry through a drought that's the worst in the last 50 years. And he's trying to heckle me about the farmers in the North Peace. You're right, hon. Speaker, and that member is right: the farmers in the North Peace have a problem, and this government just wants to sit here and do nothing -- put its hands in its laps and just say that we'll look for some long-term strategy. It's about time that member woke up and convinced the rest of those members that they should do something for the farming industry in British Columbia, especially the farming industry in the North Peace. I know I've strayed a little bit from the text, but I could not help but reprimand.

It becomes evident that north and south trade is important to us in British Columbia; in fact, as important as trade in the Pacific Rim. We have the opportunity to become the hub of that agreement, an agreement that will see British Columbia's gross domestic product increase, which is good for all Canadians and British Columbians especially. It strikes us as a rather fragile argument from the government that NAFTA is bad for British Columbia. Our Premier is on record in this House as saying that an agreement should be in place for all of South and North America. This is a start. South America will come in time. I don't know when, but it will. It will come whether we like it or not. Let's prepare and let's prosper from the deal as best we can.

I agree with the Premier that we must encourage north-south trade as well as Asia-Pacific trade if we are to continue to enjoy the standard of living we now enjoy. Strong negotiating on our part is mandatory. We cannot just sit on our hands and say that we cannot go out of our borders and that we cannot compete with Mexico. Hon. Speaker, that will not take us into the next century. Dealing with the issue as best we can, and taking the good parts out of it, will bring us into the next century.

R. Neufeld moved adjournment of the debate.

Motion approved.

Hon. A. Hagen: I'd like to advise the House that we will be sitting tomorrow, Wednesday. With that announcement, I move that the House do now adjourn.

The House adjourned at 5:09 p.m.

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