Mr. SPEAKER:

The house will revert to government orders.

Customs Tariff Amendment

Mr. YOUNG:

Would you mind reading the first sentence of subsection (9), Mr. Chairman?

The CHAIRMAN (Mr. Gagnon):

It reads as follows:

"(9) (a) Notwithstanding the provisions of any other law, the governor in council may, from time to time and as occasion requires, order and direct, subject to such exceptions as may be made, what shall be the rate of exchange fixed for any currency in computing the value for duty of goods imported into Canada from any place or country the currency of which is depreciated, and in ease a sum in Canadian currency less than the invoice value of the goods in the currency of the place or country of export, computed at the rate of exchange so ordered, be paid for in goods, the actual selling price of the goods to the importer shall be regarded as less than the fair market value of the goods when sold for home consumption, and the provisions of this section shall apply and special or dumping duty shall apply equal to the difference between the value of the invoice computed at the current rate of exchange or at the average current rate from time to time fixed by order of the governor in council, and the value of such invoice, computed at the rate of exchange for duty so ordered as aforesaid, or may be less than such difference as the governor in council may from time to time order and direct; and the governor in council may order and direct that iii all cases of sales or consignments of goods imported into Canada, where the importer owns, controls or is interested in the business of the exporter, or the exporter owns, controls or is interested in the business of the importer, or the importer and exporter operate under a controlling or holding company, notwithstanding the expressed terms of the sale or consignment, the transaction shall be regarded as a sale and the actual selling price to the purchaser in Canada shall be taken to be the value of the goods in the currency of the place or country of export converted into Canadian currency at the current rate of exchange, or at the average current rate from time to time fixed by order of the governor in council, and shall be regarded as less than the fair market value of the goods when sold for home consumption, and the provisions of this section shall apply and special or dumping duty shall be deemed to apply equal to the difference between the value of the invoice computed at the current rate of exchange or at the average current rate from time to time fixed by order of the governor in council, and the value of such invoice computed at the rate of exchange for duty so ordered as aforesaid, or may be less than such difference as the governor in council may from time to time order and direct. .

[Mr Speaker.]

Mr. YOUNG:

Thank you, Mr. Chairman.

Mr. RYCKMAN:

I should like to point

out that there is a typographical error in line 17, where the word "in" should be struck out and the word "the" substituted, so that it will read: "be paid for the goods." I move accordingly, Mr. Chairman.

Mr. EULER:

May I ask the minister

what the clause that has just been read means?

Mr. RYCKMAN:

If my hon. friend will

follow the section I think he will see that we have just put into words what the department has been doing since September when England went off the gold standard. We provided by orders in council for the exchange value of the pound for duty purposes. We provided also for the exchange value of the pound for special duty purposes. Then, as exchange was moving up and down, and as stability or an attempt at stability was desirable, we passed orders in council from time to time fixing the average value of the pound for special duty purposes. Having done that we found, and this appears in the section, that in order to avoid the payment of special duty, no matter what might be the exchange value of the pound, there were some who were selling at the fixed value of the pound for special duty purposes, thereby avoiding the payment of any special duty. There were certain articles of trade, such as wool, which had a gold value, and it was necessary for us to make orders in council in reference to the trade in wool. The trade in wines bottled in England, a trade which had been in existence for many years and was on a gold basis throughout the world, had to be provided for. These different movements and others, [DOT] if hon. members will accept this long sentence which is Gladstonian in its proportions, will develop just exactly the course of the department in handling the business. I hope that this lengthy explanation will be at least in a measure satisfactory.

Mr. EULER:

Since the minister has stated that the object of the legislation is merely to put into statutory form a practice which has been followed by the department for some time, why is it necessary, if the practice was legal before, to put it now in the form of a statute?

Mr. RYCKMAN:

That is of course a very proper question. When this was done in the first instance I was not in the country. I was in London, England, when gold took the flight. It was found that in an emergency in which quick action had to be taken a decision was

Customs Tariff Amendment

made which later had to be modified by order in council. Upon arriving home I canvassed the whole situation as carefully as I could. I was told, but not with emphasis, that the govenor general in council had done something which it had not authority to do. When I inquired what that w-as, I could not find out. However someone had set on foot the story that there was imperfection in the action taken by the governor in council, and in order to remove any possible doubt, I was anxious to effect a remedy. It is not proposed to go back and take the course of making merchants pay who have not paid but have been fair. The idea is to have the matter clear beyond peradventure. I may tell my hon. friend that the closest I could get to any definite statement as to what was done by the government which it had not power to do by order in council was that we had fixed an average for duty over fortnightly periods, and that it was necessary that the amounts so fixed should be the real exchange values of the pound on the particular dates. In order, as I say, to have some degree of uniformity we had fixed fortnightly values which obtained during the respective fortnights, action which it was suggested the government had not power to take. I think that it had. But if anyone wishes to challenge the action of the government I think this House of Commons, the final authority, ought to give the governor in council full power for what has been done.

Mr. MACKENZIE KING:

Who was it

told the minister? Was it his colleagues?

Mr. RYCKMAN:

No it was not. So far

as I know my colleagues are of the opinion that their action was correct. But there was the idea abroad to which I have referred. When I tried to localize it and find out what the trouble was the suggestion was made that we had not the power to fix the average value for duty covering fortnightly periods. So, in order to remove all possible doubt we are asking this House of Commons to pass this legislation, remembering, if you will, that it was necessary to act quickly. I think that while some people may object, in the main the action taken was beneficial to the country.

Mr. EULER:

The minister admits that there was some doubt as to the legality of what was done in the past, since Great Britain went off the gold standard. Will he say now that this bill will regularize what was possibly done illegally in the past? Is it retroactive?

Mr. RYCKMAN:

Yes. I say, as frankly as I can, that I believe the government had the authority. I believe that in the emergency the government should have had the power; I think all the chances are that it did. There is the view that improper or unwarranted action may be asserted. No one has done so thus far, but if such a contention should be advanced naturally the interests of the government and the revenue should be fortified. My answer to the hon. member would be that if this legislation is made retroactive from the month of September, when Great Britain went off the gold standard, we would be prepared for any threat on the part of any body in connection with the correctness of the action taken by the government.

Mr. MACKENZIE KING:

Has any threat been made up to the present?

Mr. RYCKMAN:

None that I know of.

Mr. YOUNG:

Mr. RYCKMAN:

No, that is not correct. The hon. member may have got that idea from what I said. But in connection with duty upon the pound, may I say that the value of the pound was fixed at par when our tariff was made. The value for duty is still with the pound at $4.86?. But there is a special duty, and that special duty is levied or was a short time ago, because at the present time there is none. The value of the pound for special duty was first $4.40 and then it was changed to $4.25. The exchange value of the day, or of this fortnightly period, deducted from $4.40 at first, and later from S4.25, constituted the special duty or what is commonly known as the dumping duty.