Mr. Frank Howard (Skeena):

May I direct a question to the parliamentary secretary to the Minister of Finance. Before the Minister of Finance gets negotiated out of all the money he has in the treasury, and in view of the fact that the interim supply bill passed a few months ago will no longer have validity after the end of this month, is it the intention of the government to have another interim supply bill introduced to carry on the public business after the end of July.

Combines Investigation Act

Mr. R. A. Bell (Parliamentary Secretary to the Minister ot Finance):

I think the hope of the house is that its business may be concluded in time so that a further interim supply bill will not be necessary.

Mr. Pearson:

It won't be.

Mr. J. R. Taylor (Vancouver-Burrard):

Can

the Minister of Northern Affairs and National Resources say whether the premier of British Columbia has yet made any offer to him of Garibaldi park as a national park?

Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):

No, Mr. Speaker; I have received no offer from British Columbia.

The Chairman:

Shall the amendment to clause 13, section 33, carry?

Mr. Pickersgill:

Mr. Chairman, I was in the middle, or perhaps not in the middle; I should say I was at the beginning of a statement about this matter which has been occasioned by the observations which were made by the Minister of Justice just before I began.

In order to put what I now have to say in perspective I should like to recall just what it was I did say in my introduction last night. What I said was that, as the hon. member for Ottawa West had shown in his masterly reading of the proceedings of the banking and commerce committee, the government had made a firm and unqualified decision, and announced it to the committee, not to do anything about this problem. The government had decided that because the restrictive trade practices commission was carrying on an investigation into an export problem in British Columbia, no attempt should be made to meet the requests of the fisheries council, of the forest industries and of the metal mining industry which were

presented so ably, and I think so convincingly, to the committee, and whose views were put on the record at such length by three hon. members on the other side of the house last evening in speeches the urgency of which was apparent to all who listened to them.

That was the situation right up until the last meeting of the banking and commerce committee. At that point, sir, as I explained earlier yesterday, thanks to the courtesy of the committee and because of my absence on that Monday morning, the committee resumed its sittings in the afternoon and I introduced an amendment to clause 15 of the bill. I should like very briefly to draw to the committee's attention now the reason I gave then for doing so. This will be found at page 747 of the proceedings and evidence of the banking and commerce committee for July 18. Quite a way down the page the chairman is reported as follows:

Perhaps we could go on with Mr. Pickersgill first-

Then I am reported as having said:

I have an amendment I would like to move, seconded by Mr. Tardif. But before doing so, I would like to say that some of my friends and I on this committee were very much impressed by the representations that were made to the committee by a number of witnesses, expressing the hope that if the act was to be amended, as was the government's intention, some express provision could be put in the act to make it abundantly clear what everyone, I think, recognizes has always been in fact the situation, namely, that the purpose of the legislation was to prevent combinations within Canada respecting trade within Canada and was not intended, in any way, to cripple our export trade; and that if certain types of combination or arrangements were necessary for the promotion of our export trade they should not be hampered by this legislation.

Now I recognize-as I am sure every member of the committee does-how frightfully difficult it is to draft provisions which will make that position abundantly plain to the courts, without, in any way, having any ancillary effects or any serious ancillary effects which would enable it-as we thought might be the case with some of these new provisions that it is suggested should be inserted into one of the other sections, section 32-to be used as a cloak for combinations that are clearly intended to be against the law.

However, we do think that an amendment might be made to clause 15; and I must say that in proposing this, I am not absolutely wedded to this particular wording. It is the best, with such resources that were available to my friends and myself, we were able to come up with at the moment; but we would certainly appreciate any suggestions from any member of the committee that might make it more acceptable to the government.

In the present circumstances, when it is perfectly evident to everyone that we are not going to have the kind of sellers' market for our exports we have enjoyed most of the time since the second world war, we do think it is of the utmost importance, in the national interest, that we should do everything possible and everything reasonable both to promote our exports and to make sure,

by the laws of our country, that we are not providing any obstacles, even if only psychological obstacles, that can easily be removed.

When I made that statement I was authorized to speak, and was speaking, on behalf of my friends here in the house. That was the position, after very careful consideration of this very ticklish and difficult problem, that the Liberal party had decided to take on the matter. We had decided to take the view that even though there might be some slight risk -and we recognize there might be some risk -that such combinations for the purpose of promoting Canadian exports might become a cloak or might have effects in the domestic market which would by themselves be undesirable, for the greater good of the country and indeed the greater good of a majority of consumers, in view of the tremendous extent to which the income of the Canadian people, particularly of the people in certain provinces, is dependent upon our income from exports, that balancing the two, one against the other, it was in the national interest to move such an amendment.

Now, sir, I am glad to say that the arguments we put forward there and, perhaps more than the arguments, the knowledge that the Liberal opposition had taken this up officially as its policy, caused the government to change its mind. Let no one be under any illusion about this matter. The amendment we are now considering, for which we intend to vote and which I admitted quite frankly yesterday is better drafted than mine was, would not have been offered at all if it had not been for the stand I was asked to take in the banking and commerce committee on behalf of the Leader of the Opposition and our party on the last day the committee sat on this bill.

In view of some of the things that were said yesterday, and in view of the obvious efforts of certain members opposite to get on this band wagon and try to make it appear that in some way this was their doing, I think the record ought to be set straight.

Mr. Fulton:

The hon. member has made what he alleges to be a statement of fact, and I wish to say at once and immediately following what he has said that his statement of fact is not correct. It is not the case that this amendment would not have been offered had it not been for the motion made in the committee by the Liberal opposition. It is true that I had indicated in the banking and commerce committee throughout that I was concerned as to the appropriateness of offering an amendment while a case was still under discussion before the commission and up to the time I had last previously spoken in the

Combines Investigation Act banking and commerce committee I had not been able to see my way around the difficulties.

But I had indicated clearly that we were considering the matter. I was considering the matter. I had discussions with a number of our own members, and I told them that the government and the minister were prepared at any time they could come to the conclusion that an amendment could be drafted to submit one to the house. I repeated that on the day the hon. member for Bonavista-Twillin-gate has referred to, Monday, July 18. It was not by any means simply because he had presented an amendment that we came to the conclusion that an amendment could be drafted and that we were justified in drafting and submitting an amendment at this time.

My hon. friend probably will not accept my assurance on this point. No more do I accept his statement or interpretation of why this amendment is now before the house. But hon. members on this side, with whom I had discussions both before and after he offered his amendment, will know perfectly well the truth of what I say, and they will know that it is a gross exaggeration, and immodest exaggeration for the hon. member for Bonavista-Twillingate to say it is simply because he moved this amendment that the house now has one before it from the government.

Mr. Pearson:

Mr. Chairman, may I ask the minister, who now so passionately claims the parentage of the idea of this amendment, why, having regard to the months, indeed, the year or so when they were drafting their amendments, this idea did not appear in the bill when it was submitted to the house after all the consideration that was given to the matter by them?

Mr. Fulton:

This and all sorts of other ideas occurred to us.

Mr. Pearson:

You did not put it in the bill.

Mr. Howard:

Mr. Chairman, from the activities of both the Liberals and the Conservatives. I know they are very excellent band wagon climbers, and therefore it is doubtful whether the accusation of the hon. member for Bonavista-Twillingate should be treated too seriously. However, I think he did place some of the facts before the banking and commerce committee in a little different light. Trade is an extremely important matter because we depend so much upon it; but because we have been in so much difficulty since approximately the middle of 1957 in our trading relationships with other countries I hope the Conservative government and its supporters will not think that the change now being made in this legislation is a cure-all for our trade problems. I trust they will not

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Combines Investigation Act be content to rest upon the false base that this amendment will assist to any measurable extent in increasing our trade with other nations. It only needs a cursory glance at the provision to see that it cannot be considered a cure-all for our trading problems, and that more aggressive measures must be taken by government departments, notably the Department of Trade and Commerce, to increase our exports to other countries.

Our objections to this amendment have been placed on the record clearly and I do not think there is any point in going over them again. I am only making these remarks because the feeling might develop that we have done something which will cure our trading problems or as a result of which they will solve themselves. We need a much more aggressive attitude toward trade. There are other problems and difficulties which have not been thought of or have been glossed over. We are encountering difficulties because of the activities of other nations, and those interested in export trade have used these difficulties as a basis for arguing that they should be exempted from the application of the Combines Investigation Act so far as their export activities are concerned.

A reading of the briefs presented by organizations which appeared before the banking and commerce committee and advocated that their export activities should be exempted from the provisions of the act indicates that they used arguments which were not valid. Perhaps they are most succinctly put by Mr. Nicholson, president of the council of forest industries of British Columbia, who appeared before the committee on June 22 along with representatives from the fisheries council of Canada and the Canadian metal mining association, to which reference has been made.

As found on pages 292 and 293 of the proceedings of the committee Mr. Nicholson put forward what I think were false arguments to promote an exemption under the combines legislation. I should like to refer to them in order to indicate that we need to tackle our trade problems in other ways than by means of the Combines Investigation Act. Mr. Nicholson referred to the letter read by Mr. Hyland of the fisheries council which was written by the Japanese cartel on fish, and near the bottom of page 292 he said:

I was shocked at the letter as I am sure you were-the letter that Mr. Hyland read here today which was written by the Japanese fishing cartel and written approximately eleven months ago. I am sure the words burn themselves in your mind just as in mine-"We have not yet fixed our final price for the sale of our salmon in the world market: we give you a tentative price and as soon as the Canadians and Americans have fixed their price we will give you ours." How in the world

are you going to fight in world markets where 50 per cent of the products of the forests of British Columbia are being exported and one third of the income coming into this country from the sale of our exportable commodities coming in from the sale of Canada's forest products, if we cannot meet the competition coming in from foreign countries?

Then my colleague the hon. member for Port Arthur asked a question:

Mr. Fisher:

Could the witness give us the parallels in the timber industry to the Japanese salmon industry? I do not think that is contained in the brief.

Mr. Nicholson:

I cannot give it to you for Japan, but I can give it to you for Russia. Prior to the war, and in fact up until 1954, Canada was Britain's leading supplier of softwood products-lumber, shingles and material of that kind. That is, as late as 1954 it was the leading supplier. By 1957, Canada's share of the United Kingdom imports had dropped to 14.7 per cent and Canada's position was that of fourth place supplier of products to the building industry in Britain. We had been replaced successfully by Sweden, Finland and Russia. During this period when Canadian sales were dropping off the Soviet of Russia had increased her sales from one tenth to one fifth of the total of United Kingdom's softwood importation. In the case of the Swedish and Finnish importers they were trading at a profit.

Notice the distinction there, and it is developed later on, that the Swedish and Finnish exporters were operating at a profit. The implication is that the Russian exporters were not operating at a profit, and this is developed later on. I continue the quotation:

Their objective was to make a profit, but their operating costs were lower because wages were lower. That was not so in the case of Russia, when they came in and took that market. I am reliably informed by an official of the Department of Trade and Commerce-this can be checked by reference to the minister or other officials of that department-that the Russian technique in invading the British market is that they will come in with a particular type of lumber which is in demand, and even though the lumber may be needed at home in Russia, they will quote to supply the whole demand at a price that is better than the Canadian price for a particular kind of lumber.

I imagine when he uses the word "better" he means lower.

It is even better than the Swedish and Finnish prices in some cases. Then if you repeat the order they will give you a further reduction. That is not done by any cartel. That is done by a government trade agency. Does that answer your question?

He went on then to deal with another matter. I should like to point out that our problems and difficulties in the export markets could not be even partially solved by the amendment before us now to exempt export activities from prosecution under the Combines Investigation Act. 1 refer particularly to our difficulties in so far as the Soviet union is concerned. Mr. Nicholson has pointed out here the manner in which the Soviet undertook to export lumber to Great Britain,

thus cutting into the amount of lumber that had been exported from Canada prior to 1954. I have not been in Russian nor have I worked in industry there, so I have no personal knowledge of these facts, but it is generally understood that Russian exports are controlled by a state organization. They have no worry about profits; they have no worry about costs of production; they have no balance sheets which have to be totalled up. The cost of production can be absorbed by society as a whole. The selling price in the world market means, in fact, relatively little.

Canada cannot possibly compete with the Soviet union in world markets because of the system under which the Soviet operates. When it comes to Sweden and Finland undercutting us because of wages, that is another matter. The natural implication of Mr. Nicholson's remarks is that if wages are the only factor, then one solution perhaps would be to reduce wages here to a point where they were comparable with wages in other countries so that we would be able to compete on price. Alternatively we could increase our productivity to the point where we were producing units of wood or whatever it was, say 1,000 board feet of lumber or squares of shingles, at lower per unit costs and then we would be in the position where we could compete. None of these things can be accomplished by an amendment to the Combines Investigation Act.

If it is desired to tackle this question through the Combines Investigation Act, then this amendment fails to meet the problem because it refers only to those exemptions connected with price conspiracy under section 32, which covers agreements between so-called competing corporations. There is no reference whatever in the minister's amendment to the activities of monopolies in the export market. It is true that a monopoly, because there is only one corporation, would have difficulty in conspiring with itself to set prices. It is an automatic action that a monopoly takes to meet these conditions. However, a monopoly does operate in the export markets, and that fact is not dealt with in this amendment.

Then we have to consider the problem of the merger of two companies in the export field. Suppose there were two competing firms, Anglo Canadian Fish Company and B. C. Packers or any other two fish companies or two lumber companies, which entered into a conspiracy in relation to the export of articles, and that conspiracy had no deleterious effects on the domestic market. For the sake of argument let us say that the conspiracy with regard to the export market was protected by the proposed amendment

Combines Investigation Act to add subsections 4 and 5. These two companies merge, and they are still engaged in export trade. There is then no conspiracy, because the companies have merged and there is now a monopoly or price leadership situation. What is the position of these companies in so far as the Combines Investigation Act is concerned?

As I understood the amendment originally proposed by the hon. member for Bonavista-Twillingate in the banking and commerce committee, it dealt with mergers and monopolies as well as price conspiracies. It appeared to cover the whole range of illicit corporate activities with which this Combines Investigation Act seeks to deal, apart from the resale price maintenance and price discrimination provisions. These are matters which I think should be dealt with and answered.

There was one other matter which I raised and upon which I was not satisfied with the answer given to me by the minister last evening. I think perhaps the point I made is still valid and I should like to reiterate it. In paragraph (c) of the proposed subsection 5 which is before us it is stated:

(e) has restricted or is likely to restrict any person from entering into the business of exporting articles from Canada;

My contention was that there could be some conflict between that provision and the provision in subsection 3 of section 32, which reads in part as follows:

-has restricted or is likely to restrict any person from entering into or expanding a business in a trade or industry.

It was my thought that the minister should have included these words "or expanding a" also in (c). The minister maintains that these things are dealt with in other paragraphs. He mentioned that paragraph (a) contains protection in this regard when it talks of reduction or limitation of the volume of exports of an article. I believe he also made reference to paragraph (b) in which the language used is:

-has restrained or injured or is likely to restrain or injure the export business-

It could be interpreted to mean that if it prevented the expansion of business, therefore it meant to restrain or injure the export business of any domestic competitor who is not a party to the conspiracy, but I think for soundness and for sense my suggestion should be followed. There is a connection between the activities of corporations which conspire to set prices, to limit production, to limit supply or to do any of the other things prohibited in subsection 1. There is a connection as to whether these activities are in the export field or whether they are solely in the domestic field or whether they are

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Combines Investigation Act all one or a bit of each. There is a close connection. It is very easy for the activities in the export field to spill over into the domestic field and to injure trade or commerce in Canada internally as a result of their extraterritorial designs and activities.

I think it would be best to place these words "or expanding a" in the subsection so that it reads substantially the same as subsection 3. It is dealing with the same thing. The minister started off in subsection 4 by relating it to a paragraph in subsection 1 and saying that in any prosecution under the subsection a corporation may be convicted if certain things take place. This is the same argument or the same thought that is expressed in subsection 2 where it refers to a prosecution under subsection 1. They are relating to subsection 1 in each case. Subsection 3 indirectly relates to subsection 1 because it talks about entering into or expanding a business. I think these things all have a connection with the basic prohibition against conspiracy to injure trade, fix prices and so on.

Accordingly in this regard, Mr. Chairman, I think I should formally place this matter before the committee by moving:

That the amendment be amended by deleting in line 2 of paragraph (c) the word "the" between the words "into" and "business" and substituting therefor the words "or expanding a".

In my view this amendment would bring the provisions or the words in line with those in subsection 3. I do not think it would have as great a tendency to leave the court in the position of wondering whether we meant something different, as to the activities of a conspiracy and their effect on the export market, from what we meant when we were talking about a conspiracy to exchange statistics internally and its effect upon the domestic market.

If it is the intention of the minister that he means something different, then that is another case entirely, but it appears to me that we are getting at the same thing. It seems to me that the minister wants to ensure that if there is a conspiracy on the export market, this should not have any detrimental effect internally, within the nation. Such being the case I think this suggestion should be adopted, for the sake of consistency and in order to make it easier for the courts, if a case such as this gets into the courts, to determine just what parliament was getting at when it drafted these particular words.

Mr. Fulton:

This matter was discussed last night and I explained that we had thought about this problem. It is not as though the amendment was drafted without a good deal of care and consideration. We came to the

conclusion that the problem of preventing somebody from expanding in an export industry is covered by a combination of subparagraph (a) and subparagraph (b) of this proposed subsection 5. Surely if the arrangement would prevent the expansion of some business in the export field it is covered by (a), because the arrangement is likely to result in limitation of the volume of exports of an article; and if it was not covered by that provision, the arrangement would certainly have the effect of restraining or injuring or being likely to restrain or injure the export business of a domestic competitor under (b). Hence in either one or both of those subsections the problem has been covered.

As I said last night, what my hon. friend seeks to do, whether or not there is any necessity or any logic for it, is to force words which are applicable to one situation into a section or subsection applicable to another situation. Following that course would result in the complete distortion, twisting and straining of words, or else a framing of amendments beyond their natural and proper meanings or their logical and proper compass.

I therefore oppose the amendment, not because I say the objective sought to be achieved is undesirable, but because the objective is already achieved. It has been carefully considered as a matter of drafting, and I submit that the hon. member for Skeena does not base it upon any sound proposition. He would be sound if he could show that it was not covered, but he cannot do that. He is simply basing it on the proposition that exactly the same words should be used in all parts of the bill. That is a proposition with which I cannot agree.