Monday, December 26, 2016

Quebec's dependence on Canada

The author is an MP for the Bloc Québécois.

In the absence of our political independence, it seems that many have come to act as if Quebec were already a country and to ignore Ottawa. Yet every day Ottawa decides and acts on our behalf with consequences that, in most cases, serve us very badly. Here are some examples.

Softwood lumber

A new trade dispute over lumber between the United States and Canada has begun and its outcome could be very damaging to the Quebec economy.

The 2006 agreement expired and the American lumber industry filed a complaint on November 25th. The 2006 agreement was a bad deal for Quebec, which led to the loss of 23,000 jobs in the lumber industry.

The new deal could be worse. In the joint statement signed with Barack Obama last June, Prime Minister Trudeau makes no reference to the Quebec system and even opens the door to a future agreement which would include the secondary processing sector.

In order to comply with the NAFTA rules, Quebec has revised its forestry management in depth. An auction system has been put in place to determine the price of wood so that it is no longer subject to compensatory duties, US taxes or quotas.

All this seems to have been done in vain. In order to avoid overshadowing the British Columbia model, Ottawa prefers not to defend the Quebec's forestry system in Washington.

While the Quebec lumber industry wants to wage a legal battle to have its system recognized, the West Coast industry is demanding that an agreement similar to that of 2006 be reached as soon as possible. And everything indicates, for the moment, that Ottawa is leaning in that direction.

The humid and mild climate of BC favors the rapid growth of trees. The forest industry is dominated by large firms and its operating costs are low. It adapts well to compensation rights or quotas, especially since it exports a lot of uncut logs, which are poorly taxed, and that a large part of its production goes to Asia.

If the Quebec lumber industry is allowed to defending itself, there is a good chance that it would win its case. But to do so, it needs loan guarantees to compensate for the punitive customs duties, which will be put in place during the conflict. That's what it wants from Ottawa.

In 2006, without this support and forced into bankruptcy, the lumber industry had to resign itself to accepting a bad deal. This cost us 23,000 jobs and Quebec's share of lumber exports to the United States fell to 18.5%, whereas it was traditionally at 24%.

With a weak-kneed federal government confronting Washington, which once again seems to show a preference for the lumber industry out West, Quebec's forestry industry is once again in jeopardy.

There are 60,000 jobs in 250 towns and villages that are at stake, including 120 rural communities that depend exclusively on forestry.

Without wishing to speculate on the outcome of the new softwood lumber dispute, we at the Bloc Québécois will do everything we can to ensure that Ottawa defends the lumber industry in Quebec, but Ottawa's style of conflict management illustrates how it does not defend Quebec or its economic model.

The textile industry

Unfortunately, the case of lumber is no exception. The issues on which Ottawa lets Quebec down are numerous and constitute the general rule.

In 2002, China's entry into the World Trade Organization (WTO) led to the collapse of our textile industry. Ottawa promised support and assistance for the transition, but in the end, did nothing.

Three years later, 40,000 jobs were lost at the same time as Ottawa was cutting employment insurance, thereby abandoning these people to their fate. It is therefore not surprising that the unemployment rate on the Island of Montreal still exceeds 10%.

The pharmaceutical industry

Nor was anything done to stop the collapse of the pharmaceutical industry in Quebec and its shift to Ontario. A boost from Ottawa would have allowed it to stand out in North American.

With the signing of the Canada-Europe Free Trade Agreement and the announced death of the agreement between the United States and Europe, Quebec would have everything it needs to be an intermediary between Swiss pharmaceuticals and the US market. In addition, Donald Trump announced plans to import more drugs from Canada to lower the price of pharmaceuticals in the United States.

However, there is no indication that Ottawa has any interest in supporting Quebec in this regard.

Supply management in agriculture

The federal government is abandoning our farmers by allowing more and more loopholes in our supply management. Milk and chicken from the United States cross the border without Ottawa intervening to resolve the situation.

The compensations announced for cheese and dairy producers following the adoption of the Canada-Europe Free Trade Agreement are insufficient and place Quebec at a disadvantage.

Whether we like it or not, the price of Quebec's dependence is to see a host of powers and decisions differed to a government controlled by a nation that works first for itself. The result is that the advancement of their nation is to the detriment of our own.

The aerospace industry

When GM closed its automobile plant in Boisbriand Jean Chrétien did nothing. His argument was that Ontario had automobiles and Quebec had aeronautics. And when the auto industry in Ontario struggled in the 2008 crisis, Ottawa did not hesitate to give it billions in aide.

But when it comes to helping out Quebec's aerospace industry, it's another matter. Quebec has not received its fair share of aid programs, with Ontario collecting the lion's share. Ottawa did not offer anything during the layoffs from Bell Helicopter, CAE and Bombardier.

Ottawa continues to postpone the announcement of financial support for Bombardier's C-Series, weakening this Quebecois company and forcing it to make cuts in its other operations. There is every reason to believe that Toronto banks have persuaded Ottawa to put pressure on Bombardier to divest its multi-voting shares, making it vulnerable to external takeover.

With the modernization of Pearson Airport, Ottawa decided to move the Canadian Air Traffic Center from Montreal to Toronto. In Toronto, the runways are not even suitable for the landing of Bombardier C-Series aircraft.

Instead of forcing Air Canada to comply with federal law requiring it to maintain its aircraft primarily in Quebec, the Trudeau government changed the law, abandoned Aveos workers and weakened the Quebec aerospace cluster.

The privatization of Air Canada had as a counterpart a guarantee that the company would always maintain its aircraft primarily in the Greater Montreal area and secondarily in Toronto and Winnipeg.

But with the decline in its demographic and economic weight, Quebec is marginalized in the federation. When Ottawa should intervene for Quebec, its needs are usually ignored. Quebec MPs from federalist parties rarely defend the interests of their nation. The interests of their party always come before the interests of their constituents.

Faced with this reality, the semi-state of Quebec struggles to compensate for the inaction of the Canadian state.


Despite the many environmental issues, the three pan-Canadian parties are advocating the construction of new pipelines, such as Energy East and Keystone XL, in order to double oil production from the tar sands. Regardless of the serious risks of contamination to our rivers and the impact on global warming, jobs in the western provinces are more important. Canadian reality obliges... even the Green Party supports the exploitation of the tar sands!

According to environmental groups, Ottawa still subsidizes the oil industry to the tune of $3.3 billion a year.

Had such amounts been used to develop the green economy and the electrification of transportation, which are areas in which Quebec has the greatest potential, there is every reason to believe that today we could be a world leader in a promising industry.

Instead, the people of Quebec, through their taxes, support a moribund industry that runs counter to their economic interests.

In fact, the strong Canadian dollar in the 2000s, caused by rising oil prices and exports, seriously contributed to the plunge in our manufacturing sector. Unsurprisingly, Ottawa did not adopted any measure or industrial strategy to mitigate this effect on our economy.

The maritime industry

The situation is the same for the shipping industry. Ottawa has awarded its shipbuilding contracts to Irving in Nova Scotia. The volume of these contracts is such that the company is unable to honor them, accumulating delays and cost overruns.

Meanwhile, the Davie shipyard in Lévis is rejected by Ottawa, threatening its survival. As if a seaway like the St. Lawrence could exist without the presence of even a single shipyard!


One of the most outrageous issues is that of Muskrat Falls or the Lower Churchill Project. In order to compete with Hydro-Québec's exports, Newfoundland decided to build a large hydroelectric power plant and an underwater cable to bypass Quebec in order to export electricity.

Since this province does not have the means to develop such a project on its own, it requested financial support from Ottawa. All the federalist parties supported the request and Ottawa's decision to grant a $5 billion loan guarantee. We are faced with a situation where our taxes are used to finance a project that will directly compete with Hydro-Québec. It should be remembered that Hydro-Québec never received any support from Ottawa for its hydroelectric projects.

This major injustice is coupled with a real fiasco in the management of the project. The province is multiplying the blunders and costs are exploding. Economist Jean-Thomas Bernard estimates the cost of producing electricity at 22 ¢ / kWh, while the export selling price is around 4 ¢ / kWh.

We are talking about a $15,000 per capita of debt for Newfoundlanders for this unprofitable project. It is clear that Ottawa will end up paying for this.

Faced with this money pit, Ottawa raised its support from $5 billion to nearly $8 billion and left the door open for additional funding. The federal government is even implying the possibility of imposing the construction of an electricity transmission line in Quebec to link Labrador to Ontario.

The Securities Commission

There are numerous examples of how Ottawa does a poor job of serving Quebec's interests. After the Montreal Stock Exchange was bought up and then closed by Toronto's Stock Exchange, Ottawa sought to merge and centralize the securities commissions in English Canada.

Such a merger would lead to the disappearance of the Autorité des marchés financiers (AMF) and would once again benefit the Toronto financial sector. This would mean a further erosion of Quebec's powers.

Research and development

Quebec is a leader in many high-tech sectors. As the economy of the rest of Canada relies mainly on the presence of subsidiaries of US companies, there is very little in-house research and development (R & D) in other provinces.

The Greater Montreal region is the second largest center in R & D in North America after Silicon Valley. Almost half of Canadian technology exports come from Quebec.

Since R & D is not an important issue in companies outside Quebec, Ottawa ends up doing very little to support our high-tech sectors. The federal government prefers to support industrial research in the university environment and the subsequent transfer of technology.

Again, the structure of the Quebec economy differs greatly from that of Canada and the federal government adapts its policies to support the economy of its national interests, to the detriment of ours.

Social economy and social programs

It is not surprising that the federal government does nothing to support our social economy. This model is unique to Quebec and virtually non-existent elsewhere in Canada.

With respect to social services, Ottawa withdrew from funding for health, education and other services. This increases the pressure on Québec's public finances and justifies austerity policies.

In its latest changes to employment insurance, Ottawa has set up a special policy for regions affected by lower oil prices, disadvantaging regions of Quebec which were among the first victims of the previous reform regarding seasonal work.

In social services, there is also a form of competition between levels of government. For example, Quebec has adopted a comprehensive homelessness policy, ranging from prevention to reintegration, while Ottawa focuses on homeless shelters. The amounts paid are difficult to predict and Ottawa's measures do not fit very well with Quebec's policy.

The same applies to family policy. While Quebec has decided to promote child care with its CPE policy, the Trudeau government favors family allowances. Pooled under the jurisdiction of a single government, these resources would have provided a more effective family policy.

Consolation prizes

Like it or not, Quebec is still a Canadian province. The Quebec nation continues to be administered by English Canada, which manages economic and social policies first and foremost in accordance with its own interests.

In most cases, this means a lack of support from Ottawa for Quebec which ends up hindering our economic development. Faced with this situation, equalization represents a very poor consolation prize. The same goes for the Trudeau government's infrastructure program. And these are consolation prizes that are largely paid with the taxes we send to Ottawa.

As long as Quebec remains in the Canadian federation, it will be deprived of the tools available to the central government which are currently used to develop the economic interests of English Canada. Therefore, Quebec struggles to take its place in a globalized economy with unequal weapons. 

By Gabriel Ste-Marie, MP for Jolliet, researcher at the Contemporary Economics Research Institute and lecturer at Université du Québec à Montréal

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