EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 5, 1996

.0908

[English]

The Acting Chairman (Mr. Flis): I declare this morning's meeting open. We have members of Parliament from the official opposition, the third party and the government side, so we will begin.

We're very pleased to have with us this morning Carol Bellamy, executive director of UNICEF. Joe Judd is the deputy director of the program division of the United Nations Children's Fund, UNICEF.

I feel very honoured this morning, Ms Bellamy, because exactly 40 years ago I was introduced to UNICEF.

Here is how this happened. After I started my teaching career, the principal, who came to me because I was the only male teacher on staff, asked me to organize the UNICEF boxes. So I had to make sure that each child had a UNICEF box for Hallowe'en. It was my job then to collect the money, count it and turn it over to UNICEF. We didn't collect much; it was an inner-city school. But we collected a couple of hundred dollars.

Ever since then, I had an interest and connection with UNICEF. When I became a parliamentary secretary, Minister Ouellet asked me to be the government spokesman for the annual UNICEF report.

So as I say, it is indeed an honour for me to chair this morning's meeting.

Our format usually is that after opening comments, we start the questioning with the opposition. Then we go to the government side.

Without further ado, the place is all yours.

.0910

Ms Carol Bellamy (Executive Director, United Nations Children's Fund): Thank you very much.

Good morning to everyone. I understand this is a very busy time, so I do appreciate the opportunity to come before this standing committee.

I might comment on your introductory remarks. I now have been executive director of UNICEF for slightly less than two years. When I was named, I found that a good number of my friends came up to me and said, ``Trick or treat for UNICEF''. There was nothing in their hands, but everybody remembered that they had gone out on Hallowe'en collecting for UNICEF. The hand automatically went out in terms of that little orange box. I want to tell you, we still use the little orange boxes to raise money to help UNICEF do the work it's doing.

I have one other orange box story. Recently I attended an event in the U.S. One of the U.S. ambassadors for UNICEF is the actress Meg Ryan. She said one of the reasons she had recently become involved in assisting UNICEF was that as a youngster she had helped collect some money for UNICEF with these orange boxes, she but admitted that she had not returned the money. She felt so guilty that many years later she felt it was incumbent upon her to help. At the current rate of interest, she figured, she owed a great deal of money to UNICEF. She was now helping by fund-raising.

Let me make a couple of brief comments about UNICEF, and then I will be glad to respond to any questions or comments you might have.

First, let me say how delighted I am to be here in Canada. Canada has long been a supporter of UNICEF. It has been a supporter through its government support, and I would point out that this has been financial support; Canada has been one of the main financial supporters of UNICEF - and intellectual support, if I might make that point as well. Canada has long been a member of the board of UNICEF, and a very active and constructive member of the board of UNICEF.

I won't go into detail about our board activities, but it is now a board of 36 member countries. It plays a very key role - certainly it always has - when all of us at the UN are trying to take a hard look at ourselves and how we run things; how we can be as effective and efficient as possible; what our policies are; how we can avoid duplication; and how we can work in a coherent way. Our board plays a particular role in that.

So I want to thank you for that. I also want to thank the Canadian people generally for supporting their government and the national committee in Canada, which has been a very strong supporter. I want to acknowledge that.

On December 11, next week, UNICEF is celebrating its 50th birthday. Actually, we have been celebrating our 50th birthday all year, but having passed myself the age of 50, I keep cautioning people not to try to become 50 too fast. We've actually been 49 - about to turn 50.

It is an interesting time to step back for a moment and take a look. UNICEF was begun at the close of World War II, basically as a humanitarian relief fund - that's why the ``f'' for ``fund'' is still in the name - largely to respond to the needs of children at the end of World War II with blankets, food and emergency needs. Fifty years later, we come back and find that most of those children now are great supporters of UNICEF, so we virtually are not doing that. However, in some instances - for example, in the former Yugoslavia - we're back in the very same places we were 50 years ago. But we find as well enormous advances for children in these 50 years and yet some of the same problems.

I would point out that in 1996 the number of children in the world caught in some form of violent armed conflict - not necessarily in world wars but internal conflicts, from Rwanda to Sri Lanka to the former Yugoslavia, just to name some countries - is now probably as high as it has been in the 50 years. So while UNICEF has changed over the years - it isn't just an emergency fund, but has heavily invested in basic grassroots development - we find that this development is also influenced in many cases, obviously, by the conditions in the country in which we are working. In an increasing number of those countries those conditions are also conditions of armed conflict. So the problem of children in war is a very direct, key problem for us.

.0915

We approach it, I would point out, again from a basic development perspective. We believe that even in times of abnormality, some normality for children is so important - in other words, basic health services; basic primary health care; immunization; simple, understandable, low-cost primary health interventions; anti-diarrheal activities; vitamin A; iodization of salt; clean water.

I would particularly emphasize the issue of primary education, just basic education. If you can't keep some kind of basic education even in the middle of the worst conflict, you don't have anybody left to run the country when you finish the conflict. Your next generation has been lost in the process.

After 50 years, what can we say? What has been done? I say to my colleagues in UNICEF that people like UNICEF, yet if you think about it, we find ourselves in the middle of two things totally under attack in the world today. One is that we are part of the UN, and the UN is not enjoying its most widely acclaimed glory these days. Two is that we are in development. People keep saying that we've been spending money on development, but what have we gotten for that money? Does it make any difference?

My response in both cases is that I think one can strongly defend the UN and strongly defend development. That doesn't mean every part of it. I happen to believe very strongly that the UN, as well as UNICEF, needs to run itself even more effectively and efficiently than it has, but we are at work trying to do that. It's the same with development. I'm not prepared to say that every element of development has been perfect in the past, but I think it is very important to recognize that the investment in development has made a difference. I want to speak briefly to that in the following context.

I've talked about 50 years, and I want to talk about the last decade, although much went on before that. In 1990 a very important event was held: the World Summit for Children. It was actually the beginning of a number of these big summits. Canada was one of the six initiators of this summit. It was a brilliant idea by my predecessor, Jim Grant.

Over 70 heads of state and over 150 senior representatives of countries participated in the World Summit for Children. This summit was a place where people talked and read statements and wrote things on paper, but they made a commitment. These governments made a commitment to try to improve the quality of children's lives, largely in the area of health and education and children's rights, and to measure that. That's what is really important. This wasn't just a meeting where people came and left and nothing was done.

Since that meeting there has been an attempt to take a look. What has been the difference? Has it made a difference? Indeed, just a couple of months ago a report was issued by the Secretary-General looking at the mid-decade. What has been the result of these commitments to try to achieve universal immunization of children, to try to achieve improvement in children's health? What has been the result in the five years, looking at it from country to country?

To give you a couple of statistics, 129 countries have met the mid-decade goal of 80% immunization coverage. I'm using some of these statistics not to be boring, but to indicate that there has been a review of how these financial resources have been spent and whether development is making any difference at all. It is now estimated that without the current immunization program, close to 3 million children a year would die from measles who are not dying at this point as a result of some of this activity.

Polio and Guinea worm are on the verge potentially of being wiped out. We're not there yet. It is close to 80% polio coverage around the world, and the last 20% may be almost as hard as the first 80%. But if you think about the fact that this world did wipe out smallpox some 25 years ago, the fact is that we're virtually there with Guinea worm, and I believe in the next 10 to 15 years - and I'm pushing it, because I wish it could be in the next 5 - but in the next 10 years the world could wipe out polio. The Americas are now polio-free and have been for a couple of years. This past year, there was a national immunization day in India in which 70 million children were immunized.

.0920

So I want to just use some of these statistics to indicate to you that we in UNICEF in our focus on primary health and education - I'm not saying it's only UNICEF - really do try to measure what difference is made by the investment of these financial resources that come into UNICEF.

I want to mention two others that Canada has been particularly involved in. Salt iodization is a very simple little thing. Every human being needs just the slightest amount of iodine, just a little bit. One of the best ways to get it is through salt. One of the areas in which UNICEF has been very active with the different governments in countries in which we work is in helping to bring about an understanding for laws or plants that produce iodized salt.

What difference does it make? Actually, a lack of iodine is the major cause of mental retardation in the world today. So when you talk about handicapped children or issues like that, it's very important to move toward salt iodization. Canada has been a major supporter of UNICEF in this area. And being a supporter of UNICEF means being a supporter of it happening in the different countries.

So I just wanted to say that there really is some good news in terms of the investment of development dollars. Infant mortality rates have virtually been cut in half in the last 25 years. We're getting closer, as I said, to universal immunization. Treating iodine deficiency and oral rehydration therapy have been major advances.

Having said that, maybe because I've been in government myself - I've been in both the private sector and in government - there are also some challenges that remain. That mid-decade report that talked about the good news also pointed to some of the areas in which there's still a lot of work to be done.

It was said at that meeting in 1990 that there were some commitments made to reduce malnutrition in youngsters and to reduce maternal mortality. These are two areas in which, worldwide, the movement has been much less positive. In fact, the issue of child malnutrition is still a very major issue worldwide. It isn't just the issue of severe malnutrition that kills children, but also mild and moderate malnutrition whereby children can't study as well or work as well in school.

It's the same with maternal mortality. Death and injury shouldn't be as prevalent as it is in the context of giving birth to a child. We need to make some changes. So it indicated those two areas in which we had to rethink our strategies and policies.

I have one other comment, then I'll stop.

It also pointed out some areas in which there had been some significant improvements, such as in education access - more children are now going to school today - and in access to clean water and better sanitation. While there have been improvements in these areas, population growth in the world has outpaced those improvements. So it said that on this hand, primary health care, there were significant improvements, but there's still a little bit more. It said that on maternal mortality and nutrition there was very little improvement, so one had to rethink one's policies. On education and water there was good improvement, but one has to run even faster than population growth.

Let me conclude by just saying that this is what we've been doing in recent years. Just look a little bit toward the 21st century. One of the really exciting things at UNICEF these days has been with these improvements in many of the areas of child health and child survival. We find ourselves now confronting some of the problems of the next generation in the next century.

We see it particularly in the area of children's rights. There have been 187 countries in the world that have now ratified the United Nations Convention on the Rights of the Child, including Canada, which was early on. I must say that the major country that has not done so is mine, and I don't see that happening in the near future, unfortunately.

But with virtually universal ratification of the United Nations Convention on the Rights of the Child, we see an increasing amount of the work of UNICEF in the context of children's rights.

What does that mean? Does that mean that's not what we've been doing? No, it means that which we will continue. It's the right to health and education. But seeing these issues in the context of a child having the right to this creates much more sustainability. In other words, it isn't just if you feel sad about this child and how nice it would be for you to do something. It means that a child, anywhere in the world, poor or rich, has a right to decent health. So we see this as a real challenge as we move into the next century.

There's the modern issue of violence, whether it's in the street from crime, abuse or prostitution, or because of war. There's the issue of exploitation, whether in the labour market or from sex trafficking. We see the challenges of adolescent health care in young people today in behavioural styles, whether it's substance abuse or other issues, as increasingly issues that are being confronted with street children in Nairobi, child prostitutes in Nepal and child labourers in Honduras. Indeed, even though UNICEF doesn't have offices in a part of the developed world, there are challenges for children today, such as the challenges of child poverty.

.0925

So we celebrate our 50th year feeling very good about how far we've come, but we celebrate it, I think, with our eyes open about how to respond in the future.

I'll conclude by saying that we are actively involved internally in UNICEF in trying to do this in a way that acknowledges that we do not see generally our financial or human resources growing in the future, so we're looking at how we can take better advantage of the resources that exist right now.

I include both financial and human resources, because we think it's the quality of the people, our staff, as well as the amount of money that will make the difference. We are hard at work trying to streamline, tighten, focus and improve systems, whether they're management or technology systems, or how we deliver our programs.

I wanted to mention a few things. I always say that one of the good things about coming from New York is that I talk too fast, but I could try to get a few more things in.

That's a little bit about UNICEF. I will be glad to try to respond. If I didn't touch on something that maybe you particularly are interested in or have heard about, I'd be glad to try to respond to your questions.

The Acting Chairman (Mr. Flis): Thank you very much. I purposely did not give a long biography about you because all the members did receive a press release from Mr. Axworthy, which was press release number 234, December 4. I think you will see the commitment to UNICEF, and all the things you talked about, with Mr. Axworthy, Mr. Boudria, the Minister of Health and David Dingwall.

You heaped a lot of praise on Canada. Canada could not do this without the kind of people you see here from CIDA. I'd like the people around the table to introduce themselves while we're here.

Ms Annamaria Laurini (Senior Program Funding Officer, UNICEF): Annamaria Laurini, UNICEF program funding office.

Ms Ardith A. Molson (Senior Program Manager, Multilateral Technical Cooperation Division, Canadian International Development Agency): Ardith Molson, CIDA.

Mr. Robert Ehrhardt (Director General, Multilateral Technical Cooperation, Multilateral Programs Branch, Canadian International Development Agency): Robert Ehrhardt, CIDA.

Mr. Anthony Kennedy (Director, Program Funding Office, UNICEF): Anthony Kennedy, UNICEF.

Mr. Harry S. Black (Executive Director, UNICEF Canada): Harry Black, UNICEF Canada.

Mr. Flis, you spoke at our press conference two years ago, and Mr. Dupuy spoke at our annual meeting last year, so it's nice to see good friends around the table.

Mr. Wah Wong (President, UNICEF Canada): Wah Wong, volunteer president of UNICEF Canada.

The Acting Chairman (Mr. Flis): We're glad you could join us this morning for this important message.

The first questioner is Mr. Paré.

[Translation]

Mr. Paré (Louis-Hébert): I have some short questions.

[English]

Ms Bellamy: You all speak better French than I do. My second language is Spanish, I'm sorry.

[Translation]

Mr. Paré: I have some very short questions, and if the answers are short, I will be able to fit several of them in.

The World Food Summit recently took place. In my opinion, it was overcautious in the objective it set to reduce food problems by 50% over 20 years. I would like to know what UNICEF's position was and if you attended the summit.

[English]

Ms Bellamy: I will be brief, and then you can ask another question.

Yes, we are presently a small delegation. I headed the delegation, and I did make a presentation.

We were supportive of this conference. The position we took was, however, to understand that the reduction of hunger in the world is not just a question of the production of food; it has to take in a broader range of issues, such as malnutrition issues and poverty. So it wasn't just a matter of food production and agricultural policy. That was only a piece of the overall challenge in terms of reducing hunger.

[Translation]

Mr. Paré: Various groups have often criticized international financial institutions' structural adjustment programs. These programs often make the poorest people even poorer.

.0930

How do you see these structural adjustment programs impacting on children in developing countries?

[English]

Ms Bellamy: This is a somewhat more complex problem, but I will attempt to respond.

Actually, I think UNICEF has taken a bit of a lead in commenting on the importance of adjustment - to quote from a description by a former colleague of mine at UNICEF, ``adjustment with a human face'' - to recognize that many of these governments had to engage in some form of modification of their systems and financial systems, but levying a very extensive amount of debt on a country could create a situation that would have particularly negative circumstances for children.

One of the areas we at UNICEF have been supportive of is the concept behind something like what has been discussed in terms of 2020, which is understanding that governments of developing countries, as well as developed countries, need to understand that investment on the economic side of the ledger should go hand in hand with investment on the development side of the ledger. There needs to be some recognition that the two contribute to each other.

So if the focus is only on debt reduction, or only on reconstruction of financial systems, or the economic systems, without understanding the need for investing on the human side, whether it's in education or health care or human services, then you really will not have an adequate financial system.

The bottom line is that structural adjustment, on balance, has had some negative impact on children. Our job is to try to convince governments to make adequate investment in their children, even as they're going through structural adjustment.

[Translation]

Mr. Paré: I would like you to tell us how UNICEF's budget is broken down in terms of emergency services and sustainable human development.

[English]

Ms Bellamy: I'd be delighted.

UNICEF's budget is approximately $1 billion U.S., if I can give you a flat number. That doesn't entirely reflect what we are able to do, because we are confronting a number of difficulties at this point. We have not been cut as badly as some parts of the UN have, but we ourselves envision over the next few years that the best-case scenario will be a no-growth budget, which will mean some reductions. That's why we're trying to make sure we use our money as effectively as possible.

We also find a troubling imbalance in resources coming in between what we call ``general resources'', which is core programming, and ``supplemental funds'', which are project-based funds for particular projects that may be very good but sometimes are less flexible in terms of the most efficient use of those resources.

Third, however, we are what is called a ``voluntarily funded'' UN organization. This means we are under the UN, but each year, as do most of the funds and programs, we have to go and solicit the funding for each year's budget. So we will come to Canada - not just once, I hope - or Germany or the U.S. or India or Bangladesh each year and basically put our position before, and be judged by, these governments. I actually think that's not bad. You learn a great deal if they think you're working well or not working well.

That is contrasted with being part of the assessed system. As you know, a lot of the debate recently in the UN has been over those governments, the United States being the major one, that have not paid their assessed amount. We are not subject to whether a government particularly pays its assessed amount, although we have views on that and we hope every government will, but we have to go and get our direct funding from governments each year.

.0935

We also now raise approximately 30% - and that's a gross figure, I will tell you - through the private sector. That is largely through the 38 national committees UNICEF works with, such as the Canadian national committee for UNICEF. They are part of the overall family. Although not directly run by UNICEF, they are part of an extended family.

That is our budget picture at this time.

You asked specifically about emergencies. Over the last couple of years it's shifted a little bit, but last year a little less than 25% of the overall budget of UNICEF was spent on what I would call complex emergencies. Remember ``emergency'' stands for everything from a major drought to flooding, but increasingly we find ourselves working in countries where there are wars, whether it's Burundi, Rwanda, Sierra Leone, Liberia, Sri Lanka or Guatemala, although one hopes that finally, after 30 years, there will be peace there.

Having said that, I want to make a point. People ask how much we spend on emergencies, as though that's totally different from what we usually do. Even in those countries, the majority of that money is still being spent on immunization, primary health care and basic education. For example, I just returned from a visit to our program in Rwanda. Most of our work there is basic health care work.

I will say, however, that as you might expect, because our programs have to particularly meet the needs of the country where we are, in some of these complex emergencies we do have some specific kinds of programs. For example, in Rwanda we've been working on child soldiers and the demilitarization of child soldiers.

In this most recent large-scale returning of refugees, we have been working in conjunction with other UN agencies - the UNHCR, the refugee agency, being the lead agency - particularly on reunification of children with their families. For example, we had people at the borders with megaphones saying, ``Hold on to your parents' clothing'', and we were ready with Polaroid cameras to take pictures of children who'd lost their parents. We were working with Save the Children and the International Red Cross on this reunification.

So of that 25%, the majority is in the basic development work we do, and some of it is very specific to the emergency - child soldiers, pyscho-social counselling, child reunification, etc.

The Acting Chairman (Mr. Flis): You have time for one more.

[Translation]

Mr. Paré: I will continue later.

[English]

The Acting Chairman (Mr. Flis): I think we have time for round two.

Sarkis Assadourian.

Mr. Assadourian (Don Valley North): Thank you very much.

Welcome to Canada.

Ms Bellamy: Thank you.

Mr. Assadourian: I have a few short questions.

How do you decide what emergencies to work on? Do you just watch CNN?

Some hon. members: Oh, oh!

Mr. Assadourian: Do you have criteria for how you go about deciding which project to support? That's my first question.

Second, does the U.S. ever pay into your UNICEF fund on time or on target, or do they just drag their feet and see who's the chair of the Security Council this year, and say, ``Boutros-Ghali is okay'' and then they pay or don't pay? Do they play politics with their funding?

Third, I spoke to Stephen Lewis -

The Acting Chairman (Mr. Flis): We have time to take them one at a time, Sarkis. Why don't we have Ms Bellamy answer the first one?

Ms Bellamy: First of all, how do we decide? It isn't just by watching CNN; I want to assure you of that. In fact, sometimes in countries there are emergencies that never get on television and are very significant emergencies.

Right now UNICEF has country programs. Basically we're very decentralized, if I can explain. We are actually headquartered in New York at the UN - it's actually across the street - but we are heavily decentralized and have been for many years.

The way we develop our programming is through a country programming process. In other words, within the approved policies of UNICEF, we identify a country, whether it's a sub-Saharan country such as Chad or else Argentina or the Philippines, and the program gets built in conjunction with the partner government and the other partners there, and then it comes to the board for approval.

.0940

So country programs look different in different places, as you might expect. The program in South Africa is going to look different from the program in Mali, even though they're both in Africa.

We have programs in 140 countries. The way we are now increasingly finding ourselves caught in these problems of armed conflict is we're already there. In other words, we were already there in Burundi and Rwanda several years ago. We haven't been there all 50 years, but we were there several years ago, even before 1994, when the Rwanda genocide really took place. And we were already in Central America before the wars in the mid-1980s took place.

So it isn't, ``Oh look, there's a war in Sri Lanka. We'd better go start a program there.'' We generally have been there and conditions change.

An example is what's going on right now in the Central African Republic, which is a place where we've been working in a traditional UNICEF program, and when I say ``traditional'', I don't mean it's old-fashioned. It now has to be restructured. I may take some people out of there, because we can't do very much.

Afghanistan is another example. We were there in a basic program, but because of some of the changes, we have to make some modifications and reconfigure the program, maybe even reduce some things, based on our ability to have access to people.

The one modification I would make on that is this. As with many development organizations, with the ending of the Cold War in the early 1990s, UNICEF is now present in a number of the central and eastern European countries and in the Commonwealth of Independent States. We weren't there before.

For example, in the former Yugoslavia, we didn't go there because there was a war there, though with the wars being there and UNICEF being there, the timing was closer. We went there because the systems in many of those countries, which were highly developed systems in many cases, are very significantly deteriorating.

The health care and human services systems, particularly in many of those former Soviet Union countries in the Commonwealth of Independent States, were highly developed, but now that the focus is on a market economy and on political reforms, there's much less focus on the human services side and there's enormous deterioration. That's what taken us in there.

Your second question, which I thought was very good too, was...?

Mr. Assadourian: The U.S. paying their fair share.

Ms Bellamy: Oh, that's right. I'm sorry. That's why I forgot it.

Mr. Assadourian: How could you forget that one?

Some hon. members: Oh, oh!

Ms Bellamy: The answer is that actually the U.S. failure to pay into the UN has not affected UNICEF, as I said before, because that less-than-full payment - and there are a few other governments, but I think the U.S. is the major one - affects the agencies, most of which are called specialized UN agencies, more, in terms of their funding, than it affects UNICEF.

The U.S. is actually a contributor to UNICEF. The U.S. actually has been the largest governmental contributor to UNICEF over the last few years. The largest private sector - and by that I mean through the cards and individuals - is actually Germany, but the largest government contributor to UNICEF is the U.S. The second-largest contributors to UNICEF, in terms of a region of the world, are the Nordic countries, but the largest individual government is the U.S.

UNICEF has thus far, over the last couple of years, been able to continue to maintain. It hasn't grown, but it hasn't been cut, and some others have been cut. I must say, each year it is a challenge, because we are dealing with the U.S. Congress as well as the U.S. government. Thus far we've been able to maintain our support from the U.S. government, and I hope we will be able to continue. We try.

But so far, no, that hasn't hurt us.

In terms of the Secretary General issue, we just stay out of that entirely, but whatever happens on that, I hope something happens, just because it is obviously creating some uncertainties at the UN, and at a time when the UN is having enough difficulties, any uncertainty creates even more difficulties. So whatever happens there, I hope it happens.

The Acting Chairman (Mr. Flis): You had a third question?

Mr. Assadourian: Yes, I have a question on landmines.

As you know, landmines hurt mostly women and children, especially children, because they look like toys or whatever. This is what we were told last week at our meeting. Do you have any programs to remove landmines, or do you look to other governments for landmine removal?

.0945

My other question related to this is that I spoke to Stephen Lewis last year. He was sent by the UN - by UNICEF, I believe - to go to war zones such as Bosnia or Afghanistan or wherever to write a report on the effect of war on children. Can we have that report, if possible?

Ms Bellamy: Yes - although it's not Stephen Lewis's report. I'll speak about that in a moment.

First, we are very involved in the issue of landmines. We're not the only ones. We are involved, as you just pointed out, because landmines are indiscriminate in terms of who they injure or kill; in fact, wars are. If you take a look at the beginning of this century, the majority of people killed or hurt in wars were military - not that this was acceptable. It was just the truth. Today, as we end the century, over 90% of people wounded or killed in war are civilians, and largely women and children, because they become the target.

Landmines have become very much a part of that process. It is estimated that there are more than 110 million landmines in 64 countries around the world. The cost of building a landmine is estimated at somewhere less than $10 U.S., yet the cost of de-mining a single landmine ranges, it is estimated, between $300 and $1,000.

The countries most affected by landmines are Afghanistan, Angola, former Yugoslavia, Bosnia, Cambodia and Mozambique. The major mine producers over the last 25 years have been the major arms-producing countries. I would remind you as well that one of the big countries where there is a huge number of landmines right now is the former Yugoslavia. Up to the point of that war, they were one of the major landmine producers.

UNICEF is involved in landmines in basically three different ways. We are involved in education about landmines, particularly for children, because they are planted in so many different places. You can tell adults where they can walk, but it's harder with children. They go to school and run across fields. They take new paths. So they are very subject to being hurt.

As you pointed out, some of them look like toys. They are made to almost look like toys so that you'll pick them up. So we're involved in education.

We are also involved in global advocacy with many other organizations in the humanitarian area. We strongly urge a total ban on production, stockpile and manufacture of landmines. We congratulate Canada for its position and for the recent conference in I think Ottawa. Stephen actually was at that conference. It was very important.

In a more minor way, in a couple of particular countries we're involved in rehabilitation of youngsters in terms of everything from prosthetics to other kinds of things.

This isn't the only way we're involved. In El Salvador, for example, we've had a very good mine awareness program. We issued an anti-war agenda.

Last year, in our State of the World's Children report, we decided to focus on a single subject. The subject we focused on was children and war. We wanted people to realize how many more children were caught in war these days. One of the things we did was to issue a 10-point agenda. We weren't saying this would stop all wars, but one of the items we were pushing in that agenda was landmines and a ban on landmines.

The report I think you're talking about, however, is a kind of sister report, if you will. I shouldn't say that, because it's actually an official UN, so probably it's an even more important report. A report Stephen Lewis was very involved in, as part of UNICEF and because he cares about these issues, is one that recently has been issued by the United Nations. It was put together under the auspices of an expert group chaired by Graça Machel, the wife of the former president of Mozambique. This report contains a good deal of information, really statistical information, as much as possible - it was done worldwide - on the issue of children and war. Again, one of the items was the issue of mines.

So we will continue globally to push for the ban, and to do awareness in the countries...everything from a comic book in Bosnia, in conjunction with with DC Comics. It uses Superman in different languages to explain to kids how dangerous landmines are. As well, as I said, we do some of the rehabilitation.

Mr. Assadourian: Could we have a copy of the report?

Ms Bellamy: I don't have one with me, but we can get you a copy of the report.

Mr. Assadourian: I'd appreciate that. Thanks.

.0950

The Acting Chairman (Mr. Flis): Beryl Gaffney.

Mrs. Gaffney (Nepean): Thank you very much. It's very kind of you to appear before our committee at our request.

I was in New York a few weeks ago and visited with Steven Lewis there. I was pleased to hear what UNICEF was doing and also pleased to hear about the good cooperation with CIDA and the good moneys that CIDA is throwing their way.

Having said that, you know that we have a subcommittee on child labour, which I sit on. You mentioned child exploitation, and I would assume that child labour falls within the confines of what you call child exploitation. I have a very direct question for you.

We've heard witnesses from the children, we've heard witnesses from organizations, we've heard witnesses from industry who are working in different ways to eliminate child labour within their industries. One, of course, is the carpet-making industry. UNICEF Canada appears to be embroiled in a debate with regard to the merits of the Rugmark campaign. What is the global position taken by UNICEF on the use of export labelling systems to combat child labour, and on Rugmark in particular? What is the difference and what is the problem?

Ms Bellamy: I don't think there's a problem, but I will respond to your question. Let me go back to the beginning of your question and then bring it to Rugmark.

We do see the issue of child labour within the whole area of exploitation, and I'm not trying to put things in boxes. By the way, I think it needs to be defined. We are not talking about all work of children. We are talking about that work which is exploitative, which is hazardous, and hazardous can be physically hazardous or psychologically hazardous. We get people saying, I had a paper route when I was a child; are you telling me I can't have a paper route? No, we're not, but we are talking about a very real type of thing.

These are guestimates, but if you take the latest estimates from a recent report from the ILO, with whom we are working very closely, a quarter billion children in the world are involved in some kind of exploitative labour situation. It is not only in developing countries, although the numbers in Asia and Africa are quite extraordinary. It's a problem that doesn't lend itself to an absolute, simple solution, either Rugmark or...we have a program in Bangladesh with the garment manufacturers. There is not a simple solution.

Primary education, compulsory, good education, is one of the keys, and we are very supportive of it. But one has to understand that there also need to be aspects of financial implications for families. There has to be a commitment to codes of conduct, to children having the right not to be exploited, to more information and data collection on child labour as it is. It's a very complex issue.

Specifically on Rugmark, we at UNICEF do not think Rugmark is the only thing that will save all children from labour, nor do we think it's a bad thing. We think it is a project, in this case in India, in conjunction with rug manufacturers, that is one of many kinds of things. It is an activity that will have some impact on reducing the exploitation of children in the labour force; therefore, among a number of initiatives, it is one we are supportive of.

Mrs. Gaffney: Is there a report coming out on that?

Ms Bellamy: I don't know if there is a report. I think there have been some observations about the breadth of Rugmark, and probably correctly so. The majority of child labour is not even in the formalized labour market. The majority of exploitative child labour is in informal areas, in agriculture, in domestic work.

But in terms of whether Rugmark is good or bad, the reason UNICEF provides some assistance to Rugmark is that we believe it makes a contribution to reducing child labour.

Mrs. Gaffney: Then you don't see any conflict in opinion?

.0955

Ms Bellamy: Oh, I think there are shades of opinion, if you want my honest evaluation.

The Acting Chairman (Mr. Flis): Beryl, being mindful of the clock, I'd like to give Michel Dupuy an opportunity to ask a question also.

Mr. Dupuy (Laval West): Thank you, Mr. Chairman.

Let me tell you how much I've enjoyed your very stimulating comments. To let you know where I come from, I'm a former ambassador to the United Nations and a close personal friend of Jim Grant. I was also president of CIDA. So you can rest assured that I have a great deal of support for UNICEF.

Ms Bellamy: I see. Oh, oh, you know all the answers.

A voice: Scary stuff.

Mr. Dupuy: I should first like to pick up on what Beryl Gaffney was telling us. I was in Delhi a few days ago, and among the subjects I was interested in is indeed child labour and the general attitude of the Indian government towards children. I was able to see how much good work UNICEF is doing on the ground. There are even some projects with which we are associated.

How do you evaluate Indian policy? Do you feel that the Indian government is moving in the right direction, giving appropriate support to your efforts, or that you give appropriate support to Indian efforts? How do we evaluate the situation from a policy angle?

Ms Bellamy: That's a very good question. Our program in India is actually our largest program. I always try to avoid implying, when I say things like that, that therefore that's the important program and if it's a small program it's not important. I think we should think even UNICEF'S smallest programs are very important, and try to have as good quality as our large programs. UNICEF will never be the big money organization anyway, and we shouldn't just measure something because it's the largest.

But in terms of actual financial resources, our activity in India - as one might expect, given the population - is the largest. I think generally we are satisfied with our activities in India and with India's commitment. I didn't mean to hesitate on that. I mean we can always challenge ourselves to do a little better.

We have just come to our board with a bridging program - I'm sorry, this is boardspeak, but it means a shorter-term program - that does do some shifting in what we've been working on, hot because what we've been working on was bad; in fact, we should shift as things improve. The point is, if UNICEF is still doing in a country today what it was doing 10 years ago, then we haven't been helping to build any capacity. I'm passionate about the issue of capacity-building. I don't think we should keep doing it forever and ever; we should be helping people to do it for themselves.

So our work in India has been shifting in a number of ways. We are still very active in some of the primary health issues. I mentioned before the national day of immunization, where it was something like 60 million or 70 million or 80 million children. I don't mean to throw those numbers like that, but it was this huge amount. This wasn't just UNICEF doing this; this is now the Indian government that does it. UNICEF helps, and others help as well. But it doesn't have to be UNICEF doing it, and it shouldn't be, at this point.

Our work has been increasingly shifting. We find ourselves, for example, working in a couple of particular areas. We've identified women's groups at the community level as something that is - I mean, it's not always groups, but women - very important in the ability to really reach in and do development, so we've had a focus there.

We've had a focus on the schools. This has a lot to do with the child labour issue and the - what are they called? Child-friendly, enjoyable schools? No. What are they called? I forget the term.

A voice: Joyful schools.

Ms Bellamy: Joyful, yes, I'm sorry. There's a project called joyful schools, which is to try to improve the environment.... It's not just how pretty the school looks. The idea is not just to get a child into school; it's for the child to continue in school.

I think we feel that we have a good working relationship with the Indian government. We feel they are committed. Of course we can do more, and they can do more. We should always be looking to see how we can improve.

The Indian government takes its role also as a board member very seriously. They send people from the capital to the board meetings, which is something not all of the governments do at this point. Canada does as well, which is very important, because it brings people who know something about development. With all due respect to those missions in New York, sometimes the people who sit on the board are very nice, but they don't know anything about development.

.1000

I would think on balance we feel pretty satisfied. But again, I think my job as executive director is partly never to be entirely satisfied with what we're doing, because you should always keep saying: Can we do it a little better? Can we be a little bit more efficient? Is there anything more we can get out of it? I'm never willing to give an A to anything. I'm willing to give a B and occasionally a B+. But I always think you just keep saying, okay, can it be a little better, a little better, a little better? But it's certainly not a bad program; I think it's a pretty good program.

Mr. Dupuy: Do I have room for one tough question?

The Acting Chairman (Mr. Flis): Unfortunately not, because I notice our next witness is waiting.

But the Minister for International Cooperation and Minister responsible for Francophonie, and of course the minister for CIDA, said in welcoming you, Ms Bellamy, and I quote him:

UNICEF is the key partner in our efforts to meet basic human needs and protect the rights of children and women in developing countries. As part of the overall UN reform process, Ms. Bellamy has shown strong leadership in promoting changes within UNICEF to maximize the impact of its programs and its global advocacy for children.

I think you saw by the calibre of questions and the interest.... Many of the members wanted to ask a second round of questions and unfortunately we don't have time, but as a former educator, I would give you A+.

Ms Bellamy: Thank you, everyone, very much.

The Acting Chairman (Mr. Flis): Before you leave, just a reminder, so that you will come back to Canada - our famous maple leaf.

Ms Bellamy: Thank you very much. It's appreciated.

The Acting Chairman (Mr. Flis): We'll take a minute break while the next witness comes to the table.

.1002

.1008

The Acting Chairman (Mr. Flis): Ladies and gentlemen, we will move on to the second portion of our meeting.

As we all know, it is the mandate of this committee to be able to call people who have been appointed to various positions around the world. This is not to question the quality or calibre of those appointments; we always find it a learning situation. It helps our bilateral relations and it helps our multilateral relations.

We are very pleased to have today Ambassador Extraordinary and Plenipotentiary of Canada to the French Republic, Ambassador Jacques Roy. With the ambassador we have some people from the department: Robert Richard, deputy director of the western Europe relations division; and Albert-Jan Galpin, from the European Union division of the department.

You've been around here long enough to know some of the unexpected interruptions. We are told that the bells may be ringing for a vote. If it is a vote, it will be a half-hour vote, so even if the lights are flashing we'll try to continue as long as we can. Then we'll see if there's time to come back and finish. If not, we do have one more item this morning, the softwood lumber. I count on all members to be flexible. We can get together at the end of the bells or after the vote to see if we have time to continue.

Mr. Ambassador, welcome. The floor is yours.

Mr. Jacques Roy (Ambassador Extraordinary and Plenipotentiary of Canada to the French Republic): Thank you, Mr. Chairman.

.1010

[Translation]

It is a great honour for me to be here this morning to talk to you about relations between France and Canada.

As you know, I have only been in France for a few months. Previously, I was ambassador to the European Union. In that capacity, I attended the summit meeting that took place between Canada and the European Union at the end of June in Rome, which enabled me to accompany the Prime Minister and Minister Axworthy to the G-7 summit meeting when they arrived in Lyon on June 27. So I officially arrived in France along with the Prime Minister and Minister Axworthy, and that enabled me to participate in the meeting that took place between Prime Minister Chrétien and President Chirac on June 27.

I delivered my letters of credence to President Chirac on July 10. As you know, I was born in Sainte-Anne-des-Monts, in Gaspé. There were 2,400 people living in Sainte-Anne-des-Monts when I was born and the population is now roughly 5,000. So you can appreciate that when I went by the Republican guard, at the Élysée, and I climbed the stairs leading to the palace, I thought about my roots in Sainte-Anne-des-Monts, and I thought to myself that the Canadian Department of Foreign Affairs has a very broad representation amongst its diplomats. Canadian diplomats come not only from large Canadian cities, but also from small isolated villages like Sainte-Anne-des-Monts.

[English]

When I had my discussions with President Chirac, I told him that my three main objectives in France would be to increase the commercial and economic relations between France and Canada, to pay quite a lot of attention to the development of our cultural relations, and to work with the French authorities in promoting the Francophonie in the Francophonie countries, but particularly in close cooperation with France.

I did not fully realize the time, the intensity and the diversity of the relations that exist between France and Canada, and the great number of cultural manifestations that take place all the time. I had been there for a week when I was invited to Saint-Malo for the arrival of sailing vessels from Quebec City. This takes place every few years and it's a great ceremony in Saint-Malo. This gave me the opportunity to visit the house of Jacques Cartier in Saint-Malo, which was restored by a Quebec anglophone, Mrs. Lilian Macdonald-Stewart, who just a week ago received the Légion d'honneur from the President of the Senate.

This has a very special significance for me because I was born in 1934, the 400th anniversary of the coming to Gaspé of Jacques Cartier.

[Translation]

In the summer of 1934, my parents, that is my father and my mother who was expecting me, went to Gaspé to participate in the 400th anniversary of the arrival of Jacques Cartier. There were representatives from France, England, the United States and Canada. You realize that in 1934, it was not very easy to go to Gaspé. Nevertheless, many people went and my father was very impressed by the celebrations.

When he returned to Sainte-Anne-des-Monts, he and my mother had a long talk about what they would name the baby if it were a boy. Since the French representative's name was Flandin, my father decided to name his son Flandin. My mother was vehemently opposed and succeeded in convincing my father that I should be called Jacques, for Jacques Cartier. In my mind, that was the biggest victory my mother ever won.

[English]

Since I arrived in Paris, we have had a great number of visitors. This shows the importance attached not only by the federal government but by the various provinces and by the chefs d'entreprise of Canada generally.

.1015

We have had nine federal ministers come to Paris. We have had eight provincial ministers. We have had one premier, the Premier of Ontario. The vice-premier of Quebec is there today. We have had the vice-premier of Saskatchewan, and we will have the Premier of Alberta next week. We have had a great number of chefs d'entreprise. As you know, many Canadian enterprises have been extremely successful in France.

McCain controls 30% of the frozen French fries. One has to do it in France as they have done it in Belgium, where they have 90% of the frozen French fries. You can see that some Canadian companies have been extremely successful in developing a market in Europe.

Bombardier is very strong in France, as is Nortel, Quebecor, Cascades, and many other companies. In an attempt to increase the economic relations between France and Canada, I have made it a point systematically to call on the French industrialists and potential French investors in Canada. It is a rewarding experience. From what I have learned at these meetings, generally speaking, French investors are quite confident about the future of Canada and are quite interested in investing in Canada.

On the cultural side, just about every day there is one Canadian manifestation or cultural event in Paris or elsewhere in France. We have spent quite a lot of money renovating the Canadian cultural centre. We will have a room that will be devoted to multimedia. We are in correspondence with various companies in Canada to make certain that we will develop the room in such a way that it will be helpful to them and that they will contribute significantly to the financing of the operation of that room.

As you know, we will have the visit of the Prime Minister soon, and we are working on a program for that visit.

During the month of June, Prime Minister Juppé of France came to Canada and said it was the objective of France to double its trade with Canada between now and 2000. He went further than that and said it was also the intention of France to try to become the first European partner of Canada.

I have mentioned to the French authorities that we in Canada were quite prepared to accept the challenge. It's a significant one, but I am glad to report that our exports to France will probably increase by about 35% this year. They increased by about the same percentage last year.

We have been very successful in encouraging French citizens to come to Canada. This year we'll probably have about 475,000.

We at the embassy respond to the inquiries made by French citizens who come to Canada, 80% of whom want to come to Quebec. We're happy to do that work for the province of Quebec.

I have been trying, since I arrived in Paris, to have the closest cooperation possible with the

[Translation]

délégation générale. We worked very closely together on the asbestos issue.

.1020

We had several meetings. We held, among other things, a joint press conference. We did not win our case on possible dispensations from French legislation which comes into force on January 1 1997. We did however win on certain points. The French authorities told us that they did not intend to urge the European Union to adopt a Pan-European regulation to ban asbestos and that it would perhaps be possible later, when the public's reaction to the use of asbestos had died down, to allow dispensations. We plan to pursue our work in this direction.

I would just like to conclude my opening remarks by saying that relations between Canada and France are excellent. We were able to show this in our efforts to find a solution to the problem of the refugees in Rwanda, Burundi and Zaïre. It is thanks to the co-operation between Canada and France that something could be done.

About two months ago, I had the honour of awarding a decoration to General de La Presle, who commanded the Canadian forces in Bosnia. It was very touching to hear him say that he had great respect for Canadian officers and the Canadian forces that are now in Bosnia and have been in Bosnia for some time. Thank you very much.

[English]

The Acting Chairman (Mr. Flis): Ambassador, our first questioner will be the vice-chairman of our committee, Mr. Bergeron.

[Translation]

Mr. Bergeron (Verchères): Good morning, Your Excellency. It is a pleasure to see you again after having met you several months ago. We met in Brussels, when you were the Canadian Ambassador to the European Union. We were sitting at a joint committee at the time and one of our former clerks, who is with us today, was in Brussels as part of Canada's foreign policy review.

I read in your curriculum vitae that you were succeeding the Honourable Benoît Bouchard. I certainly do not expect you to provide us with more personal information in addition to your C.V. However, you are undoubtedly aware that at present, there is a lot of talk about succession, namely at the head of the Bloc Québécois which, as you know, was founded by Lucien Bouchard. When it comes to replacing Lucien Bouchard, that means filling some pretty big shoes. You must understand what I'm talking about, since you're filling his shoes as Canadian Ambassador to France.

I note that you're also filling the shoes of our colleague from Laval-West, the Honourable Michel Dupuy, and...

Mr. Dupuy: Lucien Bouchard filled my shoes.

Mr. Bergeron: We are well aware of the importance and the prestige of the position of Canadian Ambassador to France. We are very happy with the importance and the quality of the relations that exist between Canada and France. I think they're all very positive.

As the chairman indicated, pursuant to the Standing Orders, we occasionally call in a certain number of ambassadors, after their Order in Council appointments, theoretically to assess their expertise and qualifications. But we have gotten into the habit of making it more a meeting where we discuss the bilateral relations of the countries involved.

In your case, it is not a question of seriously analyzing your qualifications, because they're quite eloquent. Your record is impressive. That is not the purpose of the meeting.

I must however say, Your Excellency, that last year, we were a bit shaken, not as concerns your expertise, but by your judgment in the Berthu case. Your reaction at the time, which was a bit excessive and untimely, could have seriously damaged relations between Canada and the European Parliament.

.1025

In fact, we had and will always have, as long as the delegation for relations with Canada is not replaced, people who have always been very sympathetic to Canada's cause on very important issues like, for example, fur.

Having said that, I would like to move to some more specific questions regarding relations between Canada and France. We are well aware of the very positive work that the Canadian Embassy has done and continues to do on asbestos in conjunction with the Quebec government.

But as you also know, we sometimes have the impression that the Canadian Embassy tends to get a bit too involved in some issues which concern Quebec. For example, rumour has it that the Canadian Embassy, the Ambassador himself, established direct contact with the elected municipal officials in the asbestos region of Quebec, and we see it as perhaps an infringement of Quebec's jurisdiction at the municipal level. I would like you to start by commenting on this issue, Your Excellency.

Mr. Roy: Thank you very much. I must say that when you talk about my predecessors, I was wondering if, in talking about Benoît Bouchard and the problems you faced in the Bloc Québécois, you were suggesting that I enter the Bloc Québécois leadership race.

Some hon. members: Oh, oh!

Mr. Roy: I must admit that thought never crossed my mind.

Mr. Bergeron: That is the last thing I would expect, Your Excellency.

Mr. Roy: You also referred to my judgment in connection with the presidency of the Canadian delegation to the European Parliament in Brussels. In my view, the only person who lacked judgment in the issue you raised is the President of the Canadian delegation to the European Parliament, Mr. Berthu. I think that on the Canadian side, our judgment was exemplary.

As for the last subject you raised, I must say that I don't understand the purpose of the question. I did in fact contact the mayors from Quebec who had called me in Paris to have my interpretation of what was happening with the asbestos issue. It was a pleasure for me to answer the mayors' questions as honestly as I could. If you are suggesting that the mayors from Quebec do not have the right to call the Canadian Ambassador in Paris, well, that is news to me. They decided to call me. I must say that I took their call with pleasure and that I gave them all the information that I could. Thank you.

Mr. Bergeron: Far be it from me, your Excellency, to suggest that Quebec men and women, regardless of what they are and what position they hold, cannot benefit from the services offered by the network of Canadian embassies abroad. As long as Quebec men and women pay taxes to this government, it is normal to be well served by this government. In that sense, I fully agree that elected municipal officials can contact ambassadors in order to receive the services they're entitled to.

However, the information I received was that on some occasions, you directly contacted elected municipal officials. Perhaps you were returning their calls. If that is the case, please disregard this question.

Having said that, Your Excellency, since you considered it appropriate to address the Berthu affair, I would like to say that my opinion is quite different from yours.

Although I do not want to judge Mr. Berthu's statement, I think that under the principle of the division of powers - and I've raised this with the Canadian Ambassador to the European Union - , it is somewhat unacceptable for a member of the executive branch to intervene in the internal affairs of a Parliament, and even more unacceptable for the government of a foreign country to intervene in the affairs of a Parliament. That is what you tried to do last year, and it caused a certain number of problems which, as I pointed out, could have negative consequences.

.1030

Regardless of what Mr. Berthu said, I'm mainly concerned with the impact that your untimely attitude, as I described it, could have had on the relations between Canada and the European Parliament.

Having said that, Your Excellency, allow me to return once again to the relations between Canada and France.

In your presentation, you attached a lot of importance to cultural demonstrations, to culture, and rightly so. What's more, you could have obviously talked about education and a certain number of topics that are exclusively under provincial jurisdiction.

The question I would like to ask, Your Excellency, is this: is it possible for you to formally guarantee that you will in no way attempt to block Quebec's direct and privileged relations with the French, by trying, for example, to oppose the signing of bilateral co-operation agreements between France and Quebec in the area of culture and education, which specifically concern Quebec and fall under exclusive provincial jurisdiction?

Mr. Roy: As you know, it has already been established for several years that Quebec can have direct relations with French authorities. It is out of the question for me or anyone else to call this established right into question. When Quebec wants to hold meetings or negotiations with French authorities, as long as these meetings or these potential negotiations are carried out in accordance with arrangements made in the past, there is no question of my intervening.

Everything that is done according to the rules must be allowed in the future according to the rules that have already been established. Changing the rules that have already been established is out of the question.

Mr. Bergeron: I have another question, Your Excellency. It would seem - if this is a rumour, please confirm that that is all it is and I will be reassured - that the Canadian Embassy was informed at least six months ago of the project under discussion in certain European countries, including France, to ban the use of asphalt shingles, which are manufactured mainly in Quebec.

If that is the case, I am surprised and concerned, Your Excellency, that the Canadian Embassy did not tell Quebec authorities, through the délégation générale du Québec in Paris, that this project was underway.

Mr. Roy: I do not know if we were informed six months ahead of time, but I know that we intervened in this area. We seemed to have won our case. On all these issues, there are frequent and regular meetings between our trade officers at the embassy and those at the délégation générale du Québec. I am under the impression that there must have been discussions on that.

I am not in a position to tell you exactly when this information was passed on to the délégation générale du Québec, but since these meetings are very regular, I am under the impression that this information must have been exchanged by the partners at the embassy and those at the délégation.

Mr. Dupuy: Thank you very much, Mr. Ambassador, for having taken the trouble to cross the Atlantic to meet with my colleagues and I. We were eagerly awaiting your visit. I think that your initial work in Paris is just as worthy as that of your predecessors.

I would like to clarify with you some issues relating strictly to foreign policy. As its foreign policy has evolved, France has gone through various stages with respect to Canada.

.1035

As we all know, there was a difficult period under General de Gaulle. Subsequently, France's position, as expressed by Raymond Barre, who was prime minister at the time, was essentially that with respect to Canada, there would be what he called non-interference and non-indifference, which means that it scrupulously respect Canada's sovereignty.

After that, there was another stage which became apparent when Mr. Mitterand was President of France. He expressed this evolution himself when he said: "We have normalized the relations between Canada and France". When I left the embassy in Paris, I think that we had reached a stage that was even more advanced, and a friendly relationship had been established between Canada and France.

Would you now call the relationship between Canada and France friendly, and do you feel that France's foreign policy with respect to Canada can be characterized this way?

Mr. Roy: Mr. Chairman, I am very happy to be here with you today, as I said earlier, and for a very special reason: one of my predecessors is here in the person of Michel Dupuy, whom we called Ambassador Dupuy at that time, in France. As someone pointed out earlier, it is an important position in France and filling the shoes of a predecessor is always very difficult. Mr. Dupuy certainly made his mark in Paris, and my French colleagues often refer to him. So it is with a lot of emotion, in a way, that I meet my predecessor today.

Concerning the relations between Canada and France, they are in fact excellent. When Prime Minister Raymond Barre talked about non-interference and non-indifference, he established a policy that still guides France today. I must point out, on that subject, that the fact that France has non-interference with respect to Canada is not surprising. There are Canadian soldiers buried in 585 cemeteries in France. The embassy is invited to participate in memorial ceremonies almost every week. The ceremonies are always extremely moving ones, where the French tell us how grateful they are to Canada for all the Canadians who died on French soil.

The French are obviously not indifferent to Canada's fate, since 75% of their investments are outside Quebec, and 25% of their investments are in Quebec. So it is clear that the French are not indifferent to Canada's lot.

Nor are they indifferent when they realize that two million anglophones have become bilingual in recent years, that 300,000 anglophones in Toronto speak French and that each year, 300,000 young five-to-nine-year-olds go to French immersion schools.

For all of these reasons, France is not indifferent to what happens in Canada. We must be fully aware of the fact that this policy of non-indifference is fully understandable.

.1040

We work very closely with France in various areas. In the area of foreign policy in Bosnia, Rwanda and Zaire, and within the francophonie generally speaking, our relations are excellent. We work very well together in the G-7.

Very often, the French and Canadian positions are consistent. The French have also often told me that the French President is very happy to work with the Canadian Prime Minister because he is the only person around the table, the only other government leader, with whom he can speak French.

For these reasons, the relations between Canada and France are very good, and even excellent, and I am under the impression that they will continue to be excellent and can only get better. Thank you.

Mr. Dupuy: Calling once again upon memories, it is clear that a certain rapport between the Canadian ambassador to France and the délégué général du Québec in France must be established. In your presentation, you already indicated that there were converging interests.

When I was in Paris, one of the fundamental points on which the déléguée générale, Louise Beaudoin, and I, agreed, was that the disagreement that existed between Quebec and Ottawa had to be settled here, on this side of the Atlantic, and not projected on to the European side of the Atlantic. In other words, to use a common expression, we have to wash our dirty laundry at home, not elsewhere. This fundamental principle was reflected in our operations, because we met periodically, specifically to avoid there being unpleasant situations that could tarnish Quebec's reputation or Ottawa's.

My question is this: does the same spirit of mutual respect, and I would even say respect for our French hosts, in muting any discord when we are there, still exist?

Mr. Roy: During my first week in Paris, I invited the délégué général du Québec to a luncheon where we discussed the state of relations between Canada and France, between the Canadian embassy and the délégation générale du Québec, and we agreed to work together whenever possible, but it was clear of course that in certain areas, where the objectives were different, the positions we explained to the French would also be different.

So the message would be similar where there was agreement and different where there were different points of view. Up until now, we have not had to defend diverging opinions in public, but if need be, these positions will be taken. Of course, it would be preferable for us to wash our dirty laundry at home, here in Canada, instead of doing so publicly in Paris, in France.

[English]

The Acting Chairman (Mr. Flis): Thank you, Ambassador.

We'll go back to the official opposition with Mr. Bergeron.

.1045

[Translation]

Mr. Bergeron: Your Excellency, I think that one can, without being offended, expect openly partisan comments on the part of members sitting around this table. But although one cannot say the Canadian Ambassador to France is partisan, one can note, without worrying about being mistaken, that he's decidedly positioned.

Obviously, no one expects a Canadian ambassador abroad to promote Quebec's sovereignty. A foreign ambassador is expected to promote a united Canada.

However, I'm a bit surprised with your interpretation. I am not surprised on the part of my colleague Mr. Dupuy, who can now speak freely as a parliamentarian. When he talks about difficult relations between Canada and France under General de Gaulle, that illustrates very eloquently the problems that we experienced last year with the European Parliament. As soon as something bothers Ottawa, it reacts excessively. Ottawa, I must say, tends to be quite quick-tempered with respect to statements from Europe that could in any way be positive toward the Quebec sovereignty movement.

I am however very surprised at your somewhat very narrow interpretation of France's non-indifference with respect to Canada. Of course, the things you mentioned are probably of interest to the French and warrant their non-indifference with respect to Canada, but you neglected a host of other reasons why the French government is certainly non-indifferent to what is happening here.

Getting back to the issue of the Canadian Ambassador to France's bias, I would like to ask you the following question: does the Canadian Ambassador to France, when asked about the state of the political situation in Canada and Quebec respond objectively by describing what is really happening here, or does he adopt, if I can put it this way, the federal government's somewhat misleading position which is to say that there is no problem and that everything is fine and dandy?

They say that Quebeckers have chosen Canada and that now, we are working on the real problems: employment, bread and butter; by doing so they are suggesting that there are no problems and that Quebeckers are very happy in the current federal regime, when last year, close of 50% of them expressed quite a different opinion. Do you discuss this situation, Your Excellency, when you are asked questions about the political questions in Canada and Quebec?

Mr. Roy: Thank you for your question. I must say that it would be difficult to claim that the results of the referendum were not what they were. The French read the newspapers and know that the results of the referendum were close. If they ask me questions, I say that indeed, the results of the referendum were close. Saying otherwise is out of the question.

I also tell them that several polls have indicated that 80% of Quebeckers chose Canada when they were asked what country in the world they prefer. And I also tell them that 25% stated that they thought that Quebeckers, if the yes side had won the referendum, would continue to have federal members of Parliament here, in Ottawa.

So when I am asked these questions, I try to respond with the information that we have, that come from polls or other sources. It is also clear that when I am asked what the true problems in Quebec and Canada are, I can repeat what Premier Bouchard said, ie that the Quebec government's objective for the time being is to put its finances on a sounder footing.

I believe - although you seem to be suggesting that this isn't the case - that for the time being, the government of Quebec's objective is to find jobs for people, which is also the objective of the federal government. When people ask me what the Quebec government's priority is right now, I tell them, as Premier Bouchard says, that the top priorities are to put the provincial government's fiscal house in order and to create jobs.

.1050

Could you tell me whether I'm mistaken or if you would provide different responses. At present, it's my impression that these are the priorities for Quebec and for Canada. Thank you.

Mr. Bergeron: Ambassador Roy, the government of Quebec has its own representatives to get its message across, and they do a very good job of that. I'm not here to transmit a message from the government of Quebec. My message has nothing to do with the government of Quebec's position on improving government finances. That is a fine objective, both in Quebec and in Canada, and it is important to focus on it. But that's not what my question was about.

You don't seem to have really understood the point of my question. And by the way, I thought it was very bad form on your part to use opinion polls to interpret the results of last year's referendum. I think that Quebeckers are intelligent enough to understand the question that was put to them, although you don't seem to assume that, and I take the results at face value, and I don't try to make them be what I would like them to be.

The question I asked you is as follows: when the French ask you questions about the political situation in Quebec and in Canada, such as, "do you think that the sovereignist movement will keep on going?" or, "will it be possible to reform the federal system so as to respond to the aspirations of Quebeckers?", it would appear that your answer is - and if this isn't the case, please tell us so - that there is no problem these days, that the people of Quebec have chosen Canada and 80% of them think that Canada is the finest country in the world. Do you try to hide the reality and create a smoke screen using opinion polls that are not representative of reality?

An opinion poll is only a snapshot of reality. If you really want to know what Quebeckers think, you have to ask their opinion in a referendum. I would remind you that Quebeckers have already rejected the 1982 Constitution, although they only did so through their government, and did so again in 1992, in a referendum on changes to that Constitution. People can try to engage in demagogy on either side of the issue.

Back to my question. Do you give an objective presentation of the facts regarding this malaise in Quebec, a malaise that could continue to grow if major changes are not made to the current federal system?

Mr. Roy: Thank you very much. I tell them that since the referendum, various measures have been taken within the federal government in an attempt to solve the problems between the citizens of Quebec and the federal government. Apparently, manpower training is an important issue for Quebec, and negotiations are underway between the federal government and the government of Quebec to attempt to find a solution to the problem.

The citizens of Quebec think it is important to gain recognition of their status as a distinct society. I tell them that a resolution was passed by the House of Commons in this regard, and that various discussions have been held with provincial authorities throughout Canada with a view to promoting the concept of distinct society. I tell them that the federal government is displaying a strong desire to solve the problem, and that Canadian federalism is one of the most flexible forms of federalism in the entire world.

I myself spent a few years in Switzerland, and I was able to compare what's going on in Switzerland with what is going on in Canada. Sometimes people ask me questions about bilingualism in Ottawa. I tell them that when I came to Ottawa in 1960, it was very difficult to find signs in French, and now, when I return, which I do quite frequently, I see that the situation has changed a great deal. I would invite any of you here at the table to travel to Berne, Switzerland, the capital of a federal state, where the French-speaking Swiss are a minority, albeit a very large minority, and try to find French signage.

.1055

Five years ago, there was no French public school in Berne. There was no French university in Berne. The French public primary school in Berne only opened in 1970, and it took until 1990 to get primary education up to grade 7 in French. I could give other examples, but to get back to your question, I try to be as totally objective as possible when I describe the situation.

Now, what one person may find objective may not appear to be objective to another person. It all depends on your point of view, doesn't it? Over the course of my career, I learned that it was always very worthwhile to seek objectivity, but that total objectivity was very difficult to attain. However, you can be sure of one thing: the embassy staff and I are making every possible effort to be as objective as possible when presenting the situation. When I finish making my official presentation, I always share my strong convictions with the people I am speaking to, namely, that Canadian unity will be maintained.

I say this partly to reassure French investors, who, like other people, read the newspapers and often read about political uncertainty and Quebec. Often I tell them that they shouldn't worry about this political uncertainty, because in any event, Canadian unity will be maintained. Thank you.

[English]

The Acting Chairman (Mr. Flis): Mr. Assadourian, you have equal time.

Mr. Assadourian: Thank you very much. I've waited for so long, Mr. Chairman, I think I should take my time.

First of all, I'd like to congratulate you, Mr. Ambassador, on your appointment, and the Prime Minister for appointing you, ending the Bouchard tradition in Paris, France. We had Lucien Bouchard before, then we had Benoît Bouchard, and now we have Roy. So I'm very pleased to end the old tradition and begin a new one.

I'd also like to say that I was in Montreal when I first came to Canada. I lived there for three years. My parents live in Montreal. They were extremely pleased about your presentation there while visiting Canada. They may have handicaps - they're ethnic and they have money - but they were very happy with your presentation there.

The previous ambassador in France mentioned a few months ago, during a debate after the referendum, in which we discussed separatist issues, that Canada is not a country. He stated that this, in his mind, was a fact.

Would you comment on that, if it's worthwhile commenting on? If you don't want to comment, I'll understand. You don't have to.

As well, the Quebec government mentioned as soon as it took over after the election that it will fire any personnel in missions abroad who do not promote separatist ideas. Do you agree with this concept of representing Canadians, that if they don't share their point of view they should be fired from their work - not because of the way they perform their work because of their political beliefs? Is this within the diplomatic norm? That's my other question.

We are here, Mr. Ambassador, because we want to discuss trade between Canada and France. You outlined your three objectives at the beginning of your presentation. The first one was trade between Canada and France. Can you elaborate on trade between Canada and France, and the amount? You said you'd like to have it doubled by 2000, or near 2000.

I also would appreciate it if you could give us a breakdown as to what kind of trade we have with France.

.1100

Mr. Roy: As to whether or not Canada is a country, I think I have not met anybody in France who would ask that question: is Canada a country? I think they all know it's one.

Not only do they know it's one, but it's one they highly respect. I have been absolutely overwhelmed by the kind of affection they show for Canada and manifest and display with Canadian representatives. So from that point of view, it's clear that it appears, at least in the eyes of others, that Canada is a country, and it's a great country.

Concerning people of various political beliefs or views working in one mission, I don't know exactly how it's decided in Quebec. But I know for a fact that within the Canadian government, especially with the Department of Foreign Affairs, we are not asked for our political affiliations. People of various tendencies work in our embassies abroad, and they all try to promote Canadian interests. It is on that basis that they work at the embassy.

Concerning our trade, it's growing quite significantly. We export raw materials to France, but we also export finished products. Bombardier is being quite successful in exporting planes. This explains partly why our trade has grown so rapidly in the last few years. As the market for airplanes grows, our exports grow quite significantly as well.

The same is true with various products. Les pâtes et papiers is one that is in short supply at present. The price has increased, and we've done very well.

Investments have increased very rapidly by France in Canada and by Canada in France. As trade is becoming more and more dependent on investments, the greater the investment, the greater the trade. This is why it's so important at present to try to interest French investors in coming to Canada and Canadian investors in going to France.

I was very interested to note something quite recently at a seminar I attended in Bordeaux for relations between Canada and Europe. A French representative at the French consul general in New York was advising French investors in the Bordeaux region to come to Canada in order to penetrate the market in the United States, by saying that it was a better place to go.

I was puzzled, though, by something that happened at the same meeting in the presence of Mayor L'Allier of Quebec, because there is a jumelage between Bordeaux and Quebec City. We were attending the same meeting. It was announced at that meeting that the Bordeaux region would open its first office in Canada in Toronto. I thought it was quite interesting, but I was puzzled by the choice.

All of that is to say that the trade relations between France and Canada are very widespread, and that great efforts are made by various players to increase these relations.

.1105

When Premier Harris went from Toronto to France, he was able to announce that the Province of Ontario had just assumed obligations in France for a value of three billion French francs. It was the first time that the Province of Ontario had done that. It shows the interest of Ontario, and it probably shows the interest of other provinces, in increasing relations with France.

Thank you.

The Acting Chairman (Mr. Flis): Thank you, Sarkis.

Mr. Dupuy, and then Mr. Bergeron would like another round.

[Translation]

Mr. Dupuy: I would like to go back briefly to the very interesting questions that my colleague, Mr. Bergeron, was asking. I think they struck directly at the very nature of a diplomatic mission overseas, be it a Canadian mission or the diplomatic mission of another country. Mr. Ambassador, would you agree that the most important asset that an ambassador has abroad is his credibility in the eyes of the government that he is accredited to?

If an ambassador has a bias, especially if he has obvious partisan positions, how much credibility will he have with the foreign government that he is supposed to be briefing? If that is one of the basic rules of the game, don't you think - and this is specifically in response to Mr. Bergeron's query - that the ability to give an objective presentation and to provide an objective analysis is an ambassador's greatest virtue? Under these circumstances, one can only trust Canada's ambassador to France, who is a professional who has never been involved in politics in any way, something which cannot be said of Quebec's current délégué général in Paris.

[English]

The Acting Chairman (Mr. Flis): I think it involves politics after they leave the diplomatic corps.

[Translation]

Mr. Roy: I totally agree with Mr. Dupuy. An ambassador's credibility is extremely important, and the credibility of Canada's ambassador to France is particularly important. Each time I have to make public statements or have private discussions with French authorities, I always remind myself that it is important to give the most objective presentation possible.

That is what determines the credibility of the Canadian ambassador in the eyes of the people I deal with. If they thought that my presentations were not worthwhile, I would lose my credibility, and my role would become far less important. If I made statements or gave presentations that were not acceptable to the French, going by their own analysis of the situation, they would ask their ambassador here whether my presentation reflected the facts. If it didn't the role of Canada's ambassador in Paris would become marginal. As a result, in my own interest, and in that of the government of Canada, I cannot say things that don't correspond to reality.

The Acting Chairman (Mr. Flis): Mr. Bergeron.

Mr. Bergeron: Before I provide a short preamble to my question, I wanted to ask you a very direct question about the response you just gave. In light of your response, Ambassador Roy, would you say that was the reason why you were replaced in Brussels?

.1110

Mr. Roy: I thought it was a great honour to be asked to go to Paris. You seem to be saying that I was replaced in Brussels because people had doubts about me. I must say that any Canadian diplomat would consider it a great honour to be asked to serve in Paris. Being appointed to Paris is a major promotion, and I was very pleased to accept it.

Mr. Bergeron: Ambassador, please let me set the record straight. I'm not suggesting anything. I just was asking the question.

However, I must say that I agreed with the previous question from my honourable colleague from Laval-West. I was even very surprised at the preamble that he gave leading up to the questions, but I didn't agree at all with his conclusion.

You can't immediately presume that Canada's ambassador in Paris or elsewhere is entirely objective, for the very reason that the Ambassador himself gave regarding the way the members of the Foreign Affairs staff are selected. On the other hand, if I look at this objectively, I see that there are some ambassadors whose political affiliations are not entirely unknown, and after their career, they become members of Parliament belonging to the political party that we thought they approved of. Conversely, formal federal ministers whom we presume to be federalists have suddenly become délégués généraux representing Quebec overseas, after having served as federal ministers, and are promoting an entirely different option.

As for myself, I think we'll have to revisit the whole issue of credibility and the objectivity that lies beneath it.

However, I would like to get back to your last answer to the question I was asking you, Mr. Ambassador. You said that you were trying to reassure French investors, telling them that Canada will remain united. That's all very well and good, and I hope for your sake that you're right, but I'm far from certain that Canada will remain united.

I certainly want French investors to be reassured, but I wouldn't want you to pull the wool over their eyes. For instance, you told them that there were more and more signs in Ottawa. I suppose that's why there were several demonstrations in the past few months by people demanding more bilingual signs in Ottawa. And I imagine you told the French all about that.

That's probably why the Standing Committee on Official Languages, here, in Ottawa, the national capital of this country, decided to study the whole issue of bilingual signs in the national capital. That's also probably why the parliamentary committee wanted to study the issue, and I suppose you also told the French about that.

But I also imagine that is why - and I'm not talking about 1960, I'm talking about 1996 - I, a federal member of Parliament, a member of the House of Commons, landed at the Ottawa airport, returning from a trip overseas, I landed at the airport in the national capital of this country, and a Canadian customs officer spoke to me somewhat abruptly, in English only, and refused to speak to me in French. Because I refused to speak to him in English, I was sent off to the side to have my luggage searched. Right here, in February of 1996, to be precise, I was searched at the Ottawa airport because I refused to speak English to the Canadian customs officer. I suppose you don't tell the people you deal with about that sort of thing, Mr. Ambassador.

In order to get away, as much as possible, from the partisan debate that I did not expect to have with you this morning, Ambassador Roy, I would like to ask you a question about the factual information that was provided to us.

Apparently - and I asked Minister Axworthy this question when he appeared before the committee - cultural promotion activities have been reduced at the Canadian embassy, particularly efforts to promote Quebec culture.

According to the information I have - and perhaps it is incorrect - bursaries and grants are no longer awarded on the basis of merit, but rather, on the basis of geographical distribution. Obviously, this has the effect of penalizing Quebec's cultural industry. What do you think of that, Mr. Ambassador?

.1115

Mr. Roy: I don't want to make any specific comment about that, but you must remember that far more Quebec cultural groups carry out activities in France, compared with cultural groups from other provinces. There are good reasons for that: Quebec and France share a common language, and cultural groups from Quebec have been present in France for many years. Quite often, they do not go through the Canadian embassy or through the délégation générale du Québec. Several cultural groups from Quebec come to France because they make money there. They don't need grants.

When you look at what's happening on the French cultural scene, you may be pleasantly surprised to see that there are a great many cultural events, Canadian events in general and Québécois events in particular, and even if we wanted to change the geographical breakdown of these events, the number of Quebec cultural events would still be much higher than the number of Canadian cultural events in general. The situation will not change. Thank you.

[English]

The Acting Chairman (Mr. Flis): If I could add to this, when I was in Vienna about a year ago, the La La La dance group from Quebec was there and really made a hit in Vienna. When I was in Cuba opening up an international trade fair, a jazz singer and pianist from Quebec was there, teamed up with a jazz singer from Cuba, and that was another big hit. The next day the talk was not about the trade fair, it was about the cultural exchange that happened between Quebec and Cuba.

Are there further questions?

[Translation]

Mr. Bergeron: I could make a comment, Mr. Chairman, since it would appear that we have exhausted the series of questions that we wanted to ask of the Ambassador. Personally, I would just like to conclude by expressing a desire: of course, I hope that the Canadian Ambassador in Paris is working in the best interest of Canada, but also in the best interest of Quebec, which for the time being is still part of Canada, while respecting Quebec's exclusive areas of jurisdiction.

[English]

The Acting Chairman (Mr. Flis): Well, I'd like the ambassador to be able to comment on that first and then.... Okay, why don't I take all comments and interventions, and then the ambassador can reply. Beryl.

Mrs. Gaffney: I have kept very quiet during this, Ambassador Roy, mainly because I don't speak French. I wish I did, but I don't.

Having read your curriculum vitae, there's no doubt in my mind, looking at the countries in which you've served in the world, that you have the best interests of Canada and all of the provinces - and Quebec is a province of Canada at this point in time. I just want to reassure you that I'm positive that this is your main concern as Canada's ambassador in Paris.

Thank you very much.

The Acting Chairman (Mr. Flis): Is there anyone else with a closing remark? If not, Ambassador, the last word is yours.

Mr. Roy: Thank you very much. I should like to thank everybody for having received me here this morning. It has been a great honour for me. I will leave Ottawa this afternoon with a better appreciation of what is of concern to the members of your committee.

Some have suggested that I should try to represent not only the views of Canada but also those of Quebec as objectively as possible.

[Translation]

In that regard, I would like to say that I will continue to make every possible effort to present the situation as objectively as possible. Obviously, the role of a Canadian ambassador overseas is to present a positive vision of the country.

.1120

Given the situation we are currently experiencing, it is also important to say, with conviction, that efforts are currently being made in Canada to solve the problems that may crop up from time to time, and that Canada is a united country that will remain united. These things must be said with conviction, and I strive to do so nearly every day in Paris. I do so because I myself strongly believe that Canada will remain united. Thank you, Mr. Chairman.

[English]

The Acting Chairman (Mr. Flis): Thank you, Mr. Ambassador.

Mr. Ambassador, when you return to Paris, please, on behalf of the foreign affairs committee, thank the entire staff - because sometimes we forget about the people working behind the scenes - for the excellent work they are doing in representing the best country on this planet, as designated by the United Nations.

We wish you continued success in the new year. Thank you for coming.

We'll have a seven-minute break, ladies and gentlemen, until we come back to our final topic of the morning, softwood lumber. I would invite members not to run away, but to please be back here for 11:30.

.1122

.1135

The Acting Chairman (Mr. Flis): Members of Parliament, I would ask that you take your seats, please.

As you know, in the last meeting of this committee, the Reform Party brought in a motion regarding the issues around softwood lumber. At that meeting we decided to postpone it until today so we could get further clarification.

I'm pleased that we have with us Ron MacDonald, the parliamentary secretary to the Minister for International Trade. I'm going to ask him to open with a few remarks and then open it up to questions and debate.

From the department, we have people who are also knowledgeable about this issue: Wallace Dowswell, head of the software lumber unit; and Keith Aird, deputy director of the softwood lumber task force.

Thank you for coming, because when we opened it up before, we didn't have much expertise around here, so we're pleased you're here.

Parliamentary Secretary, would you open, please?

Mr. Ron MacDonald (Parliamentary Secretary to the Minister for International Trade): Sure. Thank you, Mr. Chairman.

I'm not going to do a formal presentation. I would like, however, for the benefit of the members of the committee, to give a thumbnail sketch of how we arrived where we are today and then take some questions. I think that would be more appropriate than wasting a lot of time on a formal presentation.

The current system we've arrived at with respect to the allocation of quota system of softwood lumber was done after two actions by the United States in the past in anti-dumping and countervail, both of which we challenged through dispute-settling mechanisms and both of which we won. The United States then changed the law, and it looked as though we were going to go into another period of countervail, CVD.

At that point in time the industry approached the Canadian government and indicated they wanted to do a side deal with the Americans. It was not the government that initiated this; it was the industry in the four provinces that had been affected. They indicated they wanted to try to do some side deal arrangement with the United States, because they did not want to get into another CVD action, even though they believed that at the end of the day we might win, once again, the challenge of the CVD.

The reason they did that is when a CVD action is taken, a lot of money is tied up. The industry indicated that rather than have the money tied up, rather than being frustrated at the border with that type of action, they preferred to have some certainty of access into the U.S. market.

Negotiations took place down in Washington, I guess it was about last Easter, leading up to the deal that was announced. The industry was there every single step of the way. The industry did not have the system imposed upon them. Indeed, the industry came to the government and asked the government to enter into the negotiations. The government, every single step of the way, had the industry and the provincial government representatives at the table down in Washington.

Indeed, the deal that was agreed to and initialled just around Easter of last year was agreed to by Canada on behalf of the industry and the four provinces affected.

At the very end of the deal, it was tied up a bit to make sure. There was some question as to whether or not products from the other six provinces would be exempted, and indeed that was the case.

So we arrived at a system, agreed to by the industry and by the four provinces - British Columbia, Alberta, Ontario and Quebec - that would see the U.S. agree not to take any actions against softwood lumber entering into the U.S. market from those four provinces, in accordance with the following regime.

On an annual basis, 14.7 billion board feet would be allowed to enter into the market fee-free. The figure of 14.7 billion board feet is roughly 90% of the best year we had, which was the 1995 year. The industry agreed that in order to get unimpeded access into the U.S. market for softwood lumber, they would take a 10% reduction over the best year, which was 1995. That amounted to 14.7 billion board feet.

In addition, as part of the agreement, 650 million board feet would be made available on $50 fee tickets. So after the fee-free lumber was shipped, 650 million board feet would be made available for $50 per 1,000 board feet tickets.

.1140

After that was expended, the exporters of Canadian softwood lumber from those four provinces were still permitted to export into the U.S. market, but any exports at that point would attract a fee of $100. Those fees would be collected by the federal government and remitted back to the provincial governments. That's the system we arrived at.

In addition to that, we negotiated what's called a trigger price bonus. The trigger price bonus works as follows: in any quarter when the average price on the U.S. market for Canadian softwood lumber exceeds $405 U.S., we automatically get 82 million board feet of additional fee-free lumber. I wasn't part of the negotiations - was it 92 million?...92 million.

The U.S. had sort of agreed to this at the very end of the negotiations because they never believed that the price would be $405. Indeed, my reading of the documents from the negotiations indicates that in only one quarter in the previous five years had the price of softwood lumber ever hit $405 U.S.

I should tell you that in the first two quarters, we have exceeded that price for Canadian lumber and we have gotten the 92 million board feet additional allocation in both quarters. We are anticipating getting it in this third quarter as well. This is because the price has been unusually high. When this deal was being negotiated, I think the price for softwood lumber going into the U.S. market was about $300 or $320 per 1,000 board feet. The price has fluctuated. I think at this point it's at $485, but it has gone as high as $565.

So the price Canadian lumber producers are getting for their lumber in the U.S. market is the highest it has ever been. Even if they've used the quota allocation that has been given to them, and if they are still shipping into the U.S. market and attracting the $100 fee, they're still making more money than they've ever made before, even with the $100 fee deducted.

In other words, if a company has received a quota and has expended the quota, if it has expended the $50 tickets it has been given and is now shipping at $100, it's getting $385 after the fee. That is still $50 higher than the very high price they were getting one year ago when the deal was negotiated.

How did we arrive at how we were going to allocate the quota? I indicated that at the beginning, when the deal was negotiated, we took our instructions basically from the lumber industry. There are five associations in Canada: two associations in Ontario, one in Alberta, one in Quebec and one in British Columbia. We had negotiations, which I chaired, with the industry back in August.

There were about 72 people at the table, and we agreed that we would allocate the quota based roughly on an adjustment of the 1995 figures. Those 1995 figures as adjusted allowed for about 59% of the total quota to be allocated in British Columbia. I think we got 10.3% in Ontario, 7.7% in Alberta and 23% in Quebec. There was agreement among the governments sitting at the table as well as the industry associations that this was a fair and reasonable split, and that it reflected historical shipments from those provinces into the U.S. market.

Art Eggleton did not want to be imposing a system of quota allocation on the industry, because we don't know the industry. The industry associations know the industry. The next thing we did was to go back and consult in August, September, October, November, and in December we're still consulting with them to make sure the system we're implementing is a system that reflects the reality of the industry.

We went back to each of the industry associations and said, if in British Columbia you have 59% of the quota available to exporters of record of softwood lumber, how should we allocate it? In each situation, each industry association came up with what it believed was the fairest formula to allocate its portion of quota within the province. We took the advice of the B.C. association and we implemented it. We took the advice of the Alberta association and we implemented it. We took the advice of the Ontario associations - there are two of them - and we implemented it. We took the advice of the Quebec association and we implemented it.

After we did all that, the quota was allocated. We had made a decision as well that the historical share of exports by wholesalers would be reallocated back up to the primaries. We made a decision that remanufacturers would get a separate quota. Those decisions were made after the consultations, and there was unanimity among the five associations and the provincial governments represented at the table that this was the system they wanted.

.1145

We're left today with the situation where once we allocated the quota, some companies came forward and said there must be something wrong because they didn't get as much as they wanted. Now, there's nothing wrong with the system. I said to each and every one of them when they came that if they think the data we've plugged into the formula is wrong, in each and every case we will review the data.

The difficulty is that lumber is trading at such a high price that everybody wants more quota. When we're under a quota system where we're stuck at 14.8 billion board feet, we can't make more quota. The only new quota that becomes available is quota we get on the trigger price bonus. That's the only way we can get it.

We've attempted to be as open as possible with our allocation methods. About three or four weeks ago the minister tabled in the House some documents with respect to how the quota had been allocated globally, the percentages per province, how we dealt with things like border mills in Quebec, how we dealt with the wholesaler sales, how we had to deal with certain adjustments under the agreement to make sure that in the first two quarters there was no excess capacity shipped into the U.S. market.

When the quota was finally allocated and the actual numbers were given, we sent a letter to each of the presidents and CEOs of the associations across the country, with detailed explanations of how the quota had been allocated in their province. Indeed, we indicated to them that we would continue the consultation process, and we do that on a daily basis. We would continue the consultation process and we would be leading up to meetings in January - the large meetings again - to seek their input into how this system should be adjusted, where the anomalies have come forward, and how we readjust the system for April 1.

In a nutshell that's the allocation system. That's how we've done it. I'm not going to say it's been done without problems. There have been major problems. A lot of the data we received from the industry has been found to be wanting. A lot of the wholesaler data initially came in and was not what we needed. There is a remaining problem with the definition of remanufacturers, particularly in the province of Quebec. It's a complaint we continue to get from the association.

But by and large -

The Acting Chairman (Mr. Flis): Mr. MacDonald, I wonder if we could cut it there. I do want time for questions.

Mr. MacDonald: Okay. By and large, the system we have is one that we have said we will remain flexible on. We will take input from the industry associations and the governments, and the minister is quite prepared to adjust so that it is as fair and reasonable as it can be.

The Acting Chairman (Mr. Flis): Lee Morrison will lead off the questioning since it was the Reform Party that requested this, with the permission of the official opposition. Since Reform raised this, can we give the first questions to them?

[Translation]

Mr. Sauvageau (Terrebonne): They can ask a question.

The Acting Chairman (Mr. Flis): Could you repeat, please?

[English]

Mr. Sauvageau: One question, yes.

The Acting Chairman (Mr. Flis): Lee Morrison is representing Charlie Penson, who raised this issue.

Mr. Morrison (Swift Current - Maple Creek - Assiniboia): We only have ten minutes for this thing.

Ron, you discussed at some length how well the quota allocation system worked, and then you said that actually there are some problems. I would suggest there are terrible problems. We've identified companies that have received as little as 10% of their production as quota, and these same companies have, within the last year or so, made very heavy capital investments to take advantage of the U.S. market. Now they are teetering on the edge of bankruptcy. There's no other solution.

I don't know how, in a situation like this where people have made long-term plans and then suddenly get the rug pulled out from under them, you manage a very large commodity market, probably one of the largest commodity markets in North America, with a few bureaucrats. This is just not reasonable, Ron.

Mr. MacDonald: I agree with you. You're talking about a lot of the new entrants.

When we met with the industry, we recognized that if you use 1995 as a base year for the allocations, there would be activity post-1995 and post-first-quarter of 1996 that would not be reflected in the quota. So we negotiated a deal with the industry that they would put aside 628 million board feet, and they said this would satisfy the anomaly you're talking about.

Well, it simply hasn't. I'll be quite up front with you. The industry vastly underestimated the requirement for quota under new entrants.

.1150

We put the new entrants questionnaires out. Again, we asked the industry, five industry associations, to put the questionnaire together for us. They did it. We came back, and instead of having 700 million or 900 million requested under the new entrant category, we had 8.4 billion board feet.

Now, after we went through a very methodical examination of every request, it factored out that the real new entrants were probably around 1.2 billion board feet of requirement.

What we've done on this is that the minister has used his discretion. We've allocated that. But recognizing that some very heavy capital investments have been made, and that the quota was not available through the system to deal with it, he has made a statement that indicated that as new quota becomes available, the trigger price bonus, he will apply it not all through the industry but on a priority basis to those new entrants you've talked about, new entrants who could not be satisfied in the request and whose operation may be in financial jeopardy.

So we've done that. As the trigger price bonus becomes available from this quarter, the $92 million, it would be the intention of the minister to allocate that on a case-by-case basis back into the very companies you've talked about.

It's a problem. I agree that it's a problem. It's one we will be addressing with the industry come January, because we needed about another 400 million or 500 million board feet.

The Acting Chairman (Mr. Flis): Mr. Sauvageau.

[Translation]

Mr. Sauvageau: Thank you very much.

First of all, I would like to make a comment to the Honourable Parliamentary Secretary to the Minister of International Trade. You mentioned some explanatory material regarding the allocation of quotas that was tabled three of four weeks ago. With all due respect, and with all due politeness, I would like to ask you whether you have any copies in French, because we would like to see them and read them, considering that we never got them.

Secondly, regarding the allocation of quotas, you said that there had been problems, but that you didn't get all the information and that some wholesalers had been able to wiggle their way in, and consequently, as our Reform colleagues were saying a few moments ago, this created some unfairness for the companies that had made a large investment.

Since all this has been said, and since it was said that some errors could have crept in, is there an appeal process or a process to correct the problem that would quickly be put into effect? Or is someone going to make a political speech and say that they are going to look into the situation, set up some subcommittees, and next year, tell those who went bankrupt that someone really made a mistake?

[English]

The Acting Chairman (Mr. Flis): Mr. MacDonald.

Mr. MacDonald: There are two things. First of all, when you're dealing with my comments on information that was less than whole, it was information that came from the industry. We had put a triple whip on at the department and had pulled in, from as far away as Geneva, experts in some of the quota management systems. I can tell you that both I and my personal staff in my parliamentary office worked 38 solid days. We did not miss a day. We worked late in the evening to try to structure an administration system that was fair.

We were supposed to have had this quota allocated on the first day of October in accordance with the deal. Rather than do it in a haphazard fashion and then have to adjust because some of the data we had received was not correct, the minister made a decision to issue quota letters but not to issue the actual quota for the month of October. The month of October was used to go and send auditors in the field from Audit Canada to ensure that the data we had, which we thought was less than full, was checked, corrected and fed into the system. So the data that was used for the actual allocation of numbers by the end of October was the most correct data we could get.

The appeal process is as follows. If a company believes the data that was used is not the proper data, they can get in touch with the department, where it's dealt with very quickly. For companies that have in the first two quarters expended all of their quota...and some of them did it, because the price was so high. If lumber is trading at $500 when it was trading at $300, I would be tempted, if I were a sawmill operator, to ship as much of my quota I was anticipating as quickly as I could, just because the price was so high. It's a volatile market, and the price can change.

So some companies made very strategic business decisions to ship two to three times as much as they normally would because of the high price. What we did, because we were concerned about what would happen when some people would hit the wall -

The Acting Chairman (Mr. Flis): Mr. MacDonald, can you speak a little slower for our translators, please?

.1155

[Translation]

Mr. Sauvageau: I think I heard the answer. I understood you to say that if a company is not satisfied, it calls you. Is that how it works?

[English]

Mr. MacDonald: Well, Mr. Chairman, it's a long answer because it's a complex issue.

M. Sauvageau: S'il vous plaît...

The Acting Chairman (Mr. Flis): Order, please.

Let me caution all members. The bells are ringing, so I'm going to extend this to 12:05 p.m. I'll ask for short answers.

If you can finish up, Mr. Sauvageau, Mr. Gilmour is next.

[Translation]

Mr. Sauvageau: If you realize that the quotas the wholesalers got are too large, will they be withdrawn or redistributed to producers who are not wholesalers?

[English]

Mr. MacDonald: It has been done. The wholesalers have not received quota. What we've done is to reallocate the quota back up to the primaries.

In terms of the appeal process, if somebody believes they've not been treated properly we have a system where the appeal is looked at very quickly. For people who have expended their quota, we even have a quota bank, a unique program that's never been in a quota-managed system before, so that they don't hit the wall. It would allow them to borrow against next year's anticipated quota.

[Translation]

Mr. Sauvageau: So no wholesalers have been penalized?

[English]

The Acting Chairman (Mr. Flis): Sorry. Mr. Gilmour, please.

Mr. Gilmour (Comox - Alberni): Thank you, Mr. Chairman.

What the industry agreed to was a 9% reduction on the 1995 record level. That's what industry was expecting. However, what happened - and this is borne out by our research as well as Weetman's research - is that the quotas are coming in at 25% to 35% below what they expected, not the 9%.

That is what's troubling industry. That's why they're having such difficulty, because the quota came in substantially lower than the 9% they were expecting. Can you state that the 14.7 billion, less the 2% cushion, has been allocated, or is there in fact a cushion in there? If so, what is that cushion?

Mr. MacDonald: I'll tell you exactly. I'll quote the numbers. The established base allocation is 14.7 billion. We did a less-the-new-entrants drawdown, which was 2%, as agreed to by the industry for new entrants. That was 294 million board feet.

We had to have a one-time transitional adjustment, because you cannot be in a surplus position. In the first two quarters, because we didn't have a quota, it was a run to the border. So we had to adjust to make sure we were basically at zero when we started the quota system. We took 170 million board feet to do that adjustment.

Then there's a transitional reserve of 50 million. That's the only reserve we have. It's to try to deal with the anomalies, with the hardship cases.

So the total allocation available for this first year is 14.186 billion because of the adjustments that were made. Next year it will be 14.7 billion. These are one-time adjustments as start-ups for the system. We've allocated everything.

Where some of the difficulty has come in is that some of the primaries have neglected to take out the roughly 14%, I think, of quota that has been allocated to remanufacturers across the country. Indeed, we've had some of the large companies in. I see them whenever they want to come in and talk about their allocation. Most walk out saying, oh, I forgot to take out the 14% national allocation to remanufacturers.

In actual fact, everybody wants more, but if you sit down with the numbers - we tabled these in the House, and I'll be glad to give any of the members any information they want on this - it's a mathematical function. At the end of the day everybody wants more quota, and we recognize that, but the 14.7 billion: we will go back to the industry associations and they will tell us whether or not they want the method of allocation adjusted. If it's fair and reasonable, we'll accept it.

Mr. Gilmour: Could you then table for this committee this breakdown you just went through?

Mr. MacDonald: Yes, I can.

Mr. Gilmour: You will state categorically that the full allocation has been set out and there's no cushion.

Mr. MacDonald: The only cushion we have is the 50 million. We have the 50 million, and that's a one-time transitional reserve. We are dealing with such things as data entry errors, where some companies have given us information they've come back and corrected. Some companies were late in putting applications in. Whatever is not used out of that reserve on January 1 will be turned entirely back into the system. We don't want to bank quota.

So we needed this for the first quarter. Whatever is left on December 31 will go directly back in on a pro rata basis right across the entire system.

.1200

The Acting Chairman (Mr. Flis): Any further questions? Mr. White.

Mr. White (Fraser Valley West): Thank you, Mr. Chairman.

I come from an area that has some serious problems with this whole agreement. I think I've counted now about 400 employees who are losing their jobs. It has impacted us severely. I also come from an area that is heavily involved in the dairy industry quota system, which is basically changing.

It's ironic that we have one of the really true market-driven industries here in forestry, but now we're into a quota system that has been created in an industry that has really never worked on quotas. It's probably one of the really true market systems that's in place.

How are we going to get around the fact that quotas ultimately will be considered an asset, as they are in the dairy industry, and a commodity, and get around the fact that we've just entered one of the biggest industries in the country into a full-time quota system that we just tried to get out of in the dairy industry? How do you figure on managing that?

Mr. MacDonald: I guess there are two things.

Number one, speak to the industry association in British Columbia to ask them why they supported a quota system. The industry association in B.C., which represents 59% of the exports - that's a very significant exporter - was one of the driving forces to have a side deal with a quota system.

I don't know what they'll feel after a year under quota. They may change their minds. That's one of the reasons why we have a consultative mechanism there. We will listen to the industry associations as this thing evolves.

The second thing deals with - this is a concern we had, Randy - trade and quota. We didn't want it to be like a commodity. We've seen it happen in the fisheries. I've seen it out in British Columbia with the herring roe fishery, where they basically leased the licence. You have these armchair traders, and they make all the money. We have developed a system with strict rules on the transferability of quota.

As a matter of fact, one of the reasons that wholesalers did not get quota was that if you look at the value of their asset as a wholesaler and you give them quota, it makes them incredibly attractive for a buyout by a large primary mill just to get the quota. That's one of the reasons we decided against it.

There's no question that this is a complex quota management issue. There will be more than 550,000 permits issued this year. On all of the other quota-managed commodities, we only issued, in total, 450,000 permits, so this has more than doubled the number of permits.

The Acting Chairman (Mr. Flis): I'm sorry, but I'm going to cut Mr. White off because Mr. Duncan has a question.

Mr. Duncan (North Island - Powell River): Just very quickly, I'd like to say that as for the organization you're dealing with in British Columbia, if I know the numbers, 59% are exports, but most of those exports are going overseas, not to the U.S.

Mr. MacDonald: That's 59% of the exports into the U.S., in the four provinces covered, that comes from British Columbia.

Mr. Duncan: But the COFI organization is coastally dominated. Prior to all these countervail threats and so on in the early 1980s, the coastal industry was still predominantly exporting to the U.S. The vast majority of their exports now go to the Orient, because they got smart.

That's the free market; that's not this marketing board concept. This is going to be quite a problem.

I want to get into the numbers just a little bit.

Mr. MacDonald: Sure.

Mr. Duncan: Early in your statement you said there was a 628 million board feet set-aside, which has not satisfied the new entry category. You said the real new entrants were 1.2 billion.

Mr. MacDonald: That was the request, pretty much, when you stripped it down.

Mr. Duncan: But I got the impression you had satisfied that?

Mr. MacDonald: No.

Mr. Duncan: Okay. So there's this 628 million, this 2% new entrants -

Mr. MacDonald: That's part of it.

Mr. Duncan: That's on top?

Mr. MacDonald: No, that's part of it.

Mr. Duncan: That's part of it.

Mr. MacDonald: This is the way we constructed it. We put the 294 million board feet aside. The industry said it would take 2% of the total of the 14.7%. Then we augmented that with two trigger-priced bonuses, which was 184 million board feet. We knew we'd get the trigger-price bonus in the first two quarters because the price was so high; plus, we put in 150 million board feet of the $50 fee tickets, so that's how we got it up to 628 million.

The Acting Chairman (Mr. Flis): Mr. Parliamentary Secretary, unfortunately I do have to cut the debate off here, but I want to thank the Reform Party for bringing this issue to the committee. I want to thank the parliamentary secretary and the people in the department for coming and, at least in this brief time, sharing and shedding some light.

.1205

Mr. MacDonald: Mr. Chairman, could I just ask something? If any of the members of the committee have specific cases - I know they have - I'd be more than pleased to sit down to deal with them.

The Acting Chairman (Mr. Flis): The meeting is adjourned.

Return to Committee Home Page