FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 18, 1999

• 0938

[English]

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Colleagues, I'd like to call this meeting to order.

We have one small matter of petite cuisine before we ask our witnesses to begin.

As you know, all parties have agreed to travel. Next week we are moving into the first phase of our travel. We'll be going to both the Maritimes and Quebec. As colleagues know, not everybody is able to travel. We're not able to travel with the whole complement of the committee, largely because the House leaders have taken a very Draconian attitude as to how many people will be allowed to travel. However, I think we have a fairly good group going to both the Maritimes and Quebec.

As you know, in April we'll try to go out west and to Ontario. I need a motion this morning, if I could—I know you don't have the actual travel documents in front of you—for authorization to apply to the House for travel authorization, which will be approximately $180,000 for the two groups to go out west.

Mr. Penson.

Mr. Charlie Penson (Peace River, Ref.): Mr. Chairman, how does that compare with the original figures worked out for the western side?

The Chairman: It would be about 45% less than the original figures, because we've cut the number of MPs from eleven to seven in each group, and we've cut the number of staff down as well.

Unfortunately, you can't cut the staff as much as you can MPs, because the way it works with collective agreements and everything, you need a certain number of console operators and a certain number of translators.

It will work out, for example, that in the two trips we're taking at the moment, I think it's seven MPs and eight staff. I think probably that is the proportion it will have to be out west as well.

• 0940

At the insistence of the House leaders when we had the last budget discussion, I've kept the budget at exactly the same level on the assumption that if it's in those constraints, it's more likely to get approved. If we go above that we'll have more trouble.

Mr. Charlie Penson: I think that was sort of the criterion, to cut it down to the same proportion as we did the eastern side of things.

The Chairman: Yes, I think we'll be all right. It's the same proportion and will not be more.

You know, people might want to travel on their own points to be somewhere. For example, a couple of members for Quebec have said they want to be here on a certain day but not other days. So they can use their own points and come and sit in.

So we'll accommodate it. It'll work out.

I'd appreciate the authorization, then, because I want to get it to the House this week. We want it approved so that we know.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I so move.

The Chairman: Thank you. I appreciate that very much.

Secondly, everybody will get a modified briefing book—that is to say, smaller—for your trips.

Hon. Sheila Finestone (Mount Royal, Lib.): Soft cover?

The Chairman: I know, Mrs. Finestone, you've already read all of the contents of the big blue book. You'll find that some of these repeat that. I just want to warn you that there's replication and duplication.

[Translation]

There's always some mix-up with our documentation. You'll all get a copy of it.

[English]

I'd like to introduce the panel this morning. This is a kind of a different cut at this. It's the sort of overarching theme of the international financial architecture and how it plays into trade, plus global governance issues generally and how they relate to trade. So I think this will be a very interesting morning, and I look forward to it.

I thought perhaps we would start with you, Ms. Plewes, if you're comfortable with starting.

As usual, if you can keep your remarks to about 10 or 15 minutes we'll then have lots of time for questions.

Ms. Betty Plewes (President and CEO, Canadian Council for International Cooperation): Thank you.

We're very pleased to be here today. We're pleased that the committee is taking the time to hold these hearings and to hear what a broad variety of Canadians have to say on this issue of the WTO.

As many of you know, the Canadian Council for International Cooperation has more than 100 members working in international development. They have experience in working on issues of poverty and injustice in many parts of the world. Our members are very aware of the important role multilateral institutions play in international development.

The viability of global trade, and the prosperity it can create, depends on programs designed specifically to tackle poverty and inequality worldwide. Over the past several years, CCIC has elaborated proposals for poverty-sensitive foreign policies, including international economic policy, the proposed multilateral agreement on investment, and the contribution of overseas development assistance.

In fact, last week we made an urgent appeal to the government to renew its commitment to Canadian aid to place the interests of the poor firmly at the centre of the program.

[Translation]

In 1998, the CCIC launched a world action campaign against poverty called In common. Through its 19-point action program, this campaign lets people know that eliminating poverty is a very realistic goal and is in fact the most urgent problem facing the world's citizens and leaders today.

We would like to point out that Canada continues to play a central role in the network of multilateral organizations working to help the world achieve its objectives of eliminating poverty and attaining peace, justice and human security. To do this, we show initiative and determination by fostering greater collaboration in the international policy field.

CCIC members support the Canadian goal of multilateralism and the broad objectives of the WTO. The institution of international trade and investment rules is an essential condition for strengthening multilateralism.

• 0945

In Canada in the World, it says that establishing rules helps restore the balance of strength. It is precisely this unbalance of strength that developing countries are victims of that bothers us when we think of the WTO.

While working with groups of farmers, fishermen and women in developing countries all around the globe, we have seen first hand the grave defects in current financial, commercial and international systems. Some of our members, independently of each other, have written reports describing the perverse effects of the WTO they have come across, for example in areas such as food source security, the right to work, biodiversity and fair trade.

As a council, we would like to draw your attention to the problem of the consistency and general governance of the WTO and of the multilateral system of rules regarding international commercial and financial exchanges.

[English]

Today I want to speak to, and make recommendations to the committee on, two key areas that require Canadian leadership—greater integration and coherence among key instruments of economic and social governance, including the WTO, to assure more concerted global action for sustainable human development; and greater democratization in the functioning of the WTO itself.

It's important to remember that the WTO is but one key instrument in the emerging architecture of global governance and global economic management. This wider picture must guide the committee as it makes recommendations for Canadian priorities for the WTO agenda in the coming year.

Other key institutions include the United Nations and the other Bretton Woods institutions; the ILO conventions; the Universal Declaration of Human Rights; the Rio declaration on environment and development; the Beijing declaration on women; and the Copenhagen declaration on social development. There are many others as well, yet it is the WTO alone that has been given the power of enforcement, able to prevail over agreements, to strike down national laws protecting the environment and social rights, and to set the patterns of international interaction.

The CCIC is concerned that the goal of sustainable and equitable development is not driving the evolution of the trade regime at the WTO. Too often we have seen its trade rules and dispute mechanisms used to extend the interests of the economically powerful without regard for negative consequences on the poor and the environment. From our point of view, this power and independence raises profound issues for international and national governance.

In this current context of rethinking global architecture, there is a growing challenge to the lack of policy coherence of the global system and, more specifically, its inability to address the dominant threats to global prosperity posed by world inequity, instability, poverty, and environmental degradation.

Part of this questioning appears most explicitly in the calls from countries and experts around the world for rethinking the global financial system. The key lessons and issues that have emerged from the global financial crises are directly relevant to the committee's deliberations on the WTO.

These we discussed with you following the return of our in common mission to southeast Asia—that is, recognition of the economic and human dangers of rapid liberalization of markets; understanding that no one set of policies should be followed identically by countries of highly different levels of development; and recognition of the need for systems of national and international governance for market transactions.

This highlights the integral role for national governments and the need for serious democratization of the functioning of the international financial institutions, whose current structure and decision-making processes resulted in prescriptions that favoured the interests of commercial banks over the interests of the majority of the citizens and demonstrated their inability to integrate or assess the social and environmental impact of their prescriptions.

• 0950

There is an increasing need to build more effective participation of civil society into global policy-making. Given the MAI experience, it is clear that governments face a structural vulnerability on trade, investment, and other policy issues unless they can point to genuine national and international transparency and democratic access to policy processes.

What does this mean for your deliberations on the WTO? We welcome Trade Minister Marchi's recognition that the global economy must be a humane place where good government, democracy, and the rule of law ensure that the benefits of trade liberalization are shared among all levels of society. We need, therefore, a greater integration of the World Trade Organization into a policy framework of sustainable human development.

In a fundamental way, decisions taken at the WTO are affecting governments' abilities to meet social and environmental goals and commitments.

As an example, there are strong concerns that commitments regarding food security and protection of the livelihoods of the poor are threatened by the agreements in agriculture. Because of the loss by African countries of preferential access to northern countries, while safeguards remain in place for their European counterparts, Africa's share in the global food market is likely to drop.

We believe Canada should make a major effort to bring the WTO back to its overall objectives, to prevent it from doing harm to broader social and environmental goals, and to insist that it be more purposefully linked to other multilateral institutions and initiatives that share the goal of equitable and sustainable development.

Canada is in an excellent position to play this active role, as it is recognized as one of the “quads”—that is, one of the four economies with the United States, the European Union, and Japan—who dominate the agenda of the WTO. Developing a Canadian agenda for reframing the institutions of global governance is, however, hindered by our lack of effective mechanisms for policy co-ordination among the strands of our international policy-making.

Greater democratization of the WTO would require more southern participation. Much needs to be done to make the WTO a fully democratic institution representative of the international community. The limited participation and secrecy in the Uruguay round leading to the formation of the WTO, and in the WTO dispute resolution process, reinforced the view of the WTO as an organization that was protecting powerful and exclusive interests. As a result, many developing countries, which now make up three-quarters of the WTO membership, are starting out in the WTO system without a shared sense of ownership and confidence in that system.

In theory, the WTO is more democratic than the World Bank or the IMF inasmuch as each country has one vote, but in practice there are many limitations to effective participation. The negative consensus procedure at the WTO works against the participation of less-developed countries in that if they are unable to attend a meeting, they are assumed to be in agreement. Since many WTO meetings take place simultaneously, it is virtually impossible for poor countries to have delegates at each meeting. Poor countries also have difficulty making effective use of the dispute settlement procedure due to high legal costs and possible negative consequences of the cross-retaliation allowed by the WTO.

Another element that is required in order to promote greater democratization of the WTO is greater civil society participation. Members of civil society have often been frustrated by lack of access to the WTO. Other multilateral institutions have in recent years become more open to input from development NGOs and environmental, labour, and human rights groups, establishing consulting mechanisms or allowing observer status in order to benefit from the insight and creativity of these groups. That would be an important step.

We are encouraged by current initiatives at the WTO to hold high-level round tables with civil society representatives on environment and development. Nevertheless, we believe a more regular system of consultation with official status must be established that is non-exclusive, flexible, informal, and of a facilitating nature.

• 0955

The issues of both civil society access and fair participation among the WTO membership are issues that are inextricably linked. The undemocratic beginnings of the WTO have led to suspicions on the part of developing countries on the motives of northern countries. This climate has inadvertently hurt civil society initiatives that have been taken up by some northern governments.

For example, at the Singapore ministerial in 1996, the U.S. and France were unable to secure agreement for the establishment of a working group on labour issues. Until the WTO addresses the power imbalance between rich and poor nations, and provides the means for their active participation, even well-meaning initiatives are likely to be met with skepticism.

Our recommendations are three. First, the next comprehensive round for trade negotiations should be structured and informed by the lessons of a prior assessment round on the implementation of the Uruguay round in the WTO. A comprehensive, objective review of the WTO is needed, with provisions for timely input from civil society as well as business. Implementation of the Uruguay round should be measured against the goals of sustainable human development, as articulated in international agreements.

Second, the Canadian government should develop ideas and explore with members of the WTO options for democratization of the WTO, including the following: parliamentary oversight of the WTO; national advisory groups that include civil society participation; rules of operation for the WTO that do not exclude participation of developing countries; and technical assistance to enhance southern participation in trade negotiation and dispute settlements.

Third, we should develop a coherent Canadian agenda for reforming the international financial system, including the WTO, through a multi-staged planning and policy-making process that includes the ministries of finance, foreign affairs, international trade, international cooperation, and the environment, with the goal of policy coherence and strengthening enforcement machinery of international agreements on human rights, labour rights, environment, gender equality, and social development.

Thank you very much.

The Vice-Chair (Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.)): Thank you.

Mr. Campbell, we'll hear from you next, please.

Mr. Bruce Campbell (Executive Director, Canadian Centre for Policy Alternatives): Thank you, Madam Chairman. I thank you for inviting me here this morning.

It has indeed been an active decade for international trade agreements. We have the FTA, NAFTA, GATT, Uruguay round, WTO, APEC, FTAA, and MAI. All of these initiatives are pushing the same globalization agenda. We know what that is—trade and financial liberalization, market deregulation, privatization, social cutbacks, and the list goes on and on.

This decade has been distinctive for rapid expansion of trade, and especially financial flows, but it has also been distinctive for financial crisis and collapse, economic stagnation and worse.

I'd like to divide my remarks into four sections: first, trade and investment issues and experience in the nineties; second, economic and social conditions and experience in Canada in the nineties; third, the issue of global financial instability; and then a few suggestions.

First, on trade and investment, the post-war Bretton Woods system sought to avoid the financial crisis of the twenties and the economic depression that followed through a measured opening of trade combined with tight controls on private financial flows. The goal of the system was not to maximize the flow of trade, per se, and certainly not capital flow, but rather a means to maximize international economic stability and national prosperity.

The current agenda is driven by the notion that maximizing trade and capital flows is the goal, and it is taken for granted that national prosperity will follow. The current decade has, or at least should have, put to rest any claim to the validity of this thinking. It's been a pretty dismal decade all around. However, most of the world's political leaders and policy-makers, including Canada's, seem in denial about this reality.

• 1000

Trade and financial opening, under conditions of global monetary and fiscal austerity, have produced instability and crisis, stagnation and unemployment, and overcapacity as nations scramble to out-export each other.

Our trade minister appears to accept the dominant consensus around free trade and capital mobility, that it is inherently good, that more is better. He seems to want to move full speed ahead.

Of course we're a highly trade-dependent nation, and possibly too much so. Of course a lot of people are employed in trade-related activities. Of course we need rules to conduct trade in a stable and orderly fashion. But we have lost sight of the fact that trade or trade policy must be justified on the grounds that it serves the broad public interest.

Canada's trade and liberalization agenda has been driven, for the last 15 years at least, by very powerful business interests. It certainly hasn't been driven by a labour agenda, or an environment agenda, or a human rights agenda.

I think this government has a major political problem in convincing Canadians that its free trade/capital mobility agenda is in their interests. Most believe, and with good reason, that it has not benefited them and that it is at least partly responsible for the economic insecurity and declining living standards of the nineties.

In the absence of world government—and we're a long way from that—national governments, at least democratic ones, are where the public interest is negotiated, expressed, and implemented. International trade and investment agreements should ensure the maximization of a nation's ability to advance these goals within an orderly and supportive regime. It's time to replace the prevailing clichés with an honest and clear-headed assessment of the effect of this agenda on the lives of people.

It's true that under free trade, Canada-U.S. trade flows in the nineties increased dramatically, much faster than the overall output of the economy. Canada's merchandise trade surplus grew as well. However, Canada has become dramatically more trade-dependent overall, especially on the U.S., and therefore more vulnerable to adverse trends in the global economy and to retaliation, especially from the U.S. Still very dependent on resources, still a huge deficit in our technology trade, our services deficit with the U.S. has widened, and there has been a relative decline of trade within Canada.

Overall employment in the goods-producing export sector, despite a mini-surge in the last year, still employed 100,000 fewer workers than at the dawn of free trade in 1989. Traditional sectors like clothing, textiles and furniture were hard hit, but so were so-called winning sectors—for example, electronics, which lost a fifth of its employment base. Cross-border capital flows, both direct and portfolio, have grown even faster, and more striking has been the flooding of Canadian capital into the U.S. market.

Free trade was supposed to lead to the closing of the productivity gap with the U.S., and thus to more jobs and higher incomes. It didn't happen. Overall, productivity has continued to lag, and the gap has remained, or even widened.

Free trade has meant massive upheaval as companies have adjusted to the new reality. There have been record waves of takeovers and record numbers of business bankruptcies. The competitive slugfest has meant layoffs, plant closures, relocations, downsizing, wage rollbacks, outsourcing, just-in-time production, and just-in-time workers.

Most of these trends were evident in the previous decade, but what is new is the pace of change. It's accelerated. It has meant bidding wars amongst national and subnational governments to offer subsidies, tax and regulatory incentives to corporate investors, crowding out social spending. It has meant using monetary and fiscal policy tools to control wages and ensure competitiveness.

• 1005

Despite the claims that the state would become stronger in line with the surging economy, and be better able to preserve and enhance social programs, this decade has seen massive public sector downsizing, with federal spending dropping to levels not seen in 45 years.

What about the economic and social conditions of the nineties for Canadians? Well, it's been grim. Despite the boom—and there has been a boom in Canadian financial assets—the economy performed worse in the nineties than in every decade this century except the thirties. The decline in living standards, as measured by per capita income, has been, although not as deep as then, even more prolonged.

Unemployment has averaged higher in this decade, at 9.8%, than in any other this century except for the thirties. On the whole, we're more insecure as a society. We're more anxious about our economic futures and those of our children's. People are anxious about health care and public education and the ability—or willingness—of governments to maintain them.

Perhaps the bigger story of the nineties has been the explosion in precarious employment and contingent work, and its reflection in the leap in equality of earnings. Millions have been caught in the whirlwind of corporate and government restructuring, forced into an even greater dependence on the market as coverage under unemployment insurance has plummeted.

Almost all of the net job creation between 1990 and 1997 was self-employment and part-time employment. The gap between the rich and poor has grown, with more bunching at the top and the bottom and fewer in the middle. There's been a huge increase in market income inequality, reflecting the decline of wages and the lack of work. Public transfer has greatly lessened these disparities, but less so now with the cuts of the last five years.

Global financial instability: I'm sure you're all aware from your briefing material of the huge disconnect between the financial and the real economy, and that it's grown more acute.

I'm reminded of a quote by John Maynard Keynes, applying to another time. He wrote:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.

Well, that's an understatement in these times. You're familiar with the series of crises—Mexico, Thailand, Korea, Indonesia, Russia, Brazil. There will be others. Two-fifths or possibly more of the world's economy is in recession. The relative stability in North America provides an eerie sense of unreality, almost like the eye of a hurricane. The question is not if, but when, the bubble is going to burst.

While acknowledging that global financial liberalization has problems, most key policy-makers are unrepentant about the basic direction that has been taken and see the need for only superficial reforms, a fine-tuning of the system. The drive continues, although more low-key now, to achieve the capital account deregulation through changes to the IMF articles of agreement.

You may be aware that the G-7 has just set up its financial stability forum to strengthen supervision and surveillance. This exclusive club is chaired by the head of the BIS, the world central bankers' club, and has representatives from the G-7 central banks as well as the finance ministries—not from the foreign affairs or trade ministries. It also has representation from the IMF and the World Bank and the OECD, but none from the WTO. Participation from emerging market countries is by invitation only.

Minister Marchi appears to believe, like his colleague Paul Martin, that more surveillance is the way to financial stability. He speaks of measures to root out crony capitalism. We know what he's referring to. He's referring to Asia. But what about rooting out crony capitalism closer to home—for example, with the hedge fund long-term capital, which almost brought down the system, or the crony capitalism of Wall Street/federal reserve/U.S. Treasury/IMF access? This small cabal wields enormous power over the global financial system, and hence the fate of nations and national economies everywhere. They are purveyors of the view that seems to be accepted as gospel in most government policy circles, that unfettered capital mobility is both desirable and inevitable.

• 1010

While that may be good for Wall Street and Bay Street, enhancing as it does their profit-making opportunities, especially since they are assured, with the help of the IMF, of getting their money out from stricken countries when crises hit, as they inevitably do, it certainly is not beneficial to the world.

Professor Bhagwati, one of the world's leading free trade proponents, is extremely critical. Recently he wrote for Foreign Affairs that the merchants of free capital mobility have “hijacked the ideology of free trade”. He said:

They have been used to bamboozle us into celebrating the new world of trillions of dollars moving about daily in a borderless world, creating gigantic economic gains, rewarding virtue and punishing profligacy. The pretty face presented to us is, in fact, a mask that hides the warts and wrinkles underneath.

Mrs. Sheila Finestone: Who said that?

Mr. Bruce Campbell: Professor Bhagwati, in an article published in the spring of last year, I think. I highly recommend it to you.

The Vice-Chair (Ms. Colleen Beaumier): Mr. Campbell, can you...?

Mr. Bruce Campbell: Yes. I'm just going to wrap up with a few suggestions. Okay?

The Vice-Chair (Ms. Colleen Beaumier): Yes, please.

Mr. Bruce Campbell: First, I think it would be wise for the Canadian government to set out a detailed set of negotiating priorities, made accessible to the public, to guide the Canadian position at the WTO negotiation.

I also think the Canadian government might want to consider pushing for a framework of principles. I would recommend those principles first articulated in the UN Declaration of Human Rights and Freedoms and in both the later covenants and other international agreements.

Third, I would suggest measures that would expand safeguard provisions to enable countries to suspend WTO rules in periods of capital account stress; rules to allow countries to impose controls on portfolio capital; collective measures to reduce speculative flows, the most well known to you of which, I guess, is the Tobin tax; rules to control the abuse of power by multinationals; provisions to enable countries to maintain key sectors such as health and education in the public domain and outside the market; and provisions to safeguard the ability of countries to maintain their social security or social insurance programs, such as UI and pensions.

Thank you.

The Vice-Chair (Ms. Colleen Beaumier): Thank you.

Professor Mendes, we don't want to underrate the importance of your testimony, but I think we'll go in the order of girl, boy, girl, boy.

Ann Weston, would you please go ahead.

Ms. Ann Weston (Vice-President and Research Co-ordinator, North-South Institute): Thank you.

I'm very pleased to have the opportunity today to appear before this committee to talk about what I think we all recognize is increasingly a very major issue—the future of the world trading system. It's clear from the remarks of other people who have appeared before you that the rules of world trade today affect us in very many different ways.

[Translation]

It is no longer just a question of the impact of trade on our national revenue. WTO rules control our choice of clothing, the price of our drugs, the way we support our farmers and our industrial policies.

Today, I am going to concentrate my remarks on trade relations between Canada and developing countries and their interests in the WTO.

[English]

My underlying argument is that we should be seeking trade policies in the WTO that are coherent with our aid policies and that help to reduce global poverty, as Betty Plewes has already pointed out, and even as the government itself recognized in the document, Canada in the World, when it noted that, “Canada's economic security is increasingly dependent on the security of others”.

• 1015

With such a large number of developing countries now making up the WTO—it soon will probably be more than 100—it's important for Canada that we ensure that the WTO develops in a way that also helps to promote sustainable development in these countries.

I have four brief points I want to make today, about the need for, first of all, improving developing countries' access to the Canadian market; increasing technical assistance; recognizing the limits to openness; and broadening efforts to ensure that the benefits of openness are shared more broadly.

Turning first of all to the issue of opening our markets, in the Uruguay round Canada made various commitments to open our markets to developing country products. The biannual reviews of our trade policies and practices that have been carried out subsequently by the WTO show that there has been some progress. We have, for instance, removed what are called “nuisance tariffs”, or all tariffs of less than 2%. We've lowered our use of anti-dumping duties. We've ended quotas on four textile and clothing products. But still, when you look at the share of developing country trade in our total imports, it's only 14%, and in our exports it's only 7%, whereas for most developed countries, typically developing countries account for about 30% of both imports and exports.

Why is this? Clearly, we have a large share of our trade with the United States, and I would argue that this has been accelerated as a result of the FTA and now NAFTA. Part of this is due to trade diversion. When we look in particular at our imports from the United States of textiles and clothing, we see that the U.S. share has increased quite substantially.

In the case of men's and boys' shirts and underwear, for instance, it grew from about 10% in 1990 to 26% in 1997. This is partly the result of the fact that the U.S. is free of quotas and it also pays zero tariffs. In contrast, our imports from developing countries still pay 22% on men's shirts, for instance.

For many products, then, we do have lower tariffs. We have lowered our tariffs, under what's called the “general preferential tariff”, for developing countries. Despite its name, the general preferential tariff still leaves many developing country products at a disadvantage compared with suppliers in the U.S. or in Mexico. If you use an umbrella today, you can think that product has, if it's been imported from a developing country, paid a tariff, under the GPT, of 5%, whereas if it's come in from the United States, it would be free.

[Translation]

Basically, Canada has accepted the need for special policies for less advanced countries. We have eliminated customs duties on a number of products imported from these 40 countries, but clothing and footwear are still excluded from those special policies. Each year, Canada receives about 20 million dollars in customs revenues on our imports from Bangladesh alone.

[English]

So Bangladesh products pay, on average, a tariff of some 16%, because we haven't excluded clothing.

The head of the WTO, Renato Ruggiero, has, on repeated occasions since 1996, called on all developed countries, and the more advanced developing countries, to remove all tariffs from imports of the least-developed countries. I would call on you to recommend in your report that it's time for Canada to do that. We have gone a certain distance, but what we need to do is remove tariffs on all products from these developed countries and bind this commitment. If we can do it for the United States and for Mexico, why not for Bangladesh and the other least-developed countries?

My second point is that we need to review the technical assistance being given to these developing countries. Many developing countries are finding it extremely difficult to implement their obligations under the WTO.

Just yesterday I was speaking to a consultant who's been involved in countries in Africa helping them to introduce the new GATS or WTO values code. Many countries were given five years—even Canada was given five years—to introduce this new code, but many of them are still scrambling to introduce it. They're finding it very difficult. When the obligation comes due in 2000, as many other obligations come due, they're not going to be able to live up to what they had signed in the Uruguay round.

A large number of technical assistance activities have been carried out by countries like Canada. I participated in a series of seminars in Pakistan that CIDA funded a couple of years ago. As well, a number of activities have been organized by the WTO itself.

• 1020

One of the problems, however, is that most of these activities rely on ad hoc, voluntary contributions to the WTO, and only a small number of developed countries have actually given money to the WTO to do these technical assistance activities.

Another problem is that they're poorly co-ordinated, and we don't really know how effective they're being. So I would recommend that we consider helping the WTO to increase its regular funding for technical assistance, that Canada would contribute more to the voluntary contributions, and also that we would ensure that there are efforts made to co-ordinate this technical assistance.

Technical assistance is also needed to help countries take advantage of the dispute settlement system. That has already been mentioned this morning. This is a very important part of the WTO, but many countries don't have the technical or legal expertise to use their rights under the dispute settlement mechanism, so they have to rely on international law firms. The WTO itself is not able to provide more than a minimum amount of technical assistance. It lacks the funds, and it's not allowed to be too partial in cases being carried out under the WTO system.

It's important, then, to consider how we can help these countries. One recommendation that has been put forward recently is for a centre to be created in Geneva, an advisory centre on WTO law. I would urge Canada to consider making a financial contribution and to support the idea of this advisory centre.

Turning now to the limits of openness, it's clear that technical assistance can't solve all the problems that developing countries face. As I've mentioned, many of them have not been able to implement their obligations, and yet now they're being called upon to take part in a whole new set of negotiations. At the same time, as we know, they're involved in negotiations about trade liberalization regionally. They're undertaking domestic changes in trade policy. They're also being forced to consider issues like renegotiating the Lomé convention.

In the case of Jamaica, for instance, a very small country, it's having to take part in deepening the Caribbean regional agreement. It's taking part in the FTAA and it's also involved in the post-Lomé negotiations, yet at the same time it's being called upon to consider what its interests might be in a new round of WTO talks. The point isn't just one of negotiating capacity; there's also the capacity to adjust to the changing rules.

I think there's been a tendency for too many of us to assume that the more open our economies become, the more the economies are going to grow, and yet there's increasing evidence that openness is really not the only way, and not even a guaranteed way, to grow, particularly in developing countries. There's much greater skepticism now about the extent to which openness will lead to more growth, more employment.

Increasingly, people are recognizing that what is needed is some openness, but at the same time there is a need for policies that promote investment, domestic investment as well as policies that promote macroeconomic stability. The question many people have is whether or not the WTO is going too far in introducing rules that really limit countries' capacity to develop their economies in a way that is most suitable for employing their people.

One recent commentator, Dani Rodrik, has warned that policy-makers should avoid becoming “knee-jerk globalizers”.

I think even the trade minister recognized this when he appeared before the committee. He called for a “more sensitive approach” to make sure that “as we move this WTO forward we're not leaving too many countries behind”.

The U.K. development minister, Clare Short, has called for us to make sure that the next round of negotiations is a development round.

I would just argue that it is important—and Canada should recognize this as we move forward—that we make sure the existing rules of the WTO, and any future rules, really allow countries to develop economically, socially, and in an environmentally sensitive way.

So I would support the call Betty Plewes made, that there be an assessment of the WTO rules, and that this assessment should look at the social, including gender, environmental, and economic impacts of the WTO. Perhaps this assessment would be carried out not just by the WTO and not just by governments but also in collaboration with the ILO and the UN environment program.

Finally, I want to turn to the point of how we can make sure that the benefits of openness are shared more broadly.

There is the point to be made about strengthening institutions of global governance. It's already been mentioned this morning about the impact of the recent financial crisis. Certainly many developing country exporters of primary commodities in Africa and the Middle East were very badly hit by the financial crisis in east Asia, as were other countries that export manufactures.

• 1025

So it's essential that we show leadership in reforming the global financial system to enhance stability in capital markets. Otherwise, the commitments, by both countries and people, to the world trading system are going to be undermined.

It's also important that international efforts maximize the social benefits of increasing trade. A particular concern some people have is that competition will be increasingly based on labour costs, as trade is liberalized.

If you look at the case of clothing, there's a real concern that as we remove quotas, countries are going to attempt to maintain their share of markets by cutting their labour costs. This could mean lower wages, lower working hours, no holidays, and poor working conditions. Certainly some of the research we've been involved in at the North-South Institute has shown that this is a growing problem and concern for many of the millions of young women workers involved in this industry in different countries.

Now, the ILO can help by monitoring labour standards to see whether these conform to national or international norms, but I would argue that complementary measures are needed. It's for this reason that several Canadian groups have called on the government to create a task force on sweatshops. This group would allow people to investigate ways of making sure that increasing trade doesn't undermine employment conditions.

Social labelling—that is, labelling to indicate that products have been made according to certain international labour standards—or additional tariff cuts could be used to help encourage companies and countries to improve their treatment of workers.

On the other hand, while we begin to do that, we'll have to make sure the WTO rules allow this sort of approach to be implemented.

To sum up, my points are these. First, Canada should remove all remaining tariffs on imports from least-developed countries, and bind them at zero. We should consider increasing technical assistance through the WTO and the proposed new advisory centre on WTO law, and make sure there's increasing co-ordination amongst countries providing this technical assistance. We should recognize the limits of openness and ensure that WTO rules, both existing and proposed, respect developing countries' need for a range of approaches to economic and social development. Finally, we should support complementary measures to reduce international financial instability and to strengthen international labour rights.

I have one final thought for you—namely, that maybe one way of ensuring that the Canadian government includes a greater development emphasis in the trade policy measures it's considering would be to have somebody with development expertise included in one of the trade minister's advisory committees.

There are many people I could suggest. For instance, the University of Toronto's Professor Gerry Helleiner is somebody who would make a very important contribution to those advisory committees.

Thank you. Merci.

The Vice-Chair (Ms. Colleen Beaumier): Thank you.

Professor Mendes.

[Translation]

Mr. Errol Mendes (Director, Human Rights Research and Education Centre): For those who don't know me, my name is Errol Mendes and I'm the Director of the Human Rights Research and Education Centre. I'm going to do my presentation in English, but I would be happy to chat in French with my friend Daniel Turp after that.

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): There are other francophone members here.

[English]

Prof. Errol Mendes: Much of my presentation can be found in the extract of the book we have recently published on the relationship between international trade, financial institutions, and global labour standards. I will not go into that, because the time is limited. I just want to hit some key points.

I want to start off with an interesting statistic out the United States, from a think-tank there, that of the top 100 economies of the world, 51 are corporations. It really shows the power of global capital and global commodity manufacturers and producers in the world today. The nation-state is becoming increasingly less important, and the private forces of global capital and global commodities are rapidly increasing.

There is a fundamental asymmetry between the free mobility of capital and commodities and the lack of mobility with labour. What that does is create a crisis very similar to the one we saw in the financial markets, with the Mexican peso crisis in 1994 and the Asian financial crisis last year.

• 1030

However, it never, or very rarely, gets the attention of the media—and this crisis is the following—that as labour markets are blocked from mobility, you have in effect an ongoing crisis where trade becomes unfair trade for the mass of workers in the world, and you have in effect various forms of exploitation, from illegal trafficking of human beings, especially women, and other forms of exploitation of vulnerable sectors of humanity, particularly children and women, etc.

In addition, as you have competition for scarce economic resources, increasingly you see a rise in competition for resources, which results in war and violence, creating waves of internally displaced persons as well as refugees and asylum seekers in the world.

This is the crisis that's continuing. Even if the Asia financial crisis stops, this crisis will continue. This crisis will get worse. This crisis will eventually overwhelm many countries in the world, and maybe ours.

Now, what this implies is that we have to look at all the systems of global governance we have, including the WTO, but also the United Nations, also the International Labour Organization, and also the international financial institutions.

The way we propose to do this is detailed in the book. It is extremely complex. It burst a few of my neurons trying to write, so I'll try to just hit the main points going through it.

In terms of the WTO, one of the things that I think is not discussed enough is that it's a relatively weak institution. It is still fundamentally based on contracts between nations who decide to give each other most-favoured-nation status. It is only because it has wrapped around these contractual relationships an institutional body called the World Trade Organization that it is now attracting a lot of attention in terms of labour standards, the environment, human rights, etc. But fundamentally, after studying it for over 20 years, I am still convinced that it is a very weak institution. It is essentially still based on a set of contractual relationships between nation-states based on the most-favoured-nation clause, and increasingly going into areas where it is having difficulty, such as intellectual property, such as services, and such as financial services.

This does not mean to say that just because it is difficult to discuss issues such as the environment and labour standards it should not be done, but my recommendation to you is do not accept simple solutions, because simple solutions will not work. Look at the deep complexity of this area. In particular, look at the complexity of areas that already have had success, such as subsidies, and see if there are analogies between subsidies and, for example, exploitation of scarce environmental resources, or exploitation of workers in developing countries.

The answers are there. If you look at the parallels between what has been accomplished already in the World Trade Organization with subsidies, there are analogies to the way in which you can use them to argue for better environmental and labour standards' integration into the World Trade Organization.

I am one of those people, however, who do not agree that you should only focus on the sanctions part of developing an integrated approach to environment, human rights, and labour standards. In addition to the so-called eco-labelling and human rights labelling, and in addition to arguing for increased pressure on countries to improve their labour standards, my recommendation is also to take the carrot approach, the incentives approach.

A lot of really interesting studies have come out of the OECD and other international bodies. They show that if you focus on human resource development, for example, it increases not just productivity and competitiveness but also labour standards.

A 1996 OECD labour study, which I highly recommend you look at—it is discussed in our text—shows the relationship between productivity, competitiveness, and labour standards. It actually casts an interesting light on the discussion that's been going on in the chamber in terms of productivity, that too often productivity is cast in the classical mode of productivity in terms of capital and labour and land, but the nations who will be successful in the 21st century are those who take an expanded view of productivity, which is basically total-factor productivity. That includes everything from human resource development to education, especially for women, to training in the new and emerging knowledge industries to reform of government institutions, including financial institutions.

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These are total-factor productivity analyses. If you focus on these areas, it it will increase the general level of productivity and competitiveness in countries around the world.

One way in which you can introduce the carrots approach to labour standards and other aspects of integration of social justice into the WTO and the international financial institutions is to look at a part of the WTO that has not really been the subject of headlines. It is called the “trade policy review mechanism”. This is the part of the WTO that is supposed to be looking at the relationship between trade policy and general economic policy, and could include labour market policy. It is within this area of the WTO that I think Canada could take a leadership role to argue that there should be a very sophisticated, in-depth discussion of the linkages between trade, financial institutions, labour standards, labour market development, and total-factor productivity.

There is a great opportunity coming up for Canada to do this. In 2000 there will be a general review of the trade policy review mechanism, which allows countries to put forward their analysis of how trade and labour and environmental standards fit together.

I suggest Canada can take a leadership role in suggesting that at that time, countries should take the leadership and integrate these different areas into their reports to the World Trade Organization. I think we would have allies with Britain, and maybe even the United States given Bill Clinton's statement in his State of the Union address that this area is one of his top priorities.

In terms of other areas in which Canada could take a leadership role, Ann has mentioned the private sector. As I mentioned, the private sector is now becoming increasingly more powerful than nations, and in the next century may completely rival nations and the United Nations.

How do you deal with that? Again, you have to take a very sophisticated approach. In addition to the types of codes of conduct that have been argued for, I think you should also work within national financial institutions such as the World Bank, such as the International Monetary Fund, to propose to the private sector that they have a role to play in creating a sustainable international, financial, and economic system.

For example, when the World Bank and the IMF and the ILO discuss how to produce sustainable bailout packages, not ones that just go into a black hole—for instance, the $43 billion that was sunk into Indonesia and no one knows where it went, or the x billions that went into Mexico—they should look at it in terms of a sustainable structure that combines labour standards, combines environmental resources, combines an analysis of total-factor productivity to create stable regimes. There is not enough co-operation going on between the various levels of the international community to focus in a very sophisticated and in-depth way.

I say to you again that oftentimes simple solutions are proposed, but they will not provide the answer in the long run. It is so complex that I've abandoned my prepared text. I don't have the time to tell you all the details, but please, you can refer to it in the book.

My one final point is that in terms of the early initiatives the foreign affairs department is taking—and it links into the emphasis on children—there should be a discussion. Perhaps Canada could propose a world conference in the millennium, sponsored by the ILO, the United Nations, the World Bank and the IMF, to look at how trade standards and the international financial system is impacting on children.

For example, there could be a motion to make bonded and forced labour of children a crime against humanity. I suggest that Canada can have a very focused approach, not try to take on everything but have a very focused approach to achieve very defined results in this very complex area.

I'd just like to finish off with the last statement of our book:

The pinnacle of humanity is the quest for justice and dignity; its ultimate debasement is exploitation.

Thank you.

The Vice-Chair (Ms. Colleen Beaumier): Thank you.

Mr. Penson.

Mr. Charlie Penson: Thank you, Madam Chairman.

I'd like to welcome the presenters here this morning.

You know, I came here this morning thinking this was a pretty good day, as I was walking along, but in my view, this was a fairly heavy presentation. I thought we had a pretty good organization in the World Trade Organization, and that it was working fairly well. I see that 134 member countries have signed on, with more countries signing on all the time.

• 1040

A lot of Canadians, I would suggest, think it's working pretty well. I notice that Canadian farmers, for example, would like to have agriculture included a lot more fully in the trade and investment liberalization areas so that they don't get beat up quite as badly as they are now, when they are losing their farm operations because of massive European subsidies—$72 billion last year in the European Union. They're hoping for some sanity so that they can compete on a level playing field with those European farmers.

One wonders. If so many countries are signing on and wanting to take advantage of this organization, it must be working fairly well. That's what I thought, but that's not the message I got this morning.

It seems to me, Madam Chairman, that there are two international organizations that are known for their effectiveness: NATO, because of the power they have militarily, and the World Trade Organization, where the power is much more subtle, of course. It's the power that member countries have in the World Trade Organization, that is, the power of retaliation if other countries are not following the rules. It's just that.

There was talk about enforcement this morning, but I don't really know that it has much of an enforcement mechanism. What they do have is that the World Trade Organization makes a ruling as to whether a country is in violation of the trade rules and that country then has two options. It can accept that and change that policy or domestic legislation or it can accept retaliation. Retaliation essentially means that the other country that's found to be harmed—and there has to be harm—has the right to withdraw access to, in the example of Canada, Canadian exports to another country. They have the right to put on duties or not give the kind of market access that they were giving. That's the context for this.

It just seems to me that what I'm hearing—and I've heard it a few other times in the committee—is that a lot of people want to load down this World Trade Organization with environmental legislation, labour matters and human rights, and I don't think it's the right vehicle for it. Roy MacLaren, our High Commissioner to Britain, who is lobbying to become the chair of the WTO, has been suggesting exactly that, that is, there are organizations like the United Nations and the ILO. We have these international organizations. What is the reason for this new interest? Is it that they're not working effectively and that we think the WTO is somehow the new hot vehicle that we can harness and so get things that we haven't been able to get through these other organizations?

I'm suggesting that it's not and that if we try to put this on it, it's going to break down too and, therefore, we'll destroy a vehicle that has been working effectively for a lot of Canadians. I put that out for comment.

The Vice-Chair (Ms. Colleen Beaumier): Professor Mendes.

Prof. Errol Mendes: Ann will speak to that.

The Vice-Chair (Ms. Colleen Beaumier): Ms. Weston.

Ms. Ann Weston: I think you're right. These sorts of opportunities do encourage people to focus on what's not working well and do encourage you to recommend changes that would make sure there are improvements. That's not to say that there aren't some things that are going well in the WTO.

But I'm not sure whether people are joining the WTO because they believe in everything it stands for. I think there are different elements of the WTO that people don't necessarily agree with, but this is just the way you have to operate these days. If you don't join it, you're going to be out of it and you're not going to be able to influence a really important organization. That's why a number of countries are joining.

In the case of agriculture, you referred to our own farmers. Just today there has been an outcome of a dispute settlement panel that I think is going to be somewhat problematic for some of our farmers.

The results of some of the dispute settlement panels have been difficult to implement. As a result, we've seen some countries taking retaliation, which underlines the fact that dispute settlement doesn't necessarily always work. For very small countries, the present system doesn't really work because their only retaliation is to withdraw their purchases. If they're going to be withdrawing purchases from U.S. exports, that's not really going to have much of an impact on the U.S.

There are actually some proposals where, for the least-developed countries in particular, the right of retaliation could be extended to other countries, where there would be some form of sanction that would be much broader so that big countries like the United States would be forced to comply with rulings. That's just one illustration of how criticism can then lead to thinking about solutions in order to move the system forward.

• 1045

In terms of whether or not we should link the WTO to a lot of these other issue areas, I think it's increasingly important that we make sure the WTO does not develop in such a way that it makes the work of other international organizations very difficult. That's what a lot of people are concerned about: at the same time that we're talking about improving labour standards in the ILO or improving environmental standards of the UN environmental organizations, one of the problems could be that decisions taken in the WTO actually undermine the capacity of the ILO and other organizations at work.

Mr. Charlie Penson: Ms. Weston—

Ms. Ann Weston: That's why it's important to ensure that these issues are brought together to—

Mr. Charlie Penson: —can I just follow up on that point with you? In terms of labour standards, I was just wondering whether you recognize that it can be very much a protective measure as well. The U.S. Congress, for example, particularly the Democratic party, I believe, have followed that route. They're negative towards expanding the FTAA or free trade with Chile, for example, for that very reason. It sounds well intentioned when we say we want to raise labour standards in developing countries, but in fact, I believe, in some cases it's nothing but a protectionist measure.

Ms. Ann Weston: I agree that we also have to be very careful not to introduce approaches that are then used to restrict imports unfairly. Errol has something to add to that.

The Vice-Chair (Ms. Colleen Beaumier): Can we keep the answers a little shorter?

Prof. Errol Mendes: First of all, let me answer your first question. In globalized capital markets and commodity markets, countries have no choice but to join the WTO. It would be very foolish—

Mr. Charlie Penson: They always have a choice.

Prof. Errol Mendes: —given, as I said, the increasing power of private capital vis-à-vis public institutions.

Secondly, let me just give you an example—I'll try to keep it simple—of why existing notions within the WTO can be expanded to include environment and labour standards. Let's take the notion of subsidies, for example. The reason Canada has recently been hit with a lot of allegations of violations in terms of illegal export subsidies is that the theory behind subsidies is this: if you allow governments to subsidize exports, it creates a bidding war, if you like, between countries, until you have a massive distortion of international trade, which results in a massive distortion of allocative efficiency. If you're an economist, you know what I mean.

However, the same thing can apply to labour standards. If, let's say—I'm going to answer your second point now—China and other countries have labour laws that prevent women and children from being locked up in cages after they finish work and then being brought back into the factory the next day, but those laws are not being observed, or if you have labour regulations in Indonesia that prevent workers from being dismissed en masse if the company suddenly has to pay its debt in a U.S. loan and can't afford it because the rupiah has been demolished.... You will find that most of violations around the world occur in countries that are not even respecting their own labour laws.

The very same thing has been happening, then, with illegal subsidies. Countries are bidding against each other, not to go to the top, but to the bottom—

Mr. Charlie Penson: Why wouldn't you use the International Labour Organization to address that issue?

Prof. Errol Mendes: Because, frankly, in my view it is totally ineffective and does not have very much of an enforcement power. This is one area where Canada should say—

Mr. Charlie Penson: How would the WTO be able to police that and correct that?

Prof. Errol Mendes: If you take a very sophisticated approach, which allows discussion of linkages with environment, labour and international trade in the TPRM, the trade policy review mechanism, you can then move towards looking at discussions of unfair labour practices or subsidies, which then require governments to increase their labour standards.

The Acting Chairman (Mrs. Sheila Finestone): Excuse me. Sorry, Mr. Mendes, but there are other people who have things to say and other colleagues who want to ask questions.

Mr. Campbell, do you want to make one small comment?

Mr. Bruce Campbell: I can pass.

The Acting Chairman (Mrs. Sheila Finestone): Fine.

Mr. Turp, s'il vous plaît.

[Translation]

Mr. Daniel Turp: Madam Chair, I'am going to share my time with my colleague, Ms. Debien.

I found the thoughts of the Canadian Council for International Cooperation, which presented a very good brief, very interesting. I find that the issues raised here today really deserve the attention of our committee. It's true that GATT and now the WTO have taken very little interest in social matters and, in particular, the issue of workers' rights and of human rights in general. I'll come back to that later.

My first question relates to the democratization of international institutions and, in particular, of the WTO.

• 1050

I would like to know, Ms. Plewes, exactly what recommendations you would like the Canadian government to make and implement during the negotiations. Would you like the WTO to become an organization like the ILO, more open to NGOs and other elements of society, but with additional and more democratic powers? Is that what you're looking for? In answering that question, perhaps you could comment on what is being done today and since last Monday within the WTO, with those symposiums that gave the WTO the chance to prove whether or not it was open to players other than government players.

My second question is on labour standards. Maybe Errol could answer it. Should the WTO choose a model—you mention this in one of your books—similar to that of NAFTA? If so, are there some things that should change and how should they change?

[English]

The Acting Chairman (Mrs. Sheila Finestone): Who would like to start?

Madam Plewes.

[Translation]

Mr. Daniel Turp: Perhaps we could ask our other question, Mrs. Finestone.

The Acting Chairman (Mrs. Sheila Finestone): Yes, of course. Would you mind waiting?

Ms. Maud Debien (Laval-Est, BQ): Good day, Ladies and Gentlemen. Welcome to our committee.

Several witnesses have come to meet with us so far and most of them were of that opinion. Most told us that the WTO, because of its enormous power—it's perhaps the most powerful organization on the face of the Earth—, was after all the best institutional answer to fears and apprehensions raised by globalization.

Mr. Penson said you drew a rather dark picture of the WTO, but several witnesses said here that the WTO is not perfect and that there are many problems with it. You listed a good number of them, and other witnesses mentioned others: transparency problems, dispute resolution problems and many others. Contrary to Mr. Penson, I don't believe you painted a particularly dark picture of the WTO. Others did that before you.

The WTO is a very important forum. Several witnesses told us that the WTO should absolutely not deal with issues relating to human rights, the environment and social clauses, while others told us it should. I would like to hear your opinion on that.

The Acting Chairman (Mrs. Sheila Finestone): Go ahead.

Ms. Betty Plewes: Thank you.

[English]

In terms of the democratization of the WTO, first of all, there has to be a more equal playing field for participation by southern nations. Canada has in fact made some efforts to ensure southern participation through some of the activities that Ann has mentioned and through some support for southern participation. For example, in this most recent round, Canada has provided some funding, I think, so that someone from the trade ministries as well as the environmental ministries in southern countries can participate, which is an important step.

But the WTO is so complex that more ongoing and consistent technical assistance needs to be given to southern expertise in order for them to participate more effectively in trade negotiations. The WTO has been very exclusive of civil society. Now there is this initiative this week in Geneva, which is a positive step, but it's an ad hoc step. More consistent participation of civil society groups needs to be built into the ongoing processes, both at the national level, where this is an example of how you can have some input from civil society organizations, and at the global level.

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One of the things that Canada did this week, which we also support, was to come out in favour of carrying out a related trade and environmental assessment on some of the impacts of the WTO.

These are positive things, but it needs to be looked at much more systemically and much more comprehensively so that these invitations to civil society organizations are not made on an ad hoc basis, as is currently occurring.

There's just one other thing that I'd like to say. It's not in your question, but what many NGOs would have liked to see was no separate meetings on trade and environment and trade and development. In fact, we need to have a more comprehensive picture of trade, environment and development, because it's artificial to separate environment and development.

So actually, in answer to the first question, we are at a new stage in global governance and global trade, and it's realistic to think that we need to stop and take a look at what has happened to date. No institutions are perfect. This was begun in a climate of distrust from southern countries, so many valuable things that northern countries or even NGOs might like to do are still distrusted by southern countries. You can't in fact proceed with the process of more democratization...or at least the first step has to be better integration of southern countries and their capacity to participate.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Campbell, would you like to comment, please?

Mr. Bruce Campbell: Sure. First of all, I'd like to comment on the notion of the broadening of the WTO agenda. I think this contrasts with the situation in the eighties, when political leaders were focusing on these agreements—whether it was the FTA or the NAFTA or the WTO—as commercial agreements, and these other things didn't have a place. It's good to see that this has changed. In the remarks of the minister, he emphasized the interconnectedness and the impacts of exchanges.

Really, that broadening has been forced upon the political leadership by the opposition, by civil society, which has experienced first-hand the incredible social and environmental impact of these agreements. It's all very nice for business interests to want to just focus on business issues, but these agreements have broader implications. Therefore, these agreements must be broadened to take those into account.

As well, I just want to make a brief comment on the nexus between capital mobility and mobility and openness and expansion on the trade side, because the nexus between the two seems pretty vague. Should the WTO be negotiating and having provisions that will allow countries to place restrictions on capital mobility? Surely the power of inflows and sudden outflows on the real economy, on trade, on the current account, on all the things that are being negotiated at this and previous rounds, is immense.

Is the WTO the place to talk about the Tobin tax? Is the WTO the place to perhaps talk about emergency measures? There are safeguards and provisions, but maybe they should be looked at and broadened to include situations in which countries are undergoing severe financial stress—countries like Indonesia or Brazil—so that they do not necessarily continue to be bound by the provisions of the WTO in these situations. I think those links really need to be looked at very carefully.

• 1100

There's the situation I mentioned of the G-7 just recently setting up this surveillance mechanism and not including representatives other than those in that narrow club of financial and monetary regulators.

Mr. Daniel Turp: Should we look forward to creating an economic security council? Has that been brought up at this point? It would be the equivalent of the security council of the UN, but for economic issues like this one.

The Acting Chairman (Mrs. Sheila Finestone): Before you answer that, I would like to hitchhike my question onto that one, if I may. As I'm listening to all of you, I would like you to address the question of whether the architectural design of the WTO is at fault.

Mr. Bruce Campbell: I'm not familiar with the concept of a global security council, of whether it would be something that would be entirely new and would come out of a new kind of Bretton Woods type of negotiation that would in fact be an umbrella, in effect, which the financial institutions and the trade institutions would be all part of, with a set of rules, criteria, values and priorities that would govern them. In principle, there may well be some merit.

We're a long distance from world government. It's probably moving in that direction. In the meantime, I think it should be stressed that rules be created that create more space than they do now for national governments to maintain and pursue national policies. The hallmark of the global architecture—trade and especially the financial architecture—is such that it reduces the capacity of countries to pursue their own macro economic policy, their own fiscal and monetary policy, and hence, policies to create jobs, keep interest rates low, stress growth and maintain social safety nets.

This applies to Canada and to other countries. I think the political legitimacy of expanding and opening trade is really diminished if countries don't have the capacity to do those things, to maintain a social safety net and other things. Maybe this is part of the solution.

The Acting Chairman (Mrs. Sheila Finestone): I see that there seems to be some interest in this direction of questioning. Does anyone want to add a question to this? I know that Mr. Mendes is very anxious to answer.

Prof. Errol Mendes: Daniel asked me a specific question that I want to answer.

The Acting Chairman (Mrs. Sheila Finestone): Bill, is your question a hitchhike or a supplementary? Do you want to wait?

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): I just want to get on the list to ask a question.

The Acting Chairman (Mrs. Sheila Finestone): Go ahead, Mr. Mendes.

Prof. Errol Mendes: Daniel asked me if we should adopt the NAALC model, the present North America labour corporation agreement model. My answer to that is definitively yes, as a start—not as the finish, but as a starting point. We have a great chance to do that. We're in charge of the summit of the Americas next year. We are also leading the pack in terms of the trade negotiations for the Americas. We can propose that as the fundamental principle underlying the Americas free trade area, that there should be a NAALC type of arrangement, as a start.

There are a lot of problems with it; I'm not saying that it's problem-free. One of the problems is that there's no direct access. There should be direct access by trade unions, as in the environmental area, but it's a start. Once that's accomplished within the Americas, you can then push for that to be accomplished worldwide, perhaps. There are some very definitive steps.

To answer your question, Madam Chair, I don't think there's something wrong with the WTO. I analogize the WTO to a child growing up; it is essentially a weak institution because it is fundamentally based on contractual agreements, but over time, if you add to it, if you give it the proper direction and the proper strategies, it could see the linkages between the environment, between trade, labour standards and international financial stability. So it's not so much that it's a weak institution. It's growing up, but we—somebody—has to take charge.

The Acting Chairman (Mrs. Sheila Finestone): In other words, you think we need some parental oversight, like a parliamentary body. Is that what you're saying?

Prof. Errol Mendes: No.

The Acting Chairman (Mrs. Sheila Finestone): Mommy and Daddy weren't very good—

Prof. Errol Mendes: Some children do better without parental oversight.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Blaikie.

• 1105

Mr. Bill Blaikie: I have more a comment than a question, and then I would be interested in your comments.

Just following up on some of the things that have been said, Bruce, you said that we're a long way from world government, and I agree. Yet on the other hand, what world government we do have is at the WTO—unless you're the Serbs in Kosovo, where at the moment you might think the world government is NATO. With respect to economic matters, we have a world government in the WTO that overrides national governments. Whatever overrides national governments is presumably some kind of world government.

A national government would like to have, presumably, protection for generic drugs—can't do it. A national government would like to have a national moratorium on bulk water exports—can't do it. A national government would like to have certain arrangements with respect to split-run magazines—can't do it. The list just goes on and on of all the things that national governments used to be able to do and regarded as their purview and can't do because some other level of world governance is telling them they can't. That other level is the WTO, and what makes it governance as opposed to the ILO and UNESCO and the United Nations is this matter of enforcement.

It seems to me that it is ultimately perverse that only these kinds of rules should be enforceable and that everything else should be a matter of moral exhortation, endless conferences and chatter. This is basically what the rest of us are reduced to. But when it comes to investor rights and the rules that have been designed by and for the transnational corporations, these are the things that have to be enforced. It would be as if we had a national government and the only thing that it could enforce were economic rules, as if all our labour laws and our environmental laws had no enforceability, that they were just nice things that we hoped people would pay attention to. That's what we have at the world level.

Probably you've figured out that I tend to agree with most of the things that have been said by the witnesses this morning. I just think we have a major problem here. People have to realize that this is what is actually going on. It needs to be named for what it is. It's not just an immature organization. It's an organization that is very mature in many respects. It's been maturing for 50 years under the influence and the guidance of certain forces.

The WTO is not the beginning, although I hope it's the beginning of a new and more genuine, comprehensive and integrated global governance. It's a mistake to say that it's a beginning in the sense that it's also the culmination of 50 years of getting the rest of the world to accept an American model of what constitutes legitimate economic activity. What doesn't fit into that model is being slowly proscribed by the WTO and made illegitimate; it's being pushed outside the boundaries of legitimacy. From a Canadian point of view, where we've done things differently, this is a disaster. It begs the question: why would we want to be part of a process the outcome of which we know is the further erosion of our ability to be ourselves and to do things differently?

The Acting Chairman (Mrs. Sheila Finestone): Who would like to take a crack at that?

Ms. Plewes.

Ms. Betty Plewes: I just want to give an example that illustrates some of the points you're making. This is a question around Burma. There are some municipalities and county governments in the United States that have decided to impose economic sanctions on Burma because they don't like the human rights situation in Burma. They've done that through selective purchasing laws and by making agreements that they will not in fact purchase goods that come from Burma. This is being challenged at the WTO by the EU and Japan. This process of imposing sanctions was what allowed us to pressure the South African government for change.

• 1110

Now we're saying that this can't be used. These are laws that are being passed within the United States. They're legitimate, but they're being challenged at the other level. There are many other examples of national environmental standards being challenged.

We all agree that we need a rules-based system, but who's making the rules and in whose interests are the rules being monitored and implemented and in what direction? What's the vision we have for this evolving system of global governance? We're saying that it should be sustainable human development and that requires us to take a step back and look at how these various institutions are evolving.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Mendes.

Prof. Errol Mendes: Just very briefly, to answer Mr. Blaikie's question, 50 years is a long time in my lifetime, but it's a short time in the lifetime of humanity. Again, I want to emphasize that the reason it's a young institution is that it's still fundamentally based on contractual relationships. There is no enforcing central part of the WTO. Essentially, it works by saying that if you're found in violation of the WTO, that allows the other party to take reprisals against you. It is essentially still a contract between nations.

The evolution has to move beyond contract to justice, to equality, to dignity. That's the big struggle: to go beyond contract law to something else. The something else that has to happen is that careful integration of labour standards with environmental standards, etc. That's going to be extraordinarily complex. It needs leadership, and right now no country is providing it.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Campbell.

Mr. Bruce Campbell: I share the perspective that the WTO as it has evolved has constrained national policy space, although I think one can go to the other extreme in saying that there is no policy space. It's constrained and the options are limited, but there is a lot of space, and sometimes those options are not fully explored.

In the past 50 years of the WTO and the Bretton Woods system, for a good part of that, at least for the first part of that period, there was a sensitivity. That was the goal of the original architects of Bretton Woods: to maintain the balance between international management and national sovereignty. In the last 25 years, the drift towards measures that limit the ability of governments to do certain things—except to enforce market disciplines—have upset the balance between management and the market-centred driving force.

When I think of what limits the capacity of governments besides the WTO, I think that more powerful still are the financial markets, which are accountable to no one and leave us in this awful situation that we've been in for at least the last decade. We're forced to maintain these inordinately high real interest rates at a time when unemployment is high, at a time when we really need to take measures for fiscal and monetary stimulus. There's an incredible amount of power.

I don't think it's inevitable. These things do change. There is pressure. Maybe it seems like the odds are pretty steep for reversing some of the trends of the last 10 to 15 years.

[.Translation]

Mr. Daniel Turp: Madam Chair, might I point out that there are only two of you Liberals at this committee?

The Acting Chairman (Mrs. Sheila Finestone): I already noticed that.

Mr. Daniel Turp: Our guests, I think, deserve to be heard by more members, including from the ruling party. After all, it must be rather disappointing for Ms. Plewes and her colleagues to find only two Liberals here.

The Acting Chairman (Mrs. Sheila Finestone): Daniel, you're right.

[English]

Mr. Reed.

Mr. Turp, don't be difficult.

[Translation]

Mr. Daniel Turp: The Liberal party rests on your shoulders, your broad shoulders.

[English]

Mr. Julian Reed (Halton, Lib.): Thank you very much, Madam Chair. I appreciate the vote of confidence.

Some hon. members: Oh, oh.

• 1115

Mr. Julian Reed: There was a comment, which I think Mr. Mendes made, about the fact that the WTO should take on things like labour standards because the ILO is ineffective. This is one of two questions that I have. Should we do away with the ILO? If the ILO, in your view, is ineffective, why should we continue to have it? The question is, can the WTO take on these other issues or should the ILO be given teeth so that it can deal with them? I just wonder how much we can put into one box here. I would appreciate your comment on that.

I have one other question. I don't hear any commentary about the responsibilities of consumers, except in something Mr. Mendes said about eco-labelling. It would seem to me that if we're dealing with these elements like indentured labour—our government is trying to deal with some of them, indentured labour being one of them—shouldn't we be able to expand the mechanisms for being able to qualify consumer products so that the consumer will understand and know how they originate and where they originate?

The Acting Chairman (Mrs. Sheila Finestone): Thank you.

Who wants to start?

Prof. Errol Mendes: On the question of the ILO, we have very specific recommendations for the ILO in the book. They are too detailed to go over, but essentially we recommend strengthening it by integrating it into the World Bank, the IMF and the WTO to act as an advisory body to these other bodies in formulating their core mandate, which, in the case of the international financial institutions, is how to have sustainable development, as Betty put it, as essentially scoped out, and in the case of the WTO, how to make sure that certain types of labour standards can act as illegal subsidies, in my view. The time has come to start looking at labour standards as being integrated into these other international financial institutions.

The very nature of the ILO, however, prevents it from being effective, because it's a tripartite body of labour, employers and governments, and oftentimes they just come with their own agendas and they clash, etc. Somehow that has to change. It'll be almost impossible to change it unless you wipe it out and start afresh. Somehow there has to be a new approach to labour standards.

Now we have a new director general, who, some people have been saying, will perhaps be very promising. Perhaps we could have the new director general come to Canada and maybe discuss how to improve the ILO. That could be one very critical move we can make.

With respect to the other question on labelling, I am actually quite skeptical about labelling. There are many examples whereby it has been shown that because there has been no government supervision of eco-labelling or social labelling, frauds, essentially, have been committed on consumers. You don't have the effective monitoring and auditing of companies that say they're doing the right thing and are not. There is no substitute for concerted effort by governments and the international community to raise labour standards. I'm troubled by some of the problems that have been arising with eco-labelling and social labelling.

Mr. Julian Reed: Today I'm wearing a shirt made in the Dominican Republic. I know that, or at least I believe that, because that is on the label. There's nothing there that indicates to me that the manufacturer of this garment complied with anything. I know enough about the Dominican Republic to know that this manufacture was probably taking place in one of these free zones. That's all I know as a consumer. Or if I have a pair of shoes made in Indonesia, that's all I will know as a consumer. That's a concern. I think there is a consumer responsibility here, which could have a great influence if in fact the message could be directed there and would not isolate the consumer from this kind of discourse.

Ms. Ann Weston: May I just add some points? I think both of your points are very important.

• 1120

On the issue of consumer responsibility, this clearly is one way, and I think a number of consumer groups would probably support the “sweatshop initiative” that's being called for, because this would be one way of looking at how we can make sure that when people buy shirts they know how those shirts are made. I would call upon the committee to consider that the sweatshop task force might be a useful experiment in looking at this particular issue and at how we can move ahead within Canada, within rules that comply with what the WTO allows us to do to ensure that there's more information about how shirts are made and to ensure that companies that sell those shirts are encouraged to take greater responsibility for the conditions of production.

It's not just an issue of consumer responsibility. There is a responsibility there for government and a responsibility there for the corporations. All three need to work together.

Coming back to the issue of ILO and whether or not it has any weight, there's a tendency to be very dismissive of the ILO. Clearly there have been a number of problems, but there has been a bit of a rebirth in the ILO in the last year, and there is now a new director general, so let's see if we can work through the existing mechanisms of the ILO. It doesn't just get involved in issues where trade sanctions might be appropriate. It goes in and it works with countries, with governments, to create labour standards, to create national enforcement mechanisms.

After all, that's really what we should be aiming for. Why should we go for the big stick when, really, what's most important in countries is that we have inspectors who go into factories and check that national labour standards are being enforced?

I think we should try to work through the ILO. At the same time, we can talk within the WTO about a committee that looks at the relationship between trade and labour issues and then we can begin gradually to see whether or not there are particular elements that need to be included in the WTO to reinforce what the ILO is now doing.

We actually are working with elements, with other people, to try to organize a conference later this year in Canada which would promote what's going on in the ILO and would create an opportunity for Canadians to debate about what they think of what the ILO is doing and about whether or not it can be made more effective in and of itself before we talk about using the WTO as a way to solve all labour problems—because I think that's really not necessarily the best solution.

The Acting Chairman (Mrs. Sheila Finestone): I don't know. It just strikes me that we should stop the world, get off and take a good look. Maybe we should smell the flowers before we get back on.

[Translation]

Mr. Daniel Turp: Spring is coming, Mrs. Finestone.

The Acting Chairman (Mrs. Sheila Finestone): I know.

Mr. Daniel Turp: At 8:40 PM Saturday, it'll be Spring.

The Acting Chairman (Mrs. Sheila Finestone): That's lovely.

Mr. Daniel Turp: There'll be beautiful flowers.

Ms. Betty Plewes: But the flowers are starting to die.

[English]

The Acting Chairman (Mrs. Sheila Finestone): Okay. Stéphan Tremblay,

[Translation]

you have the floor.

Mr. Stéphan Tremblay (Lac-Saint-Jean, BQ): And it's a good thing too, because I just happen to want to talk about flowers. There are some people who are worried about flowers dying and others who think the flowers are doing very well.

I haven't been in politics long and I'm absolutely fascinated by the differences of opinion and perception you find there. A little while ago, we heard the differences between the thoughts of our colleague Mr. Penson and those of Mr. Campbell. One thinks that everything is going fine and that there are just a few adjustments to be made. The other thinks that humanity is in a state of crisis.

Last week, I went to a university to have a discussion with some students. Very few of them know how the Tobin Tax works or the state of the international financial and trade system. It seems to me that there's a communications problem. When people are better informed about problems and when we admit there is a problem and that we are in a state of crisis, it seems to me that then we'll be able to solve our problems.

What should we do to agree on the fact that something is very wrong with society? The absence of certain members shows that the subject is not considered to be all that important.

[English]

The Acting Chairman (Mrs. Sheila Finestone): Stéphan, you're not in the middle of a political debate. We understand that. You go ahead and ask your questions.

[Translation]

Mr. Stéphan Tremblay: Yes, that's right. I apologize. You're right.

The Acting Chairman (Mrs. Sheila Finestone): It's youth.

Mr. Stéphan Tremblay: I would like to hear what you have to say about that. Thank you.

[English]

The Acting Chairman (Mrs. Sheila Finestone): Who's going to take on this young and very vibrant gentleman who's learning that politics is a

[Translation]

pain in the butt

[English]

and fascinating?

Voices: Oh, oh.

Mr. Bruce Campbell: I could start.

The Acting Chairman (Mrs. Sheila Finestone): I think you started him thinking, so it's a very good idea for you start.

Mr. Bruce Campbell: Do you think I should?

The Acting Chairman (Mrs. Sheila Finestone): Please do.

• 1125

Mr. Bruce Campbell: I really do agree on the need to dispense with a lot of the hype around liberalization and globalization, that is, that it's a good thing, and if it's not a good thing, it's an inevitable thing and so you had better go along with it, you had better accept the reality and go with the flow and make the necessary judgment, and if you're really lucky and really quick, you'll come out on top.

It's not the rising tide that raises all boats, it does it only for those who have boats, and there are a lot of people who don't have boats.... A lot of those people get left behind. There are big numbers of people in the middle who are on the edge, especially in this decade. They're amongst the anxious classes. There are very few in the “comfortable” department, certainly a lot fewer than there used to be.

I really think it behoves the political leadership to be really clear-headed about what the impact has been. Betty called for an analysis of the impact of the Uruguay round. There has never been a serious analysis by this government or the previous government of 10 years of free trade; it almost passed unnoticed. You will recall what a huge debate that was.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Campbell, you must admit that there has been an economic analysis, because we know the percentage of trade that has increased for Canada in international trade, so—

Mr. Bruce Campbell: That's pretty straightforward. No one's disputing that.

The Acting Chairman (Mrs. Sheila Finestone): Excuse me. There has been that aspect of the analysis. Perhaps the balance of the analysis you presented earlier is what has been missing: the social sides.

Mr. Bruce Campbell: You will remember, Mrs. Finestone, that during the free trade debate there were all kinds of claims made on both sides of the debate about what the impact would be. There was a whole variety. No one disputed the fact that there would be more trade, but the impacts.... I think there needs to be a clear analysis of those impacts, and I think that applies to multilateral trade as well. Rather than just assuming that trade liberalization and capital liberalization, especially capital liberalization, is necessarily a good or inevitable thing—I think it's just wrong-headed—I think one needs to move from there and look at what we want to get out of a trade negotiation. Let's set those priorities and set them out clearly so people can see beyond the generalities.

The Acting Chairman (Mrs. Sheila Finestone): Ann, then Betty, and then Mr. Turp has a question.

Stéphan, did you get your answers? C'est beau.

Ms. Ann Weston: I just want to say that even sub-federal governments can take more responsibility for making sure that the social impacts are not quite so negative as they seem to be in some cases. I'm thinking about this debate over the sweatshops and the clothing industry in Ontario and in Quebec. There has been a real problem with sub-federal governments cutting back on the number of factory inspectors. That's nothing that the WTO tells us to do, but we are doing it nonetheless.

There's a danger, perhaps, in blaming international rules too much for things that we actually do have somewhat more control over ourselves, whether it's in terms of enforcement of our own legislation or whether it's in terms of designing appropriate social safety nets. If, in economic terms, NAFTA is good for Canada, let's make sure that we have economic policies or fiscal policies in place to compensate those people who are hard done by. Unfortunately, we tend not to do that and that's why people resist. There is much greater scope for doing well in this more open global economy, but it does require leadership, both at the corporate level and at the government level, whether it's at the sub-federal level or the federal level.

The Acting Chairman (Mrs. Sheila Finestone): Thank you.

Betty, please, and then Monsieur Turp, s'il vous plaît.

Ms. Betty Plewes: I just wanted to respond to one element of Mr. Tremblay's commentary, which is that of public education and public involvement. It is true that we can't just leave these issues to the experts. While they are very complex and demand very sophisticated responses, there are some basic values and principles and some choices that people need to make.

• 1130

I know that most governments are currently concerned about how one democratizes the process of public policy formulation. We're concerned about that, both at the national level and at the international level.

One of the ways to do this, which we have recommended most recently, is that we increase the amount of the CIDA budget that is spent on public education. This budget was dramatically cut in 1995, and it's one of the areas in which we do have some resources to devote to increasing Canadians' understanding of these key global challenges. I think it's a very important question about how these very complex, sophisticated issues can be part of a public policy debate.

The Acting Chairman (Mrs. Sheila Finestone): As a matter of fact, I think it's a question that all of us around this table are going to have to look at. The MAI should have forewarned us that an uninformed population can take a situation that may have been a good idea.... I don't even know after hearing all the debate whether it was good or bad; all I know is that it flunked. It flunked for a very good reason. If you believe in democracy and you believe an enlightened society has the right to make choices, but right choices or wrong choices, only if you get information....

[Translation]

Mr. Turp.

Mr. Daniel Turp: On that subject, Madam Chair, I was in the UK a few days ago. I had the chance to talk with the Parliamentary Secretary for International Development. You know that the British have made that effort. We already talked about that with Ms. Plewes. New Labour has made an effort to make the citizenry aware of the public aid to development issue. It's fascinating what they've done, especially since they've succeeded.

In supermarkets and places people go to do their shopping, they distributed pamphlets on the new development aid policy to inform people and get them to understand it. Stéphan is doing the same thing in his own way. It's something that should be done not only for public aid to development but also for issues such as the future of our planet on the economic and commercial levels.

It's serious, the suggestion being made to do impact studies on what has already happened, but even more so on what will happen with the new policies and rules that will be adopted within the framework of the next negotiations in the Uruguay Round. I'm sure there'll be great difficulty imposing retroactive impact studies because you can always find good reasons not to do it for the Uruguay Round. However, we should certainly want the WTO and the various countries to do impact studies on what has been done, on what has been decided and on the results of applying these new agreements.

I would like for you to talk a bit more about the idea of these impact studies for the future.

The other question, I'm borrowing it a bit from Maud. Will the WTO become the most important organization? Should we be thinking more about reforming the WTO as it is now rather than investing our energy in the ILO and other organizations that could become essentially subsidiary organizations of the WTO when it comes to applying labour standards or developing labour standards to be applied by the WTO? Perhaps the WTO could have more serious and coercive mechanisms for applying labour standards and human rights.

[English]

The Acting Chairman (Mrs. Sheila Finestone): Mr. Mendes.

Prof. Errol Mendes: Daniel, that's exactly what we're recommending in our text, that is, that the ILO become an advisory body, if you like, to the World Trade Organization, the IMF and the World Bank to show how labour standards and human resource development and total-factor productivity can be integrated into every single aspect of the World Trade Organization, the IMF and the World Bank. That's exactly right.

I also agree with the impact statement.

The Acting Chairman (Mrs. Sheila Finestone): Do you think, Mr. Mendes, that at the same time an evaluative process should be set up so that you have a bottom line, a baseline, from which you can then examine progress or regression, as the case may be?

Prof. Errol Mendes: Absolutely. As I said, there's a great opportunity for that coming up next year. There will be a global review of trade policy in the World Trade Organization next year. Canada could take a lead and suggest precisely this as part of a trade policy review mechanism for the millennium. It's something that I strongly encourage the committee to do, to make a recommendation to the government on that basis.

That's exactly right, Daniel.

The Acting Chairman (Mrs. Sheila Finestone): Just one moment. Madam Debien will add a question, and then you can finish off because we're going to close down.

• 1135

[Translation]

Ms. Debien.

Ms. Maud Debien: Last week, some witnesses suggested that a moratorium be placed on the next negotiations, on the next round of the millennium. You have all talked about an impact analysis. You said, all four of you, that an assessment would have to be made of the Uruguay Round and a very detailed analysis of its impacts, and some witnesses said here last week that it would perhaps be advisable to place a moratorium on the next negotiations so that the various countries could do impact analyses. Do you think that's realistic?

Ms. Ann Weston: I see what you're getting at, but I don't think you should forget that, in the Uruguay Round agreements, negotiations on agriculture and other subjects have already been arranged. Even if it is decided not to start another round of negotiations, some negotiations will take place anyway. People have asked for a new round so that several subjects can be on the table at the same time to make trade-offs.

Even if there is a moratorium, decisions should be taken on agricultural issues, etc. I don't think we can stop those decisions, which will be hard ones for our country and developing countries.

[English]

The Acting Chairman (Mrs. Sheila Finestone): Excuse me.

Mr. Turp, will you please read your motion in afterwards, before we close the meeting?

Mr. Daniel Turp: Sure.

The Acting Chairman (Mrs. Sheila Finestone): Avant qu'on termine.

Madam Plewes.

Ms. Betty Plewes: There are two things. One, I think, that people who are calling—

[Translation]

The Acting Chairman (Mrs. Sheila Finestone): Just a minute. I would like to establish the rules of the game.

Mr. Daniel Turp: Things are starting to get interesting under your chairmanship, Mrs. Finestone, because the opposition has all the questions.

The Acting Chairman (Mrs. Sheila Finestone): That's not true. I have some questions.

Mr. Daniel Turp: That's right. Mr. Reed asked some.

The Acting Chairman (Mrs. Sheila Finestone): And me too.

[English]

We will hear from each of you as a summation or closing statement, please. You can include your responses to the questions that were asked. Is that quite all right, gentlemen and ladies? Would you like to do it in two- or three-minute responses as you go along, starting with Mr. Campbell?

Mr. Bruce Campbell: Okay. I'll just respond to some of the recent comments that were made, starting with impact analysis.

Most of the impact analyses that are done on these trade agreements, that have been done in the past, have been done about what would happen. I know that was very true with the FTA and with NAFTA. You had the government doing its impact analysis and basically justifying what its policy desire was, and you had the C.D. Howe doing its impact analysis and they had a distinct bias, and we did our analyses and we both.... One kind of analysis was a general equilibrium analysis. These were computer models. We put different assumptions in and we came out with different results. Probably neither of them were that accurate in terms of capturing the complexity.

That's why I would tend to be somewhat skeptical of impact analyses unless I had confidence in the body that was doing those analyses, and the Department of Foreign Affairs would certainly not be my first choice.

We don't have, for example, what they do in the U.S. Congress, which is a congressional office of budget analysis—

The Acting Chairman (Mrs. Sheila Finestone): We need an independent policy shop that—

Mr. Bruce Campbell: Yes, one that has some confidence from different sides. One way of measuring the impact would be to look at what's happened from agreements that have already been put into place and that we have an empirical basis for evaluating. I think we can get a richer assessment of what is likely to happen by looking at what's happened with past agreements, whether it's ten years of the FTA and NAFTA or five years of the GATT Uruguay round.

• 1140

One particular point, and then I'll close, is the issue of the competitiveness dynamic, which is always an issue on both sides of these debates. The critics argue that you set up a dynamic with these kinds of freewheeling market approaches where you allow capital to move at will and set up shop and threaten to close a plant if the workers don't take concessions—there's the chill effect—and there are times when they close and they move to the southern United States and so forth.

There's that competitiveness dynamic, which, on the part of the companies in the free trade market, becomes a reality, so they're fighting amongst themselves and trading off workers' rights, wages and benefits against each other. Then you have governments. I am using just the example of North America. You have 90 national and sub-national governments all vying to provide subsidies and tax breaks and lowering their taxes and this and that. It has an incredible downward pressure effect.

That dynamic is something we need to study—and to study in depth. We need to study what the effect is and we need to work out international agreements that reduce that ability and that in fact promote a virtuous dynamic that raises standards. The European Union may provide some guidance in that respect.

The Acting Chairman (Mrs. Sheila Finestone): Thank you very much.

Ms. Plewes.

Ms. Betty Plewes: I think all of these various voices, some calling for a moratorium, some calling for a period of re-assessment and some calling for a development round, as Clare Short has done, are all saying that there are some serious issues we need to study here before we go ahead and that these kinds of reviews should be done on a very broadly based basis with participation from civil society.

Secondly, I'd like to say that we're not proposing to give all these jurisdictions to the WTO so that they have more power on labour, environmental and human rights issues. We are suggesting, in fact, that we strengthen these other instruments that have responsibility for these issues and that we look at the nature of the relationship among all of these various institutions.

Finally, I think it's very important that in Canada's participation in these various complex processes we have a more coherent approach ourselves. We need to know what we're doing through the Departments of Finance, International Trade, Environment and International Cooperation so that we have an agenda with international priorities and so that we can be effective in all of these institutions.

The Acting Chairman (Mrs. Sheila Finestone): Thank you very much.

Mr. Mendes.

Prof. Errol Mendes: I suggest that in the context of the upcoming negotiations of the WTO and the review of trade policy next year, Canada should urge the international community to undertake a global conference on the emerging issues in international trade and their relationship to environment and labour standards. The conference should be jointly sponsored by the United Nations, the ILO, the WTO, the World Bank, the IMF and other concerned multilateral agencies.

The aims of such a meeting should include: evaluating the role, the mandate and the function of the ILO in the context of the world economic system; the evaluation of how trade, labour standards and the environment can be integrated to each other—

The Acting Chairman (Mrs. Sheila Finestone): Could you please slow down a little bit so the French translator can catch his breath? Thank you.

Prof. Errol Mendes: —the adoption of a declaration that forced labour and bonded labour are crimes against humanity; an examination of how the TPRM, the trade policy review mechanism, can include analysis of labour standards and environmental resources; and the refocusing and expansion of the programs of the World Bank, the IMF and other donor agencies on human resource development investment in developing countries.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Mendes, there is a sense of skepticism that we've just sensed over here. I think we have to come into the real world, not into cyberspace.

Some hon. members: Oh, oh.

The Acting Chairman (Mrs. Sheila Finestone): We'd like to know when this is supposed to be accomplished—in our lifetime or in the next ten years or what?

Prof. Errol Mendes: With respect, we have—

Mr. Daniel Turp: You have to face this part of reality, Mrs. Finestone.

The Acting Chairman (Mrs. Sheila Finestone): Yes, I know. How we're going to protect our privacy is part of reality as well.

Prof. Errol Mendes: With respect, we have an opportunity coming up next year. It is in train. We can either totally ignore it and call it unreal or we can start discussing these issues.

Madam Chair, it's up to you to decide whether we want to take a leadership role in the negotiations next year—or not. It's as simple as that.

The Acting Chairman (Mrs. Sheila Finestone): Mr. Mendes—

[Translation]

Mr. Daniel Turp: Was that before the start of the Ministers' conference, before November 1999?

Ms. Maud Debien: Before the start?

• 1145

[English]

Prof. Errol Mendes: There are discussions next year to review trade policy within the WTO and to examine what the scope of that trade policy should be. It is a golden opportunity. It is totally realistic. We can start the discussions now.

[Translation]

Mr. Daniel Turp: But, Errol, you know very well that will be incorporated into the round of negotiations.

[English]

Prof. Errol Mendes: Exactly.

[Translation]

Mr. Daniel Turp: That will go away because it'll be part of the round of negotiations. Would you want the conference to take place before the start of the next round of negotiations, in November? That's not very realistic.

Ms. Maud Debien: It's next autumn; it's this autumn.

[English]

Prof. Errol Mendes: No, it is an integral part of it. There is some indication that Britain and the United States would want to do this anyway. It was in the State of the Union address by Bill Clinton. It may be a train that is starting to move already. It is quite completely realistic, Madam Chair.

The Acting Chairman (Mrs. Sheila Finestone): I'm glad that we asked the question, because in listening to what seemed liked a very ambitious and important undertaking, it also has to be within the realm of timing and reality, and you know that timing is a great thing in life....

I know that you were in the process of finishing a statement. Do you wish to finish your statement?

Prof. Errol Mendes: No. I'll leave it at that.

The Acting Chairman (Mrs. Sheila Finestone): You mean you've caused enough trouble already.

Some hon. members: Oh, oh.

Prof. Errol Mendes: Yes.

The Acting Chairman (Mrs. Sheila Finestone): Okay. Thank you.

Ms. Weston.

Ms. Ann Weston: Just to pick up on that point, every year, as we know, the WTO is carrying out trade policy reviews of a whole host of countries. Canada was reviewed last year, so it's too late to introduce this idea for Canada this year.

What I would recommend is that if Canada really wants to support this concept of taking the evaluation of trade policies beyond a narrow, economic or WTO-legalistic approach, if we want to include social and environmental impacts, we could encourage the WTO—it might require some additional resources, which Canada and other countries would have to put in—as they start their next trade policy review of whatever country is coming up on their planning agenda this year, to begin to test out these ideas concretely.

We don't have to study the whole world. We could study the four or five countries that are already going to be reviewed in the next six months, and then you'd have your meat for the discussion when you meet in November of this year. It doesn't require a whole new process. It's just something to add on to an existing process that's already in motion.

I would just come back to this: what else can we realistically do? Let's not continue to always focus on what we're going to tell the WTO and other countries to do. Let's come back to what we—

The Acting Chairman (Mrs. Sheila Finestone): Exactly.

Ms. Ann Weston: —ourselves can do here in Canada. I still believe that we need to consider this issue of whether we are really going to open our markets to these developed countries. I think that we do need to come back to the call by Renato Ruggiero. I notice that most people have been silent on this particular issue, but I do think it's an important one.

We also have some capacity to contribute more in the area of technical assistance. We can also make our trade policies much more coherent with our development policies.

I would like to endorse what some of my colleagues have said here today, but let's show the initiative within Canada and recommend to others to follow suit internationally. There is certainly something that we can do here.

The Acting Chairman (Mrs. Sheila Finestone): Do you have another question?

Mr. Julian Reed: I have a point of order, Madam Chair.

The Acting Chairman (Mrs. Sheila Finestone): Yes, sir.

First of all, thank you very much.

Your point of order, sir.

Mr. Julian Reed: Thank you, Madam Chair. I just would like to explain to my friends from the Bloc that my colleagues were hijacked or otherwise shanghaied—or whatever kind of expression you would like to use—in order to vote on legislation in other committees and that our illustrious chairman is away at the moment receiving an award for the work he has done in promoting the French language across Canada.

[Translation]

Mr. Daniel Turp: That's true.

[English]

Some hon. members: Oh, oh.

The Acting Chairman (Mrs. Sheila Finestone): I can only say as the co-chair of the official languages committee that I'm very pleased to hear that of Canada.

[Translation]

Mr. Daniel Turp: Madam, can I read our motion before...

[English]

The Acting Chairman (Mrs. Sheila Finestone): Yes.

I would like to thank our guests, our witnesses. It's been very enlightening. I would sincerely hope that all the various government department representatives who are sitting behind you take quick and important note of this and do some follow-up, because we're going to ask some questions to see if they've done some follow-up on what you've suggested. Thank you very much.

[Translation]

Mr. Turp.

Mr. Daniel Turp: In the light of events in Cuba early this week, I'm tabling a notice of motion asking that our committee send for the Minister of Foreign Affairs to hear what he has to say about the changes he wants to make in Canada-Cuba relations, since that's what he talked about in the House. So, I'm tabling this motion which should be debated, I would imagine, at the next meeting of the committee.

The Acting Chairman (Mrs. Sheila Finestone): Thank you very much.

[English]

The meeting is adjourned.