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]

Monday, March 22, 1999

• 0932

[English]

The Acting Chairman (Ms. Sarmite Bulte (Parkdale—High Park, Lib.)): Good morning, ladies and gentlemen. I'd like to bring this meeting of the Standing Committee on Foreign Affairs and International Trade to order.

Pursuant to Standing Order 108(2), the main committee is conducting an examination of Canada's trade objectives and the forthcoming agenda of the World Trade Organization, the WTO. In addition, pursuant to the same standing order, the Subcommittee on International Trade, Trade Disputes and Investment is conducting an examination of Canada's priority interests in the FTAA process.

[Translation]

I would now like to welcome our guests and thank them for being with us today.

[English]

This is the first in a series of public hearings being held by the committee across Canada on the key aspects of Canadian international trade policy. These hearings come at a time when countries are facing some crucial choices and decisions in the complex negotiating process that's being conducted multilaterally both under the auspices of the World Trade Organization and in developing regional forums, such as the proposed free trade area of the Americas.

In undertaking wide-ranging studies and public consultations on Canadian interests in both the WTO and the FTAA negotiations, the committee and its trade subcommittee strongly agree with the Minister of International Trade, Sergio Marchi, on the necessity to provide Canadians with more opportunities to have input into the positions that the Government of Canada takes going into such negotiations.

This week, while one half of the committee is holding hearings in the Atlantic provinces, the other half of our committee is having similar hearings in Quebec. In the last week of April, the committee will again divide into two groups in order to be able to conduct extensive hearings in Ontario and the western provinces. We hope to benefit from as broad a cross-section of Canadian opinion as possible and to reflect that in reports to be tabled in Parliament before the summer, in advance of major international trade meetings taking place later this year.

Leading up to this phase of our cross-country consultations, the committee heard first from the minister and senior officials. Following that, during March, seven very successful, initial round tables were convened in Ottawa, with presentations from 40 witnesses, covering a very wide range of both systematic and sectoral concerns.

As Minister Marchi stated in his opening presentation to us, international trade has now become a local issue. What happens at faraway negotiating tables has consequences that reach right down to the kitchen table and other domains of daily life. As this trend deepens as a result of globalization, the making of trade policy cannot be left to only a few officials in backrooms. It needs to engage the whole of society and governments at all levels. The members of the committee therefore welcome these hearings as one step in contributing towards that goal. We encourage more citizens in all parts of Canada to participate, to give us their best ideas, and to follow the progress of our parliamentary study process in the coming weeks and months.

• 0935

[Translation]

Of course, this is a bilingual meeting and you may speak in the language of your choice.

[English]

Before we start, Mr. Ploughman and Mr. James, I would like to ask my colleagues to quickly introduce themselves. We will then come to you for your presentations.

[Translation]

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): Good morning. My name is Daniel Turp, I am a member of the Bloc Québécois and its foreign affairs critic.

[English]

I'm happy to be here, and I look forward to hearing your presentation.

Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): I'm Darrel Stinson, Reform Party of Canada member of Parliament for Okanagan—Shuswap, in British Columbia. It's a pleasure to be here today to listen to you gentlemen. Thank you.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I'm Bob Speller, parliamentary secretary to the Minister of International Trade, and a Liberal member from southwestern Ontario.

Mr. Sarkis Assadourian (Brampton Centre, Lib.): Sarkis Assadourian, member of Parliament for Brampton Centre and a Liberal. It's my first time in Newfoundland, and I look forward to your testimony. Thank you.

The Acting Chairman (Ms. Sarmite Bulte): I'm Sarmite Bulte, an associate member of the committee and the chair of the Subcommittee on International Trade, Trade Disputes and Investment. I'm a Liberal member from the Toronto riding of Parkdale—High Park, and I'm delighted to be here.

Now, gentlemen, if I may....

Mr. Lorne Janes (Chairman and Past Chairman, Alliance of Manufacturers and Exporters Canada): Madam Chair, good morning. First let me thank you for being in Newfoundland. It's unfortunate that our weather is so cold and miserable. It's not like it traditionally is here, so we hope the weather will be a little warmer the next time you come back, like it usually is.

Having said that, in our view, the timeframe we had to prepare for these meetings was not long enough. If these meetings are as important as we are led to believe they are, then the couple of days we had to go to our members, which total about 130 companies—remember, in our association it's the company that's the member, not the person, but there are about 20,000 workers—across the 1,000 kilometres, with an issue that involves 20 or 30 pages of documentation by our look, was not sufficient to give you the answers we feel you're here to seek. What we've had to do is put something together as best we could from what the alliance has available nationally, pull out of that some meat or some nuggets, go across on the telephone as quickly as we could, and see at least the views that the alliance is sharing nationally. My maybe very biased view is what you're going to get today.

To get the answers you're looking for as you conduct these meetings across the country, I would strongly urge you to try to give the associations, and particularly trade associations.... Many people are like myself. They are unpaid volunteers with businesses, families, snow clearing, and bank payments to worry about. Our association has about 120 issues that we're dealing with on our own, and I can tell you that this particular set of meetings is not even on our Christmas card list. So it has been rough to get this put together. Having said all that, what we've done is basically taken the headings as we see them, and we'll give you a nugget of a point of view that we feel we would like you to take forward.

Starting with the one on the importance—as we've called it—of international rules, the alliance feels we should have a rules-based international trading system in which the field is level and in which both the purchaser and the vendor know what we are dealing with.

On the issue of the millennium round, the alliance feels policy should be directed toward securing a greater liberalization of trade in goods, services, and investment. Also, it means that the round must not necessarily be a marathon round, as it was in the Uruguay session. What we're saying is that if we can move a little away from process and get a little more to results, let's try to get some action rather than having ongoing meetings and discussions.

Under the heading that we've called comprehensive versus restricted list of subjects, one thing is clear. If the next round is to be centred only on agriculture and services, Canada will not have the requisite degree of leverage and muscle to obtain advantageous results there. It will only be possible under the broadest set of negotiations, in which there is more room in trade-offs. In simpler words, because I'm trying to do both here today, we feel that if Canada gets trapped into being focused on one specific issue, such as agriculture, we could lose. If we can have these meetings on the broad-based issues on which Canada is stronger, we could get an agreement that is of much better benefit to Canadian industry.

• 0940

Under the heading of unilateralism, the alliance suggests that the dispute mechanism be elaborated and modified, so that in the event there is disagreement over measures designed by the World Trade Organization members to comply with the panel, the dispute can be resolved fast and in an effective manner. What we're saying is to go ahead and do something, even if it's not right, and let the dispute mechanism settle it should an error be made. Again, let's try to cut down on what seem to be marathon meetings that go on decade after decade.

By the way, this is the first draft that we have of the presentation you will be getting in great detail from Dr. Jayson Myers and his staff in Ottawa when that turn comes. I guess it's a preview of what they will be telling you.

The next heading you will see is under the issue of tariff reductions and custom procedures. We're saying there are a number of areas where industrial tariffs remain high and continue to be obstacles to Canadian trade. While tariffs are being progressively reduced and are less of a problem than before the Uruguay Round, the alliance would like to see the remaining tariffs reduced or removed as soon as possible. While this is not the highest priority for Canada, these remaining tariff issues should be addressed in the next round.

The alliance believes that some attention needs to be paid to the nuts and bolts of the customs clearance and documentation issues, in order to remove the remaining red tape at border crossings and bring the aspect of international trade up to the same speed found with electronic commerce. There's a real concern amongst the alliance members, especially the SMEs, who do rely more on the rules-based system. For example, in many smaller firms, we do not have a customs import-export division—and the international trade management team will be with you this afternoon, but this morning they are making deliveries.

I have an example. A Canadian purchaser, a small company, will buy from a small U.S. firm that has probably not done a lot of import-export into Canada. When the Canadian purchaser receives his documentation from his customs broker some months later, along with maybe four, five or six pages on the purchases, there's a total there and he, she, or they will pay the bill. What they may not realize is that if the U.S. exporter had not made it clear to the customs broker that the goods purchased were eligible for an FTA exemption, the Canadian purchaser does pay the customs. The customs people are customs people; they are not the FTA police.

I don't know, but I would suspect that there are many millions of dollars sitting in our federal revenues that have been collected either incorrectly or maybe even unfairly, only because it is not the job of the customs brokers to protect my business. Maybe we still need to do some more education with Canadian business in particular, to make sure they inform their American suppliers of what documentation is required when those goods hit the Canadian customs brokers.

Under the title that we have for extending the scope of schedules and agreements, Canada is a major exporter of financial and other services, but we are falling short of having an appropriate share of world business. We consider the need to extend the GATS to cover a wide range of services and areas, and the discipline to hidden obstacles and services trade, to be the priorities. We need more effective rules to prevent discrimination against Canadian companies.

The alliance would like to see an agreement on the issue of telecommunications and information technology. The alliance would like to see the agreement deepened and widened, with a focus on market access and market issues. At the same time, Canada must try to have the agreement extended to a wider number of World Trade Organization members to achieve a better balance of multilateralism within this sector.

• 0945

Under the heading of Internet and international commerce, again we believe the international community has to move quickly to set rules and establish disciplines, so as to ensure the free flow of electronic trade and to avoid unfair, discriminatory limitation of Canadian companies in all markets.

Under the heading of trade and compensation law policy—this is my last point, and I thank you for your patience—we think the next set of meetings should give encouragement to the efforts. However, we think the focus should shift away from trying to agree on the substance of competition rules and remedies—the minutiae—and to developing a clear set of principles and guidelines for the administration and enforcement of the rules so that we can move forward. For the alliance, our prime interest is to ensure a fair and liberal trading competition environment for our members in foreign markets. What we see as a high priority is the need for Canadian exporters to be on a level playing field on which rules of competition are clear, openly published, and fairly administered on a non-discriminatory basis.

I think that completes the notes we had from 9.30 last night until about 1.30 a.m. Newfoundland time. Our staff person worked from 9 until midnight Ottawa time.

Mr. Burf Ploughman (Vice-President, Alliance of Manufacturers and Exporters Canada): While the Oscars were on.

Mr. Lorne Janes: Yes, while the Oscars were on, of course. I was sitting at home with the television on, in appropriate garb, as you would be with a bottle of wine. I had the computer in front of me, and I'm sure my counterpart in Ottawa was doing the same thing.

If you could glean all these twenty-odd pages down to half a dozen nuggets and could take those nuggets into a half a dozen words, what we're saying is to move forward, to do it with some rules, to not try to solve every problem before it occurs. Let the dispute mechanism solve what may come up, and let's get this thing resolved to move forward.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Janes.

Mr. Ploughman, do you have anything to add?

Mr. Burf Ploughman: No, I have nothing to add at the moment.

The Acting Chairman (Ms. Sarmite Bulte): Thank you both very much, and thank you for your comments regarding the amount of time you were given as well. We'll take that back with us.

Mr. Stinson.

Mr. Darrel Stinson: First of all, I want to say that it really concerns me that you were given such short notice about what was going on here. It's very disturbing to find that out, so you have my sympathy. I know what pressure you had to be under given such short notice.

That brings me to my main question. In regard to us going around the country, basically trying to find out where we can improve and what we should be looking after, do you feel you are being adequately consulted in regard to the matters we're facing here? From what I've heard today, I can't believe you do.

Mr. Lorne Janes: First, in reply to the timeline, if you're a little frustrated, I can assure you that we were. But Newfoundlanders are used to working with adversity, so we'll deal with it okay.

On the consultation process, the word is tossed around. Mr. Ploughman and I quite often sit in your seats, giving measures to somebody else, so we appreciate the budgeting issues you have to deal with. We understand that your funding was only approved on Friday, or so we were told when we got the call on Monday.

Mr. Daniel Turp: It was because of the Reform Party.

Mr. Lorne Janes: Thank you.

To go out to consult, I think my first comment is still my foundation. If you're going to consult, I think you must give the people you're working with the time they need to properly give you the information you are looking for, and you must be sensitive about who you are going to. I have no idea how you structure it in Ottawa, but I would assume that if you were taking this committee to a group of international trade lawyers who have been dealing with this for their entire career, probably a week's notice or a couple of days or an hour on a certain issue may be enough. When you take it to a volunteer, unpaid group with a small staff in Newfoundland and this is one of 130 issues we're dealing with, I think you have to consider that we may need a little more time. When you say “WTO” or “World Trade Organization”, it would also help us to know what that means. Do you put on craft fairs? What do you do?

So I think it would be a great help to us if you were to bring forward what the issues are, and if you outlined to us what you think the impacts would be on our companies. Then you should look for our comments, rather than asking me, aside from my business and family issues, to get up to speed in a couple of hours or a couple of days on what you've not been able to do in twenty years.

Mr. Darrel Stinson: Thank you very much. That's very interesting. And I agree, it would also help us on this side too.

Mr. Lorne Janes: In actual fact, getting information to you is what you want.

Mr. Darrel Stinson: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

• 0950

Mr. Daniel Turp: I think one of the important things you've said, sir—

Mr. Lorne Janes: It's Lorne. “Sir” is my father; Lorne is fine.

Mr. Daniel Turp: —is you don't want those negotiations to be only on agriculture and services; you want them on investment. So could you tell us a little more about investment and these negotiations and the positions you might have taken in the past. I don't know if you reacted to the MAI when there was a debate on this multilateral agreement on investments. That's on a more professional note.

On a more personal note, I'd like to know how you can be president and past president of your organization at the same time. Were you happy with the results of the Oscar night?

Mr. Burf Ploughman: Madam Chair, I can probably explain that. When I faxed who was to appear before you today, I stated that Mr. Janes was the past chairman of the national association, but he's also the chairman of the Newfoundland association. It came out that he's the past chair as well as the chair.

Mr. Lorne Janes: I guess I'm in my fifth year here of a one-year term, so either I'm doing a good job or they're going to keep me here until I do it right.

When I was chatting last evening with Pam Fehr in Ottawa, who provides us with most of the data I'm fortunate to be able to give you this morning, we looked at a couple of areas. There were two specific ones we discussed that we agreed we would try not to get involved in. One was the corruption issue, as we have not developed a position for the alliance to properly present to you on that, and the second one was investments. So you focused right where.... She said the good people would do that, so thank you.

Surprisingly enough, we boxed out an appropriate response should that question be asked. First of all, when we say to focus on other things aside from investment, I think it's more important to say don't get trapped in focusing on one issue. There's investment, services, product, and goods. Don't get trapped in basing your discussions on just one sector. We may lose that. I think Canada, being the type of country we are, needs a much more broad-based set of rules.

Specifically on the issue of investment, we do not think it serves a useful purpose for the alliance to simply advocate the importance of global investment rules to ensure Canadians are not discriminated against in foreign markets. We think that's a given anyway. What is needed is a negotiating strategy to ensure the matter can be handled in the right way and attract the degree of international and domestic support needed for fruitful progress.

Since this issue has come up here this morning, I will make sure it will be detailed, so the next time you get together, Pam and Jay in Ottawa will be able to answer that question far better than I can, as that is their job.

Mr. Daniel Turp: On exports, what do you want? You're an alliance of exporters as well.

Mr. Lorne Janes: We're an alliance of manufacturers and exporters. Some years ago the manufacturers' association and export association merged, hence the name.

Mr. Daniel Turp: What do you think should come from those negotiations, from an exporter's point of view? What has to happen to make things better for exporters here in Newfoundland?

Mr. Lorne Janes: Newfoundland companies tend to be smaller. They probably have as good or higher quality goods, but they tend to be smaller; therefore the staffing within those firms may not be fragmented to provide the detail that quite often is required to deal in export markets. So we would like to see, from a Newfoundland standpoint, the rules made as translucent as possible and as quick to react as possible, so we can move our goods out and the money in.

Mr. Daniel Turp: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Speller.

Mr. Bob Speller: Thank you, Madam Chair, and thank you, gentlemen, for your presentation this morning.

As Mr. Stinson did, I also want to apologize on behalf of the committee for the short notice.

• 0955

In terms of the overall negotiations and the consultations being done by the government, as you may or may not be aware, the Minister of International Trade, in early February, actually put out a call for submissions on the two issues of both the World Trade Organization upcoming talks and the talks we're chairing as a government for the next year, the free trade talks of the Americas.

I have seen you in the past on consultations on the whole question of the European free trade area, and one of our goals as a government is to not only consult with the national groups but also to get out into the various regions throughout Canada to consult with individual Canadians at the provincial level. So we want to hear from the people at the local level, as well as from their national organizations. That's why we sent out letters—I'm sure you received them—in early February asking for information at the local level. We want to also be aware of what's going on locally.

In terms of the committee itself, it's playing one role in terms of the consultations. The minister hopes to get out in the areas to talk to individual groups, as do I. I'd like to get a better understanding for the committee of the businesses you represent and some of the problems they may face individually with world trade, whether it be at an international level with the WTO, or trade into the Americas—Latin America.

Can you give us a little bit of an understanding of the types of businesses you represent and the types of things they do? It might help us get a better understanding of some of the problems you face here.

Mr. Lorne Janes: As best I can, understanding my initial comments that still have to apply, and aside from a few phone calls we could make, the type of manufacturing businesses we have here today in Newfoundland that are emerging exporters tend to be fairly varied. Many of them tend to be in the building-supplies-related field, and I don't know why. We have companies that do drywall and companies that do insulation products. We have companies that do cast polymer moulding—one is called Continental Marble. That's 782-8844 if you want to buy something before you leave here; that's my company.

We have companies that are heavily into the food industry, and when we say food I don't mean ocean resources from the raw materials but the value-added processing of high-end fish and food-related items. We're heavily into electronics. We have a couple of good computer firms in the province. We're doing well on the software side.

Manufacturers such as textile companies, where raw materials are brought in that are subject to high value-added, would do well here because rolls of material can come in fairly inexpensively. When the material is made into clothing, the value-added going back out is quite high.

In the plastics industry, for example, drums of resin can come in that would fill this table, but the products going back out from that would fill the building. So it tends to work well in Newfoundland for very high value-added products.

The problems they run into are the ones I mentioned earlier. Newfoundland farms produce good products with a good workforce—as good or better than most, I think—but we have to learn more about dealing with the documentation, the bureaucracy, and the logistics of international trade. What happens when you find out your boat full of goods is on the bottom of the ocean in the Adriatic Sea? Who pays you for your goods? We have to learn more about dealing with Export Development Corporation and North Star.

Those are areas that smaller companies, not just Newfoundland companies, are traditionally not involved in. It's not your job, of course, to teach us, but if you can do something to make those rules more workable for small firms across the country, your group will have done an excellent job.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Mr. Janes.

• 1000

Mr. Bob Speller: Just a final point, Ms. Bulte, and for Mr. Stinson's benefit also, one of the things we've done as a department is to put some of that information you asked for on our web site. We've also put forward issue papers that address some of the issues that may be of concern to your businesses. So you might want to get that information off the web site and pass it on to your smaller businesses.

Mr. Lorne Janes: I think the web site is an excellent idea. The reality of human nature, however, is that we do not go looking for a problem that may occur and have a solution ready.

In response to your question of what problems are we incurring, where we run into problems, we tend to go ahead and do what we think is right, and when the inevitable happens and something goes wrong—which, rest assured, it always will—then we go looking for a quick fix. That is where I think the rules will be a big help to us.

Mr. Bob Speller: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Assadourian.

Mr. Sarkis Assadourian: Thank you very much.

You represent the Alliance of Manufacturers and Exporters Canada. Am I right?

Mr. Lorne Janes: No, I'm the past chair of the Alliance of Manufacturers and Exporters Canada. This morning I'm wearing my Alliance of Manufacturers and Exporters Newfoundland hat.

Mr. Sarkis Assadourian: So the presentation you made applies to Newfoundland. Am I right?

Mr. Lorne Janes: No, the presentation I made in Newfoundland was generated by using the draft document the national organization is preparing, and I've tried where possible to put a Newfoundland emphasis on the issues as they have risen in our discussion so far. But we are a division of the national organization, yes.

Mr. Sarkis Assadourian: So if we go to, say, Toronto or Vancouver and we again have a witness from the Alliance of Manufacturers and Exporters Canada, would they make the same presentation as you or would they make a different presentation?

Mr. Lorne Janes: Hopefully, with time permitting, they would take the national view, which will be complete at that point in time—this is only a draft—and interject into that whatever division issues are appropriate, as we have tried to do this morning. You were also dealing with the national body as a separate issue.

Mr. Sarkis Assadourian: In response to earlier questions, most of the time you referred to size as a factor in Newfoundland and other provinces with big companies. You mentioned that a drywall company may be good, but the numbers are very small compared with other large companies. Would that be the only difference between your manufacturing base here in Newfoundland and some other large provinces or large companies?

Mr. Lorne Janes: If I understand your question, I use size only as a means of making the point that the smaller companies, regardless of where they are, tend not to have the staff a larger firm would have to deal with issues of logistics, such as freight, customs, documentation, and claims that may occur. In my firm, for example—as I said earlier maybe a little humorously—the same person who handles the foreign issues on our shipping and does our documentation will not be available until this afternoon because this morning that person is making deliveries and doing installations. In larger firms you have people who have more time, who are more dedicated, and who possibly have a higher skill level to deal with those issues. In a smaller firm we certainly are much more cross-trained and multi-tasking, if those are the new words we are using today. So I think it's important for us who export that the rules are as clear, as precise, and as concise as possible.

Mr. Sarkis Assadourian: Maybe I can make one final point. We will be meeting again in the western provinces with other witnesses. If you have other points you have not been able to mention because of the time factor, it might be advisable to make a presentation when we go to the west coast, Alberta, what have you.

Mr. Lorne Janes: Thank you. That's an excellent suggestion.

Last evening I was speaking with Pam in our Ottawa office. Since this is the first meeting we've had, if time permits I will phone her this morning and, while it's all fresh in my mind, review what we've discussed here, so they can interject this into the draft document, which is at this moment in time a living document until they meet with you in Ottawa. Thank you.

Mr. Sarkis Assadourian: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Mr. Janes.

I have just a quick question to wrap up. To follow up on what Mr. Turp stated, you said in your third point that we should not just look at agriculture and services, but we should include other sectors. Do you have any suggestions as to what those other sectors should be? I know you talked about investment, but are there any other specific sectors your association feels Canada has particular strength in that we should include?

• 1005

Mr. Lorne Janes: If I understood what Pam was saying, I think what they're getting at there is not suggesting what you should go to. The strategy was to ask you not to get trapped—and that was their word and mine as well—and just discuss agriculture, as an example. Look at the entire broad base of the Canadian economy, and under a broad-based set of rules, Canada has a much better chance of getting a favourable set of rules.

The Acting Chairman (Ms. Sarmite Bulte): Okay. Thank you, Mr. Janes.

I think we're out of time, Mr. Turp.

Mr. Daniel Turp: You didn't answer one of my questions. Are you happy with the results of Oscar night?

Mr. Burf Ploughman: Very happy.

The Acting Chairman (Ms. Sarmite Bulte): Gentlemen, I want to thank you very much for coming. For the record, I just want you to know this is just the beginning of our consultations. This is the first of the public meetings we are holding.

We welcome you to submit a brief, not just from your national association, but also from your provincial association. The committee is open also to receiving submissions from your individual members, and we would encourage you to do so. On behalf of the members who are here today, please feel free to contact us at any time. We want to hear about your own experiences. If the companies in Newfoundland have particular problems, let us know. Give us the problems and together we can perhaps find a solution.

Again, thank you for coming.

Mr. Lorne Janes: Through Mr. Ploughman, our vice-president, we will do that. Thank you very much.

The Acting Chairman (Ms. Sarmite Bulte): I would like to call upon Mr. Legge, the next witness.

Colleagues, I invite you to take your seats. We have a very tight schedule this morning.

I'd like to welcome Mr. Eugene Legge from the Newfoundland Chicken Producers Supply-Management Group. Good morning and welcome, Mr. Legge.

Mr. Eugene Legge (Vice-Chair, Newfoundland Chicken Producers Supply-Management Group): Thank you very much. I apologize, because when I came here this morning, I didn't have enough copies for everybody. Your staff, rightly so, went and got them copied for me. Pretty well what you have in front of you is a statement from the downstream users and the supply management people I'm speaking on behalf of this morning. I might just stray from that text you have in front of you.

As I was just saying to Mr. Speller, I was in Gander all last week at a federation meeting and I never got back until Sunday, and I only had pretty well one day to put some notes together to talk to you people. It was very short notice, and I apologize for not being as organized as I should be.

As preparations are made for the next round of the World Trade Organization agriculture negotiations, which are scheduled to begin in 1999, the Canadian poultry, meat, and egg industries have joined together to adopt a unified position to help draw up the Canadian negotiating position. Also, all the supply management sectors have joined together to give government direction for the next round of talks.

• 1010

You might ask why we are so concerned about our future. There's a lot at stake for our fellow organizations, which include the Canadian Broiler Hatching Egg Marketing Agency, the Canadian Egg Marketing Agency, the Canadian Poultry and Egg Processors Council, the Canadian Turkey Marketing Agency, the Chicken Farmers of Canada, and the Further Poultry Processors Association of Canada. These groups have just joined together to adopt a unified position to help draw the Canadian position.

Combined, the Canadian poultry and egg industries in 1997 generated $2.2 billion in farm cash receipts and over $4.6 billion in total retail sales. There are close to 9,000 Canadians employed full-time on almost 5,000 farms. About 20,000 Canadians are employed full-time in 550 hatcheries, egg grading stations, and processing and further processing plants. The total value of the feed purchases was $1.1 billion. The investment in plant and equipment is more than $1.5 billion. Exports have increased dramatically over the past five years to $117.3 million, representing more than 6% of our production.

You probably want to know what we want to see in the next round of the negotiations. Canadian dairy, poultry, and egg farmers want fair and effective trade rules. The Canadian farmers want clear, binding rules that are the same for everyone. The next round of WTO negotiations must ensure that all countries deliver on a commitment to fair and effective trade. That means fair and effective trade rules that are binding and enforceable and not just guidelines that allow countries to interpret them to their own benefit.

Canadian farmers agree that a rules-based international trading system is in the best interests of Canada. As a country that depends on international trade, binding trade rules allow for more stability and predictability by curbing the political power plays of economic powerhouses such as the U.S. and the EU. Having these rules might have prevented some of the 157 challenges since 1995, and over one-third of these disputes involve agrifood products.

The place to start to achieve fair and effective trade is to get rid of export subsidies and to ensure equal market access. For example, the European Union has negotiated minimum market access for far below expectations. For poultry, the EU twelfth submission for year 2000 is 30,000 tonnes, representing 0.5% of their 1986 and 1987 average domestic consumption, which is ten times smaller than the 5% mentioned in the agreement on agriculture.

Another example is for pork. The Pork Council anticipated gaining 750,000 tonnes of port access, but they achieved 75,000 tonnes. What we would like to see is everybody get rid of export subsidies. Canada's primary WTO objective must be the outright elimination of all export subsidies. They are by far the most distorting trade measures. They cause an artificial decline in world prices, leaving other countries less and less competitive. Thus the only way to compete is to apply more export subsidies, and this becomes a vicious cycle.

Since Canada has already eliminated all of its export subsidies, Canadian exporters are at a serious disadvantage when competing with nations that still benefit from the massive export subsidies. The Canadian agriculture and agrifood industry and Canadian governments cannot compete with the mega-treasuries of the EU and the United States. The United States and the EU are responsible for more than 90% of all agricultural subsidized exports. Together, they account for 95.6% of the total cheese subsidized exports and over 99% of total poultry subsidized exports.

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We must maintain over-quota tariffs. Over-quota tariffs must be maintained at the current levels. Over-quota tariffs are a transparent replacement for the import quotas previously allowed under GATT article 11. The sole purpose of over-quota tariffs is to determine the level of market access. Without effective over-quota tariffs we can't manage the amount of supply on the domestic market, which is the cornerstone of our supply management system. Covering these tariffs means playing with the predictability of the system, a principle that even the WTO itself considers fundamental in establishing fair and equitable trading practices.

We need transparent, binding rules that ensure clean in-quota access. Market access discussions in the next round will focus on achieving clean in-quota access, and improved in-quota access offers the best means of achieving real-market access gains. Canada must obtain full equivalency of binding rules based on minimum access levels, which means the administration of TRQs must be cleaned up so that the level committed at market access is achievable. There should be no country-specific allocations; for instance, the United States has allocated a part of its ice cream quota to Jamaica, a country that has not exported ice cream in the last 30 years. No in-quota tariffs should be reduced to 0%. That means if you were to allow 5% access into your country, it would be at 0% rate, not like some countries that have in-quota tariffs as high as 50%. Norway has a huge in-quota tariff of 272% on this so-called clear access.

There should be an overall limit on domestic support, whether it's green, blue, or amber. It is impossible for Canada to compete against the mega-treasuries of the U.S. and the EU. Farmers in the U.S. and the EU receive domestic subsidies in the order of 32% and 42% respectively of the total value of farm production. The United States and the EU spend billions of dollars on domestic farm aid annually. Here, not only has the country reduced its support altogether, but it has added a burden on our industries by introducing many cost-recovery measures, like the inspection services that we have in our plants. In addition to this, the United States just last year came out with an $8.25 billion FAIR Act. It might be fair to them, but it's not fair to us. The U.S. announced in October 1998 support payments to its farmers of another $6 billion on top of that.

Another point of contention is going to be that sanitary and phytosanitary measures need to be based on sound and accepted science. Sanitary and phytosanitary measures must be based on sound and internationally accepted science so that we don't have restrictions like those for getting chicken into Australia. One of their measures is that it has to be cooked at 70 degrees centigrade for 143 minutes, virtually making it dog food.

I also wanted to mention the fact that at the annual meeting of the Canadian Federation of Agriculture we just had the Canadian Pork Council and Agricore join the group as full members. Also as a point of interest is the fact that we've been told in the past that you couldn't get export commodities and import-sensitive commodities around the table to agree, but that's what we did. We did come up with a unified trade statement that is supported by all the exporters and import-sensitive commodities who sit around that table.

Thank you. That's my presentation.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Legge, for your excellent presentation with its very specific recommendations.

Mr. Stinson.

Mr. Darrel Stinson: Thank you. First of all, I want to say that my wife is one of the 20,000 you talk about who are employed by the poultry industry out in British Columbia. She likes her work, I might say, and she appreciates the paycheque. That brings me to one of the questions you talked about, which was on the clarity of the rules. You find the rules in regard to this issue unclear?

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Mr. Eugene Legge: From what I understand, in the last round there were guidelines. There were no straightforward rules laid down; they were like guidelines. A prime example is when they try to figure out how much clear access of any type—and I'll stick to poultry, which I probably know a little bit about. When the EU decided to come up with how much poultry they needed in the country, they included every little bit that had feathers on it, whether it be pigeons, terns, or anything. When it came time to allocate the access of foreign countries, they said, “We'll allow the majority of it to be pigeon meat”, knowing full well that it wasn't going to be achieved or fulfilled.

This is what I'm saying, how they interpreted the guidelines to come up with their clear market access. If there had been rules enforced, straight black and white rules, they wouldn't have been allowed to do what they did.

Mr. Darrel Stinson: That leads me to the next question, though. You represent a number of other industries here outside of poultry. How much consultation were you given in regard to what would be implemented in the last round? Were you people consulted?

Mr. Eugene Legge: I think we were consulted, although maybe not as much as we wanted to be. But when we were in the last round we wanted article 11. That was our main goal; that was our life's dream. And we lost article 11. What they gave us was tariffication. That put a dollar value in my mind on what our industry was worth, because now we get high-use tariffs out there for the import-sensitive, which is dairy, chicken, turkey, and broiler hatching eggs.

But we were only a few of the tariffs. I do believe I have some notes here on this. Just bear with me. Canada has TRQs for dairy, poultry, wheat, barley, margarine, and beef. These account for 21 of the 1,336 TRQs held by all of the WTO members. So do we have some protection? Yes, but every other country in the world has industries they want to protect. Why? Some of the reasons are to keep your wife in a job, to keep 20,000 people working in our plants, to keep 9,000 people on farms working. That's what it's there for, and also to provide a safe and secure food for our country.

Mr. Darrel Stinson: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

Mr. Daniel Turp: Mr. Legge, in your paper you say there shouldn't be any other trade-offs. Article 11, during the last negotiation, was the trade-off. It was a major trade-off against those over-quota tariffs. It's true that it's a big problem when you resort to over-quota tariffs because they're going to be diminishing at every round.

My first question is, what trade-off do you not want to see happen during this round in your industry?

My second question is on blue box. Why, at 4.2, do you want to see blue box programs eliminated?

I had a third question on procurement. It's interesting to see that the United States protects this $4.2 billion school lunch program. Does that exist also in Canada and Newfoundland? Is it open to American products? Do you just want Canada to negotiate procurement, the lifting of these kinds of protectionist measures, during this negotiation?

Mr. Eugene Legge: I'll try to go through your questions one at a time.

Trade-offs. You're saying that, yes, we lost article 11 and we were given TRQs. That was the best deal I think the negotiators could come up with at that point in time. It mightn't be the right one, but it's the best they could come up with in order to maintain and give us a chance to get our act together in order to compete. It's a time delay. That's all it is, a time delay.

Yes, the tariff levels are going to come down. But if they come down here in Canada, they also have to come down in all the other countries in the world at the same rate and same time. And I truly believe that with—

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Mr. Daniel Turp: Is that happening, in your opinion?

Mr. Eugene Legge: No. We are losing so much of the rate now. I think it's 5% per year. It's supposed to be reduced, I think, by 36%. But when you have a TRQ of 270%, 5% doesn't really mean a whole lot.

The main thing here is we don't want to see one industry sacrifice for the benefit of another. That's why we sat down about eight months ago at the Canadian Federation of Agriculture trade table to come up with a unified trade position that represents all the exporter alliances bunch and import-sensitive people. We sat down and we took everybody's trade statements and analysed them to see what we had in common, what we didn't have in common, and where we had to build these alliances to come together. That took eight months. Three weeks ago, in Regina, we had a consensus of approval from everybody sitting at that table, which included beef, Agricore, some of the wheat pools, the Pork Council, supply management, and sugar beet producers. I don't think we'll see the wishes of any other farmer wanting to make a gain as the result of some other farmer losing.

Does that answer your question?

Mr. Daniel Turp: What about number one, the blue box?

Mr. Eugene Legge: The blue box is a way of funnelling money that is distorting. Canada does not have a blue box. It doesn't have an amber box. They say that crop insurance and NISA is on the amber side of it. I'm hoping that's going to be changed so that it will come into the green side. We have very few dollars in the green box. All it's doing is that you see that the governments of the EU and the United States will be taking money out of this blue box, if they will, and I don't think they will for a long time, and funnelling it into green programs. It's just another way of putting more dollars into farmers' pockets.

In the document you have there is mention of a figure of $685 Canadian that a European farmer gets for his farm, for growing wheat or what have you, versus nothing on the Canadian side. There is an unfair advantage that these farmers have over our people. We're then trying to compete on an open market at world prices. My understanding is the blue box is not going to be eliminated in this round; it's supposed to have been, and it was totally reduced. So I don't think it's going to happen.

About this lunch program, in the United States it is another way of supporting industry. They make sure anything they buy is American or originates in the United States. It's an unfair form of subsidy, if you want to use that word. Even in Newfoundland, we have a lunch program here and it is supported by local people. Who's to say how they spend the money? If they can get a good deal on a product, they would buy whatever they can, I would imagine.

We talk about making sure we have clear access and all that stuff. The broiler hatching egg agency allows 21% of their production from the United States. The chicken allowance is for 7.5% of the previous year's production, and in turkey and eggs, 5% is allowed to come in, free of charge. The United States really don't do that. This is the problem we have with it.

Mr. Sarkis Assadourian: Thank you very much. In the third paragraph of your draft paper, you mention a figure of 5,000 farms that employ 9,000 workers and that the annual cash is $2.2 billion over $4.6 billion in total sales. This calculation gives me—correct me if I'm wrong—$1 million per farmer, if you divide $4.6 billion by 5,000 farms.

My first question is, how do you define farmer in this case?

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My second question is, how does that figure compare with EU and U.S.A. farmers who receive subsidies?

What I'm trying to find out is whether the income of a farmer in Canada is similar to that of those in the EU and the U.S.A. If you have 5,000 farms with only 9,000 workers, it means basically that you have 5,000 owners anyway, so there isn't much room for job creation there or a job market. Maybe I'm wrong. I just want to be corrected if I'm wrong.

Mr. Eugene Legge: To be quite honest with you, I took those figures right off that sheet, and those figures came from the industries that are involved. You must remember that the farm population in Canada is not getting any larger. Its getting smaller and smaller. It takes more cows to make the so-called farm viable, it takes more chickens to make the farm viable, and it takes more land to make it viable. There probably are more than 5,000 farms out there, but I'm only talking about farms that are supply managed here, not all of Canada.

There are 58,000 grain farmers alone in the province of Saskatchewan, I think, so—

Mr. Sarkis Assadourian: This says 5,000 farms. I'm going by the figures you have here.

Mr. Eugene Legge: Yes, but that is for the poultry industry. If you read it, this is for the poultry industry, not all of Canada. When you think about it that way, that's what it comes down to.

As I said, the farms are getting larger and larger. We have one guy on the west coast of this province who's milking 300 cows, almost 6,000 litres a day. That's a huge farm. So what I'm saying is they're small in number, but they're huge in the value of farm gate cash receipts.

There are 2,700 chicken farmers in this country. That's not a whole lot. These are the numbers I'm talking about, just the turkey, egg, and chicken side of it here. You can't add the dairy into this, and you can't add the grain, the beef, or the pork. This is just specific to my sector. That's why maybe your numbers are not jiving that way.

On my farm alone I grow a little over one million birds a year. I'm only one person. I employ one man full time.

Mr. Darrel Stinson: How many do you help employ on a spinoff effect?

Mr. Eugene Legge: In Newfoundland—I know we're getting off your question—20 chicken farmers in this province got together and created a company called IPL. We have in the field at any given time 1.4 million birds. We turn that number around every six weeks. We own the feed mill that supplies the feed, we own the processing plant that kills the birds, and we own the further processing plant that does the birds. It employs 400 people in this province. We did this in order to make sure that we will survive if we lose the TRQs, to try to eliminate all the profit centres to make sure we have an industry in this province.

This is what you're seeing in northern New Brunswick. You have 10 chicken farmers who have gone out, bunched together, and formed an association. They own their own hatchery, they own their breeder flocks, and they're in the process now of buying out some of the smaller farmers and becoming a larger unit. This is why when you divide the numbers, each farmer shows $1 million. It doesn't take a whole lot these days to have $1 million worth of farm cash gate receipts if you're growing any substantial amount of product.

Mr. Sarkis Assadourian: How does that compare with the EU and the U.S. farmers, because they have subsidies and you claim it's not fair?

Mr. Eugene Legge: They have subsidies, but we don't have any subsidies here in the feather industry, not one.

Mr. Sarkis Assadourian: But if you're doing well, what is the point of having subsidies? I'm not saying they should have subsidies, but how do you compare the income of Canadian farmers with that of the EU and American farmers? Is it justifiable for them to have it? That's what I want to know.

Mr. Eugene Legge: I think I said somewhere in my documentation that 32% of the United States farm income in that sector comes from the government, and in the EU 42% comes from the government. The government in this country gives the poultry industry zip.

Mr. Sarkis Assadourian: My question, sir, is, with regard to individual farm income. How do we compare with the EU and North America? I know we don't have subsidies, but I want to know the income level of farmers.

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Mr. Eugene Legge: I don't know what the income level of farmers is. In the States they have an integrated system. I think seven or eight major companies control the chicken industry in the United States, Tyson's and all these wonderful people. They control the industry.

A farmer like me in the States.... I'm a contract grower. I have to have an off-farm job in order to survive. He's probably growing a half a million birds every six or seven weeks. He doesn't own the feed, he doesn't own the chicks, and he probably gets 3¢ to 4¢ a pound for every pound of chicken he grows—just barely enough to cover his costs. What's his income? Do you add off-farm income, or do you just say what he gets on the farm? I don't know.

Mr. Sarkis Assadourian: I would like to ask one further question. If you took away the 32% subsidy for the U.S. farmers, would they go bankrupt?

Mr. Eugene Legge: There's no doubt in my mind.

Mr. Sarkis Assadourian: They would?

Mr. Eugene Legge: Yes.

Mr. Sarkis Assadourian: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

Mr. Daniel Turp: If I understand you well, you don't want government money. You don't want Europeans and Americans to get money from their governments. Is that your position?

Mr. Eugene Legge: True.

Mr. Daniel Turp: Okay.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Speller.

Mr. Bob Speller: Thank you, Madam Chair, and thank you for the presentation.

As you know, our committee is only one of two committees that have been studying this issue. As you know, the Standing Committee on Agriculture has also consulted widely with the different groups across the country, and the Minister of Agriculture has been meeting and is continuing to meet with different groups in terms of the consultation process, something that didn't go on the last time around.

I think one point you made is interesting, and that was the whole point about the different agricultural groups coming together. As you know, there are some within the House of Commons who don't understand supply management. In fact, some parties have been fighting against supply management in the House and not supporting our system of marketing. I'm wondering if you could explain to the committee exactly why supply management is so import sensitive. There are some who would say, well, why don't we just get rid of all the barriers, and we shouldn't be having TRQs of 300% or so. Can you explain to the committee why your industry is import sensitive?

Mr. Eugene Legge: As I said before, the basis of supply management is to make sure the domestic market is totally supplied with a product. The only way to make sure that market is supplied properly is to have control of production and to make sure requests are met. I think this year almost 80 million kilos of chicken were coming into the States to help meet that market because of commitments we made under the NAFTA—not the WTO, but the NAFTA and what have you.

Supply management, as I said earlier, doesn't cost the government one cent. We get what we can for our product out of the marketplace. Yes, we have high TRQs, but eventually they're going to fall. The time it's going to take to get rid of the TRQs would give us a chance to get our act together.

When I look at what is happening in the States, our main competitor, and why they can maybe produce it so much cheaper than we can, one reason is that it's totally integrated down there. There is also the fact that the farmer has to go off his farm in order to make a living, even though he's growing a huge amount of product. Plus, I think this country has so many social benefits, which is a cost to us. We have universal health care. They don't have that in the States. The social benefits that we enjoy in this country have a price tag, and we pay part of that price tag. If that was eliminated....

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Last year, even with our importers being allowed to bring in, say, 75 million to 80 million kilograms of chicken, they waited until the year was almost out because it wasn't worth their while to bring it in. The price of chicken in Canada versus in the United States, with the exchange on the dollar, pretty well made it cheaper to buy chicken in Canada than in the States. The only reason they brought it in is that they had to do it or they would have lost their permit to bring it in next year.

So, yes, we have supply management, but we regulate the market. We don't regulate the prices to the farmer; we can only regulate production. In the chicken industry right now, it's not the farmers who dictate how much production there is in this country; the processors come to us and say “We have a market requirement, we need x kilograms of chicken, and it's your obligation to grow it for us.” We've totally restructured our industry. Four years ago the farmers made the decisions about how much chicken was going to be grown, top to the bottom. Now it's from the bottom. The processors go to the farmers and say “We want x number of chickens to satisfy our markets.” So we've totally reversed what happened in the past compared to what happens in the future.

I hope that has answered your question.

Mr. Bob Speller: Thank you. As you say, there's one company in the United States that could easily cover the whole Canadian market with one growth. Do we want a situation where our food is being produced by foreign country? I don't think we do.

Mr. Eugene Legge: In the last little while we've had what they call the J virus in the chicken industry, where the quality of the hatching eggs has been terrible, and if we were eliminated, two things would happen. One, would we get the product that we require; and secondly, would the consumer really see any difference in the stores? I don't think so.

We saw the same things happen here in the pork industry. We all know the hurt the hog industry has gone through in the last number of months. The value to the hog industry is, as I think someone said, 19¢ a pound. But here in this province we didn't see a thing change in supermarket sales. If pork was, say, $3 a pound eight months ago, it's still $3 a pound.

So if you eliminate supply management, what are you going to do? You'll knock away all these jobs, fine. You might have a secure food supply system, maybe. You'll see a small gain and maybe some reduction in prices in the short term. But I guarantee you that in the long term the consumer will not see any difference when she goes to the check-out counter.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Legge and Mr. Speller.

In concluding, Mr. Legge, it's been brought to my attention that from April 18 to April 20 there is an agricultural trade policy conference in Ottawa. I hope you'll be joining us there at that time.

Mr. Eugene Legge: I wasn't invited.

The Acting Chairman (Ms. Sarmite Bulte): We were going to be holding our consultations out west that week, but because of the agricultural trade policy conference we've had to postpone them.

On behalf of the committee, I would like to thank you again for coming here today, for your wonderful presentation and your recommendations. Thank you very much.

Mr. Eugene Legge: Thank you for your time and effort, ladies and gentlemen.

The Acting Chairman (Ms. Sarmite Bulte): I'd like to call upon our next witness, Professor McGrath. Is Mr. McGrath here? Not yet? We'll have a five-minute break while we await Professor McGrath.

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The Acting Chairman (Ms. Sarmite Bulte): Colleagues, I'd like to welcome our next witness, Bev Brown. Ms. Brown has advised me that she has to depart a little early, so I'd like to call the meeting to order.

Ms. Brown, please, you have the microphone.

Ms. Bev Brown (International Secretary, National Anti-Poverty Organization): Hi.

Poverty is an ethical issue first, a human rights issue. There are no human rights without economic and social rights, accompanied by civil and political rights.

As the Canadian government negotiates or renegotiates international trade deals and works at the World Trade Organization, the National Anti-Poverty Organization asks that protection for human rights be built into all these partnerships and agreements using enforceable, transparent and publicly accountable processes.

Everyone is bound when trade agreements are signed, but only governments and business have been setting the agenda as key players. However, the public has told the government clearly during the multilateral agreement on investments negotiating process that Canadians want and need to be consulted in a meaningful way when the Canadian government makes these decisions that affect us all.

Therefore, my first recommendation is that the Canadian government negotiate and renegotiate international trade partnerships and agreements in an open way that is really inclusive of civil society. For example, these WTO/FTA hearings were publicized poorly, were organized with undue haste in a way that has prohibited real public participation. To participate democratically, Canadians need information about our trading options, information about how trade deals have affected us in the past, and a clear presentation of the choices we must make as these deals that help shape our lives are negotiated.

My second recommendation is that the government examine carefully the real global record of trade and investment liberalization, because trade liberalization has contributed to an increasingly less fair distribution of the resources of our planet. Liberalized trade regimes have exploited labour, depressed wages, and contributed to poor living standards in developing countries. Social exclusion and rates of unemployment have climbed, environmental protections have been lost, and there has been a huge social dislocation because of rapid urbanization in modernizing economies.

We recommend the Canadian government examine this global record, using measures of income distribution, living standards of all citizens, life expectancy, and democratic participation, rather than proclaiming a country's advancement because of a climbing gross national product, increase in precarious employment with low wages, or trade that ignores citizens' basic rights and needs.

For example, Chile is often held up as a model of a good example of a country whose GNP and foreign investments have climbed through trade liberalization, but policies that privatized and cut social programs, ended job security, and lowered wages have created a country where the economy is doing well—the people not so well. Chile has the second-worst income redistribution in the hemisphere, third-worst in the world; the state education system is a wreck; wage competition has left wage earners under the poverty line; and state hospitals are run down.

Last year the National Anti-Poverty Organization helped to organize an anti-poverty round table discussion with other groups in the hemisphere working to eradicate poverty at the People's Summit in Santiago, Chile, while leaders of 34 countries met to continue free trade agreement of the Americas negotiations. We added the perspective of people with low incomes to the growing hemispheric social alliance at the People's Summit. Participants at our round table and at the People's Summit all agreed that real protection and advancement of human rights must be the number one criterion as international trade deals are negotiated or renegotiated and we all live and die with the consequences.

My third recommendation is that all international trade agreements that Canada has signed or will sign protect and advance these essential human rights: the right to join a trade union of one's choice and to organize collectively, the right to be free from slavery and bonded labour, the right to one's childhood, and the right not to be discriminated against because of one's race, gender, colour, religion, political views or national or ethnic origin.

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To this end, we support the World Trade Organization's adoption of the seven key International Labour Organisation conventions—which I added as an addendum to your piece—because the WTO agreements are backed by sanctions for non-compliance, unlike those of the ILO. We want the Canadian government to lobby partners of the WTO publicly to achieve enforceable, transparent, and publicly accountable rules to protect and improve fundamental human rights in the workplace.

As a long-time member of the Urgent Action Network to protect people in this hemisphere from harm as they work and live, I know there are some countries where legal protections for workers do not exist or are not enforced. I've been actively seeking to address this by using public education and other forms of advocacy. I have become aware that many people in Canada have had few opportunities to get the information we all need about existing living and labour conditions around the world in order to make good choices.

When I participate in anti-sweatshop labour actions, I find that most Canadians do not know that many workers in Canada, and especially workers in other countries, work long hours for extremely low wages, with few or no health and safety protection. When people do know about these human rights abuses, it helps us to make good choices when we review our options for trade deals, and also when we choose our goods and services. It makes our democratic participation at these tables meaningful too. I thank the Canadian government for agreeing to a government task force on sweatshop labour. This move will help to inform the public about our trade options.

International trade deals have been called corporate rights agendas. Transnational corporations move freely across national boundaries, with no social obligations. However, because global poverty has become more widespread as wealth also concentrates, there is a growing number of people who want international trade rules to protect human life and work, and our polluted planet.

Dictatorships' access to other countries' markets must be conditional on compliance with international social and environmental standards. This must be accomplished using rules with which corporations will be obliged to comply in order to access world markets, not with token side agreements that lack legal force. The World Trade Organization, with 134 members, is a key organization that must work hard right now to achieve these human and planetary rights, which are currently very out of balance with existing corporate rights.

My fourth recommendation is that all trade deals that our government has signed, and will sign, reflect our country's obligations to the international agreements we have already signed. For example, under the Geneva Convention, Canada is prohibited from selling arms to countries waging armed conflicts, but we are breaking this rule and are causing suffering and death because we are currently not in compliance with the Geneva Convention. We signed agreements of the United Nations to protect the Canadian peoples' rights to protect and improve our living standards, but currently we are not in compliance with these agreements either, according to the United Nations ECOSOC committee in Geneva in November 1998.

Canada has signed the Universal Declaration of Human Rights, the two covenants on economic, social, cultural, political, and civil rights, and other agreements at the United Nations. These civil protections will only work if there is an international rule of law. The right to address foreign trade must become contingent on progress in achieving human rights and better living conditions for everyone.

Fifthly, the National Anti-Poverty Organization asks that mechanisms in all trade agreements be renegotiated or adopted to address gross systematic human rights violations. The right to life, the right to be free from torture, the right to end impunity for violent state crimes, are crucial to us all. Sanctions for non-compliance to these rights must be an essential part of the mandate of the World Trade Organization and all agreements Canada signs.

Thank you for this opportunity to let your committee know that a growing number of people want human rights to be the number one consideration as we sign these international agreements that will reshape our world.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Ms. Brown.

Mr. Stinson.

Mr. Darrel Stinson: Thank you, Madam Chairman.

Thank you for taking the time to come here this morning, Ms. Brown.

One of your recommendations here is for open transparency in regard to trade negotiations and what's going on. Is there some way that you would suggest that this could happen so that everybody could be better informed about what has been going on?

Another question that comes to mind here is in regard to what's going on around the world in these other countries in terms of sweatshops and child labour. We seem to have a tough time controlling what's going on there. Some people say we should stop trading altogether with these countries. I myself think that when we put these types of trade sanctions in place, we sometimes do more damage to the poor and the people we're trying to help than we do good for them. I'd like your opinion on that, if I could have it, please.

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Ms. Bev Brown: I think we can start by informing people about what is going on. For example, when the last trade agreements were negotiated, the public didn't have the information we needed to help us decide what we thought about those things. That includes the MAI, NAFTA, and the FTA. There were big public outcries about the FTA and about the MAI especially—not so much about NAFTA—because of this lack of information.

I repeat that this committee gave me the mandate for this on Saturday. That's just enough time for people to prepare to deal with these questions.

Mr. Daniel Turp: Were you preparing your brief while listening to the Oscars as well?

Ms. Bev Brown: No.

For your second question, I think we need more information to make good questions.

Mr. Darrel Stinson: How would you do this, though?

Ms. Bev Brown: By presenting clearly what the choices are and what kinds of choices we have to make, and by having that presented as part of a public education campaign of the government.

Mr. Darrel Stinson: Would you recommend that it be broadcast over public television?

Ms. Bev Brown: Sure. Put it on CPAC or something.

Mr. Darrel Stinson: I think that's a great idea.

Ms. Bev Brown: Being a person living in poverty, I myself don't have cable, so I would recommend that it be done in a public way and not in a way that excludes people without computers or cable.

For your second question, I think we can use positive as well as negative trade sanctions in order to get countries to comply. Maybe countries would be more responsive to a better tariff deal than to a boycott. We could use both these positive and negative trade sanctions to help people to comply with the human rights covenants that they've signed or to improve human rights in their country.

For example, torture is an essential part of Mexican investigation methods. We've signed the NAFTA agreement, so we get goods from this country at a reduced tariff, but the people in the country aren't protected now from human rights abuses. If they're protected in law, they're not protected in fact. We need to have some transparent processes that will make them protected in fact, and I think using the positive as well as the negative is a good way to accomplish that.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Ms. Brown.

Mr. Turp.

Mr. Daniel Turp: Ms. Brown, thank you very much for coming to this committee. I think it's going to be important that human rights groups like yours and many others come to the meetings during these coming weeks. If you want your point to be well made, you have to be here. You have to be at this table and tables elsewhere in Canada during the meetings. The more you make your point, the more I think the government will take it into account.

I'd just like to make a comment on consultations. I want to be on record on this.

It's true that you've been notified very late, but there are all kinds of explanations. The Reform Party objected to having us come here, and I think that should be known by everyone. We had problems with our committee as well, and there are technical answers. That's not justifiable, and it's not your fault or the fault of the people who want to be consulted.

But I want to say—and I said this to Mr. Speller—that I appreciate it that Mr. Marchi, the minister, has brought together this idea of consulting people, because that wasn't done before. It was not done to the extent that the minister wants it to happen now. This is a good initiative. I think we have to make sure, both in our committee and elsewhere, that it is as meaningful as it wants to be meaningful.

Ms. Bev Brown: People all over the hemisphere with low incomes agree with you, like the ones I met in Chile.

Mr. Daniel Turp: Yes, so I wanted to make this point. It has to be known that there is an effort. Because there is an effort, that should be appreciated, and those who criticize should realize that they might have a responsibility in not having people notified long enough beforehand.

You might not agree with what the Bloc Québécois does and what it wants on the national issue, but you'll be happy that one of my colleagues in the New Democratic Party is tabling anti-poverty legislation in the House of Commons.

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Mr. Darrel Stinson: Where is he?

Mr. Daniel Turp: He's in the House of Commons because we're here.

We have some concerns of that nature, but we also have a concern about those seven key ILO conventions that you've listed for us, because Canada has ratified only four of those seven fundamental conventions. I'm trying to convince Pierre Pettigrew and the Minister of Labour and the Minister of Foreign Affairs to ratify one of the very important conventions, convention number 98, and others should also be ratified so that Canada gives an example to other states that there are some fundamental workers' rights, and Canada should bind itself internationally through these conventions.

But my question is this. You mentioned all these treaties, these human rights declarations. How would you like them to be brought into the WTO system? Technically, how should that be done? Should there be a specific treaty? That's a complicated technical issue in WTO. Do you want a safeguard clause that deals with human rights and says that if human rights are breached in dictatorships like you've mentioned, a country has the right to prevent imports from that country, from Chile or from Yugoslavia or others? How would you like that to be done in the WTO?

Ms. Bev Brown: Enforceably, transparently and publicly accountably. I also want trade to be contingent on human rights maintenance and improvements, so if we've signed treaties, I want those treaties to be binding when we conduct international trade as well.

Mr. Daniel Turp: But those human rights treaties are already binding.

Ms. Bev Brown: But they're not enforced, and I think that's where the WTO comes in. It can act as an agent to enforce human rights obligations.

Mr. Daniel Turp: Could I ask your organization—and this is not the first and last time you're going to come here—or other human rights organizations to think not only about saying we have to get human rights into the WTO agenda, but about how it has to be done, because that's the difficult issue. The difficult issue is to convince countries like the United States and others that human rights should come into the system—or workers' rights, minimally. But the problem is how do you do it? How can it be done technically? That's the difficult issue. There are several trade agreements; there are more than 20 trade agreements. In which one do you put human rights? Or do you need a specific treaty on human rights that will bind the WTO institutions...? They won't be able to do anything now unless the country respects human rights.

Ms. Bev Brown: I'd say yes, make all trade contingent on this. And I'm not just speaking for myself; I'm speaking as somebody who has met with a whole bunch of groups in Chile, from the hemisphere, who also want this. I think we should renegotiate NAFTA and FTA, by the way, to make sure people have the protections they need, because I think we've merchandised social programs and we're giving away the country in that way.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Assadourian.

Mr. Sarkis Assadourian: Thank you very much.

To follow up on Mr. Turp's comments, 134 countries are members of the WTO, and if you take an Amnesty International report and cross off country by country, probably half the countries in the WTO would be off the list. If you dropped those countries off the list, lots of people living in those areas—people in poverty, disadvantaged children—would suffer even more.

Ms. Bev Brown: Yes, but I think we can use positive trade sanctions to address that, so that people would be rewarded for obeying and promoting and enhancing human rights.

Mr. Sarkis Assadourian: But as was mentioned earlier, these countries have all signed charters of human rights, all kinds of international declarations to do exactly that. But now you have the proof that they don't even do what they signed. How do you strike a balance between human rights—don't get me wrong, I'm all for human rights—and trade?

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How do you strike a balance between human rights—don't get me wrong, I'm all for human rights—and trade. When you do that, how do you provide that the local people who are suffering human rights violations and poverty do not suffer even more? That's the question I think you have to ask.

Ms. Bev Brown: You use positive trade sanctions instead of negative boycott sanctions.

Mr. Daniel Turp: What do you mean by that?

Ms. Bev Brown: I mean giving a better deal on exports to people who obey human rights.

Mr. Sarkis Assadourian: Why would a North American company have to pay extra money to a Chilean dictator or the corrupt Turkish government, or whatever country it may be, so they will comply with what they have started to comply with already? Where do you draw the line? Draw the line on human rights, to comply with human rights, right? Why do I have to pay you more, and what's the price I have to pay to stop bargaining with you to comply on the sheets you signed? It doesn't make sense to me. Why?

Ms. Bev Brown: The people who are suffering the most now don't have any rights now. In order to achieve human rights, we have to make them more concrete and enforceable. So I think people will benefit if human rights are taken into consideration.

Mr. Sarkis Assadourian: Tell me how to enforce it. Take China, for example. I want to enforce it in China. Tell me how to do it.

Mr. Daniel Turp: Team Canada missions.

Ms. Bev Brown: Canada has some expertise in the human rights field, and we could show the way to people to achieve human rights in that regard. We have done so in the past and probably will in the future. I think Canada is a country that's well suited to pushing for this kind of thing.

In China, some people don't.... I think we have to make sure we protect everybody. They are not being protected now. The people who are poor are getting poorer, so we have to reverse this trend.

Mr. Sarkis Assadourian: How? That's the question.

Mr. Daniel Turp: It's the billion dollar question. Positive trade measures would be inconsistent with the very key and general rule of the most favoured nation clause within WTO now. You're saying we probably would have to change that fundamental norm where you cannot discriminate against countries, so you could discriminate in favour of countries that respect human rights.

So we could lower tariffs, if some tariffs are left, for countries that respect human rights, or make quotas smaller. But that would make us have to rethink the whole system. Is that what you would like us to recommend to the government?

Ms. Bev Brown: Yes, thank you. I hope so. Do you think it isn't?

Mr. Sarkis Assadourian: We got this far with this kind of system. If you're going to reverse the system again to come to this point, I think more people will suffer. That's the point I'm trying to make.

Ms. Bev Brown: I don't think so.

Mr. Daniel Turp: It's very difficult to do what you want to do—positive trade measures. That is very difficult.

Mr. Sarkis Assadourian: I hope we can achieve it.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Speller.

Mr. Bob Speller: It's an interesting debate because there are those who would say that by giving a benefit to one group, you're disadvantaging another group. There are those who would say that if you stop trade because of human rights abuses, then you're disadvantaging many in those countries who depend on the trade.

It goes to the whole question of the maquiladora regions and whether these people are actually benefiting from something like that, or, as you say, are in sweat shops and only making $1 or $4 a day, or whatever it is. Do you stop something like that or do you hope something like that will have a spin-off effect and benefit more people? It's not an easy question to answer, but I'm interested in knowing.

I thank Mr. Turp for his comments on the consultations, because, as he knows, this is just the start of the consultation process. This process will lead to ministerial discussions that will take place in December in Seattle, and then continue over the next three or so years it will take to negotiate such a deal.

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This is just the first day of the parliamentary aspect of it. I want to separate it; this is the parliamentary aspect, not the government's consultations. The Parliament of Canada is doing these consultations. For various reasons, we were unable to get them off the ground as quickly as we had hoped.

Unfortunately, being first on the lift, you had to suffer by having to put your presentation forward very quickly. But I want to congratulate you anyway on the extent of your presentation.

I guess I just have one question. We've heard from different groups in Ottawa. We had groups like The Council of Canadians and others who had suggested it was probably important to be at the table, even though they felt it was an imperfect system under which we were negotiating.

I'm just wondering what your view is. After reading this, I'm not sure if I get a sense of whether you feel we should actually be at the table negotiating these trade agreements.

Ms. Bev Brown: It's an opportunity to improve human rights, and that's one of the reasons why I think we should be at the table.

Mr. Bob Speller: In terms of the whole question of the declaration of human rights and where human rights should come into trade deals, do you feel there should be explicit language within a trade deal that talks about human rights and excludes countries from trading if they break human rights?

Ms. Bev Brown: Yes, or it should reward countries in a positive way for obeying human rights.

Mr. Bob Speller: But when you reward certain countries, you automatically, as a result, discriminate against other countries. I would assume developed countries like Canada would get all the rewards and the underdeveloped countries, the poor countries, by their very nature wouldn't. It's just the way the world is now.

Ms. Bev Brown: Workers in those countries want those protections, and the models they have now couldn't have been put in place without the armed forces. So they're at a disadvantage now. I think any way we can help those people come to a better, level playing field would be good.

Mr. Bob Speller: Okay, thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Turp.

Mr. Daniel Turp: In the NAFTA context, human rights were brought in through a side agreement on workers' rights. There's a North American cooperation. Would you like that to happen in the WTO? Should there be a side agreement on workers' rights?

The other issue is general human rights—civil rights, political rights, and other rights like that. One solution could be to have a safeguard clause in the GATS, but then you'd have to ensure that the clause would allow sanctions or reprisals on the part of a government, like Canada or other governments, because another country does not respect human rights, which is not possible now. You cannot invoke a violation of human rights in another country to stop trade or put sanctions. Is that something you would like to see? Would you like to see us adopt sanctions on trade issues if a country does not respect human rights?

Ms. Bev Brown: Yes, I would like to see that. I wouldn't want it to be a side agreement. I would want it to be in the body of the agreement in an enforceable way, because the side agreements haven't worked very well.

The Acting Chairman (Ms. Sarmite Bulte): Just to follow up on what Mr. Turp asked, who would make the assessment of whether there had been human rights violations? Would it be a separate panel in Geneva? Would it be a dispute mechanism system?

Who would decide? Would we give it to someone in Geneva to decide whether it was happening? What about giving it to Mary Robinson, who is our United Nations Human Rights Commissioner? Help us here with some ideas.

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Ms. Bev Brown: I think it would be good to have a body that was impartial and publicly administered. The United Nations do that, and they're already set up to be able to do human rights ombudsman-type work. I know that when nations violate human rights, the United Nations steps in, and they sometimes have an independent person be there in the country to monitor the progress. I recommend that sort of mechanism.

The Acting Chairman (Ms. Sarmite Bulte): I certainly had the opportunity to meet with High Commissioner Robinson. One of the concerns that was expressed when we talked about the alleged human rights violations in Indonesia was that there were just not the funds available to send servers into those areas. Again, do we require all the countries in the WTO to pay for things?

Ms. Bev Brown: Well, if the United States paid the bill at the UN, we would have that kind of money. I think Canada should press the United States to pay its UN bill.

The Acting Chairman (Ms. Sarmite Bulte): I have another question before I go into round two—I know we have some other questions.

When you talk about civil society.... Again, I want to talk a little bit about the FTAA while I've got you here. We talked about renegotiating FTA or NAFTA, but now we're also going into the regional negotiations on the free trade of the Americas agreement. Is that a forum where we can—if you consider it renegotiating—bring these things together? We're talking about a hemispheric.... One of the things the FTAA has specifically put together is a special group on civil society—they've been very conscious of that consultation, not just Canada alone, but the FTAA as a whole. So how can we use the FTAA? Can we use it? What would you include in your definition of a civil society, and how can we use the FTAA to improve or enhance NAFTA and the FTA?

Ms. Bev Brown: I think we have to take social programs off the chopping block for one thing. Mel Clark, a senior negotiator for the free trade deal, said he thought it should be aggregated or renegotiated so that social programs were not subject to U.S. countervailing measures. I think we could, if we wanted, build into the FTAA measures that would stop that countervailing.

The Acting Chairman (Ms. Sarmite Bulte): I have just one last question. I—

Ms. Bev Brown: I think civil society is everybody, for example individuals, groups, non-profit groups, NGOs.

Mr. Daniel Turp: Business.

Ms. Bev Brown: Except that they're already key players.

The Acting Chairman (Ms. Sarmite Bulte): That's one of the things I can comment on—don't forget business. I just wanted to get your comments. So you also feel that business should be at the table.

Ms. Bev Brown: Yes, but it has been privileged too much, I think. I think we need to hear from other groups as well.

The Acting Chairman (Ms. Sarmite Bulte): That's a very good point.

Mr. Stinson, this is the second round now. You had a question.

Mr. Darrel Stinson: No, that's fine. My question was just answered.

The Acting Chairman (Ms. Sarmite Bulte): Okay. One of the other things I learned is that in the FTAA now, because there are a lot of smaller economies, especially in the Caribbean, one of the principles that has been proposed by the Prime Minister of Barbados is to apply a vulnerability index in the implementation of WTO obligations as they sign it. Do you see that perhaps we could move along that same area and apply a human rights index, as opposed to just a vulnerability index?

Ms. Bev Brown: I think both are good initiatives. Canada has also participated and will continue to participate in a social watch. Do you know about social watch? It's a measure of a country's progress that isn't just GNP. So I think those kinds of initiatives will help to monitor progress.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Turp.

Mr. Daniel Turp: You know you've brought up the very difficult question of who is going to decide if in Myanmar, Burma, or elsewhere, human rights are breached to the extent that it would justify trade sanctions of one or several countries. The best solution would be to have a human rights index. A human rights index existed in the past. The UNDP, the United Nations development program, had human rights indexes, but because of the objections of countries, they had to abandon the creation of that human rights index. Other NGOs create human rights indexes. So we'd have to find a body who will do that, and then make sure their judgments or decisions are used by other bodies, like the WTO, to justify trade sanctions.

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Mr. Bob Speller: And enforceable too.

Mr. Daniel Turp: My question is, who should create a human rights index? The Americans have a human rights index. Two weeks ago the Department of State published a 733-page human rights index, but you know what that means sometimes: communist countries are always bad, and other countries that are close to the U.S. are doing much better in human rights.

Who should create that kind of index?

Mr. Bob Speller: But also, before you answer that, I want to add that of course you would need to enforce these sanctions too. Look at all the military might it took to put sanctions around Iraq. There's always going to be an interest of a country, particularly around these countries, to trade with this group. So you would need some sort of enforceable mechanism if you brought in sanctions.

Ms. Bev Brown: The sanctions around Iraq are different from the sanctions around South Africa that accompanied apartheid, because it was also a war in Iraq. So the people really suffered from those sanctions, in a way that was war-like.

Mr. Daniel Turp: That is also the case in Iraq now. Certainly, women and children are suffering from the sanctions in Iraq, but at the same time, what do you do to try to put pressure on Saddam Hussein? It's very difficult, and I'd like your organization to think about how it should happen—for example, human rights indexes. Which bodies should try to make decisions on whether human rights are breached, and what should be sanctioned?

Ms. Bev Brown: I think the UNDP would be an appropriate body to do it. I'm in favour of a Tobin tax for investment. I think the UNDP would be a good body to administer a Tobin tax too. That would help curb the financial speculation that's ruining economies.

Mr. Daniel Turp: Mr. Martin says the Tobin tax is a good idea, but he can't put it further on the agenda. There are so many countries that don't want to see it happen—

Ms. Bev Brown: Yes. There's a popular Canadian movement that's growing in numbers that wants the Tobin tax, and we're working hard to achieve it.

Mr. Bob Speller: Being here in Newfoundland today on budget day...hopefully Mr. Tobin won't be putting in taxes.

Ms. Bev Brown: I'm just about to go to the lock-up for the provincial budget, so I know what you mean.

Mr. Daniel Turp: They involve civil society in the lock-up. That's a good idea. That should happen in Ottawa too, which I don't think is the case.

I was serious at our committee the other day when I was suggesting that maybe we're not ready for that yet. But there should be a new body, something like an economic security council. We have a political security council at the UN now. An economic security council could be a body where, in crises of a financial or economic nature—such as what happened in Asia, and in Mexico a few years ago. A body like that would make decisions on behalf of the international community, and maybe that would be the body that would allow trade sanctions when human rights are breached.

Maybe you could think about that. Do we need a body, equivalent to the Security Council of the UN, on economic and trade matters to make decisions relating to crises?

Ms. Bev Brown: Yes, I think that's a good idea.

The Acting Chairman (Ms. Sarmite Bulte): I would like to thank Ms. Brown, and I would like to follow up on what Mr. Turp has said. Again, this is the first of our public meetings. This is the beginning of our communications; this is not the end. We welcome follow-up. We would ask that you again speak to your members and encourage your members, either organizational or individual members, to submit briefs to the committee, so we can open up a dialogue.

Thank you very much for coming, and thank you for taking the time to share your views with us.

Ms. Bev Brown: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): The meeting is adjourned until 1.30 p.m. on the dot.

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• 1336

The Acting Chairman (Ms. Sarmite Bulte): I'd like to start this meeting of the Standing Committee on Foreign Affairs and International Trade. It's our afternoon session, and I welcome Mr. Coombs and Mr. O'Rielly from the Fisheries Association of Newfoundland and Labrador.

This is the first day of a series of public hearings we will be holding across Canada on key aspects of Canadian international trade policy. Pursuant to standing orders of the House, we are examining Canada's trade objectives and the forthcoming agenda of the World Trade Organization. As well, the Subcommittee on International Trade Disputes and Investment is examining Canada's priority interests in the FTAA process.

So welcome, gentlemen, and I would ask you to start, please.

Mr. Alastair O'Rielly (President, Fisheries Association of Newfoundland and Labrador): Thank you. My name is Alastair O'Rielly. I'm president of the Fisheries Association of Newfoundland and Labrador. With me today is Mr. Kevin Coombs. Kevin is vice-president of Fishery Products International, which is Canada's largest seafood processing and marketing company.

I think you have before you copies of my presentation. This is rather brief; it was put together quickly over the weekend. We are involved in intensive price negotiations at this particular point in time, so it was hard to find some time over the weekend to focus on this. But I think we've captured the key points, and what I'd like to do is just sort of storm through it. You can, of course, interrupt me if you want in going through it, or ask some questions at the end if that's suitable.

The Acting Chairman (Ms. Sarmite Bulte): What I prefer to do is have you make your presentation, and my colleagues will perhaps ask questions. If there's time, we'll go to a second round as well.

Mr. Alastair O'Rielly: Okay.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Alastair O'Rielly: Then I'll proceed, if that's okay.

Our organization has been around since 1944 as the representative taking care of the business interests of seafood processors. During that period, of course, we've always been an export-dominated industry. Our membership has hovered around the 80% mark in terms of representing the production and export of Newfoundland's seafood products. That's been relatively consistent over time. It may fall as low as 75%, and I think at times we've hit as high as 90%. But we do account for the lion's share of what transpires in the Newfoundland industry.

We are members of the Fisheries Council of Canada, which is the national body made up of various provincial organizations such as ourselves. The Fisheries Council will be submitting something to you later on in the process that will be reflective of the priorities for Canada as a whole in seafood.

In terms of an industry profile, we've had, I think, as many as 250 processing plants. With the resource crisis we've experienced, we're now down to approximately 142 plants, and many of these are barely operating. Some are very active. As the numbers will suggest to you, our production value is now in the order of almost $700 million. And landed value at $384 million is higher—much higher—than it's ever been.

I hope you see the corrections I have here in terms of my notes.

There are about 14,000 people employed in the harvesting side of the business and approximately 13,000 in processing. In neither case would these be year-round jobs, but this would be primarily or almost exclusively the only earned income for those people. Many of them are employed for periods of three to six months.

The export value is something less than the total production value, something in the order of $500 million. I have a few graphs that give a more detailed illustration of this. The first one shows the value of fish exports. You can see that from 1994 we have fallen down to about $300 million. We've now rebounded to almost $500 million in 1998.

The Acting Chairman (Ms. Sarmite Bulte): Could I just add something for one second? Are the figures you're giving provincial or national?

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Mr. Alastair O'Rielly: These are provincial figures, for Newfoundland only.

The Acting Chairman (Ms. Sarmite Bulte): Okay, thank you.

Mr. Daniel Turp: What do you mean by all countries? Do you mean exports to all other countries?

Mr. Alastair O'Rielly: Yes.

Mr. Daniel Turp: Okay.

Mr. Alastair O'Rielly: I have some details on where the exports go on the next graph. The fish exports for Newfoundland and Labrador of $500 million find their way into many countries around the world, but you can see from the graph here that the United States still dominates. Japan is important to us, and that varies from time to time. In the last couple of years the Japanese economy has been in somewhat of a slump, and that's had an impact. China is growing. Of course there are a lot of other countries in the mix, but these are the ones that dominate.

My next graph here simply shows production value. In 1998 there was a peak of $800 million in value in Newfoundland. We are now back to $700 million. But if you factored inflation into that—I didn't actually compute this out—I suspect for 1998, in relative terms, it would probably be $1.1 billion or $1.2 billion. We haven't come back quite as far as this graph would illustrate because inflation hasn't been factored in.

The next graph speaks to the breakdown of trade. We're about 80% export-oriented in the Newfoundland seafood sector, with 63% of that in the United States in 1998 trade. Japan is shown at 15%, China at 6%, Denmark at 4%, and then there are all the others. It's evident that the industry is totally export dependent. This is true for all firms, not just the large companies such as Fishery Productions International. All the smaller processors are actively involved in export as well, which presents many challenges to small firms in terms of adequate resources and finding their way through the bureaucracies and challenges international trade presents.

We feel our future growth really depends on having unfettered market access. I'll elaborate a little on that as I proceed. One of the challenges we see at the moment, looking forward on trade, is the evolution of the WTO. It has evolved as a replacement for GATT. There are some expectations or some sense that its form, nature, rules, how it's going to conduct itself, and how it's going to function are not all that clear yet.

Membership, for instance, is a significant factor. While you're trying to change and consolidate rules, you also have the inclusion of other major players in the seafood sector, such as China and Russia. How that gets factored in and how that plays through the whole process are not clear to us at this point.

The last round, the Uruguay Round of trade negotiations, carried forward something in the order of seven or eight years. It was a very arduous process. We are somewhat apprehensive about the millennium round being a repeat performance of that. We would certainly encourage Canada to do whatever possible to try to find an expeditious way to carry this forward.

Some of the challenges include—and these are longstanding issues—things like technical barriers to trade. Once you get past tariff issues, people find all kinds of ingenious ways of preventing your products from going in, whether it's the kind of inspection carried out or certain inane rules or regulations countries come up with to try to stifle your access.

There's growing concern, particularly in the more developed markets of the world, with respect to sanitary and phytosanitary rules for seafood and food in general. This brings forward for us the importance of the Canadian Food Inspection Agency. This agency was recently spun out of a section of the Department of Fisheries and Oceans.

While it's a regulatory agency, and we represent industry, we find to be very useful and important to us. It does a tremendous job of convincing the rest of the world that Canada's food products and food production are safe and consistent in quality. This is an important function. The CFIA has been able to help spearhead some of the direction that's taking place elsewhere in the world on seafood standards and sanitary issues.

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By way of illustration, other kinds of twists are coming forward, like disease risk for cultured foods such as salmon. Some countries are very concerned about these kinds of things, and the science has not yet been sorted out. One wonders how these kinds of things are going to play into trade discussions in the future.

There's the use of hormones. Of course, we're seeing this with the British beef issue, and so on. There's the issue of genetically altered seafood. This is more relevant to aquaculture production, but capons and the contamination of the wild, or the potential for that, cause anxiety amongst consumers, who are increasingly well-informed and very sensitive to these kinds of matters. Again, they'll play into trade discussions, we think, in seafood.

On globalization and the issue of free movement of capital and investment, as I mentioned, we have a lot of very small firms that are global traders. But that also means Canada has a very open environment for investment, which we fundamentally don't disagree with. However, it does mean we're at some risk when you have small companies that are perhaps not all that well capitalized and you have unfettered access from other major fish-producing/marketing nations.

They can come at will, and move in and out of the Canadian industry, purchasing what they need and selling it thereafter, maybe not to the strategic advantage of Canada. We see that as a concern, but our major issue is to make sure we have, on the other side, unfettered market access. We're not seeking protection; I'm just noting it as a concern.

On some other concerns, in a general sense there's always a tendency to include fish with agriculture and food, and that presents tremendous challenges for us in terms of how trade issues are debated and discussed. There's a very different environment in the seafood industry. In Canada, of course, there's much more domestic influence on agriculture. Fish is almost exclusively an export product.

There is also the very challenging issue of subsidies in agriculture. I know these are very complex and they dominate the trade debate in most countries that are involved in a significant way in agriculture. There's a different history and structure in the industry, in terms of marketing boards, their role and influence, and how they impact on price. The philosophy is different in terms of the need for protection.

There's also quite a major difference in scale. The seafood industry in Canada generates something in the order of $3 billion, with about $700 million of that in Newfoundland. So in relative terms, we're almost inconsequential next to agriculture and food. Again, there's another reason for all these reasons. We would strongly recommend that seafood in the discussions be isolated in one form or another from agricultural goods.

The major concern for us is EU tariffs. I don't have it noted here, but I should preface this by saying the accomplishments that have been realized with NAFTA have been very significant for us. The U.S. is a dominant market. As I've indicated, 63% currently goes into the U.S. market. This has been a significant accomplishment, but we would like to have better access to the European market. There are some very discriminating seafood consumers in the EU. They consume much higher levels of seafood on a per capita basis than we do in North America, and they are very protectionist.

Shrimp is a really significant industry for Canada and for Newfoundland right now. Newfoundland is Canada's largest producer of cold water shrimp at the moment, because of tremendous growth in our resources. Newfoundland is the most significant province involved in cold water shrimp. It has become very important to us.

Last year it accounted for about $100 million of the $700 million I mentioned. In the European market, these shrimp products are highly differentiated; people pay a premium price for them. They're highly sought after. Our competitors, in one form or another, have virtually unfettered access, and they're not just EU countries.

Denmark, of course, is a competitor, but they're a member. But other countries, such as Iceland, Norway, Greenland, and the Faeroes also have special deals that allow them to access that market without tariffs—there may be something, but for the most part it's not very significant.

We have a 20% tariff, which is a real killer when it comes to being competitive in those markets. But even on things like herring fillets and cod fillets, there are high tariffs.

• 1350

I note that at the end of Uruguay Round the EU would have overall seafood tariffs in the order of almost 11%. If you compare that with Canada at 2%, the U.S.A. at less than 1%, Japan at 4%, which we think is protectionist, and other countries at 1.4, it does point out, and illustrate I think, how outrageous the tariff regime is in the EU, on the one hand, and how important it is for us to make some progress there. In the Pacific Rim there are tariffs, as I indicate here, with respect to Japan, but they also are very creative at finding rules, regulations, policies, and procedures that stifle trade. I think that's particularly true for both Japan and Korea.

In Latin America there's some progress unfolding and there's some promise with respect to the initiatives of free trade with the Americas, but we think it's useful to probably fold it into the WTO round as well to ensure that we open up access to those markets, because they are growing and becoming more significant, particularly for groundfish. And we're hopeful we will see a recovery in groundfish stocks in Atlantic Canada.

On our last page is a summary of the context for the seafood sector. We are very trade dependent and we have adopted a value-added focus. We see that future success really requires that our products must meet or exceed those of low-cost global producers.

Historically, we've been producers of fairly basic seafood products, things like cod block, our low-end fillets, many of which would go to other places, including the United States, and be processed into a value-added form for consumer use. We have to do that here. We have to do it here to capture the value and to be competitive.

Increasingly, many of the third world producers have become very proficient at producing these fundamental basic seafood products at dramatically lower costs than we do. They operate with wage rates in the order of 25¢ per hour, for instance. There's no way we can compete producing low-end basic products. We have to do value-added products in order to have our industry survive; hence the need to open up access for those kinds of products.

Our growth can be achieved if we produce high-end products that can out-compete, primarily, third world producers in terms of quality, safety, packaging, consistency, convenience, and competitive pricing. We have to do more and we have to do it better. The restriction to trade certainly stifles our opportunity in that regard at the moment, particularly in the EU and in several Pacific Rim countries.

Overall, our philosophy is one of having an open, competitive environment without subsidies, without protection. However, we would like to have reciprocity in terms of access. Our major competitors in Scandinavia, for instance, have unfettered access to the North American market—no tariffs, no restrictions whatsoever. We don't enjoy that benefit in terms of access to the EU, as I pointed out.

I think our overall priorities are that we want to see the EU tariffs brought in line with other developed countries. I think we have to encourage them to stop their protectionist stance. We have to achieve improved access to the Pacific Rim for value-added products and I think continue to progress with Latin American tariffs that are underway with respect to the Americas initiative.

That concludes my comments by way of introduction. I hope I haven't gone too quickly and breezed past all this.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. O'Rielly. It was very informative and very well presented.

Mr. Coombs, do you have anything you wish to add?

Mr. Kevin Coombs (Chairman, Fisheries Association of Newfoundland and Labrador): As Mr. O'Rielly has stated, we're one of the largest producers. We're somewhat more diversified in terms of our marketing initiatives than the general industry, but still a significant part of our overall products are exported outside of Canada.

The shrimp industry is a developing industry in Newfoundland. The cold water shrimp industry has been growing significantly over the past couple of years, and it has highlighted the significance of tariffs on the basis that the largest consumer of cooked and peeled shrimp is the EU. When you're competing against other countries that are going into that marketplace with a 20% advantage on you, it is significant in our minds and a priority in terms of getting a change.

• 1355

The Acting Chairman (Ms. Sarmite Bulte): Thank you. Before I open it to my colleagues, I want to make sure I understood, Mr. O'Rielly. Did you say that Scandinavia has unfettered access, that there are no tariffs whatsoever?

Mr. Alastair O'Rielly: Not into the United States. I should say not into North America, but the primary market focus of course is the United States. Our competitors are primarily Iceland, Norway, and Denmark, and they don't have any tariff restrictions in entering the North American market. And of course we enjoy the same advantage into the United States market.

The Acting Chairman (Ms. Sarmite Bulte): But not within the—

Mr. Alastair O'Rielly: But not into the EU.

The Acting Chairman (Ms. Sarmite Bulte): I'll open it up to my colleagues, and then I'll come back.

Mr. Stinson.

Mr. Darrel Stinson: In here you say the Canadian seafood industry requires equality of access to investment and trade. I gather from this that you don't feel it is happening now.

Mr. Alastair O'Rielly: No, what I'm saying is we don't really have a problem with the opportunity that's now available for foreign countries to invest in the Canadian seafood sector. Right now it's unfettered. There is a restriction with respect to harvesting licences. I think it's a 50% ownership that has to be held by resident Canadians. You just can't come in from a foreign country and acquire licence access to resources.

In other words, in terms of investment in the processing and marketing sector, there are no restrictions. We're not opposed to that. What we're pointing out is that in the broader context it seems to us grossly unfair that they can come in and invest at will when market conditions are right or when prices are right and take advantage of that opportunity. That's another advantage they hold over us, because we don't have the same right of access in many other markets.

Mr. Darrel Stinson: If I get this right, what you're saying is they have that right, but we don't have that right to take advantage in the other countries under the same conditions.

Mr. Alastair O'Rielly: It may not necessarily be a rule of law, but it's a practical matter and it's true particularly, for instance, in the Japanese market. I think it's quite some years ago Fishery Products International made some initiatives there, and National Sea Products also made some efforts to participate in a more hands-on way in opening offices and so on in Japan. But it's not that easy. It's not a question of trade tariffs or laws; it's a question of how to conduct business, and the networks and structures they have effectively make it extremely difficult for Canadian companies to enter that market and participate.

On the other hand, if a Japanese company wants to come and invest in a Canadian processing firm, they can come in and acquire 100% of it and there are really no questions asked. We're not opposed to that circumstance; we would just like to have a reciprocal arrangement that's of equal fairness.

Mr. Darrel Stinson: In negotiations that have preceded these upcoming negotiations, how much consultation was your industry given by government?

Mr. Alastair O'Rielly: In the upcoming WTO round?

Mr. Darrel Stinson: Yes.

Mr. Alastair O'Rielly: There hasn't been a whole lot yet to my knowledge. We received notice recently that you were going to be doing some consultations. I think there have been various kinds of low-key discussions and interactions with the Fisheries Council of Canada leading up to this. I believe the people in Foreign Affairs and International Trade would be aware of what our priorities are in the seafood sector and what our needs are. I'm sure they are very familiar with the concerns we have with respect to the EU, because we've been peppering them with that particular criticism and concern rather intensively over the past couple of years. So there is an awareness of that, and there has been some measure of consultation. But my sense is that on this WTO round they're really still in the early days of trying to set their priorities and strategies as to how this is going to unfold.

Mr. Darrel Stinson: But in this coming round with the WTO.... In the Uruguay Round, how much consultation was there with the industry?

Mr. Alastair O'Rielly: The Fisheries Council of Canada was quite active at that point.

Mr. Darrel Stinson: And you were happy with that, were you?

Mr. Alastair O'Rielly: Yes.

Mr. Darrel Stinson: Okay. Thanks.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Turp.

Mr. Daniel Turp: I have one general question. In your remarks you said that you were concerned that this next millennium round might last another seven years. As you know, at the beginning the Uruguay Round was not supposed to last seven years. It was supposed to be a quick round. What would be, for your industry, something reasonable in terms of the number of years? What would make it reasonable?

• 1400

Mr. Alastair O'Rielly: I'm torn between representing the interests of our members and telling you the truth.

Mr. Daniel Turp: Tell the truth.

Mr. Alastair O'Rielly: The truth is that my members would certainly say that six months would be wonderful. Their tolerance for a process and so on is very limited, because it's so significant a cost to the industry. But in reality—

Mr. Daniel Turp: What are those costs? I'm curious, how do you factor those negotiations into your cost? Why are negotiations that last so long costly? What happens to the industry during the negotiations?

Mr. Alastair O'Rielly: The one that's probably the most horrendous, and the one that we have the greatest concern with, is the 20% tariff on shrimp at the moment for the EU. We've been working with the EU on this and trying to make some progress. If we're not successful, and there has been a suggestion, because it's part of a very complex issue, to push it into the WTO round, if that happens and it does take several years, just in our industry alone, in Newfoundland alone—not the offshore sector of the shrimp industry, just the inshore sector alone—I can easily document that it will cost us $20 million a year. So every year, obviously, it's very painful to have that kind of a disadvantage in the marketplace, because that is 20% right off the final selling price before you start.

So you can appreciate that the challenge on groundfish products is in the order of 10% or 12%, and 10% or 12%, with today's margins in the business, is a killer. You just cannot compete with other producers who don't have that tariff barrier. It's the same with herring fillets; it's 15% on something with as low a value and as low a margin. Herring in particular is a high-volume fishery with very low margins.

Mr. Daniel Turp: Should there be distinct negotiations with the EU on lowering those tariffs before the round starts, or it can be incorporated in the round but you would hope it wouldn't last too long?

Mr. Alastair O'Rielly: I guess my comments reflect a little bit of an education I have had in the last couple of years about how challenging and difficult this process is. You would think it would be fairly simple and straightforward; you would think you'd be able to get in and negotiate a deal with reasonable people. But within the EU itself, as you know, all the various member countries have different agendas, different priorities, needs, and circumstances. Trying to get something done through that political environment and the bureaucracy that exists there seems to take a long, long time.

The attitude we sense now is that they're prone to want to push this into the WTO round because it helps bring things into a larger and much broader context, and it helps them deal with some of their own problems internally.

Mr. Daniel Turp: It buys them time.

Mr. Alastair O'Rielly: Yes, and it also changes the context a little bit, I think. This is a personal opinion, but I think they would prefer to deal with it in some respects in a much broader global context than try to wallow in their own internal strife.

Again, for us, that heightens the urgency of trying to bring some measures into place, either to do this sequentially or try to put very restrictive time limits on how long this round is supposed to take, or, failing that, just to try to give seafood as high a priority as is possible on that agenda.

Mr. Daniel Turp: Do you think it's possible to isolate the negotiations on fisheries in the WTO? Should there be a distinct set of treaties on fisheries? There are some on agriculture. Should there be, in your opinion, a distinct set of rules applicable to fisheries? Why would that be the case? How could you justify that it should be distinct?

Mr. Alastair O'Rielly: I think we would have to build on the arguments and some of the points I've made about the distinction that exists between the fishing industry and the whole seafood sector than is in place with agriculture. Agriculture is so complex in terms of the impact of subsidies, and it's so politically sensitive for Canada, for the United States, for the EU, and also for Japan. It just looks like a bridge too far. I think there's a compelling argument for Canada to try to build alliances with other seafood-producing countries in the WTO to try to bring seafood outside that Pandora's box of agricultural matters and deal with it separately.

• 1405

Mr. Daniel Turp: Are other countries making that kind of argument at this point in time?

Mr. Alastair O'Rielly: I don't know, to be quite honest.

The Acting Chairman (Ms. Sarmite Bulte): If I could just follow with a direct question, what happened to the situation in the last round, in the Uruguay Round? Where were they treated? Was it under agriculture or was it separate, or was it not dealt with?

Mr. Alastair O'Rielly: It was dealt with separately, but I think there's a body of opinion that it should be folded into agriculture this time around. It's not that people have brought forward arguments for it; I think it's that people haven't brought forward arguments against it. It's such a small thing in the whole scheme of things that it's easy to look at it and say, well, let's just push seafood into the food sector. In that environment we won't get very much attention, and that's our concern.

The Acting Chairman (Ms. Bulte Sarmite): Please continue, Mr. Turp.

Mr. Daniel Turp: I have another question on NAFTA. In the graph on the value of fish exports by country, the European Union here is the U.K. and Germany, only those two. When you add the other 13 member states of the European Union, which are probably here under “other”—you also have Denmark. How important is it with the European Union? Does it become more important than China, for example, if you put all the 15 EU states together?

Mr. Alastair O'Rielly: Yes, you're correct. It would be more important than China, but I suspect it would be less than Japan. In the others outside...some of those are EU countries. I would have to check the date and confirm that for you, which I can follow up, but certainly it would be more significant—

Mr. Daniel Turp: If I can make a suggestion, it would be interesting if you would re-draw this graph to show us the European Union. In your brief you talk about the European Union and how there's a problem, so it would be nice to focus more on the European Union here than on several European countries, members of the European Union.

How do you get the European Union to bring down those tariffs? Do you have any suggestions on how to negotiate that?

Mr. Alastair O'Rielly: From our perspective, Canada has to place it as a fairly high priority in the trade negotiations with the EU. This gets complicated. It gets tied into a whole lot of other manufacturing issues and other issues related to things like wine and so on. I think what we have to do is try to encourage Canada to regard the seafood sector as particularly important, more so than the dollars would suggest, because I think in Atlantic Canada, outside of the seafood industry, there is nothing that is probably as significant in terms of employment and community strength and development as our industry. We think that would help bolster the argument for giving it perhaps a little higher priority than it would get strictly on a dollar basis. I think that might be done.

One thing that we fundamentally want to ensure in our discussions with the EU is that we do not link resource access to tariffs. That's been an issue that we hope has been put to bed, but it's been raised any number of times over the years to sort of trade off resource access in the context of the NAFO fishing agreement and other kinds of market access issues that the European countries can bring to the table. That normally wouldn't come forward, I don't think, in the context of multilateral trade negotiations. I would think that would only be something the EU would bring forward on a bilateral basis. It has to be avoided at all costs.

Mr. Daniel Turp: I thought one of your answers might be to appoint your premier as chief negotiator for these rounds with the Europeans. Remember what he did to the Europeans?

Mr. Alastair O'Rielly: Yes. I not sure how beneficial that would be.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Coombs, you were smiling. Did you want to add something?

Mr. Assadourian.

Mr. Sarkis Assadourian: Thank you very much. I have a few questions.

• 1410

First, going to page 2 of your brief, “Fishing Industry Profiles”, and then to the page with the graph entitled “Production Value”, in 1998 you had 27,000 people working for the fisheries in the province, producing approximately $700 million worth of goods. How much was that in 1993 when the production was very low?

Mr. Alastair O'Rielly: Production value?

Mr. Sarkis Assadourian: Well, in this graph you show that production in 1993 was very low, actually the lowest in the past 11 years.

Mr. Alastair O'Rielly: Are you thinking about the number of people involved?

Mr. Sarkis Assadourian: I'd like the number of people and the production value.

Mr. Alastair O'Rielly: The production value is shown on one of the tables here to be, in 1993, just over $400 million. During that period, the employment would probably have been even higher than it is presently. There has been some attrition from the industry with various kinds of programs to assist people to pursue early retirement, or attrition from the industry as a result of the raw-fish crisis. Admittedly, it hasn't been as successful or as effective as we perhaps would have liked, but certainly the numbers are down from where they would have been three, four, or five years ago.

Mr. Sarkis Assadourian: So what you're telling me is that we had more people working in the fisheries in 1993 than we have now.

Mr. Alastair O'Rielly: These people were largely displaced. The infamous TAGS program had something in the order of 29,000 people involved in that, and 75% of those were.... No, that was the Newfoundland number. It was almost 40,000 Atlantic lives. About 29,000 Newfoundlanders were displaced.

During the period of 1993-94, the crab industry was still active and in place. The number of people active and employed in the industry would be somewhat less than what it is now, but not a lot. So I think overall our industry is maybe 60% or 70% of where it was in terms of people, relative to the early 1990s.

Mr. Sarkis Assadourian: Production-wise, you have more production now with fewer workers.

Mr. Alastair O'Rielly: Yes. We had a lot more production in 1998 than we did in 1994. We're at $700 million versus about $400 million, with fewer people. But a lot of the opportunity has been changed with respect to shellfish.

I think the key thing to note is that the value-added activity in shellfish is less than it used to be in the groundfish sector. The amount of employment required to do products in groundfish was much higher. So while the landed value, the amount paid to fishers, is very high relative to what it used to be, the amount of value that's added by processing activity is relatively lower than it used to be back in the early 1990s.

Mr. Sarkis Assadourian: Okay. There were 29,000 people on the TAGS program.

Mr. Alastair O'Rielly: Yes.

Mr. Sarkis Assadourian: Also, the fishery is a seasonal job.

Mr. Alastair O'Rielly: Yes.

Mr. Sarkis Assadourian: You fish a few months, and then you collect unemployment insurance for a few months.

Would you consider that, and the buy-back program the government has, to be a subsidy for the fisheries industry compared to the Europeans, or not? Can the Europeans say to you, listen, you get unemployment insurance for six or seven months; that must be a subsidy. Can they argue that?

Mr. Daniel Turp: That's not happening any more with the new social policy. They're not getting any money any more.

Mr. Alastair O'Rielly: I suppose somebody could make that argument, but there have been significant changes in the last few years in the way these programs are administered.

In the case of the processing sector in particular, the eligibility requirements and the benefit opportunities have been significantly reduced for processing sector workers, and as a consequence there's much greater pressure and demand on industry to provide longer, more secure employment.

That's evolving. We're coming to kind of a transitional phase right now, because the TAGS program you referred to is really only in the past few months finally being brought to some form of closure. Over the next couple of years, I think we're going to see a kind of transition that will see longer periods of employment and perhaps fewer people in the industry than we now have.

Mr. Daniel Turp: Do you think, though, that that's a good way to do things? I'm trying to debate this. Mr. Pettigrew always tells us that he's doing these reductions because it's better in terms of employment. Would you agree with that?

• 1415

Mr. Alastair O'Rielly: Yes. The crab industry is now the flagship part of our industry. It used to be cod, but crab is now the most important—landed value alone is going to be a couple of hundred million dollars this year. So it's a very significant sector.

Very recently, I looked at.... A person who's earning $9 per hour in a crab plant, working an average—this is according to provincial government stats—of 517 hours in 1998, would have generated an income of just over $4,000. With the changes to the EI program's eligibility requirement, their EI benefit would be something comparable to that. So their total annual income would be less than $9,000. And they're working in one of the more lucrative sectors of our seafood sector. We find that salary level to be extremely objectionable. Some of our companies, including Fishery Products, pay higher wages than what I referenced, the $9, but even then, that won't come close to providing people with a decent annual income.

If we're going to have the kind of industry that we're alluding to here, that we want the opportunity for, it has to be an industry that produces higher-value products, with much higher quality and consistency, in a more user-ready form and safe—products that premium markets will pay premium prices for. It's very difficult to envisage that kind of industry when your income for your workers is less than $10,000 a year. You just cannot get sane, intelligent people, which is the kind of people we have, to get serious about an industry if their income prospects are less than $10,000. It's abysmal in that respect. So we have to encourage movement toward an industry that provides a reasonable level of income. That's very much in the eye of the beholder, but a 100% increase wouldn't be out of line, that's for sure.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Assadourian.

Mr. Sarkis Assadourian: Let me go back to the second part of my question. This EI thing is now being changed gradually, and it means a lot of changes. Say two years ago, when there was the EI program as described, with seasonal jobs and what have you...how does that compare with the European Union countries? Do they have similar programs to subsidize the fisheries? Are we on our own, or do they have their own programs that we can attack or discuss? That's what I want to know, the comparison between our programs and theirs.

Mr. Alastair O'Rielly: I can't answer that question with too much authority. I can't quote the detail for you, but the fishing industry is very heavily subsidized worldwide. Within the European Community, and in the Scandinavian countries, who have been and still are our principal competitors, there's been a lot of subsidization that's taken place over the years. Norway in particular had very intensive subsidies in their industry for vessels and price support mechanisms of one form or another. They are reducing theirs gradually. Iceland has had similar kinds of programs, and again, they are reducing theirs. It's the same with the U.K. They have had all kinds of support programs. I think the answer is that they are all reducing them.

Some of the forces that are causing that to happen are more driven by conservation concerns than they are by economic and trade matters, because we've woefully oversubscribed our seafood resources globally, just throwing more and more capital at it and diffusing the benefits. It's a mug's game, and I think the jig's up on it. So I think we now find ourselves having to reduce these subsidies so that we can have an industry that is sustainable, not just economically, but also from a conservation point of view.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Speller.

Mr. Bob Speller: Thank you, Ms. Bulte. Coming from southwestern Ontario, I can't say I understand fully what's been going on by looking at your graphs here, in terms of production value and what impact that's had on the fisheries, although I am from an area that has one of the largest inland fishing in the world, Lake Erie and Port Dover. In fact there's quite a huge fishing fleet out of there. So I'm trying to get a better sense of what's gone on, because I have essentially the same questions as Mr. Assadourian.

If you look at the production value, it's gone from $800 million in 1988 to $700 million in 1998. It's gone down in a dip.

• 1420

Does this graph include further processed, end-processed food, or is it fish? Is this the raw material?

Mr. Alastair O'Rielly: That's the finished product.

Mr. Bob Speller: In terms of the finished product, the production value over the last 10 years has dropped a bit, but not...except for the low, but there aren't as many people working in it as there were at your lowest point. There are in fact fewer than what you said. There are fewer people working in it today than there were in 1993.

Why is that? Why are we not able to get into further processing? Is it because of international trade rules, that we're being blocked out of certain countries? Or are there some basic problems here? I know we're moving toward more further processing, more value-added and higher-end stuff, but we're not employing any more people. In fact, we're employing fewer people by doing that. I just don't understand why that is.

Mr. Alastair O'Rielly: I'm going to ask Mr. Coombs to comment a bit about what Fisheries Products International is doing, but the question you're getting at is a very complex issue, and there's a little bit of distortion in terms of looking at the numbers. When I say that the numbers of people have fallen.... We were up to probably in the order of 30,000, 35,000 people somewhere in the 1990 period, and up until very recently, within the last year or so, many of these people were still appended to the fishing industry via the TAGS program. So in 1993—I may have said this, and I apologize if I gave you that impression—they weren't really working. They would consider themselves as part of the fishing industry, but displaced because of the groundfish crisis. What's happened since then is as shellfish resources kept growing, some of these people have moved back into that sector. But a lot of others are displaced and remain displaced after the TAGS program has expired.

I think Mr. Coombs could probably elaborate a little about his own company and maybe give you some more specific context for it.

Mr. Bob Speller: Sure.

Mr. Kevin Coombs: I think if you look at the example of FPI and the kind of company we were in the late eighties and early nineties versus the kind of company we are today, it will give you some appreciation of the magnitude of change over this period of time.

We were formed in 1984 as a result of many family companies, I suppose, going bankrupt. So we were set up essentially by the two levels of government and the Bank of Nova Scotia. In the late eighties we probably would have had 16 processing plants in Newfoundland. We would have had 8,500 employees. We would have had 55 deep-sea trawlers. That all started to come apart when the resource started to decline.

We probably would have been out of a Newfoundland base at that particular time, and we had sales on the Newfoundland base of probably around $400 million.

We have grown over the last couple of years in Newfoundland. Today we're probably in the order of 3,000 employees, not year-round work as such at the plant level, but growing. There's a big dependence on crab and shrimp, which has a different employment base from groundfish, and we have in the order of probably six deep-sea trawlers that act on a part-time basis rather than a year-round basis. So that's the significance of the change.

In our Newfoundland operation we lost 95% of our core business over that period of time, and we were forced to diversify substantially in order to survive.

The crab and shrimp resources that have multiplied, particularly on the northeast coast of our province, where northern cod used to be, have given some new life to Newfoundland and to fishing companies in general. So that's the magnitude of the type of change.

From 1992 until the time of this recovery, there were a large number of people associated with the fishing industry, either from a harvesting or a processing point of view, who would have had government subsidies. We haven't by any means taken enough out of the industry at this point in time to make a viable industry.

• 1425

One of the questions earlier was about investment. In order to have solid companies, you have to have solid plants, and to have solid plants, you have to have good investment. You can't have it on the basis of a 10-week operation. Also, the skill of the workforce that is required is very difficult to maintain with very seasonal-type operations.

The Acting Chairman (Ms. Sarmite Bulte): Before we go to the second round, I have a question. I noticed that your biggest competitors were Norway and Iceland, which are part of the EFTA. Have you had input into the EFTA negotiations?

Mr. Alastair O'Rielly: Again, through the Fisheries Council of Canada there have been consultations, and also through the provincial government there have been some discussions with us about the EFTA round and where that may lead. I think it offers some promise, but my understanding at the moment is that it's not likely to provide a remedy for the fundamental problem we have with the EU. It may deal with some of the challenges we have with these specific countries and find some more equitable way of doing trade with them, but the reality is that we're competitors. We're supplying the same markets, so the trade between ourselves is not all that relevant. It's important and it's a useful initiative, but it's not going to deal with the big problem we have with the EU.

The Acting Chairman (Ms. Sarmite Bulte): When we look at the efficiency through tariffs, which you've noted, we see that Canada is at 2.1% compared with the EU at 20%. Why are we at 2.1%?

Mr. Alastair O'Rielly: I think Canada's philosophy, generally, has been to open trade over time. We've always been an export-oriented industry, so we would be quite willing to trade off any tariffs we've had at any point in time for improved market access. There has never been a reason for us to want to try to protect our industry. Canada doesn't really count too much as a market for most of our seafood production. So I think that would probably be the underlying reason.

The Acting Chairman (Ms Sarmite Bulte): With regard to the FTAA discussions—and certainly those questions are occurring now—do you not see the FTAA as a vehicle to do the technical discussions you need to do and to take then to the WTO? What role do you see the FTAA playing, especially in your sector?

Mr. Alastair O'Rielly: I don't really know, to be honest. I haven't really pursued what challenges or opportunities are there for trying to achieve some remedies under that. I've been led to believe by the people in our industry who have looked at it, particularly the Fisheries Council, that the real opportunity for advancing some of our concerns and dealing with them is probably through the next WTO round.

The Acting Chairman (Ms. Sarmite Bulte): Canada is in the chair right now at the FTA, and we're going on. We need to have input into these negotiations. We'd appreciate it if you would look at that and perhaps get back to the committee on it.

Mr. Alastair O'Rielly: Certainly, the expansion of NAFTA will provide greater opportunity, but right now, under that arrangement the U.S. is wide open to us. It will improve access to Mexico, and that's an important opportunity.

But for the kinds of products we produce and that we anticipate producing, we really need to have access to those sectors of the world economy that can afford to pay premium prices for our products. That is the nature of where we are, and for us, that effectively means places such as Japan and the European Union member states.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much for that.

Mr. Turp, you had another question.

Mr. Daniel Turp: There have been no tariffs with the United States since 1994, when they were completely eliminated. Has that increased significantly the amount of exports from Canada to the United States, or were there important tariffs even before the FTA or NAFTA? If the tariffs with the European Union member states were lowered, would that probably mean more exports to the European Union? Is that what you need?

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Mr. Alastair O'Rielly: I think it would, and the reason is that the United States is not unlike Canada as a seafood market, that is to say, we are relatively low per capita consumers of seafood. The seafood markets in North America are not particularly sophisticated. Our annual per capita consumption of seafood is something in the order of 15 pounds. Amongst the European member states, this has been as high as 20 to 30 kilograms per capita in some of these countries, and of course in Japan it's 70 kilograms. So they have a much stronger preference for seafood, and they're much more discriminating seafood consumers. They're accustomed to paying premium prices for seafood products, and therefore it's much more attractive to us. If we didn't have the kinds of tariff barriers we have now, we would be trying to direct our products toward the best possible markets.

Mr. Daniel Turp: Your prices would be competitive.

Ms. Alastair O'Rielly: Yes. Our factors of production, we believe, are in terms of productivity, technology, marketing, and so on. We feel quite confident of being able to compete very effectively with any other country on an equal footing, except, of course, third world countries that produce very low-end products. We can't go head to head with someone making 25¢ per hour. We were producers of low-end products. We have to go away from that and produce only top-end products for the most discriminating markets.

Mr. Daniel Turp: One other thing. Mr. Assadourian brought up the issue of the government program that allows fishermen to survive during a whole year because they are seasonal workers. That might be something to deal with in a workers' rights side agreement. Some people think it's an unfair trade practice for a government to subsidize seasonal workers, as they do in the fishing industry, but maybe that's legitimate because we live in a country where you don't fish in the winter and you might not have enough fish to keep people busy for another six months after the fishing season. Would that be something you'd like to see done? If there is a side agreement on workers' rights, would you like some policy like that to be protected and allowed rather than being condemned by countries that would say these are unfair subsidies?

Mr. Alastair O'Rielly: There are a couple of elements in some of the comments Mr. Assadourian made. With regard to the subsidies or assistance that was provided under this tax program, and prior to that the NCARP program, these are special programs to respond to a kind of cataclysmic event in a resource context. I think that could easily be explained and understood.

I think the issue of ongoing subsidies through EI programs and so on as a regular course of events for seasonal workers would be what would be brought forward as an issue of concern. But many seafood producers in the world have the same circumstances. The wild fishery globally represents 100 million tonnes of wild fish, versus about 20 million or 25 million tonnes of cultured product, so most seafood is still of a wild nature. Migration patterns, spawning cycles, weather conditions, environmental factors, and so on all conspire to mean that it's a very seasonal industry wherever it's conducted. So we're not particularly unique in that respect.

In the early days of the FTA, a test case was brought forward where Canada was being assessed for countervail by the United States on this very issue. It was examined thoroughly at that time, and Canada won that interaction with the United States. The finding was that the provision of these income supports on a seasonal basis did not constitute a subsidy. There was no evidence of any subsidization. There was no change in what the prices would have been or the competitive position would have been had it been otherwise. We suspect that would probably still be the same circumstance.

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The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Stinson and then Mr. Assadourian.

Mr. Darrel Stinson: First of all, I want to congratulate you on your input. I think the concerns that you've brought here are very realistic. We talk about subsidies and handouts, and all this from different governments, in regard to industry and now the fishing industry. Would we be better off, or are we doing enough, to advertise the benefits of the farm product on the global stage?

Mr. Alastair O'Rielly: You mean in terms of marketing and promotion, that kind of thing?

Mr. Darrel Stinson: Yes. When I was in England, I happened to catch a program on fishing over there. It mentioned nothing about Canada.

Mr. Alastair O'Rielly: I think you're touching on a very important issue. Philosophically we as an organization, and I think this is consistent with the Fisheries Council of Canada, want to see an industry that's self-sustaining and globally competitive without subsidization, without bailouts, being necessitated or being a feature of the industry. In concert with that we would be philosophically opposed also to any kind of a major subsidy program for advertising or promotion. That said, however, there is a need to support what's been done in Canada in terms of transition, the whole business of developing, changing from a groundfish industry to a shellfish sector. That requires tremendous promotional costs and other costs. You have to do the packaging. You have to develop a distribution network. You have to displace the people who are already there in those sectors in order to be competitive. This is a tremendous challenge for us and one that we would welcome support on.

There are other things that come to mind readily. We have, in the past, positioned ourselves as being producers of relatively inexpensive primary seafood products like cod block and low-end fillets. As I've indicated, that's not where we want to go in the future. But changing the image of Canadian seafood is going to be a tremendous challenge for us. We've had decades of being positioned, in terms of attitude, as to where we fit in the world order as a seafood supplier. It takes a lot of promotional effort and a lot of very consistent production of high-quality products and so on to shake some of that image and to cause people to think of us in a different way. Support on that side I think would be welcomed and usefully spent.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Assadourian.

Mr. Sarkis Assadourian: Correct me if I'm wrong, but you mentioned that the Europeans have similar subsidies to ours, like the EI program or the TAGS program. Is that right? Is that what you said?

Mr. Alastair O'Rielly: Yes. I really would like to get some more detail for you on that issue as to what the nature of their subsidies are. They take all kinds of forms. They subsidize transportation. They subsidize vessels. There are some income supports. In some cases, they subsidize prices. The conduits to industry support and subsidy are probably quite different from ours. I think they would be equal or greater than anything we've experienced.

Mr. Sarkis Assadourian: Over and above the subsidies you mentioned, they also put a 20% tariff on it?

Mr. Alastair O'Rielly: That's correct. That's on shrimp. On groundfish products it varies. There are different quantities and different product forms, but it's around 8% to 12%. For things like herring, it's 15% on fillets. It varies. But any of those levels, when you're up to the order of 10% on a product, preclude you from being an effective supplier to that market.

Mr. Sarkis Assadourian: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you.

Mr. Turp, a very quick question, please.

Mr. Daniel Turp: Could you tell us what you expect from provincial governments and the federal government? You alluded to the fact that there have been some consultations at the provincial government, or discussions. How do you see this working with the federal government, the provincial government, the industry, and consumers? Do consumers have a role in this area? It is something I am trying to understand. How should provincial governments be involved in this process of trade negotiation?

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Mr. Alastair O'Rielly: In our case, in the seafood sector, I think it fundamentally goes back to what I mentioned or alluded to earlier. On raw value alone, we don't see ourselves as carrying a lot of weight when it comes to the trade agenda within Canada. But we think we are more important than our numbers would suggest, because of the impact on people, communities, regional development, and so on, and in that respect our provinces probably have a role to play in terms of bringing that message and that context to the federal government so we don't just look at the big-ticket items in terms of dollars, but also look at it in a much broader context.

Again, in our own philosophy in the seafood sector, we would prefer to have an environment where we can compete effectively, add value, and create employment, rather than be looking to Ottawa and to the rest of Canada for the kinds of initiatives that people are epitomized by, TAGS and other things. So to the extent that this is part of the philosophy and that the province can help us achieve a higher ranking in the order of priorities for Canada's trade, they're an important ally for us.

Mr. Daniel Turp: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Yes, Mr. Coombs.

Mr. Kevin Coombs: I'd like to add a point to emphasize something Alastair said earlier.

If you get into this subsidy argument and people focus on what has happened since 1990 in our eastern Canadian environment with regard to NCARP, TAGS, and retirements and assistance and everything like that, I think that has to be put into the context of the catastrophic events that occurred on the east coast of Canada. From a comparison point of view, it would be similar to taking the car industry out of Ontario. There had to be some assistance for the people who were involved in the industry. As the numbers demonstrate here today, it was 30,000 people in Newfoundland. If there wasn't something done in some kind of assistance, I don't know what we would have done. There wasn't an option to do nothing at that particular time.

The other thing I would caution is to get an understanding of what types of social programs exist in these other countries. I don't know that well enough to be able to comment on it, but I think it's important that the panel get that kind of detail to be able to do a comparison.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Assadourian.

Mr. Sarkis Assadourian: I want to make the point that we're not trying to blame anybody; we're just trying to be as helpful as we can so that we get the facts from you, so we can present that to our colleagues.

Mr. Kevin Coombs: But I think you'd have a very strong argument. If they focus on the fact that there were subsidies, if they call it that, from 1990, it was a program in the 1990s to help with the catastrophic event that happened, the decline in the resource over that period of time. I hope they bring it up so we can defend it.

Mr. Sarkis Assadourian: Okay, thanks.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. O'Rielly and Mr. Coombs, for your very informative presentation. Thank you for joining us today.

Please bear in mind that this is the beginning of consultations. We would encourage your organization, the Fisheries Council, and even your individual members, to make written briefs and submissions to the committee so that we can incorporate that into our report. Hearing you say that you'd like to see fisheries outside of agriculture, I'd encourage you to actually submit a separate argument on that alone.

Again, thank you for coming.

This meeting stands adjourned until 9 a.m. tomorrow.